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@Atlas STS is a very small business that is in negotiations with the government to produce a product. The contract is FFP over $10M and subject to TINA and Certified Cost and Pricing Data. We were the only bidder and only source of supply for this product and it is not COTS. We have supplied this data to the best of our ability, but are receiving pushback on our requested profit rate as being too high. Our buyer has said that anything near 20% is unprecedented and likely a non-starter. They proposed a 9% rate. This seems very low to me for a FFP contract. However, when I attempted to fill out the DAU Weighted Guidelines spreadsheet, I see that it is nearly impossible to get to 15% profit without exceeding "allowed" ranges in the spreadsheet. I mentioned that we are very confident in our price, but we are unfamiliar with providing cost data in this manner and may have put some of our risk mitigation costs into profit that should be allocated elsewhere. They seemed receptive to having us move costs from profit into overhead or G&A pools. All that being said, I have a few questions: 1) Am I being unrealistic to expect over 10-15% profit on a FFP contract? This seems very low to me. Is the Weighted Guidelines Method required for contracts with Certified Cost and Pricing Data? Are their any alternatives to this method? The contracting officer said they have to take our contract before a board and they will not approve anything near our profit request. 2) Is it typical to put technical/schedule/execution risk contingencies or mitigations elsewhere in the proposal? What are those costs called? What pool do they fall in (overhead or G&A)? I bid a reasonable "best case" proposal, but I know that issues will spring up based on the nature of our product and past performance. How do I correctly capture those risks in my proposal if not in the profit? Any insight or guidance would be greatly appreciated.

Recently, I have removed new members for violating the Terms of Use. That shouldn't be a problem because everyone is required to read the Terms of Use befor posting. The violations included Rule 4 exists because Wifcon.com offers paid advertising. When a new member uses one of their posts to try to sell something, they are infringing on Wifcon.com paid advertisers' rights. Rule 5 exists for obvious reasons. Another Rule that is violated sometimes is Sometimes fragments of something are left in the blog area. That is because new members may confuse "posts" with "blog entries." When I see that, I remove the fragments.

thanks to jtolli and Witty_Username for their replies👍

There is not enough info here. What costs are you planning to incur? How does the LLC currently charge those costs? What is going to change -- if anything -- because you receive a new project? And, really, you have no W-2 employees? None? Not even the CEO or CFO?

Incorrect. Unallowable base costs are to be allocated to cost objectives (contracts) although they may not be recoverable on those contracts. Despite what FAR 31.203(d) states, indirect costs are allocated to contracts, not base costs, based on the amount of base costs allocated to those contracts. See, Rice v. Martin Marietta, 13 F.3d 1563 (Fed. Cir. 1993) for a discussion of how 31.203(d) works. Yes, but that is not the only G&A base where that would be true. I don't know what you mean by "direct projects." Despite being unallowable, unallowable costs are allocated to contracts. See FAR 32.202-1, 201-6 and CAS 405. The reason for excluding unallowable pool costs from an indirect cost pool is to ensure that unallowable costs are not billed to the government on contracts subject to the cost principles and/or CAS 405. This may be poorly worded. Perhaps a better statement would be that unallowable overhead costs are to be included in the G&A base for calculation of the G&A rate.

There are a few cases (e.g., Martin Marietta) that discuss this issue. Fundamentally, when calculating an indirect cost rate, unallowable costs are subtracted from the cost pool but remain in the cost allocation base, so that unallowable costs receive their fair share of indirect costs. Overhead costs are part of all G&A allocation bases except for single element bases; thus Overhead is part of the G&A base for both TCI and Value-Added bases. If there are unallowable costs in the overhead pool, they stay in that pool when calculating the correct G&A allocation base; however when calculating the allowable Overhead indirect cost rate, the unallowable Overhead costs are removed from the Overhead pool. Emphasis added.

"That is not a true statement either. Remember, unallowable base costs are to be included in the base for calculation of indirect cost rates. Therefore, if overhead is a part of the G&A base, unallowable overhead costs are to be included in the overhead pool for calculation of the G&A rate. However, unallowable overhead costs are to be excluded from the overhead pool for calculation of the overhead rate. On another note, many people I have spoken with mistakenly believe that unallowable G&A costs can be included in the G&A base. That is incorrect. As H2H mentioned earlier, G&A costs remain G&A costs whether they are allowable or not. Unallowable G&A costs are to be accumulated in a separate pool, then allocated to contracts using the G&A base. See, FAR 31.201-6 and CAS 405. The fact that a cost is not allowable, does not mean that it is not allocable to contracts. See, FAR 31.201-1." The above is a post from the thread named "Cost Allowability". It was a clarification posted by H2H based on another thread. The above was posted by Retreadfed. I have a question... "unallowable base costs are to be included in the base for calculation of indirect cost rates."-This is so the receive their share of the pool costs, correct? "if overhead is a part of the G&A base"-This would be the case in a TCI base, correct? "unallowable overhead costs are to be included in the overhead pool for calculation of the G&A rate"-This has me confused. "However, unallowable overhead costs are to be excluded from the overhead pool for calculation of the overhead rate."-This is so direct projects do not receive a portion of the unallowable costs.

Yesterday, I updated the Legislation Page. I will do this once a week into the future. The page is here. https://www.wifcon.com/todayslegislation.htm Todays Legislation Congress.gov cannot post the text of legislation immediately. Instead, I also post the "sponsor's" Press Release which explains what the sponsor believes the legislation will do if enacted. Fortunately, few of the bills are ever enacted.

BOA as in basic ordering agreement? If so I am having a little trouble understanding the intended approach as "Application" as stated in the FAR doesnot seem to fit. Otherwise intriguing approach for a BPA. As it goes neither are a "contract" so I wonder what will happen when the ordering begins as the price(s)are not contractually binding. You say "per hour". Service Contract Labor Standards, if applicable, would seem to cause some issues with setting pricing consistently across the country. "Per Action" would seem somewhat easier sort of like the comments already offered regarding funiture and burgers.

I’ve released budgets for furniture buys and it worked great. We described the space and it’s intended use and then evaluated using the subjectivity of the government’s interior designer and customer.

I am intrigued by the thought of saying I'm willing to pay $10 per hamburger meal, for example, and inviting interested offerors to provide the best menus, ingredients, chef skills, and so forth -- the competition then will focus on quality and so forth rather than on price.

When it comes to calculating a company’s receipts for size purposes, the procedure for is (or at least was) pretty simple: Look at the company’s tax returns. Indeed, it has long been SBA’s position that they can only consider tax returns, as noted in Nordstrom Contracting & Consulting Corp., SBA No. SIZ-5891 (Mar. 7, 2018) (“[T]here is no authority for an area office to consider any evidence apart from tax returns…when calculating a firm’s average annual receipts.”) among other cases. In other words, if something was not mentioned in a tax return, it couldn’t be considered by SBA. The only exception was if the tax returns were not filed, in which case SBA will review financial statements or similar information in lieu. 13 CFR § 121.104. Therefore, other than that exception, a contractor only needs to rely on the information in its tax return when making its size representation. But the U.S. District Court of the District of Columbia (DDC) thinks otherwise. On May 18, 2023, it entered a decision on opposing motions for summary judgment in a size protest that had become a False Claims Act case. In this decision, it concluded the opposite: Contractors must in some cases consider information outside their tax returns. Let’s take a deeper dive. United States ex rel. Bid Solve, Inc. v. CWS Mktg. Grp., Inc., 678 F. Supp. 3d 53 (D.D.C. 2023) began as a standard size protest back in 2018. At first, the matter was simple enough: CWS Marketing Group’s (CWS) size was protested, it submitted its tax returns, and SBA sided with CWS over the protester, Bid Solve, Inc. (Bid Solve) after reviewing those returns. However, Bid Solve apparently knew there was something more going on and filed a False Claims Act case with the DDC against CWS. Bid Solve alleged that CWS had misreported its receipts by improperly subtracting expenses that it shouldn’t have subtracted. If these expenses were not subtracted, then CWS would be over the size standard. Proving this would necessarily require looking at information that wasn’t in CWS’ tax returns, and here is where the question arose: Was CWS justified in only relying on the information in its tax return? The DDC said “no” in light of 13 C.F.R. § 121.104: Defendants misread the regulation: They were not allowed to rely solely on CWS’s tax returns. And because of that, they should have never subtracted “flowthrough income” from CWS’s total revenue. … § 104(a) provides a clear formula: receipts are “all revenue … reduced by returns and allowances,” and “the only exclusions from receipts are those specifically” listed in § 104(a). Tax returns may be used to calculate receipts, but they cannot override § 104(a)’s basic rules. Looking at CWS’ argument, the DDC further explained why it was rejecting it: Defendants disagree, proposing a different reading. They urge that a subsection—§ 104(a)(1)—required them to use only CWS’s tax returns when calculating its receipts. That provision states that “The Federal income tax return and any amendments filed with the IRS on or before the date of self-certification must be used to determine” whether a business is small…(i)n other words, if they plugged in numbers from CWS’s tax returns, then they are in the clear, no matter if that calculation flouts other parts of the regulation. The DDC then noted that, basically, CWS was using the “only tax returns” argument to justify the fact that they violated the provision that “reimbursements for purchases a contractor makes at a customer’s request” may not be excluded from receipts. CWS’ position would basically make it impossible to enforce the rest of the regulation if the contractor in question made an inaccurate tax return (unintentionally or otherwise). The DDC then further explained how CWS’ position does not make sense. “For example, 13 C.F.R. § 121.1009(b) says that when making a size determination, the SBA will mostly rely on the information a bidder provided but ‘may use other information and may make requests for additional information.’” It would not make sense for the rule to be that others can submit other information but the contractor itself need only rely on its own tax returns. After all, the contractor would have the most access to its own information. Impact on SBA Rule Quite frankly, we think the DDC’s ruling here is just common sense. It does not stand to reason that a contractor could file inaccurate tax returns and then rely on those same inaccurate tax returns to its own benefit, or that tax returns could allow subtractions from receipts that SBA rules do not allow. It would completely undermine the size determination process. With that, we turn to the fact that, as we noted above, SBA has historically stated that area offices will only rely on tax returns, when filed, in making size determinations. Thus far, it does not appear any SBA decision has cited to the DDC’s decision, either to accept it or attempt to get around it (technically, the DDC did not overturn any SBA precedent, this was a False Claims Act case). That said, we think it would make sense for SBA to adopt the DDC’s ruling as its own standard for size determinations. However, that is basically something that SBA will have to do on its own, although we could see SBA continuing to rely on tax returns in the interest of efficiency. For it would have to be an odd situation indeed for a protester to have enough evidence about an awardee’s internal finances to be able to say that the awardee’s own tax returns are wrong. Generally, such an assertion is going to be pure speculation on the part of the protester, which means that a request that the protested firm provide additional information would be rejected by SBA. SBA will not act on requests or protests based on speculation alone. As such, it is going to be on SBA to change its own standard and ask protested firms to provide more than just their own tax returns in these protests. Whether it will do so remains to be seen. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Beyond Tax Returns: Federal District Court Says Contractors Must Include Information Outside Tax Returns in Calculating Size first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

These eight are the only imperative "D&F" statements this community located a decade ago, in FAR: 6.202(b)(1) - establishing and maintaining alternative sources; 8.404(h)(3)(ii)(A) - use of T&M; 12.207(b)(1)(ii)(A) - use of T&M; FAR 16.401(d) - use of incentive- and award-fee contacts; 16.601(d)(1) - use of T&M; 17.502-2(c) - Economy Act; 25.202 - Buy American, construction materials; and 25.1001 - waiver of right to examination of records. Any FAC since then could have added one, so keep a look out in FAR. Also, your Agency FAR Supplement may add to this list. From a very good read:

Happy Friday everyone! Here in the Midwest we are enjoying some nice spring weather. But along with the beautiful flowers comes the allergies for some folks. In contracting news this week legislators in Washington have been working on bills in an attempt to make it easier for small businesses to work with the government and there is continued movement on cybersecurity for federal contractors. You can read more about that in the articles below as well as other contracting news. Have a great weekend. Former Veterans Affairs Procurement Supervisor Sentenced to Seven Years in Prison for Pocketing Kickbacks Readout of Roundtable on Project Labor Agreements for Large Federal Construction Projects Breaking Down the DOD’s New Defense Industrial Base Cybersecurity Strategy Accenture Federal Services acquires major federal contractor How legislators could make things a little easier for those companies working with the government Congressional minority caucuses call for data on government spending on contractors Investigating the US Army’s FY2025 Budget Proposal Virginia-Based Defense Contractor Pleads Guilty to Bribery Conspiracy Involving Government Contracts Worth More Than $100 Million Virginia-Based Defense Contractor Pleads Guilty to Bribery Conspiracy Involving Government Contracts Worth More Than $100 Million House Committee on Small Business Unanimously Reports Seven Bipartisan Bills Favorably to the House Ensuring Prevailing Wages: A Closer Look at the Davis-Bacon Act Former Federal Contract Employee Sentenced to 18 Years for Child Pornography US Department of Labor Recovers $34K in Back Wages, Benefits for 9 Workers Misclassified by Subcontractor on Federal Project in District of Columbia The post SmallGovCon Week in Review: April 15-19, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

I like it, Carl. All determinations require findings, but not all determinations require D&Fs under FAR subpart 1.7. Similarly, not all justifications require justification and approval under FAR part 6.

Does this help https://www.dcma.mil/Portals/31/Documents/Policy/DCMA-MAN-2501-07.pdf See Section 8

My thoughts in support of those already provided - Yes a justification (I have used lower case on purpose) in as much as you need to "justify" certain elements of the option being solicited per the reference you have already cited - FAR 17.205 - but not a D&F. I have always remembered this quote by Vern Edwards - "All determinations and findings include determinations, but not all determinations are determinations and findings." Maybe this is a twist on the quote - All justifications and approvals include approvals but not all justifcations include approvals.

“Determination and Findings means a special form of written approval by an authorized official that is required by statute or regulation as a prerequisite to taking certain contract actions.” FAR 1.701. Neither FAR reference you cited call for a D&F. FAR 17.205(a) is justifying the inclusion of options (pre-award). DAU says this: ”The contracting officer shall include a written justification for the quantities or the term under option, the notification period for exercising the option, and any limitation on option price under FAR 17.203(g) in the contract file (FAR 17.205).”

17.205 is preaward.

Is there a requirement to execute a pre-award D&F or Justification for using options in a non-Part 14 award? 17.202(a) seems to read like it only applies to sealed bidding, and I can't tell if 17.205(a) is talking about a pre-award requirement. Thanks

DoD uses the clause at DFARS 252.204-7022, Expediting Contract Closeout.

Is there a policy for closing or reopening contracts with low dollar amounts? Is there a threshold when a deob is not necessary?

I don't understand your situation. You state that you "graduated" to a large business. Were you an 8(a) participant that graduated from that program? Is FAR 52.219-28 in your contract? If it is, were you required by the terms of that clause to recertify your size status? If you were, what was the basis of the recertification? Was the requirement to submit a subcontracting plan accomplished by including FAR 52.219-9 in your contract? Was the effective date of the modification requiring a plan the effective date of your contract or some later date?

I have a 'chihuahua with attitude' that would probably fit in.

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