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Cajuncharlie

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Posts posted by Cajuncharlie

  1. At the risk of stating the obvious, my suggestion is to ask your prime customer to write another letter, this time instead of the prime acknowledging the DNAD and authorizing shipment, asking the Contracting Officer to acknowledge the DNAD and authorize shipment. Once the Contracting Officer provides written guidance to its prime contractor, the Government QAR won't have much latitude to reject. Depending on how your prime contract is written, you may have to ask for a prime contract mod instead of a letter. Once the prime has it in writing from the Government, the prime can pass the official word down to its sub.

  2. Vern,

    Not trying to defend our company's policies and procedures, just make the best of them, such as they are. Apparently they are difficult to change, seeming to require months of critical scrutiny by various government folks.

    One thing I do know, there is a very different perspective in the field than in a corporate headquarters or in a high level government office. In the field we do the best we can with what we have.

  3. Cajuncharlie,

    The rules changed on October 1, 2010. "Cost or pricing data" is no longer certified by definition. There are two types of cost or pricing data--"certified cost or pricing data" and "data other than certified cost or pricing data", which are both defined in FAR 2.101. "Information other than cost or pricing data" is an obsolete term.

    Throw away your hard copy FAR.

    Can't throw it away yet, but soon. Our company has become rather parsimoninous and will no longer buy or reimburse hard copy FAR or DFARS, advising us to use on-line versions. There is nothing like having the book, though. How do I put sticky notes on related pages while researching something? How do I leave them in place where I can find them next time, complete with memory-jogging scribbled notes? So I have ordered myself a set for $192 (last time I had to do this it was only $165), and the closest I can get to recovering the cost is itemize the expense on this year's taxes.

  4. Interesting that each category in the pricing tables has a ceiling price. In the past I have always made each item an "estimated" quantity and amount, and waited until the end of the pricing schedule for "estimated total not to exceed." This has saved a lot of administrative effort, but it does require close monitoring of line item quantities and amounts during performance. (Watch your "burn rate.")

    See 52.246-6, Inspection -- Time-and-Material and Labor-Hour, for handling unacceptable performance or non-performance. This is not new. As with cost type contracts, under T&M if a contractor messes up, they get paid to fix it, less profit (excepting fraud, lack of faith, willful misconduct, etc.).

    What might be new is if Exhibit B provides for deduction greater than "...that portion of the rate attributable to profit." Let us hope not.

    If B.2 provides for deduction greater than that contemplated in a mandatory FAR clause, which governs? This would be material for a bidder question during the solicitation stage.

    In these tough economic times, the incentive to exceed expectations is the opportunity to earn the best possible performance evaluation to help keep T&M contracts either through option or re-competition (since much T&M work is continuing service type work), and to help win new work.

  5. When I first saw the subject of your post I was reminded of one of my civilian agency customers who calls its T&M contracts "fixed rate" apparently because it sounds better with "fixed" in there and does not carry the negative connotations that T&M does. "Fixed rate," however, is not a contract type listed in FAR Part 16. But I digress.

    I would call this a fixed unit price or fixed unit rate contract, under the general heading of fixed price, because the price is "...not subject to any adjustment on the basis of the contractor's cost experience in performing the contract." FAR 16.202-1. Just my $0.02 worth. Others may have better informed opinions.

    It is common to have fixed unit price construction contracts for civil work where the quantity cannot be determined precisely in advance, but can be measured in place. In those contracts there may be funds left at the end, or it may be necessary to provide additional funding. The Variation in Estimated Quantity clause from FAR 50.211-18 would be used, as prescribed in FAR 11.703. Unfortunately, FAR Subpart 11.7 covers VEQ only for supply or construction contracts, not for the type of services you are handling, but some of the principles are similar, i.e. pay a fixed price for each unit actually used.

    FAR Part 41, Acquisition of Utility Services, specifically excludes telecommunications services from its applicability, at 41.102( b )(3). Having never handled such a contract for the Government, I don't know where in the FAR to find anything about that.

  6. Well, if you meant "certified cost or pricing data," then your posts are difficult to understand. If the prime does not have to submit certified cost or pricing data to the government, how does requiring the sub to certify its cost or pricing data mitigate the prime's risk? What risk? Why should a contractor's purchasing system require that it obtain certified cost or pricing data from a sub when the law does not require that it do so?

    Good questions.

    First, a look at terminology, about which I always try to be precise. I was taught that "cost or pricing data" always means certified, unless preceded by "information other than." This is consistent with the FAR 2.101 definition, whose second sentence reads, "Cost or pricing data are data reqiring certification in accordance with 15.406-2." If this terminology is incorrect, I am always ready to learn.

    The short answers are:

    1. The prime's risk is mitigated by using cost analysis techniques, starting with cost or pricing data, rather than simple price analysis. The subcontract file will have stronger price reasonableness documentation. The prime can invoke the "price reduction" clauses if necessary. This assumes greater importance company-wide than in the instant case. There are many practical, on-the-ground reasons for this, with specific examples, that I will not discuss in detail because they touch on proprietary information.

    2. As a matter of overall policy and procedure, it reduces the risk of disallowance of incurred cost. In the event that subsequent changes contain or affect cost elements whose costs have been analyzed and the analysis well-documented, definitization will be facilitated with stronger support. Again, more details would be proprietary.

    3. The reason appears to be the philosophy that conducting business exactly the way the Government does gives Government auditors and reviewers a level of comfort that often means they don't dig as deep, unless they see something that arouses curiosity. My sense is that some of this also comes from reluctance to push back on auditor suggestions to set up or tighten up procedures on topics of audit interest. There also seems to be a tendency to solve every internal review finding with a new or improved procedure, kind of like thinking more legislation will improve (or reform, streamline, etc.) federal acquisition.

    It is important to remember that when subcontracts are managed by the book, the book is not the FAR but the prime contractor's procedures, and are not grounded in the FAR but in the choice of law clause in the subcontract, usually of the state in which the prime is headquartered, always bearing in mind, of course, the clauses in the four corners of the subcontract.

  7. Agree on the Contract Pricing Reference Guide, the successor to the old ASPM Pricing Manual, all clearly written and eminently sensible.

    We have printed FAR Part 15.4 and the Contract Pricing Reference Guide, and put it all in a binder, for everybody in our contracts, subcontracts, and procurement group on the team of a major project.

  8. Seeker, it was all about some basics, and reference to a pertinent piece of the FAR. The question was answered. Here is how:

    First, an approved purchasing system was mentioned because if the prime has an approved purchasing system that addresses this, that is what the prime must follow, and that?s the answer.

    Second, the original post did not indicate any basis for subcontract price reasonableness, which gave the impression, or at least left open the worrisome possibility, that the prime thought subcontract cost or price analysis was not necessary because the prime contract was to be awarded on a competitive basis. The subcontract file should stand on its own.

    Third, reference was made to FAR 15.404-3 because it includes many points that bear on the original question, notably requiring the prime to conduct appropriate cost or price analyses. What is appropriate? Does one get that from 15.404-3( c ), which most people are not familiar with, or from 15.403? Most of my Government customers, rightly or wrongly, would say 15.403, the same way they would handle it.

    Do all those concerns go away simply because the prime was to be awarded on a competitive basis? What if only one bid was received? The prime can?t rely on the weak ?stretch? definition of adequate price competition in 15.403-1( c )(1)(ii) because 15.403-1( b )(1) makes that a judgment call on the part of the contracting officer, who could easily say this isn?t competitive enough and start requiring prime and subcontract cost or pricing data. Should the prime have gotten certified cost or pricing data from the sub, and conducted cost analysis and negotiations? Most of my Government customers, rightly or wrongly, would say yes. As a prime, I would certainly want to mitigate my risk by getting the sub to certify its cost or pricing data.

  9. Don't know about your company but part of our company's approved purchasing system is a policy that requires certified cost or pricing data from subs in the same circumstances that the Government would require such data from primes.

    In your case, how did you determine the subcontract prices fair and reasonable?

    See FAR 15.404-3. Interesting that this is not a clause and therefore not within the four corners of a contract, but its paragraph ( b ) requires prime and subcontractors to take specific actions with respect to cost or price analysis. Also note that ( a ) requires contracting officers to analyze subcontractor's cost or pricing data.

  10. Good questions about an interesting case and some curious FAR guidance in 15.206. I looked at the decision before I tuned in to the Discussions page, and wondered if the agency was really thinking, as argued, that they could solicit and award based on a notional schedule that had little resemblance to their most recent forecast. Here is my $0.02 worth:

    In addition to FAR 15.206( e ) ? more on that below ? it is useful to look at how ( a ), ( b ), and ( c ) apply in this situation. ( a ) basically says, before or after receipt of proposals, if you change your requirements, you amend the solicitation ? something the agency was found not to have done in this case. ( b ) and ( c ) cover who the amendment is issued to, ( b ) before and ( c ) after proposals are due. (Let?s skip ( d ) since it is about not disclosing protected information, and not pertinent here.)

    Under ( b ), the amendment is issued to all parties receiving the solicitation. My practice, whether with the Government or as a contractor, has been to do exactly that, even if a prospective bidder has sent in a ?no bid? notification. The subject of the amendment may make the difference in a bid/no-bid decision. It may be something very simple, such as a short extension of the due date that allows a company to bid when previously their estimating capacity was tied up. Or it could be a seemingly minor change in a technical requirement that brings a job into the company?s area of competence. The point is, it doesn?t take much to change a potential offeror?s bid/no-bid decision. Going back to them all with the amended requirement maximizes the chances of competition.

    Under ( c ), there appears to be an anti-competitive note, for amendments issued after the established time and date for receipt of proposals, because they go only to offerors that have not been eliminated from the competition, not to those who might have been in competition for the amended requirement. This would appear to answer the first question in the negative. A potential offeror who had not submitted an offer, being eliminated from the competition, would not be eligible to receive an amendment after the original due date. Doesn?t sound fair, but there it is, subject, however, to ( e ).

    FAR 15.206( e ) appears to provide at least a partial remedy for the potential unfairness of ( c ), dealing with the situation after receipt of offers when an amendment proposed for issuance is judged significant enough to affect the competition.

    Would a company on the bidders list but didn?t bid have standing to protest? I vote a conditional yes, depending on the answer to the last question.

    Would a company not on the original bidders list have standing to protest? Same answer.

    Would the GAO find the refusal to cancel and re-issue to be within the contracting officer?s discretion? It depends. On one hand, the FAR is clear that it?s the contracting officer?s call. On the other hand, the FAR provides guidance on the factors affecting that call. How many times have we read that the GAO will not substitute its judgment for the contracting officer?s, provided the file shows a reasonable basis for the decision? Sometimes the GAO finds a reasonable basis and the protest is denied; sometimes not and the protest is upheld.

    In this case, the GAO did not find a reasonable basis for what the agency did. FAR 15.206( e ) tells us what should have been done: cancel and re-solicit. That would appear to give standing to any qualified company that might have considered bidding had the real requirement been solicited.

    Others with more familiarity with researching precedent, and more time to do so, may come up with different thoughts, but that?s how it looks from here.

  11. Don't have the answer but do have some history.

    Our company was awarded a large CPAF contract whose amount upon award included estimated cost and base fee but not award fee, which the contract stated would be administered separately. Nearly 7 months later, shortly after the end of the first semiannual award fee period, the contract was unilaterally modified to add all the available award fee to the contract amount, and on the same day, also modified unilaterally to allow billing of the award fee earned for the first period.

    As the contractor, we did not know why the Government omitted award fee from the original contract amount, or why they decided to add it the first time they had to take a close look at administering it.

    The Government had told us the contract was fully funded from the start.

  12. Basically, the item does not belong to the contractor but to the Government. See FAR 45.402.

    One thing it means is a lot of paperwork. In the bad old days before the 2007 rewrite of FAR Part 45 and its implementing clauses, it would have been a lot more. If the contractor will use the property after Government inspection and acceptance, it requires a contract mod to list the item as GFP. Then the contractor must track the asset in its property accounting system, perform annual inventories, submit reports, etc.

    Another thing to consider is possible state or local sales tax implications that require careful study.

  13. A quick skim through 52.227-xx clauses (I'm a four corners of the contract kind of person) indicated that the Government would require the contractor to indemnify the Government in the event of copyright infringement. That can be waived, but there was no immediately apparent indication that the vice could ever be versa.

    Turning to FAR Part 27, the General Guidance at 27.102( e ) reads, "The Government requires that contractors obtain permission from copyright owners before including copyrighted works, owned by others, in data to be delivered to the Government."

    Recommend a close reading of FAR Part 27 and its implementing clauses.

  14. Looks like everybody forgot the part of 31.205-46( b ) that reads, "...during normal business hours...". In my 25+ years of working in the Near East, I cannot recall a single flight that went fast enough to start and end during normal business hours, at least, not the same day.

    The FAR also lists an exception "...when such accommodations ... require travel during unreasonable hours...". The latter term is not defined, but it would not be hard to make a case that anything outside normal business hours is unreasonable, and easier still to make a case that any trip over 20 hours (14 in FTR) includes travel during some very unreasonable hours.

    Also, the exceptions in 31.205-46( b ) are conditions linked by an "or," not an "and," so it is not necessary to meet all the conditions, only one of them, to qualify for the exception to the blanket statement of unallowability of any fare "...in excess of the lowest customary standard, coach..." (noting also the last sentence of 31.205-46( b ) requiring the condition(s) to be documented and justified).

    Every contractor I have ever heard of, that does a lot of overseas work, understands this FAR cite and the corresponding JTR and FTR to mean that a traveler on a flight that would take over 14 hours by the most economical direct routing has a choice, either cheap seats and an overnight hotel, or business class.

    Not every contractor implements that understanding the same way. My current employer, for example, is generally more conservative in its travel policies than JTR/FTR, and will not authorize business class, period.

    Also see FTR "?301-10.123 When may I use other than coach-class airline accommodations?" at http://www.gsa.gov/portal/ext/public/site/...1868/#wp1088868, "6) Where the origin and/or destination are OCONUS, and the scheduled flight time, including stopovers and change of planes, is in excess of 14 hours, in accordance with ?301-10.125; "

  15. Quick answers:

    1. The first part of this question uses language that seems to be a stretch, i.e. "...dissolving... the set-aside....' IMHO a set-aside is a pre-award situation, similar to the difference between a solicitation provision and a contract clause. For the second part of the question, a T4C that is completed in strict conformance to the terms of the applicable Termination clause in a contract is not a breach.

    2. 19.506(a) seems to be limited to pre-award. Haven't seen anything in 19.5 about post-award.

  16. Best not to overcomplicate.

    As a contractor, I would define the ground rules up front to protect myself, and communicate my intentions clearly, first verbally and then formally, to the Goverment customer: A request to price new scope would be considered a change under the Changes clause, and my proposed UCA pricing would be revised to include actual direct costs incurred of pricing the scope change, regardless of whether the scope were ever to actually be changed.

  17. The question reminded me of the article in the February 2011 issue of Contract Management magazine entitled, "FAR 15.4, Contract Pricing - Requiring Data Other Than Certified Cost or Pricing Data: Unveiling the Ingredient Costs of the Recipe."

    The article is at http://www.ncmahq.org/Publications/CMMArti...ItemNumber=8976.

    I found that it focused more on the exceptions than the rule, all too often talked about the FAR "prescribing" actions that a close reading shows the FAR simply allows under certain limited circumstances but does not require, and used jumbled or incorrect FAR references.

    The author seemed to not only look for authority to challenge a competitive price, but also to believe that such challenges are FAR requirements with broad rather than limited applicability.

  18. Depends on whether you consider an "item" to be an option and a "quantity" to be a number of option periods. IMHO it's stretching the plain meanings of the words too far, and I would not go there. (I write this with some trepidation, not having looked in FAR 2.101, as I just read Vern's article in the February issue of Contract Management that finally arrived today.)

    Not sure what reasons there could be for not wanting to award the contract with the same options in the solicitation, unless somebody had an attack of good faith and didn't want to mislead a contractor by awarding option periods that had definitely been ruled out.

    There doesn't seem to be anything wrong with notifying a contractor early (at award) that the Government does not intend to exercise some of the options, other than the points raised by others, but there seems to be no need to do so. Why commit to such a decision so early?

    If you are looking for backup in 52.215-1(f)(5), it's analogous but not on point and therefore weak.

  19. The original question, is there any reason why fixed fee under a CPFF contract would increase, has been answered. At the risk of oversimplifying, if the scope has not changed, and there is no basis in a contract clause for an equitable adjustment that would include fee, CPFF should be taken literally: cost plus FIXED fee.

    Was this some kind of pre-arranged deal where G&A would be capped while fee was increased so that a portion of indirect cost was reclassified as fee and the contract amount remained the same, "a wash", "no harm no foul"? If so, on what basis was that deal struck? And where is the consideration for the Government?

  20. Vern's Post #2 made 5 points. People have taken exception to one of them.

    Let me add my endorsement to: "Fourth, a score of 85 percent isn't saying much. Is it okay for a CO to be right only 85 percent of the time?"

    During SCUBA training I felt much the same way. After scoring 99 on a test, the 1% you missed can kill you.

    Any system of testing has flaws, but also has the potential to measure knowledge and establish standards. Is putting an admittedly imperfect system in place better for the taxpayers than the status quo?

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