Retreadfed

FARmer, how is the order priced, (cost reimbursement, FFP etc.)?

Don, this leads to my favorite answer in government contracting, "it depends." In some instances, a contracting officer can deviate from the cost principles and comply with FAR 1.602-1 as Pepe has indicated. However, in some instances the contracting officer cannot. For example, if a cost is made unallowable by statute such as 10 U.S.C. 2324, I don't see how a contracting officer could agree to make such a cost allowable. In this regard, taxes of any sort are not listed as an unallowable cost in section 2324. Let me pose a slightly different scenario than Joel did in regard to taxes. State income taxes are generally an allowable cost for C corps. However, an S corp. can elect not to pay Federal taxes on its income but to have the owner(s) pay taxes on the income of the corp. as part of their personal income tax liability. Many state follow this pattern. Since C corps. can claim state income taxes they pay as an allowable cost, would it be permissible and maybe not so far fetched for a contracting officer to seek a deviation to allow an S corp to claim state taxes paid by the owner on income of the S corp as an allowable cost?

Don, I will let you and Joel continue your discussion as an interested by stander. However, for my benefit, could you explain what you mean by the cost principles? Are you referring to FAR 31.205; FAR subpart 3.2, FAR subparts 31.1 and 2 or something else? Also, are you asking how a contracting officer should resolve a conflict between FAR Part 31 and another FAR section?

Joel, this is partially correct. Government attorneys have two responsibilities. First, to provide agency personnel with their best advice concerning issues presented to them. After the agency makes a decision as to what course of action to follow, the attorney then has the responsibility to advocate for that decision. As to the first responsibility in this instance, I think the advice is wrong as has been stated before. Further, my experience is that the SBA and agency are generally in agreement concerning a concern's responsibility although there are cases where the SBA does issue a COC despite an agency determination of non-responsibility.

Lionel said, "relinquishing legal rights serves as adequate consideration." Legal rights are a property interest vested in the government. Do contracting officers have the authority to divest the government of its property rights without such authority being granted in a contract clause?

Sjanke, how does this clause work with performance based acquisitions?

H2H, you re assuming too many facts to make a definitive statement. Many contractors only have contracts for commercial items, which are exempt from the CAS. Also, many contractors only have FFP contracts that are awarded competitively without the submission of any cost data. These contracts are also exempt from the CAS. If these contractors change from an SB into a large business, there would be little reason to change their accounting practices to accommodate the CAS, which would still be inapplicable. My point in my original post was to state that just because a concern is no longer small, it does not necessarily follow that it has to be concerned with the CAS. Whether the CAS will apply to the contracts the concern has depends on the concern's business model and how the CASB's rules apply to that model.

H2H is wrong in what he said. Note that I said you do not have to comply with the CAS on every contract. While you may have to comply with some Standards on contracts subject to the cost principles, not just cost reimbursement contracts, that does not make those contracts CAS covered.

pdog, just because you are a large business does not mean you have to comply with the CAS on every contract. Contracts are subject to the CAS, not contractors. In this regard, look at the exceptions to CAS coverage in the CASB's rules.

For clarity, are you asking how the size of a concern is determined following a merger? I am a little confused by your terminology. In the first sentence you indicate that the acquired concern will not be an affiliate of the purchasing concern. In the second sentence you refer to the acquired firm as "previously unaffiliated." This seems to indicate that the acquired firm is an affiliate of the purchaser.

Is what is defined as a proper invoice in 32.905 the same as what is in 52.212-4(g)? Is what is in 5 CFR 1315 a part of a contract that contains 52.212-4(g)?

What does it mean to handle invoices in accordance with the PPA and OMB regulations? Are all of the regs applicable to the handling of invoices or only certain ones? If only certain parts of the regs apply, which ones?

Carl, what does 52.212-4(g)(2) mean to you?

For what it is worth, I think FAR 12.302(b)(4) is flat wrong. FAR 52.212-4(g) is supposed to be a contractual implementation of the Prompt Payment Act. 31 U.S.C. 3901(a)(3) states “'proper invoice' is an invoice containing or accompanied by substantiating documentation the Director of the Office of Management and Budget may require by regulation and the head of the appropriate agency may require by regulation or contract." Thus, contrary to 12.302, the PPA does not say what must be in an invoice for the invoi8ce to be considered proper. Moreover, note that the statute says what must be included in an invoice is to be determined by OMB and the head of the relevant agency. Thus, the statute gives broad discretion to OMB and the agencies concerning what is to be in an invoice. The rules issued by OMB and found in 5 CFR 1315 say that an invoice is to include (i) Name of vendor; (ii) Invoice date; (iii) Government contract number, or other authorization for delivery of goods or services; (iv) Vendor invoice number, account number, and/or any other identifying number agreed to by contract; (v) Description (including, for example, contract line/subline number), price, and quantity of goods and services rendered; (vi) Shipping and payment terms (unless mutually agreed that this information is only required in the contract); (vii) Taxpayer Identifying Number (TIN), unless agency procedures provide otherwise; (viii) Banking information, unless agency procedures provide otherwise, or except in situations where the EFT requirement is waived under 31 CFR 208.4; (ix) Contact name (where practicable), title and telephone number; (x) Other substantiating documentation or information required by the contract. Note item (x) in the OMB rules. It is not included in the list of items in 52.212-4(g) that is to be considered in determining if an invoice is proper. In this regard, notice what 52.232-25 lists as the elements of a proper invoice. What is in 52.232-25 is consistent with the OMB rules while what is in 52.212-4(g) is not. From what is in the PPA and the implementing OMB rules, I think Guardian's agency is on solid ground to require additional information to be included in an invoice. Moreover, to me 52.212-4(g) reflects a drafting error on the part of the FAR Councils.

The news release is not that clear but it seems the AF is concentrating on SBIR Phase I contracts. Also, although the release does not say so, the payments probably are advance payments, a form of contract financing.