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To Contents	Fixed Price Purchase Order
By Anonymous on Tuesday, January 07, 2003 - 02:54 pm: I am new to this board, hope you can help me. We had a FP purchase order for support services that ended 9/30/02. We did not use all of the funds on the PO. We sent a final invoice to the gov't for the remaining money not spent. I don't have experience with a FP Purchase Order so I hope you can clarify this for me. The invoice references FAR Part 16.202-1 which states: A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor's cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties. Is there another FAR part that allows for us to bill for the remaining funds? Thanks. I appreciate your help By Vern Edwards on Tuesday, January 07, 2003 - 03:07 pm: You are entitled to get paid at the stipulated firm-fixed-price(s) or rate(s) for work that you did and that the government accepted. If the government put more funds on the purchase order than were needed to pay you what it owned you for work performed and accepted, then you are not entitled to the extra money. By Tricia on Tuesday, January 07, 2003 - 03:09 pm: What payment clause do you have in your purchase order? By FormerCO4AF on Tuesday, January 07, 2003 - 03:12 pm: Anonymous Since you are asking this question I am assuming the Government is saying you can't invoice for the remaining amount. IT would help to know their reason. Fixed price can include estimated quantities, not to exceed, or the PO could include the variation in quantities clause (52.211-16 -- Variation in Quantity) which includes a plus or minus percentage that could effect payment. By joel hoffman on Tuesday, January 07, 2003 - 03:55 pm: Anonymous, can you describe the terms of the contract a bit more? Is it a lump sum contract for services, without regard for actual quantities provided? If so, you are probably entitled to full payment. In that case, I assume you have been receiving progress payments, based on the actual services provided, not an unusual practice. When the project is over, the Government should release the remaining funds. At any rate, the payment due is usually based the terms of your contract's payments clause, as well as the contract line item schedule or other description of the services. happy sails! joel hoffman By Anonymous on Tuesday, January 07, 2003 - 04:34 pm: I think Vern hit it on the head. The only payment clause sighted it prompt payment. The PO gives funding NTE and then the Labor Rate. It doesn't state anything further. The reason I am asking is because another contractor administrator told my boss that he is entitled to the unused funds because somewhere in the PO he said "fixed price." The only thing I have been able to find that states fixed price is a payment voucher that we received from the gov't when they paid an invoice. It simply says Fixed Price. The invoice has not been received by the government yet, but it will and I wanted to be prepared to respond. It appears that we have no leg to stand on. I don't think the boss would press to bill if it weren't for the fact that the gov't client was very poor at communication and asked us for a quote on what it would cost them to extend our services for 3 more months. Then stated they were preparing an extension. Only to get a call from our employee on 9/30/02 stating he had been told to clear out, there was no money for him. No call from the gov't at all to tell us what was going on. So our guy sat on overhead for 2 weeks. I have a feeling the gov't will call to say they won't pay. thanks for all the feedback By formerfed on Wednesday, January 08, 2003 - 08:13 am: Anon, From what you said, your purchase order seems to have fixed price hourly rates (billable amount for each hour is at a fixed rate) and a total not to exceed dollar amount. Under that you provide services at the stated hourly rate but not exceed the amount of money stated. The other contract administrator seems to confuse this type of arrangement with a total firm fixed price order. In that case, you are paid (after government acceptance) the total amount of the order, regardless of the time you actually spent. Does that make sense? By Anonymous on Wednesday, January 08, 2003 - 10:21 am: Yes, very helpful. I appreciate your feedback, I am glad I found this site. By Anon on Wednesday, January 08, 2003 - 10:22 am: A firm fixed price should have been established at some time during the active period of the order. See FAR 13.302-2. For example, for our repair orders, we normally request an inspection report with an estimate for the repair prior to authorizing the contractor to proceed with the repair. If we give the go-ahead, the estimate becomes the fixed price to repair. Sounds like the contracting officer didn't definitize the final fixed price By formerfed on Wednesday, January 08, 2003 - 10:36 am: Anon of 9/8-10:22. An unpriced order later definitized for items like repair often is a good way to go. However for other work like support services, a purchase order issued on a labor hour basis (FAR 16.602) is appropriate. This is especially true when you know support is needed but you don't know how much for certain. You just negotiate a fixed hourly rate, provide an estimate of the hours required, and establish a not to exceed dollar amount. It's also a good practice to write an ordering procedure provision that describes how and who orders the service and how the contractor gets paid. By Anon on Wednesday, January 08, 2003 - 10:54 am: I simply note the requirement of 13.302-2(c): Unpriced purchase orders may be issued on paper or electronically. A realistic monetary limitation, either for each line item or for the total order, shall be placed on each unpriced purchase order. The monetary limitation shall be an obligation subject to adjustment when the firm price is established. The contracting office shall follow up on each order to ensure timely pricing. The contracting officer or the contracting officer's designated representative shall review the invoice price and, if reasonable (see 13.106-3(a)), process the invoice for payment.

Fixed Price Purchase Order

By Anonymous on Tuesday, January 07, 2003 - 02:54 pm:

I am new to this board, hope you can help me.

We had a FP purchase order for support services that ended 9/30/02. We did not use all of the funds on the PO. We sent a final invoice to the gov't for the remaining money not spent.

I don't have experience with a FP Purchase Order so I hope you can clarify this for me.

The invoice references FAR Part 16.202-1 which states:
A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor's cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties.

Is there another FAR part that allows for us to bill for the remaining funds? Thanks. I appreciate your help

By Vern Edwards on Tuesday, January 07, 2003 - 03:07 pm:

You are entitled to get paid at the stipulated firm-fixed-price(s) or rate(s) for work that you did and that the government accepted.

If the government put more funds on the purchase order than were needed to pay you what it owned you for work performed and accepted, then you are not entitled to the extra money.

By Tricia on Tuesday, January 07, 2003 - 03:09 pm:

What payment clause do you have in your purchase order?

By FormerCO4AF on Tuesday, January 07, 2003 - 03:12 pm:

Anonymous

Since you are asking this question I am assuming the Government is saying you can't invoice for the remaining amount. IT would help to know their reason.

Fixed price can include estimated quantities, not to exceed, or the PO could include the variation in quantities clause (52.211-16 -- Variation in Quantity) which includes a plus or minus percentage that could effect payment.

By joel hoffman on Tuesday, January 07, 2003 - 03:55 pm:

Anonymous, can you describe the terms of the contract a bit more? Is it a lump sum contract for services, without regard for actual quantities provided? If so, you are probably entitled to full payment.

In that case, I assume you have been receiving progress payments, based on the actual services provided, not an unusual practice. When the project is over, the Government should release the remaining funds.

At any rate, the payment due is usually based the terms of your contract's payments clause, as well as the contract line item schedule or other description of the services. happy sails! joel hoffman

By Anonymous on Tuesday, January 07, 2003 - 04:34 pm:

I think Vern hit it on the head. The only payment clause sighted it prompt payment. The PO gives funding NTE and then the Labor Rate. It doesn't state anything further.

The reason I am asking is because another contractor administrator told my boss that he is entitled to the unused funds because somewhere in the PO he said "fixed price." The only thing I have been able to find that states fixed price is a payment voucher that we received from the gov't when they paid an invoice. It simply says Fixed Price.

The invoice has not been received by the government yet, but it will and I wanted to be prepared to respond. It appears that we have no leg to stand on.

I don't think the boss would press to bill if it weren't for the fact that the gov't client was very poor at communication and asked us for a quote on what it would cost them to extend our services for 3 more months. Then stated they were preparing an extension. Only to get a call from our employee on 9/30/02 stating he had been told to clear out, there was no money for him. No call from the gov't at all to tell us what was going on.

So our guy sat on overhead for 2 weeks.

I have a feeling the gov't will call to say they won't pay.

thanks for all the feedback

By formerfed on Wednesday, January 08, 2003 - 08:13 am:

Anon,

From what you said, your purchase order seems to have fixed price hourly rates (billable amount for each hour is at a fixed rate) and a total not to exceed dollar amount. Under that you provide services at the stated hourly rate but not exceed the amount of money stated.

The other contract administrator seems to confuse this type of arrangement with a total firm fixed price order. In that case, you are paid (after government acceptance) the total amount of the order, regardless of the time you actually spent.

Does that make sense?

By Anonymous on Wednesday, January 08, 2003 - 10:21 am:

Yes, very helpful. I appreciate your feedback, I am glad I found this site.

By Anon on Wednesday, January 08, 2003 - 10:22 am:

A firm fixed price should have been established at some time during the active period of the order. See FAR 13.302-2. For example, for our repair orders, we normally request an inspection report with an estimate for the repair prior to authorizing the contractor to proceed with the repair. If we give the go-ahead, the estimate becomes the fixed price to repair. Sounds like the contracting officer didn't definitize the final fixed price

By formerfed on Wednesday, January 08, 2003 - 10:36 am:

Anon of 9/8-10:22.

An unpriced order later definitized for items like repair often is a good way to go. However for other work like support services, a purchase order issued on a labor hour basis (FAR 16.602) is appropriate. This is especially true when you know support is needed but you don't know how much for certain. You just negotiate a fixed hourly rate, provide an estimate of the hours required, and establish a not to exceed dollar amount. It's also a good practice to write an ordering procedure provision that describes how and who orders the service and how the contractor gets paid.

By Anon on Wednesday, January 08, 2003 - 10:54 am:

I simply note the requirement of 13.302-2(c):

Unpriced purchase orders may be issued on paper or electronically. A realistic monetary limitation, either for each line item or for the total order, shall be placed on each unpriced purchase order. The monetary limitation shall be an obligation subject to adjustment when the firm price is established. The contracting office shall follow up on each order to ensure timely pricing. The contracting officer or the contracting officer's designated representative shall review the invoice price and, if reasonable (see 13.106-3(a)), process the invoice for payment.