ATSP2 offers three pricing arrangements:
- Cost Plus Fixed Fee (CPFF)
- Firm Fixed Price (FFP)
- Time & Materials (T&M)
The ordering period is through September 2006.
The performance period is through September 2008.
For the purpose of estimating a dollar value, Delivery Orders are priced in accordance with the pre-negotiated contract bid rates for the three pricing arrangements. A single Delivery Order contract may contain one, two, or all three of these pricing arrangements. Payment is made on the basis of actual costs incurred.
Any of the Contractor’s bid rates may be updated any time the ACO and the Contractor agree such an update is necessary to reasonably align the rates in the contract to the Contractor’s actual billing rates. Updated rates are added to the basic contract via modification and are utilized for new tasks. Rates utilized for existing tasks are not renegotiated.
The Contractor may re-propose existing labor rates that have been superceded by corporate restructuring, mergers and acquisitions and are no longer compliant with Cost Accounting Standards. Affected rates are submitted via an auditable rate package to the ACO. The ACO has been delegated the authority to maintain labor rates throughout the basic contract performance period.
- Cost Plus Fixed Fee (CPFF) Delivery Orders
- Fee Percentage: 9.4% (Pre-negotiated)
Applicable to all years in the contract period. In each CPFF Delivery Order, the fee is established as a firm fixed dollar amount rather than as a percentage. The Contractor is required to submit a proposal with an estimated price.
CPFF rates are loaded to include all indirect rates except for fee. At the time the order is placed, these rates are used to establish the estimated cost of the order. The total estimated cost (labor, material, indirect costs) is multiplied by the fee (profit percentage) to determine the fixed fee – total estimated cost times fixed fee percentage = fixed fee. The basic contract’s pre-negotiated fee percentage applies to all CPFF Delivery Orders awarded under the ATSP2 contract vehicle, and is in full compliance with CPFF fee limits established by Title 10 United States Code, Section 2306.
All Delivery Orders issued using the CPFF pricing arrangement are designated completion form IAW FAR 16.306(d)(1), unless otherwise stated in the individual Delivery Order. Per FAR 16.306(d)(3), a preference is made for the completion form when specific milestones can be adequately defined. Milestones reflect performance and must be accomplished within the period of performance for each Delivery Order issued.
- Firm Fixed Price (FFP) Delivery Orders
- Profit Percentage – to be negotiated on each FFP Delivery Order
In each FFP Delivery Order, the profit is negotiated as a firm fixed dollar amount. The Contractor is required to submit a FFP proposal. Material, labor hours and other direct costs are negotiated prior to the issuance of a Delivery Order.
FFP rates are loaded to include all indirect rates except for profit. At the time the order is placed, these rates are used to establish the cost of the order. The total estimated cost (labor, material, indirect costs) of a Delivery Order is multiplied by the profit percentage negotiated for that Delivery Order to determine the firm fixed price for the order – total cost times negotiated profit percentage = fixed profit.
- Time & Material (T&M) Delivery Orders
- Profit Percentage – negotiated on each T&M Delivery Order
In each T&M Delivery Order, the profit is negotiated as a firm fixed dollar amount. The Contractor is required to submit a proposal with an estimated price.
The T&M Delivery Order is priced in accordance with labor rates proposed in response to each Contractual Engineering Task (CET, i.e., statement of work) solicited to establish a ceiling price. The proposed rates are fully loaded to include all indirect rates plus profit.
At the time the T&M order is placed, these rates are used to establish a ceiling amount for the order.
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