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Thursday, October 20, 2016

Indirect Rate Ceilings on CPFF contracts = #winning?



I googled “caps on indirects” before writing this and found very little in the area of any other agency but USAID. The chief reason for that is the fact that establishing indirect ceilings in cost type contracts is not widely used by any other Government procurement agency. The reason why they don’t is simple - if they desire to fix costs, they use Fixed Price or T&M type instead.

Losing money on the sure thing– how improper contract administration makes CPFF contracts a looser for contractors…


So, I love cost reimbursable contracts; what’s not to love?  You estimate the total cost based on, most of the time, a very generous scope of work and then bill the Government for all your allowable direct and indirect costs plus a profit for job well done.  Risk = 0, right?

It is what the Pretty Woman would call “a sure thing” for contractors.

And therefore the riskiest for the Government… or is it?