Retreadfed

Why is the contractor considered to be a nontraditional defense contractor?

That is why the memos Carl referenced are important.

That doesn't mean that everyone can get a driver's license. For example, my wife had macular degeneration and was ineligible for a driver's license. However, other forms of ID can be used for purposes of the Real ID act.

Have you considered the source for this statement?

I know the National Capital Region is a strange critter, but people work here from at least Virginia, Maryland, West Virginia, and the District. What is a local driver's license here? Also, if you are wanting proof of identity, there are several other ways of doing this other than a driver's license. (As an aside, a few years back some DCAA auditors were wanting contractors to produce driver's licenses for company employees in order to determine if there were ghost employees on the payroll. Obviously, this is beyond the scope of DCAA's audit authority.) Moreover, not everyone can get a driver's license. Think the blind and epileptics. Seems like refusing to hire them because they don't have a driver's license would be a violation of the Americans With Disabilities Act.

Lets see how this would work mechanically based on what appears to be Neil's interpretation. The contracting officer receives notice from the contractor that an overrun will occur. The contractor tells the contracting officer how much more money will be needed to complete the contract. The contracting officer agrees and obtains the additional funding required. Because the contracting officer cannot unilaterally change the estimated cost in the Schedule, the contracting officer sends the contractor an e-mail informing the contractor of the revised estimated cost of the contract. At the same time, the contracting officer adds additional funding to the contract by an administrative modification. Thus, the amount obligated on the contract exceeds the estimated cost of the contract specified in the Schedule. The contractor is then obligated to perform up to the revised estimated cost of the contract specified in the contracting officer's e-mail that is not part of the contract. Is that correct?

Why in the world is a government agency asking for a potential contractor employee to provide a driver's license as a condition of employment?

Dodgeball

What language in the excerpt quoted above, or any where else in FAR 52.232-20, indicates that the contracting officer does not have a unilateral right to change the estimated cost of a cost reimbursement contract? If the contracting officer does not have a unilateral right to change the estimated cost of the contract, what language in the clause indicates that any such change must be a bilateral change? What language in 52.232-20 requires a contractor to incur costs in excess of the estimated cost of the contract?

Note that the rates stated in 31.205-46 are maximum rates. Nothing in the FAR prevents a contractor from paying its employees lesser rates. The key is that the contractor does not bill the government at the maximum rates derived from the regulations listed in 31.205-46, but pay its employees a lower rate. Don has identified what the proper cost principles that should apply to state university employees. That doesn't mean that the contracting officer may have inserted the wrong cost principle in the contract.

FAR 52.232-20 states in part "The Contractor is not obligated to continue performance under this contract (including actions under the Termination clause of this contract) or otherwise incur costs in excess of the estimated cost specified in the Schedule, until the Contracting Officer (i) notifies the Contractor in writing that the estimated cost has been increased and (ii) provides a revised estimated total cost of performing this contract." This gives the contracting officer the authority to change the estimated cost of the contract. Is it your position that the contracting officer cannot change the estimated cost of the contract without receiving some consideration from the contractor? If so, does the consideration have to be new consideration or can the consideration given by the contractor to form the contract suffice?

Mac, is the contract a cost reimbursement contract?

Whether to fund an overrun is generally a discretionary act on the part of the government. When you say consideration is necessary for the government to fund an overrun, are you talking about new consideration or are you talking about prior consideration?

Do you mean "insured" instead of "insurer?"

KB, have you read 52.232-22? As a refresher, the clause states in part " The Contractor agrees to perform, or have performed, work on the contract up to the point at which the total amount paid and payable by the Government under the contract approximates but does not exceed the total amount actually allotted by the Government to the contract. . . .The Contractor shall notify the Contracting Officer in writing whenever it has reason to believe that the costs it expects to incur under this contract in the next 60 days, when added to all costs previously incurred, will exceed 75 percent of (1) the total amount so far allotted to the contract by the Government . . . Except as required by other provisions of this contract, specifically citing and stated to be an exception to this clause- (1) The Government is not obligated to reimburse the Contractor for costs incurred in excess of the total amount allotted by the Government to this contract; and (2) The Contractor is not obligated to continue performance under this contract (including actions under the Termination clause of this contract) or otherwise incur costs in excess of- (i) The amount then allotted to the contract by the Government." Reading this, how do you anticipate recovering costs that may exceed the funded amount, even if the government does not change the estimated cost of the contract?

Just to be clear, has a new wage determination been issued that covers the six month extension? If not, what is the vendor's justification for increasing the cost of performance for the option period?

Don't think that the concept of shared services applies just to government agencies. Larger contractors will sometimes have a single entity provide a service for all segments of the company. These are frequently referred to as "shared services."

What does this mean? Also, what do you mean by this?

Neil, I don't think this is an accurate statement. Changing the estimated cost of a contract to reflect an overrun does not require additional consideration. Similarly, reducing the estimated cost of a contract to reflect an underrun does not require additional consideration.

Joel, based on this statement it is not clear whether we are talking about a first tier sub or a second tier sub. Imprecise language causing more confusion.

It depends on what terms are in your subcontract from the prime. For example, if there is an indemnity clause in the subcontract, you could be liable to the prime if you do not deliver and the government takes action against the prime. Normally, the government would not deal directly with a subcontractor because it does not have privity of contract with the sub. So without seeing the entire subcontract, it is difficult to say what recourse you have against the prime.

I don't know that this is a correct statement. If the Limitation of Cost clause is in the contract, the contractor exceeds the estimated cost of the contract at its own risk. If the government deobligates funds from the contract and changes the estimated cost of the contract, the government could argue that the LOC clause applies to the reduced estimated cost of the contract. If the contractor's actual costs turn out to be higher than the estimated cost, the contractor would be required to show that it did not know and could not have known of the overrun before it happened. The same principle would apply if the contract contains the Limitation of Funds clause. I don't know what the outcome would be in these circumstances, but I think it is risky for contractors to agree to a deobligation of funds unless they know that the funding level remaining on the contract is sufficient to cover the costs they have incurred and expect to incur.

OK I think I see a problem. I should have said that the employee works at least the minimum hours for a full pay period. I was trying not to make this more complicated than it seems. If the employee works less than the minimum hours for a full pay period, unless the contractor reduces the amount the employee receives for that pay period, an adjustment would have to be made to the amount billed to the government. Obviously, the contractor would not normally bill the government for the employee's full salary when the employee did not work the minimum number of hours for that salary. However, we are not talking about that situation. Instead we are talking about an employee working more than the minimum number of hours. If the employee worked all those hours on only one contract, unless there is a contract requirement to do so, it is not necessary for the contractor to make any adjustments to an hourly rate. Instead, all the contractor would be required to do is show that the employee charged all his/her time to the contract and got paid his/her normal salary for that period.

See my post of yesterday at 1:23. You only have to do an adjustment if the employee works on more than one contract. No adjustment is necessary if the employee works on only one contract and works the minimum number of hours for a full pay period.

Why are you concerned with an hourly rate when we are talking about salaried employees who are working on only one contract? Is this a contract requirement? Normally, hourly rates are the basis upon which effort by wage employees is billed.