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About cmoore812

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  • Birthday 10/17/1943

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  1. Yes you have it right except that it is not being applied to a specific contract. It's applied to all contracts which would include T&M, FFP and Cost type contracts.
  2. Guess I can't quite figure out why what I posted id so difficult to understand. Company A fully burdens contract labor and pays for contract labor at a lesser amount. All Contracts, T&M, FFP, Cost Type, Foriegn, Commercial.
  3. H2H Excellent advice - Thanks H2H
  4. Yes, your comments are helpfull. I believe I'm a bit under educated when compared to this forum's participants. The practice that I am refering to here is consistant over all contracts. We have T&M, FFP, Cost type, all sorts of fee arrangements, Interdivisional, commercial and more. I don't have access to the Disclosure Statement so can't see how it's worded. I'm assuming that paying for labor at a lower rate than is being charged to the Govt is improper. I don't know which FAR para may be in violation. I look at a contract as being similar to an escrow account. Money comes in (payments from US Govt) and money goes out, Labor charges, mat'l, S/C, ODC, O/H and so forth. In the case of Company A the Govt is billed for Contract labor at a higher rate than it cost the Contract. I'm having great difficulty explaining that concept. I view this as improper and was attempting to get an agreement that yes it is not proper or no problem. I've talked to our estimating manager, who is the auditing agencies interface, and asked how does the company get away with and justify, this practice and I'm told it's in the disclosure statement. I appreciate all of you patience and comments.
  5. 1. Company A bills the U.S. Government for "contract labor" (i.e., labor incurred by 3rd party suppliers) at its cost plus 26% plus fee. 2. Company A bills its own employee direct labor at its cost plus 280% plus (maybe) fee. These practices have been disclosed to the government in the company's Disclosure Statement. So, presumably, Company A is CAS-covered and has received CAS-covered contract awards valued at more than $50 million in a single fiscal year. Meaning Company A is not a small business and is likely to be of decent size. Your concern is ... what? That Company A's labor is too expensive and Company A should fire all its employees and just hire contract labor from 3rd parties? That Company A won its contracts based on a price determined via use of its disclosed practices, but the Contracting Officer could NEVER have concluded that the contract price was fair and reasonable, so Company A won its contracts unfairly? That Company A employees who receive fringe benefits and training and management support should not be more expensive than job shoppers who are paid statutory minimums (in terms of benefits, and told simply to show up at a company to report for work? Clearly, I'm not getting your concern. Could you articulate it more clearly, please? As you described the situation, it seems perfectly fine and normal and within Defense Industry SOP to me. Hope this helps. I guess the real question is can a company, by virtue of it's disclosure statement wording, violate FAR provisions?
  6. All of the above. Prior to CY 2003 Contract labor was bid as ODC, paid for as ODC and billed to the Govt as ODC. In 2003 there was a didclosure statement change that allowed the company to bid outside purchased labor at inhouse rates. Since 2003 the company has paid for contract labor as if it were ODC but bills the Govt as if it were inhouse labor and still does so. This division is the highest profit center of the corporation and I believe in part to this charging/billing practice.
  7. What I am trying to determine are Company A's billing the US Govt more for Contract labor than they are intitled to charge. Assume Company A to have $1B annual sales. Rates are not an issue. Joel's comment: "Are you saying that the company charges the government the same rate for subcontracted labor as for in-house labor?" is correct. The Company pays for Contract labor at rate, say $70 and bills the Govt $190. Company A's position that this practice is spelled out in the Disclosure Statement and is therefore OK. I see it as an overcharging scheme. The extra $120 gos to profit
  8. Contractor "A" is a division of company that does a majority of it's business with the US Govt in the Defense industry. Rates are perodically submitted for approval by DCAA, at the moment they are not approved. The disclosure statement is reviewed by DACO, the current one was submitted 10/28/2010 and not yet approved. The direct labor dollars paid to a Contractor "A" employee gets burdens (O/H, Fringe, BOSC, ITSC, G&A, COM and Fee) which compounds to approximatly 3.8 time the direct rate as a charge to the Govt. If an employee is paid $50/hour the Govt is billed at approximately $190. Contract labor employees are employed by another company which Company "A" contracts with for that persons service. If the Contract labor person makes $50/hour then the cost to Company "A" is $50 plus the Contract labor company's fee plus G&A, COM and Fee are a multiplier of roughly 1.4 (not 1.26) or about $70/hour. Company "A" realizes a gain of about $120/hour ($190 minus $70) for each hour worked by the Contract labor person. Just a clarification. Company "A" bills the Govt at the $190 rate and pays for that service at $70/hour
  9. Company A is a Defense Contractor and conducts business as follows: Contract labor is paid for as Other Direct Cost out of contract monies and cost the contract the hourly amount (plus contracting company rate) plus G&A and Fee. The US Govt is billed at a fully burdened rate for this same Contract labor. Burdens for ODC are about 26% and about 280% for company labor. This seems to me like an overcharge to the US Govt. Compliance people at Company A justify this charging by having it in ths "Disclosure Statement" Comments please.