Retreadfed

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  1. LOP, notice that the various clauses that require compliance with the 50% rule are also solicitation provisions. If you were to design your own solicitation provisions to implement what is in the NDAA, you would create an internal inconsistency in the solicitation between the current FAR provisions/clauses and what you have designed.
  2. Ji, in regard to your post #4, I do not see 31.205-6(a)(1) as being a problem. Note that it does not say work done on a contract. Instead, it relates to work for the contractor in the current accounting period. The services rendered for the contractor are what the contractor requires of the employee. Here the requirement would be to show up at 8 a.m. M-F and wait to see if the clearance comes through that day. If there is a beneficial relationship between the cost of what the contractor pays the employee for doing this work and a particular contract, that cost is allocable to that contract. Here, the only possible contract that would benefit from standby costs would be the one requiring a clearance for the employees on standby. Remember, all costs have to be allocated to some contract. There is no such thing as a homeless cost. Similarly, I do not see (a)(3) as a problem because it relates to the contractor's compensation structure which is not in issue here.
  3. FARmer, presumably the contractor is paying these people while they are awaiting their clearance. In that case, the contractor is incurring costs. Those costs must be allocated to contracts on the basis of the benefits received by the contracts. The question then arises as to which contracts benefit from the costs. This is a fact specific question and in this case, would depend upon what the employee is doing while awaiting the clearance. Some contractors that I know of put employees in a training status (and actually train them in regard to various aspects of the contractor's business) or have them do other functions that can be charged as an indirect cost. However, it is not uncommon for the contractor to exhaust these options. They then place the employee in a holding or standby status where the employee simply waits for a clearance to come through because it is impractical to have the employee begin work on another project and then switch when the clearance comes through. Further, it is usually not practical to place the employee on unpaid leave while awaiting a clearance because the employee may find another job in the meantime. This is where the big issue comes up as to whether the cost of having the employee on stand-by can be charged directly to the contract for which (s)he was hired. I do not see any prohibition in the FAR against the contractor doing so. We are talking about compensation costs. Such costs are allowable costs if they are reasonable. Assuming these tests have been met, the issue remaining is whether the costs are allocable in total to the contract for which the employee was hired. For these purposes, "benefit" simply means that there is some logical connection between a cost and a contract so that the contract should bear some or all of the cost. In my opinion, the only logical connection between the compensation cost and a contract is a connection with the contract for which the employee was hired. I see no connection between standby costs and any other contract. In my mind, I see no reason why the standby costs should not be treated as an allowable direct cost of the contract for which the employee was hired.
  4. Just a reminder that the similarly situated subcontractor concept has applied to HUBZone and SDVOSB set asides for several years. Also, if small businesses form a JV for large procurements that are set aside, the JV is subject to the 50% rule instead of the individual members of the JV. Interestingly, the small businesses that form the JV do not have to be from the same category.
  5. Cost Realism

    FAR11, why are you concerned with doing a cost realism analysis of labor rates and indirect cost rates? They are what they are. It seems to me that a more useful analysis would be of labor categories and the mix of labor to determine if they are appropriate for the work proposed.
  6. Do funds expire if protest bridges FY end/start?

    It appears that 1558 would also cover size or status protests to the SBA.
  7. Eager, when you ask about travel costs are you concerned with airfare, per diem or both? In regard to airfare, the subs will have to demonstrate that they utilized the lowest airfare available to them if you want to be reimbursed for those costs as the prime unless an exception applies. The big issue here is not receipts, but showing what the lowest available airfare was. If you are concerned with per diem and really want to simplify travel claims, why not put a clause in the subcontract saying that the subs will be reimbursed for travel at the maximum per diem rate for the travel destination specified in the applicable travel regulation plus applicable indirect costs. That eliminates the need for receipts. Look at FAR 31.205-46 to get a better understanding of travel costs.
  8. Commercial Item Determination

    I wonder if the FAR Councils will pick this up and make (B ) applicable government-wide or just leave DoD to struggle with it.
  9. I have not seen such an accounting structure, but that does not mean that it is not an acceptable accounting practice. We don't know what costs are in the MH pool and what costs are in the G&A pool. Presumably, there is not an overlap, which would be a problem if the contractor included the same cost in two pools. Further, we don't know if the contractor has contracts that consistently have a relatively uniform amount of material in relation to labor, or if the amount of material can vary significantly from contract to contract. Using this accounting method may be the contractor's way of allocating the costs in the MH pool to those contracts that benefit from them and not burdening the contracts that do not benefit from them (allocation of costs on a causal or beneficial basis). In sum, there are a lot of considerations that go into determining whether this accounting practice is CAS compliant and results in an equitable allocation of costs to contracts. No one in this forum can answer those questions. You have to rely upon the auditor and ACO for assistance in this regard.
  10. Neurotic, we still do not know if this accounting practice has been approved by the ACO as compliant with the CAS. However, if we assume it has been, can you explain what authority you have to require the contractor to propose in a way that would be inconsistent with its DS in light of FAR 52.230-2 and CAS 401? Also, can you tell us if you believe you have the authority to ignore the ACO's approval of the DS and require the contractor to propose in a manner that is inconsistent with its approved DS?
  11. You did not say that the DS has been approved. If it has, have you discussed this issue with the auditor and ACO? If it has not, and this is a disclosed accounting practice, why do you not bring this up with the auditor and ACO so they can specifically address it in their review of the DS?
  12. Travel

    While I agree that there is no prohibition against this practice, and there are some pitfalls that H2H has identified, there are some other considerations that come into play. Because the travel CLIN is cost reimbursement, travel costs are probably subject to FAR 31.205-46. That cost principle states in part that "Airfare costs in excess of the lowest priced airfare available to the contractor during normal business hours are unallowable." This raises the question of whether the prime has an arrangement with one or more airlines so that it can get fares lower than those available to the general public, and if so, are those same fares available to the subcontractor under the circumstances here. I can see DCAA taking the position that they are and questioning any airfare costs in excess of what the prime could have received. That would be the most reasonable position if DCAA believes the costs are not in accordance with the cost principle. I also can see DCAA taking the extreme position that since the prime offered to pick up the travel tab, any travel costs claimed by the sub are unreasonable and unallowable. Similarly, DCAA may question lodging and per diem, even if they are within the limits prescribed by the appropriate travel regulation, if the costs the prime could have obtained were lower than those incurred by the sub. Remember, under DCAA's revised charter, the "public interest" is DCAA's primary "customer." As such, DCAA is constantly trying to find innovative ways of squeezing contractors.
  13. Electronic Submission of data

    Some contractors maintain their accounting system in electronic form. I know that DCAA frequently wishes to have direct access to data that is contained in the contractor's electronic accounting system. Therefore, it is necessary for the DCAA auditor to have a user ID and password to gain access to the electronic accounting system. See, FAR 52.215-2(a).
  14. Jeff, 52.232-7 is relevant only if the contract contains T&M CLINs. However, for the CPFF CLINs you need to look at FAR 31.205-26, particularly (e).
  15. Jeff, you also did not say how the contract is to be priced, i.e., cost reimbursement, T&M etc. If it is T&M, no fee or profit would be allowed on material unless it is a commercial item that the contractor sells. See, FAR 52.232-7.