Fixed Fee Withholding

Can a CO withhold payment of fee on CPFF task order if clause 52.216-8 Fixed Fee is not incoprorated in the prime or task order?

What does the contract say about payment of the fixed fee?

The contract is silent about withholding fee. I believe it is a poorly written contract. It is an IDIQ, with quick close out procedures, this particular task order is CPFF (labor rates for CPFF Task Orders are established in the IDIQ), the task order pop is over but the COTR is stating that fee is being withheld on invoices pending review of by Acquistion over the performance on the task order. We are in the process of responding to a CPAR but this is about it. Can fee be withheld ?

If the contract does not say that they can withhold, then I would argue that they cannot withhold. Ask them under what authority they are withholding.

It turns out the COTR is citing FAR clause 52.232-32 (e) for withholding fee on our CPFF task order. Perhaps here are some performance issues we do not agree with.

Are you saying that FAR 52.232-32, Performance-Based Payments, is the applicable payment clause for your CPFF task order? That doesn't make sense. Performance-based payments are not for use in cost-reimbursement contracts (see FAR 32.1001(e)(1)).

Thank you. It is crazy. This is the clause that was cited by the COTR for withholding fee (the CO wouldn't cite the applicable clause). It doesn't make sense to us. Our task order is CPFF. We can also have CPAF and FFP task orders awarded under the IDIQ.

Did you look in your contract to see if the clause is there?

If I were administering CPFF work on the gov't side of the table I would be hanging my hat on 52.246-5 ( d )( 2 ) as the basis for withholding fee for nonconforming services that cannot be corrected by reperformance. If that clause is indeed in the contract or task order, as it should be, please understand that the withhold is authorized "to reflect the reduced value of the services performed" and not as a license for an unhappy customer to renegotiate the entire fee structure.

The classic example from my ASPR training days is the custodial services contract requirement to sweep and mop daily. If you miss a day, you can't make up for it by doing it twice tomorrow. The remedy is monetary.

FAR 52.245-5 does not permit "withholding" of fee. It permits the CO to reduce the amount of the fixed-fee to reflect the reduced value of the work when services are nonconforming and cannot be reperformed. To withhold fee means that the government will hold back on some amount of payment for some period of time, but will eventually pay that amount. To reduce fee means to reduce the amount that the government ever will pay. The government may reduce and withhold at the same time. Withholding does not require a contract mod. Reduction must be made by modification, ideally, but not necessarily, bilaterally.

I have a different question regarding fee withholding. For example, we are a contractor holding a CPFF contract. Our contract lists each CLIN separately, along with the associated cost and fee for each CLIN. We submit vouchers monthly. When the CLIN is completed, can we bill the withheld fee for that CLIN, or must it wait until the entire multi-year contract and all CLINS are complete? I can find nothing specific to withholding of fee by CLIN.

The fixed fee clause, FAR 52.216-8, says that the CO can withhold a reserve up to 15 percent of the "total" fixed fee or $100,000, whichever is less. I assume that means the total of all line items. I could find nothing about this in the FAR system, but I don't have time to check case law. This is the sort of thing that ought to be worked out before the contract is signed.