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Posts posted by ji20874

  1. Retreaded,

    Not necessarily.  The contracting officer can disallow the costs without making an immediate demand for re-payment (the contracting officer might want to offset future payments). The contracting officer’s decision to disallow the costs could easily be the basis for a dispute as a matter in interpretation of contract terms.

  2. On 1/25/2019 at 6:03 PM, sprice11 said:

    Well, the PNM must show, as required by FAR 15.406-3 - Documenting the Negotiation "(11) Documentation of fair and reasonable pricing."  -  This is what I am getting at.  We, as a contractor, have no say on this documentation.  The fact they let the contract shows it to be fair and reasonable.


    That's right -- and that's why you don't need the text of the government's PNM to demonstrate that the contract's estimated cost is fair and reasonable.  The contract's bottom-line estimated cost was found fair and reasonable at the time of contract formation.

    Now, during contract administration, all of that is irrelevant -- now, during contract administration, you must justify to the contracting officer's satisfaction each incurred cost for which you are seeking reimbursement in that particular voucher (or invoice).

    Generally, an incurred cost is determined reasonable AFTER the cost is incurred.  The exception is if the parties have a pre-contract cost an advance agreement (FAR 31.109) -- but it seems you don't have one, so you have to justify the reasonableness of each incurred cost with the voucher where the reimbursement is claimed, amenable to the allowable cost and payment clause of your contract.

    You err by conflating (1) the bottom-line estimated cost agreed to at the time of contract formation and (2) incurred costs for which reimbursement is sought during contract administration.  You err in suggesting that the contracting officer, before awarding the contract, already found your [incurred] costs to be reasonable [for reimburement] -- that is impossible, as there were no incurred costs at that time, and generally, incurred costs are determined reasonable after they are incurred.  

    Your responsibility now (during contract administration) is to justify the incurred costs included in your most recent voucher for which you are seeking reimbursement.  The Government's PNM is irrelevant.  Follow the allowable cost and payment clause of your contract.  If you are unable or unwilling to do so, the costs must be disallowed.  Pointing to the PNM is irrelevant to the question of cost allowability for reimbursement.

    For your next cost-reimbursement contract, maybe you should consider a pre-contract cost an advance agreement.  It is discussed in the FAR and would cover your situation.

  3. On 1/25/2019 at 9:49 AM, Retreadfed said:

    ji, in my experience, specific areas of cost, such as labor rates, are negotiated prior to the award of a contract.  As a result, the PNM addresses those costs and explains why they were determined to be reasonable and accepted.  If those same labor rates are used in contract performance, the PNM is evidence of the reasonableness of those labor rates. 

    If specific areas of cost are mutually agreed to before award of the contract, those agreements should be captured in the contract or in a bilateral advance agreement (FAR 31.109) — not in a unilateral PNM.  If the parties talked about specific areas and then did not formalize anything, then there is no agreement.  Remember, a PNM only records one party’s side to a negotiation.

    One could say they discussed specific areas solely for understanding and to come to agreement on the overall estimated cost for the contract.

    Besides, the contractor should have its own PNM with its own objectives and understandings of the give-and-take and final negotiated result.

    I wholly object to releasing PNMs to contractors.

    if the contractor wants an advance agreement covering treatment of certain costs, it should insist on one.

  4. Well, then, ask for the PNM under FOIA.

    Let us know if you do or do not get it.

    But you might be barking up the wrong tree.  You must not conflate the overall estimated cost (or price) of the contract (which is found reasonable at the time of contract formation) and the incurred costs for any individual parts or pieces of the contract (which are found allowable during contract performance).  That the contracting officer found the overall estimated cost to be reasonable (explained in the PNM) does not mean that any or all incurred costs are allowable for reimbursement during contract performance.  So to me, any incurred cost may most certainly be challenged during contract administration, and the PNM is irrelevant to that challenge of proving allowability.  The burden is on the contractor to prove the allowability (incl. reasonableness) of any and all incurred costs during contract administration (absent any pre-contract cost advance agreement (FAR 31.109)).

    On 1/24/2019 at 9:29 PM, sprice11 said:

    DCAA is the one questioning fair and reasonableness of negotiated costs.


    Really?  Is DCAA questioning the established estimated cost of the contract, or is DCAA actually questioning incurred costs?  I suspect it is the latter.

  5. Pepe, 

    Vern addressed the issue of a late option exercise back in 2013--

    "I could not find any GAO or Court of Federal Claims protest decision that addresses this issue. So why not go ahead and bilaterally extend the contract through May 6 of next year, as originally intended, document the file to explain what happened and why you decided to extend the contract through bilateral modification, and wait to see what, if anything, happens? That's what I would do. If I got a protest, how I would handle it would depend upon the protester's argument.

    Wouldn't that be better than letting yourself be frozen into inaction by speculation about how a protest might be decided?"


  6. I don't think an imperfect (such as merely late because of a funding lapse) option exercise is a violation of CICA.

    Some posters here insist that it is, and raise the CICA protest boogeyman cry.  They have not persuaded me (and a few others also remain unpersuaded).  I believe that the GAO and COFC would also not be persuaded.  If there was such a protest, the agency or the interventor (the contractor who accepted the option) could make a very strong case and would likely prevail, in my opinion.

    For those raising the CICA protest boogeyman cry, please be prepared to order your still-working contractors (whose contract periods ended during the shutdown) off the premises and to stop the work because the contracts are dead IMMEDIATELY when you return to work, even though the contracts may be important for agency mission success, because you have concluded that you have no authority to allow them to continue work while you draft and route your J&As to award sole-source replacement contracts.  In a few weeks, after your J&A processes are complete, you can allow them to return to work so that your agency can again meet its mission.

  7. Lionel's case law citation may be inapt.  Instead, the citation actually seems to support the doctrine of waiver and the notion that the contractor may waive the informality or defect of an imperfect (or late) option exercise, but in doing so cannot demand an adjustment in terms -- indeed, the court ruled that the imperfect option exercise, once accepted by the contractor, is fully enforceable.  If the option exercise was invalid ab initio, the court would have said so and the decision would have been different.

    All the talk about CICA only applies if the option exercise changes terms, such as by increasing price, quantity, or scope.  If terms and scope are unchanged, then CICA is not implicated.  A simple late option exercise caused by a funding lapse need not implicate CICA.

    We need to be practical, reasonable, and realistic -- funding lapses have occurred more or less regularly for many, many years, and for many of those circumstances, contracting officers exercised options late with effective dates back to the start of the funding lapse.  If the agency and contractor are happy (and there is no change in terms or scope), then no one else matters.  I disagree with Lionel's certainty that the GAO will uphold a third-party protest in such a case.

    A contracting officer who exercises an option as we are discussing acts honorably and within the law, provided he or she does what the FAR and agency regulations require for an option exercise.  Of course, the contracting officer may be the least important and most irrelevant person on the Government side.  If the contracting officer's managers, reviewers, attorneys, finance officials, or others object to the option exercise, then the contracting officer will never issue the option exercise -- those persons and organizations are free to be afraid of the imaginary boogeyman.  A contracting officer must follow his or her agency's rules, whether reasonable or not.

  8. Desparado,

    If your agency superiors want those contracts to die, then you let them die.  

    Or, if they want to act prudently and in the agency’s best interests with regard to those contracts, they can choose the path that I and Don recommended for your and the original poster’s consideration.  

    It’s a choice.

  9. This is a common occurrence.  How many times has it happened over history where option exercise funds were not available on Oct. 1, and yet the contractor continued working at its own risk for a few days and the option exercise (when it happened) was made with an effective date back to Oct. 1?  This is not new.  Matters like this are best handled without fanfare, with a focus on practicality rather than ivory tower sophistries.

  10. Jamaal,

    You mustn't mischaracterize what I said.

    Do you have any good advice for the original poster?  I suppose the original poster is trying to do what is good for his or her agency by keeping a needed contractor's services.  Please offer some constructive help.  It's okay with me if your advice differs from mine -- the more people that try to be helpful, the better.

  11. 6 hours ago, Jo Brown said:

    I hadn't thought about the "consideration" part.  This is a 10 year contract and we are at the 5th year where the caps come into play from year 5 on out.   We would like to be able to ask them to remove the caps so we can adjust them accordingly due to inflation, etc.,  I don't know what consideration we could offer, most the clins are FFP. 

    It sounds to me like you bargained for and got a 10-year contract -- as part of that bargain, you agreed to rate caps starting in the 5th year -- now that you have the contract, you no longer want to honor your agreement?  You want to renege on your promises?  Look at here_2_help's question:  Why is it in the Government's interest to remove the rate caps?

    On a FFP CLIN, an example of consideration would be reducing the unit price by 40% -- just an example.

    • "Regarding the purchasing system, what should an offeror submit if the offeror meets the threshold for a purchasing system review but for who a review has not been conducted yet?"
    • "How will you evaluate an offeror who meets the threshold for a purchasing system review but for whom a review has not been conducted yet?"
    • "Will an offeror who meets the threshold for a purchasing system review but for whom a review has not been conducted yet be deemed ineligible for award?  Will such an offeror be unfavorably rated in the evaluation?"

    Don't be wishy-washy in your questions.  Ask direct questions that will force the Government staff to consider your situation, and hopefully you'll get a direct answer.

    You don't have to wait until the last minute to submit questions -- the earlier you submit them, the more time the Government will have to deal with them.

    By the way, it does not appear to me in the solicitation text you quoted that the Government REQUIRES substantiation of a purchasing system review from on offeror who meets the threshold for a review -- the solicitation asks for it (if it exists), but apparently there is no indicator that an inability to submit the substantiation will make your offer unacceptable.  You really should ask the question -- ask all three.

  12. On 1/8/2019 at 1:24 PM, Joe2713 said:

    Can a contracting activity accept information/responses from a prospective contractor after the close date of a Request for Information or Sources Sought Notice? I can't find a reference in the FAR  for this. Thank you


    I hope you have concluded that YES, a contracting activity may accept information/responses from a prospective contractor after the close date of a Request for Information or Sources Sought Notice.


    7 hours ago, Lukevan said:

    We're leaning toward submitting the outside opinion letter (with our proposal) and the information that we've never been reviewed by the Government (which should be their burden), and arguing in the proposal that 52.244-2 doesn't require an approved system it just sets out the process depending on whether a company does or does not have the approved system (if we do it this way, do you think we've lost our ability to protest later on this basis?).  


    If the solicitation REQUIRES that an approved purchasing system be substantiated in your offer, and if you feel this is unfair, you should raise your objection (protest) before the date and time set for receipt of offers.  If you follow your recommended course and the Government later rejects your offer as unacceptable for this reason, your protest after the date and time set for receipt of offers likely will be dismissed as untimely.  Does the solicitation actually REQUIRE approved purchasing system, or just favor one?

    7 hours ago, Lukevan said:

    We could ask them during the Question/Answer phase to eliminate this requirement (or clarify that having an approved system is not a requirement for award), but that approach runs the risk that they'll respond with the answer that it is a requirement and then we'll have no chance unless we protest prior to the solicitation due date. 


    Your protest after the date and time set for receipt of offers likely will be dismissed as untimely.  If the solicitation REQUIRES an approved purchasing system, you should raise your objection (protest) before the date and time set for receipt of offers. 

    Ask the question and get an answer.  Do it!  If you don't like the answer, file a protest before the date and time set for receipt of offers.  

    The case referenced by another poster doesn't fit (if I understand correctly, which is that your solicitation REQUIRES  an approved purchasing system be substantiated in the offer) -- the referenced case did not REQUIRE an approved purchasing system be substantiated in the offer, but only the ability to obtain one -- it allowed for system submission and approval after award.

  14. 5 hours ago, Retreadfed said:

    That is if the contracting officer is competent and knows how to write a final decision.  However, that is not always the case and the final decision may be essentially nothing more than a statement that I have read your claim and deny it.

    That's still progress -- the denial can be appealed to a board of contract appeals.  The absence of any substantive reasoning will work in the contractor's favor in the appeal.

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