Retreadfed

CR, I don't know about today's government "customers," but I spent 24 years in DoD procurement and mischarging to FFP contracts was a significant issue if it could be detected. Detection was a problem because the government does not have the general authority to audit costs incurred on an FFP contract. Shifting costs from cost reimbursement or T&M contracts to an FFP contract, while not usual in my experience, gives a distorted picture of the contractor's ability to control costs and its internal controls. A lack of cost control would be reflected in the contractor's CPARS. A distorted CPARS showing that the contractor is a better performer than it truly is is potentially harmful to the government's interest. Further, if we are talking about CPIF or CPAF contracts, shifting potential overrun costs to an FFP contract can entitle the contractor to receive more fee than they otherwise would. Finally, if there is a follow-on to the FFP contract, the false recording of costs on the predecessor contract can be a justification for a higher price on the follow-on. In short, mischarging to an FFP contract is not a "victimless crime."

As you describe it, it is an illegal act. Intentionally allocating a cost to a cost reimbursement contract to which the cost is not allocable and then submitting a claim for that cost to the government violates the False Claims Act, 31 U.S.C. 3729. It also violates several criminal statutes such as 18 U.S.C. 287, 18 U.S.C. 1001, 18 U.S.C. 1343. The same would apply to a T&M contract if the contractor intentionally claims an hour of labor that was properly allocable to an indirect cost pool as a direct hour of labor. The criminal statutes cited above, all require intent. However, no intent is required to be in violation of the FCA.

I agree generally with Neil. However, I am a little fuzzy on why you are asking for additional funding for a CLIN. If the contract is not funded at the CLIN level, why would you need additional funding for a single CLIN if there is adequate funding for the contract as a whole?

We have seen examples of where certain functions of government are moved from Washington to other areas of the country. For example, the Social Security Administration is located in Baltimore. DoD's DFAS was centralized in Columbus, OH, elements of the FBI were moved to West Virginia. Perhaps moving entire agencies out of Washington may not be a good idea in some circumstances, but why it could not be done with others, such as the regulatory agencies such as FCC or FTC, is an open question in my mind. With modern communications capabilities, travel is much less a requirement than it was a few years ago.

Just to clarify, were the SCA clauses in the contract at time of award or were they added with the WD?

Are you with the government or contractor? If the former, one thing you have to keep in mind is whatever position the government takes has an impact on the contractor. In this regard, the answer both COs give might be different from the contractor's interpretation of the contract and none of the interpretations may be correct.

What, if anything, does your contract say about compliance with the SCA and adjustments because of changes in the WD?

The FAR does not mention a socio-economic plan. My cynical side thinks this is a way for a contracting officer not to do business with a small business since small business subcontracting plans are not required from small business concerns. Further, with the limitation on subcontracting imposed on small business concerns, they may be constrained on the subcontracting opportunities that exist under a particular contract.

I think you leadership may be getting confused concerning new language in (I believe) the 2018 NDAA to the effect that once the government makes a determination that an item is a commercial item, future contracting officers cannot question whether the item is a commercial item except in specified circumstances.

Vern, your recollection of what the Court did in Alberici is correct. However, the basis for the government's appeal was the interest provision in the Disputes clause and FAR 33.208. Unfortunately, the Court did not consider it necessary to address the government's position except in a footnote where it said "The government argues in its brief that particular regulations prohibit 'claims' for future costs, but that begs the question. Statutes trump conflicting regulations. Thus, this case turns on the meaning of section 611. The government's statement of issues in its brief essentially limits this case to 'a straightforward question of statutory interpretation' involving section 611. See Rule 28(a)(3) of the Federal Rules of Appellate Procedure, which requires an appellant to state the issues presented for review." To me, this is a statement that the regulations are in conflict with the statute to some degree. Don's original question raises the issue of how contracting officers are to comply with FAR 1.602-1(b) which says "No contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met." This seems to imply that contracting officers cannot simply be in compliance with the FAR when awarding contracts, but have to take reasonable steps to ensure that they have complied with applicable laws and executive orders as well. The FAR does not limit the term "regulation" to the FAR or agency supplements. Instead, "regulation" can be any regulation that is applicable to the procurement such as the regulations promulgated by the Department of Education for procurements conducted where the Randolph-Shepherd Act applies. This brings up the problem of what a contracting officer is to do if a regulation promulgated by an agency to which congress has delegated the power to write regulations implementing a statute is in conflict with the FAR. This is particularly problematic if the other regulation is one having the force and effect of law.

I was involved in the appeal to the Fed. Cir. I had no involvement in the case before the Board.

I see the issue, and my answer to Don's question about compliance and your second question would be my favorite answer, it depends. This topic is of particular interest to me as I was involved in the Albericci-Eby (hopefully I have spelled it correctly have all these years) appeal to the Fed. Cir.

Vern, can you expand upon your answer and give an explanation. For everyone's benefit here is what the statute says about when interest begins to accrue Interest on an amount found due a contractor on a claim shall be paid to the contractor for the period beginning with the date the contracting officer receives the contractor’s claim, pursuant to section 7103(a) of this title, until the date of payment of the claim.

FAR, have you considered this language from FAR 52.222-43 "The Contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause"? Would what you are considering be a breach of this warranty?

The FAR does not apply to grants and cooperative agreements. OMB has issued uniform guidance regarding the use of grants and CAs. This guidance can be found at 2 CFR 200. The uniform guidance is not regulatory in nature. Instead, agencies are to issue regulations covering the use of grants and CAs within the agency. These regulations are to be based on the OMB guidance. Unfortunately, the uniform guidance was not written with for profit commercial organizations in mind. Nevertheless, I suggest that you read the OMB guidance and the agency regulations implementing that guidance. Many agency regulations are also found in 2 CFR. I have had some experience with grants and CAs and this process is something that I have never seen and does not make sense.

Charles, I have not done such a search, but have you searched GAO bid protest decisions to see if your question has been answered?

USN, can you explain your concern? If DoD paid for the complete development of tech data, DoD should have unlimited rights in that data. Is this not happening?

There is no bright line test for determining when an offeror knew or should have known of a basis for a protest. This is a determination that is made on a case-by-case basis and depends on the facts of the specific procurement.

Take a look at FAR 22.1016.

To be clear about my suggestions, I was specifically referring to potential liability under the False Claims Act, 31 U.S.C. 3729. This is not a criminal statute, but provides for a civil penalty for submitting a false claim. The statute imposes a penalty for knowingly submitting a false claim, i.e., a claim that is not true. The statute says: the terms “knowing” and “knowingly”— (A) mean that a person, with respect to information— (i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information; and (B) require no proof of specific intent to defraud; In light of the limited facts we have, Vern's advice about consulting a lawyer is sound.

Rookie, just out of curiosity, is the process for awarding task orders spelled out in the contracts?

While there is no specific clause requiring a prime contractor to conduct such an audit (even assuming there is a clause in the subcontract giving the prime the right to do so), if FAR 52.203-13 is in your contract, I suggest that you read it and determine if the sub's conduct would warrant a report under that clause. Also, if you believe the sub submitted defective cost or pricing data, but you continue to bill the government at the prices set forth in the subcontract, you need to consider your own potential False Claims Act liability and whether your conduct exhibits current responsibility.

Out of curiosity, why is anyone concerned with contractor timesheets on an FFP contract?

Mike, I am not going to say your interpretation is wrong, but to me, the quoted language does not prohibit the signing of time cards. If you do not want the COR to do something, be clear in regard to what is prohibited. Vague and ambiguous terms are not effective. BTW, how is the contract in question priced (T&M, FFP, cost reimbursement etc.)?

Based upon my experience and observation (purely unscientific), if we use performance appraisals as the basis for constructing a Bell curve, I suspect that the curve would be skewed substantially to the right, with very few rated as marginally satisfactory or unsatisfactory. If they are rated unsatisfactory, chances are they will be put on a performance improvement period before removal procedures are begun. If the individual is removed or actually improves, the curve would be skewed even more to the right. This raises the question as to whether performance evaluations are being done properly or whether standards have slipped so much that what was once mediocre is now considered above average or exceptional? As a side note, pity the poor contractor who has to deal with a government employee who is on a PIP.