Beantown_Contracts

H2H-Thank you. As to pricing, NRE was paid under DoD contract, so not certain that we would fully factor that in. 

Neil- Thank you. I hear you on calling parts 'customer parts', a fight I've been winning step by painful step. Knocking down fallacies and false (or outdated) knowledge is a daily task with a company that for 20+ years had a contracts staff that did not keep up with changes or subscribe to continuing ed (NCMA, etc.)

Best,

BC

Hi,

Background:  USG/DoD Contract-Major Program; My company was Sub to Prime A under block 1; Now responding to rfp from Prime B under block 2

Recently, Prime B requested pricing for parts first created by us as Sub to Prime A (Our Part Numbers noted in  current GVT RFP). Under Prime A, we submitted a Data Rights Assertion detailing GPR.  Contractually, Prime A rec'd, (paraphrasing) 'such limited (small "l") rights as necessary...for the completion of the Prime's contract'. We clearly stated that IP (HW and tech data) resulting from the subcontract were not work product or otherwise belonging to Prime A (with the exception of reports, etc).

Management has historically referred to new product created under Primes as being the Prime's product, even where we contractually state otherwise. 

Question: Given the info above, in particular that the current GVT RFP references our product numbers, am I missing any blatant contractual issues?  It's a given that customer relationship discussions will be required with Prime A, a competitor under the RFP.

Respectfully,

BC

 Grenouille,

I've attached a link to an article from NCMA Magazine:  April 2017. The writer, Knob Moses, presented at NCMA's 2018 Congress.

https://www.ncmahq.org/stay-informed/contract-management-magazine/contract-management-magazine---article-detail/the-robots-are-coming-driving-efficiencies-in-contracting

Best,

BC

Section 811 of the 2018 NDAA  provides a class deviation for FAR 15.408 increasing the threshold to $2m as of 01 July.  This change increases the threshold for submitting certified cost or pricing data to $2m on the date of price agreement or award, whichever is later. 

Assuming a Prime is awarded prior to the effective date of 01 July, the Prime's contract is therefore subject to the prior threshold of $750k.

Question: If a subcontractor reaches price agreement or receives award post 01 July, should the subcontractor be subject to the prior or current threshold for the requirement to submit Certified cost or pricing data? Alternatively stated, is a subcontractor subject to the mandatory flowdowns, exactly as agreed to under the Prime contract (updating of named parties notwithstanding).

BC

On ‎2‎/‎2‎/‎2018 at 5:35 PM, Retreadfed said:

StePa, yes, the prime can change its mind about the parts being commercial items.  However, this does not mean that the prime is correct now and was wrong in the past when it accepted the parts as being commercial items.  You did not say why the prime rejected the parts as being commercial items.  However, the bar for what is a commercial item is low and it doesn't take much to be a commercial item.  I presume that when you say the parts are catalog items for your company, you mean that they are offered for sale to other companies, but you have only been able to sell them to the prime. 

Retreadfed, with all due respect re: "..the bar for what is a commercial item is low...", I have to disagree based on current application of the regulations by a number of DoD entities. Despite the regulatory loosening, the acquisition staff managing one of the largest current contracts insists on demanding at least two true commercial invoices, not older than two years for the exact product number in order to successfully assert commerciality. These 'over the top' requests do not at all reflect the reality that DoD most often buys technology that is at least two (if not five, ten or more) years old once full rate production begins.  Small and non-traditional government contractors that opt to provide and support legacy technology are then subject to onerous costing exercises that cannot accurately capture legacy iRAD costs.

While DCMA has launched CID centers of excellence, Primes are still on the hook for determinations for their subs using the guidance from CO's noted above.

Just wishing we all had one set of rules to work with across the board.

Olga,

Barring some unknown factors, the Contractor is out $1m.

CPFF may be a low risk to the contractor, but, low risk assumes adequate accounting system and trained personnel to accurately accrue costs as well as make timely notification (75% burn) to the Government.

In this case, Contractor is seemingly entitled to 100% of the funded value and not more.

Beantown

JMG, thank you.  To be specific, "not awarded".  Period.    I've never heard of a non-award once the process has hit the Congressional Notification stage.  Of course, until the fully executed contract is in hand...

tx

BtC

Has anyone actually had or heard of a contract not awarded once at the 3 day Congressional Notification stage?

Researching various sources with no luck.  Not looking for details, simply yes/no.

Thank you in advance.

BtC

Agree with sjanke, but add that NDIA has published "A study of the Applicaiblity of FAR clasues to subcontracts..." includes DFARS and NFS. Provides: Title, Citation, Mandatory/Optional notation, and Remarks. Available for sale on the NDIA website. Discount if a member.

Not an end all be all, and there's no replacement for learning, I do find it to be a solid resource for both sides of subcontracts as well as a training sessions.

Caveat, published in 2012.

Hoping that I've just tripped upon a newbie DCMA employee, but, a recent cost proposal was kicked back by the DCMA Price Analyst because it had markings such as "NOFORN" and "Controlled Unclassified".

DCMA PA stated, "our systems are not secure for acceptance of proposals with these markings."

None of my circle have heard of this policy change.

Before I suggest that this price analyst bring in his supervisor, I wanted to reach out in case there were facts behind the statement, even if it begs questions regarding ignoring the DD254 and/or Program Protection Guide.

Has anyone heard of DCMA NOT accepting proposals marked NOFORN and/or CUI?

V/R,

BC

Jeff, I pm'd you.

I suggest you need to reach out to someone with strong trade compliance knowledge for a definitive answer. Did you receive 'verbal' from the gov't? Is there a TAA in place? Should there be?

Also, suggest using hypotheticals, both internally and externally, when discussing possible violations.

Might want to have 'off-line' discussions internally until you have a sollid answer.

BC

Bringing this string back to life, so as not to re-create, but rather expand...

How about the pain felt by a small business subcontractor when proposing a Commercial Item to the Prime. Prime is rigorous (no argument here) and calls in DCMA. DCMA reviews vigorously (many hours of our staff, but that's part of the deal), and gives a blessing. The agency declines to accept DCMA approval. The agency (not just current CO) has taken the stand that any comp invoices must be no older than @2 years. (don't look for a reference in the FAR/DFAR) The insanity is that tech companies move rapidly forward in evolving products and the USG is buying the same product for upwards of 10 years due to program lifespans. If our last 'commercial' sale was 5+ years ago, that does NOT make our product any less commercial today.

As mentioned above, on one hand the gov't advocates 'commercial' solutions, yet on the other is deaf to a commonsense argument.

BC

Posted Today, 12:56 PM

Agree w/H2H. Have been a prime w/EDU's many times with research work. Discuss thoroughly with all parties, up and downstream. Flowdown the specific subpart, and, for what it's worth, I always notify IN WRITING, the GVT Contracts lead and cc: the sponsor and /or COR. Solid communication builds longterm relationships and minimizes surprises.

BC

Last year's story in the Post re: Guaranteed Minimums under a GSA contract.

http://www.washingtonpost.com/business/on-small-business/exclusive-gsa-failed-to-pay-thousands-of-small-government-contractors-since-2008/2013/05/15/305c4422-bd93-11e2-9b09-1638acc3942e_story.html

As to the current issue, if there is clearly a binding contractual obligation for a guaranteed minimum order or payment (perhaps included to induce sellers to undergo the proposal effort), the issuance of these payments is legally required before the contract is closed. No partials, no profit only, simply cut a payment to fulfill a contractual obligation. (Assuming the contractor was a going entity within the PoP and reasonably capable of performance).

As to the practice of guaranteed minimums...IMHO, useage should be extremely limited. This minimum (by any other name) contradicts the standard (Comm or GVT) business practice of 'seller shall not be reimbursed for proposal costs'.

BC

1. What is your all time favorite book? Marine! Life of Chesty Puller

2. What is your all time favorite song or album? Nine Tonight: Bob Seger

3. What is your all time favorite movie? Once upon a time in America

Have read the 3rd Ed. 2011. Will likely order the 4th Ed. 2013, immediately in prep for long postponed CPCM exam.

Another addition to my readily available reference materials that started with my Velveteen Rabbit of reference books, Admin of Gvt Contracts, Cibinic/Nash.

BC

Secaucus, you might want to leverage your DSS rep. to get the classified material off-site. Annually, our rep had us justify any item on our class inventory that wasn't tied to a current contract. In your case, we would likely submit a formal letter by certified mail to the appropriate contracting officer as well as the DCMA GPA, cc'g DSS: stating that, 'per DSS instruction to take action to remove x property from our inventory, after x date, we will disposition by certified destruction the classified item as the government has effectively abandoned the property and not responded to prior correspondence dated xxxx. Any funds received for scrap in excess of costs incurred for destruction, transfer, and storage will be submitted to the US Treasury-General Fund.'

Whether or not the stated disposition actions were compliant or even lawful, the resultant actions of the GPA and/or CO quickly resolved the issue.

BC

H2H and Retread,

Clarifications: End customer: DoD; Sub A to Prime via FFP subcontract;

Your inputs are greatly appreciated in (hypothetically) correcting a legacy process that was recently inherited.

BTC

H2H and Retreadfed, Thank you for your feedback.

H2H, "the Sub B FFP proposal to Sub A would appear to violate the requirements of 31.205-26(e).", I take it this is in response to the FFP relationship between A & B. You are therefor recommending a CR type arrangement? Makes sense.

To be clear, these are separate corporations under the same parent, therefore, no 'subcontract' would be placed, in lieu of, the document would be an internal statement referencing the work and that it be CR?

Is this correct.

V/R,

BTC.

Hoping for some affirmation or clarification here re: FAR 52.215-22, 52.215-23, 31.203(i)

Relationship is Prime to Sub A to Sub B.

Subs A and B are Wholly-owned, separately incorporated, subsididaries of the same parent.

To avoid profit-on-profit/fee-on-fee, Sub B will propose to Sub A on a FFP basis with Sub B's internal cost build up ex of profit.

Sub A's FFP proposal to Prime will include profit.

Note that Sub B may be >75% of Sub A's total costs.

Assuming that Sub A's proposal will be >$1m, would one expect that DCAA will assert that Sub A is taking excessive profit while adding minimal value?

Given that Subs A and B are same family AND that Sub A is the sole entity accruing profit, does this possibly mitigate the 'excessive profit' assertion?

Alternatively, perhaps the safer route is to accrue reasonable profit at Sub B level, leaving Sub A to accrue profit, ex of the Sub B costs.

Thank you in advance for your feedback.

RE: Local travel definition.

This does not exclude the employee from being reimbursed for local travel in excess of residence and regular place of work.

ie, whem traveling to a different work location, the employee may be reimbursed for the Excess miles only. Same applies if employee reports to regular workplace then must travel to a satellite location to make a repair. Note, a roundtrip from regular workplace to satellite location would be fully reimbursable, however, in line with situation noted above, if employee travels from regular workplace to satellite location to home, ONLY the miles in excess are reimbursable.

Bottom line, no part of a standard commute are reimbursable.

The following statement has been presented as factual re: a FFP proposal where deliverables are modified hardware:

"Per FAR guidelines, and DCAA, one cannot use the program kickoff as a milestone. FAR prohibits the ordering of material, passage of time, holding of kickoff meetings, and signing of POs/Subcontracts as milestones."

Milestone 1 is stated as, "Kickoff Meeting: costs incurred in support of"

While I am in agreement that one may invoice for costs incurred vs. signing of POs, passage of time, etc., does this truly hold for the milestone 1 as stated above?

My research is not providing a definitive answer.

Thank you in advance.

V/R,

BC

In addition to the recommendations noted above, I would suggest (at a minimum), a multi-day class re: Rights in Technical Data & Computer Software. There are numerous options available via NCMA as well as public and private educational outlets. I keep a copy of one particular 500+ page course manual adjacent to my Cibinic & Nash library. I don't want to be seen as promoting one provider over another here, so please feel free to message me if you'd like further details.

Retreadfed, Yes, we were prepared to defend that point, however, the Specialist was focused solely on the cost of the mod.

tx

Vern,

Thank you. I believe I am on solid ground as to disclosure of pertinent facts. The key being that our FP labor proposal is truly based on current, published, commercial labor rates, which rates have truly been used for actual commercial sales. The cost comp. using so-called DCAA-like rates (full disclosure having been made re: (in)accuracy of said rates) resulted in a larger number than our FP price.

I greatly appreciate your feedback. Better to ask for advice than have my ethics questioned.

V/R,

BC