Why Can’t I Use the FPLOE Contract Type Whenever I Want?

Why Can’t I Use the FPLOE Contract Type Whenever I Want? 

FAR Part 16 describes types of contracts that may be used in Federal government acquisitions.  One little-known and seemingly often misunderstood contract type is the firm-fixed-price, level-of-effort term (FPLOE) type contract, defined at 16.207, which provides that FPLOE is suitable for investigation or study in a specific R&D area.  The characteristics and limitations for using the FPLOE contract type include: 

• specified level of effort, stated period of time, work definable only in general terms; for which the Government pays a fixed dollar amount. 
• FPLOE type is allowed only when- 

• the work required cannot otherwise be clearly defined; 
• the required LOE is identified/agreed upon in advance; 
• the reasonable assurance that the intended result cannot be achieved by expending less than the stipulated effort; the contract price doesn’t exceed the simplified acquisition threshold (SAT - $250k or higher for various contingency, emergency and overseas situations)  
• BUT can be used for similar-purpose R&D requirements above the SAT if approved by the chief of the contracting office. 

In the first two-thirds of FY22, USASpending.gov reported 349 instances of FPLOE type contract actions, although only 82 (24.5%) of these actions had a total contract value at/below the standard SAT.  While this confirms that FPLOE represents an extreme minority of the tens of thousands of Federal contract actions during this timeframe, were these instances truly R&D-purposed actions that conformed to all of the FAR characteristics and constraints?  What about the 75% of FPLOE actions in the 1st 8 months of FY22 that exceeded the basic SAT value?  Those actions averaged over $25M each, with 2 actions individually valued over $1B!  How many of these actions were wrongly coded as FPLOE?  Or how many of them may have been an incorrect usage of the very-limited-purpose contract type?  It has also been known to happen that FPLOE type contracts have been coded as Firm Fixed Price in SAM.gov (formerly FPDS-NG). 

Are you new to working on an acquisition team?  Could you use help in assessing alternatives and deciding on the best contract type for your acquisition? One source of assistance is the video tutorials available in our acquisition planning app called Facilitated Intelligent Needs Development (FIND).  These short tutorials help you to decide which type of contract may be most suitable based on your objectives and acquisition circumstances.  The FIND Library also has many Templates, Formats and Guidance documents to assist you in documenting your contract type choice, each of which is tailorable for your agency’s needs.  

Check out our video that provides an overview of FIND.  Or better yet, request a demo at demo@seventhsenseconsulting.com or contact us at (301) 392-1895 or lakers@seventhsenseconsulting.com.    

Make it an enlightened day,  

Pat Shields  

Director – Acquisition Practice  

Seventh Sense Consulting