Cost Plus Award Fee Base Fee Calculation

Can you clarify your question?  Are you asking if you can award a contract where the amount obligated, including an amount for base fee, exceeds funding available for that contract?  If so, are you using appropriated funds for the contract?

So I would be the contractor and it is a cost-plus award fee contract with a 2% base fee. It is an incrementally funded contract. Is the base fee calculated based on the amount actually spent or would the base fee be calculated based on the amount proposed? So if the contract ceiling is 100K but we only spent 90K would the base fee be $2000 (100k*2%) or 1800 (90K*2%) Hope this is more clear. Thanks for taking the time to respond.

The base fee is based on the contract award amount (contractors proposed adjusted to any negotiated amount).  Using your example, the base fee is $2,000.  If actual cost is $90,000, the contractor is still entitled to $2,000.  

As a side note, your use of incremental terminology is confusing.  Incremental funding is different from actual costs incurred.

Thanks so much and I know I got some work to do on understanding this environment & appreciate the feedback. To expand on your last sentence. Doesn't funding basically become cost+fees since they deobligate money at the end of the option period. So actual costs+fees after all said and done matches funding? Either way thanks!

Deathdealer said:

So actual costs+fees after all said and done matches funding? Either way thanks!

That’s the way it should work, although they probably won’t reduce funds before that… they have to determine award fee, if any and fund it.

Incremental funding usually means providing funding in less than the full amount with intent to provide more later. For example if the contract is estimated at $100,000 but the agency might provide only $50,000 initially and then plan to fund the balance later.

Thank you all for the valuable feedback. This forum is great!

Deathdealer said:

Is the base fee calculated based on the amount actually spent or would the base fee be calculated based on the amount proposed?

The base fee is set at the time of contract award.  Thus, if the contract is awarded with an estimated cost of $100K and a base fee of $2K, the contractor is entitled to the $2K of base fee regardless of what its actual costs are.  If the fee changed based on costs incurred, you probably would have an illegal cost plus percentage of cost contract.

Further to this conversation, should there be a CLIN just for the base fee in the schedule?  Also, if the CLIN that the base fee is calculated on increases because the estimate was low, since it is cost type, does the base fee increase as well? Or is the base fee fixed and end of story because the base fee is the acceptance of the risk of a cost estimated contract?

The base fee is generally fixed, unless the there is a change to the scope of work or other circumstance providing for an adjustment (not due to cost growth/overruns/etc.).