Sign In
  • Question

    Where can I find information that states that a CASREP contracts remains the type it is issued whether or not it was definitized before shipping.


    Answer

    I found no instance in the FAR, DFARS, or DPAP Policy Letter (Aug 29, 2008) that indicated the requirement for a 5% profit associated with a UCA or Letter Contract. The prevailing language of the aforementioned references require that contract type risk to be assigned in the low end of the range. Correspondingly, if a substantial portion of the costs have occurred prior to definitization, the assigned contract type risk value could be 0 percent (notwithstanding contract type). The regulations are very consistent on this process.

     DFARS 217.7404-6(a) Allowable profit.

    When the final price of a UCA is negotiated after a substantial portion of the required performance has been completed, the head of the contracting activity shall ensure the profit allowed reflects—

    (a) Any reduced cost risk to the contractor for costs incurred during contract performance before negotiation of the final price;

    (b) The contractor's reduced cost risk for costs incurred during performance of the remainder of the contract; and

    (c) The requirements at 215.404-71-3(d)(2). The risk assessment shall be documented in the contract file.

    DFARS 215.404-71-3(d)(2) Mandatory. The contracting officer shall assess the extent to which costs have been incurred prior to definitization of the contract action (also see 217.7404-6(a) and 243.204-70-6). The assessment shall include any reduced contractor risk on both the contract before definitization and the remaining portion of the contract. When costs have been incurred prior to definitization, generally regard the contract type risk to be in the low end of the designated range. If a substantial portion of the costs have been incurred prior to definitization, the contracting officer may assign a value as low as 0 percent, regardless of contract type.

    243.204-70-6 Allowable profit.

    When the final price of an unpriced change order is negotiated after a substantial portion of the required performance has been completed, the head of the contracting activity shall ensure the profit allowed reflects—

    (a) Any reduced cost risk to the contractor for costs incurred during contract performance before negotiation of the final price;

    (b) The contractor's reduced cost risk for costs incurred during performance of the remainder of the contract; and

    (c) The extent to which costs have been incurred prior to definitization of the contract action (see 215.404-71-3 (d) (2)). The risk assessment shall be documented in the contract file.

    Open full Question Details