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Old-Dog

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Posts posted by Old-Dog

  1. I have a client that has a subcontract which includes the following:

    The SUBCONTRACTOR is hereby notified that effective on October 15, 2014, the

    SUBCONTRACTOR is awarded a Fixed Price Subcontract (subject to the adjustment provisions of sections 4.2 Contract Definitization and 4.3 Cost Adjustments below) for the delivery/performance of the item(s) above in accordance with all the requirements and conditions set forth or by reference attached herein.

    4.2 Contract Definitization

    This Subcontract is awarded to allow work to proceed expeditiously. However, both parties agree to diligently strive to complete contract negotiations and to definitize the subcontract as soon as possible. This Subcontract is expected to be definitized by December 1, 2014, but in no case shall the time period exceed 180 days from the effective date of this Subcontract or when 40% of the work is completed, whichever is earlier.

    4.3 Cost Adjustments

    The costs, including direct and indirect rates and fixed fee, of this Subcontract are subject to adjustment based on the resolution of recommendations contained in any report of BUYER’S Audit in accordance with cost principles contained in the Department of Energy Acquisition Regulations (DEAR) and the Federal Acquisition Regulations (FAR). The SUBCONTRACTOR also agrees to negotiate in good faith to resolve any issues resulting from the audit of its accounting system.

    Although the PO states that it is a fixed price contract for a little over $500,000 it looks like a letter contract to me.

    I would appreciate your opinions.

  2. The subcontract is for professional services.The subcontractor has been performing the same services for approximately 7 years. The prime is satisfied with their work and the work had been reviewed annually by the government without any issues. The subcontractor is not suspended or debarred.

    I'm not sure but I think this is result of personality conflicts between the government manager and the subcontractor's management.

  3. If a contractor uses the Blue Book for pricing equipment rates, does it have to make adjustments in the rate if the equipment is fully depreciated? Also, are any other adjustments required? I have included the relevant (I think) FAR provisions below.

    Thanks,

    George

    According to FAR 31.105 (d) (2) (i) (A)

    Actual cost data shall be used when such data

    can be determined for both ownership and operations costs for

    each piece of equipment, or groups of similar serial or series

    equipment, from the contractor’s accounting records. When

    such costs cannot be so determined, the contracting agency

    may specify the use of a particular schedule of predetermined

    rates or any part thereof to determine ownership and operating

    costs of construction equipment (see subdivisions (d)(2)(i)(B)

    and © of this section). However, costs otherwise unallowable

    under this part shall not become allowable through the

    use of any schedule (see

    31.109©).

    FAR 31.205-11 (f)

    (f) No depreciation or rental is allowed on property fully

    depreciated by the contractor or by any division, subsidiary,

    or affiliate of the contractor under common control. However,

    a reasonable charge for using fully depreciated property may

    be agreed upon and allowed (but, see

    31.109(h)(2)).

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