FPIS and Incremental Definitization

What is FPIS? Never heard of that type I don't think.

What is FPIS? Never heard of that type I don't think.

Read FAR 16.403-2 Fixed-price incentive (successive targets) contracts. FPIS is an alternative to FPIF -- fixed-price incentive (firm target), described in FAR 16.403-1.

We have an construction contract with 2 CLINS. CLIN 1 is a FFP clin for the construction contractor to provide preconstruction services during design. CLIN 2 is an FPIS clin to actually build the facility being designed. The design packages are phased such that the construction contractor can start working prior to the whole design being completed.

As the individual design packages are completed to 100% we are wanting to convert that portion of the work from FPIS to FFP, while leaving the remaining portions of work, still being designed, as FPIS (no work is happening on the portions that are still under design).

Question (s).

1. Does that approach seem possible under 52.216-17, specifically (g)(1) or any other paragraph in the clause that would allow incremental definitization?

2. If not under that clause, does anyone know of another clause/statute to sight to allow for this?

Thanks

It is possible, but not very practical. It would entail an awful lot of work. Among other things, each design package would have to be a separately priced CLIN or SUBCLIN with its own target cost, target profit, ceiling price, and share ratio. Also, each would have to be separately acceptable. I wouldn't do it.

By the way, the proper abbreviation is FPI(S).

It is possible, but not very practical. It would entail an awful lot of work. Among other things, each design package would have to be a separately priced CLIN or SUBCLIN with its own target cost, target profit, ceiling price, and share ratio. Also, each would have to be separately acceptable. I wouldn't do it.

By the way, the proper abbreviation is FPI(S).

Thanks for the reply. I gather you are saying if we wanted to do this, we would have to set it up at the outset the way you are describing? We have an ongoing debate and some have interperted 52.216-17(g)(1) as allowing the government and contractor to bilaterally agree to remove portions of the work to negotiate separate disposition of that work, completely removing it from the FPI(S) operation (to include negotiating a FFP profit for that piece of removed work). Adjusting the targets on the work that remains FPI(S) would be easy enough. Would this seem even plausible to you?

Thanks again for the reply

Thanks for the reply. I gather you are saying if we wanted to do this, we would have to set it up at the outset the way you are describing? We have an ongoing debate and some have interperted 52.216-17(g)(1) as allowing the government and contractor to bilaterally agree to remove portions of the work to negotiate separate disposition of that work, completely removing it from the FPI(S) operation (to include negotiating a FFP profit for that piece of removed work). Adjusting the targets on the work that remains FPI(S) would be easy enough. Would this seem even plausible to you?

Thanks again for the reply

The clause doesn't allow you to do anything. It simply specifies the payment arrangement. You can restructure the contract by mutual agreement as you described. You don't need a clause to do that, but it will be complicated. I don't know why you want to do that, but go ahead. As CO, I would never agree. It's a lot of work. What's the benefit?

Is this a Corps of Engineers' project using the "Early Contractor Involvement" procedures?

If so, I will have to check with a colleague that is a proponent for this acquisition method. I know that we are expected to definitize the FPI price to FFP, if possible. But I don't know the details off the top of my head.

How do you expect to allocate the indirect project costs to a FFP portion of the total scope? How would you adjust the original fee as you breakout some unknown percentage of the total scope?

There is a FAR prohibition at 36.208 against mixing FFP construction and other pricing arrangements such as FPI at the same time on the same contract. There are enormous administrative and project controls challenges in keeping resources and costs properly segregated and allocated between FFP and reimbursible accounts. The project controls efforts would be intensive. The project controls and management costs are examples of the difficulty in either having to use separate resources to even manage the FPI and FFP efforts or having some system able to segregate the project controls costs.

Thanks for the feedback all. You've solidified much of what I was thinking. This is not ECI Joel, but a similar variant.