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  1. Today
  2. Lionel Hutz

    Exercise option SAF

    I agree.
  3. Corduroy Frog

    ICS for Non-Profit

    That pretty much answers the question, and I agree. Thanks to all...
  4. RachelleR

    Exercise option SAF

    Appreciate your thoughtful and informative response.
  5. Yesterday
  6. here_2_help

    Pre-Contract Authorization

    Thank you very much Retread
  7. Retreadfed

    Pre-Contract Authorization

    H2H, is this what you had in mind Absent an advance agreement, recovery of pre-contract costs requires proof of four elements: (1) the costs were incurred prior to the effective date of the contract; (2) the costs were incurred directly pursuant to negotiation of the contract and in anticipation of award; (3) the costs were necessarily incurred in order to comply with the proposed contract delivery schedule; and (4) the costs would have been allowable if incurred after the date of the contract. Radant Technologies, Inc., ASBCA No. 38324, 91-3 BCA ¶ 24,106 at 120,657; FAR 31.205-32. The four part test from Radant had been cited in a few later cases.
  8. joel hoffman

    Pre-Contract Authorization

    oops. Wrong cite
  9. Retreadfed

    ICS for Non-Profit

    That is not necessarily a true statement. Unless there is something in the contract to the contrary, the contractor only has a legal obligation to pay when the supplies or services called for by the PO are delivered or performed. Until then, the obligation is contingent upon performance. I agree that accruals are an acceptable way of accounting for some costs such as sick or annual leave. However, for incurred cost purposes on government contracts, the accrual needs to be tied to some obligation to actually pay the cost. In the case of a PO for supplies or services, there is no obligation to pay until delivery or performance has occurred.
  10. here_2_help

    ICS for Non-Profit

    This quandary is why the terms "recorded" and "incurred" are not synonyms. The question speaks to the timing of when the contractor records the expense, not when the cost is incurred in the sense that cash has been credited. Accruals are perfectly acceptable -- and, indeed, often required -- means of recording costs prior to actual payment.
  11. Sometime in the past 12 months or so, a forum (ASBCA or CoFC, I believe) issued a decision regarding the elements necessary for the allowability of a contractor's pre-contract costs. As I recall, the government argued that specific pre-authorization was required, and the court held otherwise, using a strict reading of FAR 31.205-32. I've drawn a blank trying to remember that decision. Does anybody know of it? Much appreciated.
  12. Corduroy Frog

    ICS for Non-Profit

    Retread, thanks for your usual help. My question is really "when" is the cost incurred. The contractor has a legal obligation to pay when a purchase order is entered, and this is recorded as an expenditure for non-profit entities. However, the obligation to pay is a future obligation and is subject to availability, quality, and delivery of goods. The quote you present from the FAR is not in question, but the definition of "actual cost experience" is subject to interpretation and thus my question. My general feeling, and somewhat supported by your response, is that the incurred cost needs to be more solidified than the simple issuance of a purchase order.
  13. Retreadfed

    ICS for Non-Profit

    Doesn't this statement answer your own question? Generally, for government cost accounting purposes, a cost is incurred when the contractor has paid the cost or has a legal obligation to pay the cost. There are a few exceptions to this rule when imputed costs, such as cost of money, can be considered an incurred cost. These principles apply when determining what costs are included as incurred costs when establishing final indirect cost rates. See, FAR 52.216-7(d)(2)(ii) which states "The proposed rates shall be based on the Contractor’s actual cost experience for that period. "
  14. here_2_help

    ICS for Non-Profit

    Contractors have discretion regarding the timing of recording material costs, so long as they are consistent. Options include: 1. When orders are placed 2. When both the material and invoice are received 3. When the material is issued or released from inventory 4. When invoices are paid
  15. Government contractors often assume that a foreign-owned company cannot qualify as a small business under the SBA’s government contracting size rules. Not so. As demonstrated by a recent SBA Office of Hearings and Appeals size appeal decision, a foreign-owned entity can qualify as a small business, provided that it has a physical location in the United States and contributes to the U.S. economy. OHA’s decision in A&Y Government Services, LLC, SBA No. SIZ-5966 (2018) involved an Army solicitation for vehicles and spare parts. The solicitation was issued as a small business set-aside under NAICS code 336112. After evaluating proposals, the Army announced that Bukkehave, Inc., or “BHI,” was the apparent successful offeror. BHI is based in Florida, and is a wholly-owned subsidiary of a Danish company, Bukkehave Corporation. An unsuccessful competitor, A&Y Government Services, LLC, then filed a size protest challenging BHI’s small business status. The SBA Area Office noted that BHI was affiliated with its parent company and several other entities. However, when combined with its affiliates, BHI’s employee count still fell below the 1,500-employee threshold for NAICS code 336112. The SBA Area Office issued a size determination finding BHI to be an eligible small business for purposes of the Army contract. A&Y filed an appeal with OHA. A&Y’s appeal stated that BHI “is merely a sales office owned by a FOREIGN corporate entity.” Awarding the work to BHI, A&Y argued, would mean that the money paid by the Army “will go to Denmark.” OHA wrote that, contrary to A&Y’s apparent misconception, “SBA regulations . . . do not bar a foreign owned concern from participating in a small business set-aside, provided that the concern is based in the U.S. and contributed to the U.S. economy through the payment of taxes or otherwise.” In support, OHA cited 13 C.F.R. 121.105(a)(1), the SBA’s regulation defining a “business concern.” In this case, OHA wrote, “BHI is a corporation based in the state of Florida, and . . . BHI contributes to the U.S. economy by paying taxes.” OHA denied A&Y’s size appeal, writing that there was “no basis to conclude that BHI is ineligible for this procurement.” In my experience, many government contractors believe that a foreign-owned entity can never qualify as a small business for purposes of the SBA’s government contracting rules. But as the A&Y Government Services case demonstrates, the truth is more nuanced. It’s not foreign ownership that is the test, but rather a U.S. location and contribution to the American economy. View the full article
  16. Corduroy Frog

    ICS for Non-Profit

    A non-profit records committed purchases as expenditures prior to receiving goods and title. Even though the purchases account shows the expense, the cost hasn't really been incurred in the sense that we normally consider. Does their incurred cost submission need to remove such expenditures in the calculation of incurred cost?
  17. Jamaal Valentine

    Exercise option SAF

    Lionel: Solid post! (Reminds me of a discussion I had with a lawyer about some myth-information regarding ADA) As I read it, the OP seemed to say that funds were commited (commitment being an administrative reservation of funds in advance of an obligation). All the contracting officer needed was a written assurance from the financial authority that adequate funds were available (e.g., commited).
  18. Lionel Hutz

    Exercise option SAF

    When discussing appropriations, the term “availability” or “available” is a term of art that means an organization has legal authority to obligate the funds in question, i.e., the prerequisites of purpose, time, and amount have been satisfied. Per the OP, the funds were available; the PR was certified by the budget office but could not be routed through the IT system. The fact that the budget office had technical issues routing the PR does not render otherwise available funds “unavailable.” An appropriation is a type of budget authority that allows an agency to incur obligations and make payments out of the Treasury for specified purposes. Below an appropriation is the “apportionment,” which is a distribution by the OMB of amounts available in an appropriation into amounts available for specified time periods, activities, projects, or programs. The OMB apportions funds to prevent obligation at a rate that would create a need for a deficiency or supplemental appropriation. Administrative subdivisions imposed by an agency are the third level of fiscal control. These administrative subdivisions are divided into “formal” and “informal” administrative subdivisions. Formal administrative subdivisions consist of allocations and allotments. Informal administrative subdivisions are created by agencies at lower levels and are considered funding targets, or “allowances.” The Antideficiency Act, 31 U.S.C. §§ 1341-42, 1511-19, prohibits any government officer or employee from: a. Obligating, expending, or authorizing an obligation or expenditure of funds in excess of the amount available in an appropriation, an apportionment, or a formal subdivision of funds. b. Incurring an obligation in advance of an appropriation, unless authorized by law. c. Accepting voluntary services, unless otherwise authorized by law. Exceeding an allowance or other informal subdivision of funds does not violate the ADA unless to do so would also cause a formal subdivision, an apportionment, or an appropriation to be exceeded. The purpose of 52.232-18 is to prevent a contracting officer from violating the Antdeficiency Act when it is necessary to take a contract action (e.g., contract award or option exercise) in one fiscal year but funds will not be available (i.e., they will not be appropriated, apportioned, and formally subdivided) until the next fiscal year. With regard to the issue raised by RachelleR’s original post, I’ll need to speculate a bit, so take the following with a grain of salt. RachelleR stated that the budget office had certified the funds as available. This leads me to believe that funds had been appropriated, apportioned, allocated, and allotted as needed. However, an IT glitch prevented the routing of the funded PR. I do not know the administrative ramifications are of routing the PR in RachelleR’s agency. It could simply be a technical notification process with no impact on the funds at all. But at most, it involved a transfer of funds authority between informal subdivisions, i.e., an allowance, and obligating in excess of that allowance does not implicate the ADA. Therefore, while the KO might have committed an internal, administrative violation, the exercise of the option was valid. It was not necessary to exercise the option “subject to availability of funds” because the funds were legally available and exercising the option did not violate the ADA. Stating the option was being exercised pursuant to 52.232-18, while not technically accurate or necessary, did not cause any harm, assuming unbroken service was not needed.
  19. Last week
  20. If, like us, you spend your days reading through the FAR, you might suppose that there are opportunities to streamline the regulations. Congress agreed, at least for DOD acquisitions, and as part of the 2016 National Defense Authorization Act, created the Section 809 panel, an independent advisory panel on streamlining acquisition regulations. The panel is working to improve many aspects of acquisitions law, including, as we’ve written about, the definition of subcontract. A recent, small (but helpful) recommendation was the elimination of a FAR clause involving the $1 coin. The clause in question came out of The Presidential $1 Coin Act of 2005. This law “removed barriers to the circulation of $1 coins.” As part of that goal, the law: requires that business operations performed on Government premises provide for accepting and dispensing of existing and proposed $1 coins as part of operations on and after January 1, 2008. To implement this requirement, FAR clause 52.237-11, Accepting and Dispensing of $1 Coin, was created for inclusion in solicitations and contracts for services that involve business operations conducted in U.S. coins and currency on any premises owned by the U.S. or under the control of any agency or instrumentality of the U.S. The clause requires contractors to be capable of accepting and dispensing $1 coins as part of business operations under the contract. FAR clause 52.237-11 provided that “[a]ll business operations conducted under this contract that involve coins or currency, including vending machines, shall be fully capable of accepting and dispensing $1 coins in connection with such operations.” The Section 809 Panel took aim at this FAR clause as part of its review of FAR provisions. In order to remove the FAR clause, the statute underlying it had to be amended. The Section 809 panel recommended its amendment “because the intention of the Act was to increase circulation of the $1 coin, which is not directly related to agencies’ missions.” Congress listened and, as a result, the 2018 NDAA “provides an exception for business operations conducted by a contractor while performing under a Government contract from the requirements to accept and dispense $1 coins.” Although $1 coins were touted as an alternative to dollar bills in the mid-2000s, the coins never caught on with the public. The U.S. Mint stopped producing $1 coins for general circulation in 2011, making the requirement for contractors to accept those coins all the more unnecessary. FAR clause 52.237-11, along with all cross-references, has now been removed. The Section 809 panel has done its job for this clause, and we’ll continue to update our readers on their work as they streamline the acquisition system. View the full article
  21. Jamaal Valentine

    Exercise option SAF

    52.232-18 is clear; however, the clause prescription is the center of the office discussion. What does "contract will be chargeable to funds of the new fiscal year and the contract action will be initiated before the funds are available" mean in this scenario? In my judgment, this means the contract or CLIN (see FAR 2.101 definition of contract) will be chargeable to a new fiscal year (e.g., following, upcoming, or other than when the action is initiated) and the action will be initiated before the new fiscal year funds are available. Does the prescription fit the scenario usage? It could. For example, contract/CLIN is chargeable to FY 19 (12 Oct 2018, Option 1) and the contract action to exercise the option could have been initiated in FY 18 depending on option terms (e.g., first part of 52.217-9(a)). *Surely, we all know what we would do so I am not interested in that (hopefully, that's not to wait until the day of and to read and understand our clauses) … I am merely interested in Rachelle's original post and assigning meaning to the prescription 52.232-18(a).
  22. joel hoffman

    Exercise option SAF

    Attaboy/girl!!!!!!!! No slapping here!!!!
  23. napolik

    Exercise option SAF

    Take a look at this thread:
  24. RachelleR

    Exercise option SAF

    I'll remember that for the next award 😂
  25. Jamaal Valentine

    Exercise option SAF

    It would remove any doubt and save an argument that seems likely in that office.
  26. RachelleR

    Exercise option SAF

    No special statement was included. Is there a reason this clause would not apply to the option? Thanks for your time.
  27. Jamaal Valentine

    Exercise option SAF

    Does this mean the contract included a special clause stating that 52.232-18 applies to the option(s)?
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