Funding for Air Force Cost Plus Fixed Fee Level of Effort Contract, B-277165, January 10, 2000

B-277165 Jan 10, 2000 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Air Force (AF) treatment of modifications to cost-plus-fixed-fee level of effort (term) contracts for Launch Vehicle Integration analysis and support as severable services and charging the cost against appropriations current when the services were rendered was presumptively reasonable and nothing in the record overcomes presumption. AF should adjust accounting records to reflect obligation in the records of the appropriation current when the services were rendered. Nature of the work determines whether a service is severable or nonseverable for obligational purposes. Agency determination whether to use a cost plus fixed fee (CPFF) term or completion contract necessarily involves consideration of same factors that are relevant to determining whether the contract is severable or nonseverable for obligational purposes. View Decision Matter of: Funding for Air Force Cost Plus Fixed Fee Level of Effort Contract File: B-277165 Date: January 10, 2000 DIGEST DECISION This decision responds to a request from a contracting officer asking whether repeat launch vehicle integration analysis and support are severable or nonseverable services for purpose of determining the proper appropriation to charge with contract modifications extending the period of contract performance. The contracting officer also asks whether a single or multiple factor approach is correct for making a serverability determination. Background Beginning in 1967, the Defense Support Program (DSP) designed, developed, and deployed a series of infrared technology satellites. The satellites are composed of a sensor (for data gathering) mated to spacecraft segment (for communications, attitude control and telemetry). A satellite is placed in orbit by a launch vehicle. Dedicated ground stations that perform data readout, reduction and dissemination to government users provide support for the DSP satellites. In 1986, Aerojet was the contractor for production of the sensors for DSP satellites 14-17 (referred to as DSP Block 14) and TRW was the contractor for the production of spacecraft for DSP Block 14. (Other contractors produced the launch vehicles and other elements of the launch effort.) The Air Force (AF) determined that Aerojet and TRW as production contractors were uniquely qualified to perform the necessary Launch Vehicle Integration (LVI) analysis and support effort necessary to ensure compatibility between DSP satellites and launch systems. /1/ Thus AF negotiated and awarded separate contracts to Aerojet for Sensor/Launch Vehicle Integration Support (LVI) (contract F04701-86-C-0029 (Contract 0029), effective March 6, 1987) and to TRW (contract F04701-86-C-0050 (Contract 0050), effective January 23, 1987) for Spacecraft/Launch Vehicle Integration Support (LVI) for DSP Block 14. The Statement of Work (SOW) for Contract 0029 initially stated that the contractor would perform specified tasks and activities by September 30, 1990. The SOW for Contract 0050 initially stated that the contractor would provide DSP support through September 1990. Option 2 of each contract allowed the government to order the contractor to perform LVI support for DSP Flight 17. Option 2 of both contracts was structured as a cost-plus-fixed-fee (CPFF) (term) arrangement. Option 2 is comprised of contract line items numbers 006 and 007 (CLIN 006 and CLIN 007, respectively). The contracting officer's inquiry relates solely to the funding of CLIN 006 under the two contracts. The government exercised Option 2 on March 30, 1990 with respect to contract 0050 and on August 24, 1990 with respect to contract 0029. The period of performance for Option 2 of both contracts ended on September 30, 1992 and both options were funded by three-year Air Force Missile Procurement (AFMP) appropriations available for obligation from October 1, 1989 to September 30, 1992. The AF modified Contract 0029 to extend the period of performance for Option 2 to September 30, 1993. The modification increased the CPFF for Option 2 and the increase was obligated against AFMP appropriations available from October 1, 1991 to September 30, 1994, to support the extended period of performance. The period of performance was again extended to September 30, 1994, by a modification that increased the CPFF for Option 2, obligating AFMP appropriations available from October 1, 1992 to September 30, 1995. The AF modified Contract 0050 to extend the period of performance for Option 2 to September 30, 1993. The modification increased the CPFF for Option 2 and the increase was obligated against AFMP appropriations available from October 1, 1992 to September 30, 1995. The period of performance was again extended to September 30, 1994, by a modification that increased the CPFF for Option 2, obligating AFMP appropriations available from October 1, 1990 to September 30, 1993.