Project Management Central

Please login or join to subscribe to this thread

Topics: Agile, Change Management, Scope Management
Should I pay an Agile sub-contractor for pre-contract planning costs?
Anonymous
I have a vendor with an existing contract that is paid by transaction. When I have new projects, by design they have to implement them. I already have issues where when we have new projects (designated by contract amendments) they charge me a FFP which includes labor I know they already are using on existing contracted work. I was recently approached by them asking that I now pay them independently for the planning work that goes into them creating the costs and planning of amendments I will have to award them in the future. Inherently I think the planning of the work should go into their FFP estimate but they claim since they are Agile (which maybe 1/5th of their processes actually are), their planning efforts should always be paid additionally because their planning takes resources away from their staffing that maintains their per transaction based income. I would love to get some outside input on this idea of theirs. Thank you.
Sort By:
Network:592



The provisions of the contract are your, as the prime, to determine. Most contracts prohibit pre-planning costs. In fact, if you have a government contract, and are using subs, you may have to prove they did not work before the effective date of the task. Likewise, it is illegal to double-bill, unless, of course, they can provide they spent hours on your work, and other hours on other work.

If they insist, perhaps it is time to get a new sub-contractor.
...
1 reply by Daniel Tomson
Jul 07, 2017 3:27 PM
Daniel Tomson
...
Unfortunately this is a 5 year plus two optional extensions contract that was put in place long before I came on the scene (4th year in right now). I'm just trying to maneuver within the confines of what has already been decided and unchangeable from my end.
Network:0


Jul 07, 2017 10:46 AM
Replying to John Tieso
...
The provisions of the contract are your, as the prime, to determine. Most contracts prohibit pre-planning costs. In fact, if you have a government contract, and are using subs, you may have to prove they did not work before the effective date of the task. Likewise, it is illegal to double-bill, unless, of course, they can provide they spent hours on your work, and other hours on other work.

If they insist, perhaps it is time to get a new sub-contractor.
Unfortunately this is a 5 year plus two optional extensions contract that was put in place long before I came on the scene (4th year in right now). I'm just trying to maneuver within the confines of what has already been decided and unchangeable from my end.
...
1 reply by John Tieso
Jul 10, 2017 2:01 PM
John Tieso
...
Are these 'unchangeable' provisions, actually contractual, or simply informal practices? if they are not contained in the contract you have no obligation to continue practices by predecessors.

Of course, as Cris mentions, if they do good work for you, it may be better to simply wait for the expiration of the contract. If the Contract is Federal, you stand the risk that an audit will disallow the costs, and you will be stuck with them yourself.
Network:491



John makes valid points. Are you happy with the vendor? If not, then get to work on modifying the contract and perhaps triggering an early termination clause if it exists.

If you are happy and feel like the company is getting value from the service that outweighs your concerns, then sit tight, wait for the contract to expire and renegotiate.
Network:592



Jul 07, 2017 3:27 PM
Replying to Daniel Tomson
...
Unfortunately this is a 5 year plus two optional extensions contract that was put in place long before I came on the scene (4th year in right now). I'm just trying to maneuver within the confines of what has already been decided and unchangeable from my end.
Are these 'unchangeable' provisions, actually contractual, or simply informal practices? if they are not contained in the contract you have no obligation to continue practices by predecessors.

Of course, as Cris mentions, if they do good work for you, it may be better to simply wait for the expiration of the contract. If the Contract is Federal, you stand the risk that an audit will disallow the costs, and you will be stuck with them yourself.

Please login or join to reply

Content ID:
ADVERTISEMENTS

"Too many pieces of music finish too long after the end."

- Igor Stravinsky

ADVERTISEMENT

Sponsors