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Heretalearn

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Everything posted by Heretalearn

  1. There goes the evening. (Just kidding - keeping G&A low for midsize contractors and a cavalier attitued toward regulation in some quarters means not many resources for quality training programs. So the insights, alternate perspectives, challenges and recommended reading from members are challenging and invaluable.)
  2. It was Mr. Edwards' "Government Shutdown" topic resources, and some of his observations under the "Availability of Funds" thread that triggered my questions about the propriety of the option exercise and the validity of funding obligations, and their impact, if any, on a contractor's obligations. The "funding gap" I mentioned in Post #7 referred to the unfunded period between the option exercise (October 1) and the time funding was obligated retroactively (October 18). As I understand it, if the government doesn't notify one that funds have been made available for the contract option by its start date, then there is no contract, and the contractor is not obligated to continue to perform. My first question was meant to elecit thoughts on whether trying to use the "expired contract" premise as a reason to exit the contract now, given that we worked after October 1, would be feasible. Seemed unlikely (kind of like trying to unring a bell) but you never know. The article cited in Post #7 states that, ["The problems with CRs - as to both the contracting process and agency operations - begin with the language which funds continuing operations at the rate of expenditure of the preceding fiscal year. Right on the face of this language, and even without further limitations and caveats, it can be seen that the use of the term "rate" will substantially limit expenditures which might otherwise have increased with the availability of the new funds. Moreover, because the entirely of a CR funding applies only until the CR's end date (in the case of the current CR, March 4, 2011), the funds would be automatically insufficient to enable any contract funtion that is predicated on more than the months actually covered by the 'rate' and the months."] I take this to mean, in part, that CRs that expire December 3 can't fund services from December 4 through September 30. Possibly you disagree with the article's conclusion or my interpretation of it. The sense I have from most of the responses it that once the period is funded, the provenance of the funding is moot. Is that right?
  3. Not directly, though Post #2 seems to indicate that a fully funded option isn't impacted by any government shutdown.
  4. The CO obligated funds covering the entire option period.
  5. This is the remaining contract of a failed business line, and we're more concerned about the potential for future default than we are about losing some money. I've considered that we could be required to refund revenue paid from improperly obligated funds, and I believe we'd be willing to do so. I'd rather not have to explain to my company the irony of having to pay back revenue and still being obligated for future performance. Right now I'm trying to read my way through finding out whether the funds were appropriated funds and whether they came from an expired CR. Then I'm going to try to answer the questions, "so what".
  6. My option, which commenced 10/01/10, was exercised on 10/01/10 without funding and subject to availability of FY11 funds IAW 52.232-18. On 10/18/10 the CO obligated funds for the contract/fiscal year (10/01/10-09/30/11), and incorporated a price increase for an SCA wage adjustment - presumably from its P.L. 111-242 CR apportionment or allocation, which expired after 12/03/10. We continued to perform services during the funding gap. From reading materials provided by Mr. Edwards under a different topic ("Government Shutdown"), I understand that, "...the entirety of (CR) funding applies only until the CR's end date..." [Government Contract Funding Under Continuing Resolutions, Schweiter & Fenster, IIA, citing, inter alia, 31 USC 1512(a)]. 1. Have I described an "illegal" option exercise - and, if so, could the improper exercise be useful in extricating my company from the contract given that we continued rendering services during the funding gap? 2. Is the use of a CR appropriation which expired after 12/03/10 to fund a price increase and services after that date, a violation of the Anti-Deficiency Act - and, if so, could this violation be useful in extricating my company from the contract? 3. If it appears we have reasonable grounds to attempt to get ourselves off the hook on this contract, we'll refer it to an experienced federal contract attorney. In your judgement should we take any interim action, particularly if, in your opinion, my company is technically working without legal funding? As always, thank you for your observations.
  7. Absorbing reading; thank you for taking the time to research and share these resources.
  8. Thanks, we've done this, and suggested a more efficient and cost-effective way for the service to be performed by another incumbent contractor. The price (our price) is below the SAT, so we're hoping the confluence of budget cuts, relative administrative ease and our proposal will carry the day. On the other hand, we're not talking about a lot of budget money, the services are funded through September, and keeping the status quo means no administrative complication. So we'll see.
  9. Thank you. (For this particular contract we wish the Government would terminate for convenience, but it seems unlikely even given budget constraints. I was rather hoping a shutdown might present an "out".) I hadn't considered that a shutdown might affect our ability to perform - all of our Government work is at Government facilities. I think I'd better think this through and contact our COs, COTRs and PMs and make sure everyone's on the same page.
  10. I have a fixed-price service contract that is funded through 09/30/11, the current option expiration. I don't believe the funding status will be impacted at all by failure of the legislature to pass either appropriations or a CR after March 4, other than inability to get a voucher processed during any government "shutdown" period - but please correct me if I'm in error. Is my position the same if there's a failure to raise the debt ceiling (i.e., my funding is my funding is my funding), or are all bets off in that circumstance?
  11. Even those of us who aren't within shouting distance of you guys' league know better than to accept his posts untested.
  12. Sent email early this morning, along lines discussed. Received additional incremental funding within a few hours. Begs a few questions, but we're happy to just take the money & run (or I guess I mean take the money and stay put).
  13. Careless use of the word "advice". Anyway, I have a better handle on the ramifications of walking away from the business and how to best handle doing so, thank you.
  14. I apologize. Once again, I'm afraid I haven't made myself perfectly clear. For what it's worth, the CO exercised the final option in August with 1 month of incremental funding, and has been incrementally funding it a month or more in arrears since then. 1. Does having that belated information change your advice? 2. 31 U.S.C. 1341 and 1342 set forth what the CO may not authorize or accept, but they're not much practical use to a contractor. Presumably the contract hasn't expired, but I should send the email described in your Paragraph 3 above, sans the bit about not being bound by the terms of the contract during the remaining performance. Is that right? Although I obviously won't make the final decision regarding cessation, I believe the company will follow this guidance, and I'm in the process of drafting an email.
  15. The posts by heretalearn indicated to me some confusion on those concepts. My confusion was actually about the question being asked. Until some of the later posts I though the discussion was about charging the client, not charging the time. Sorry. I'll sit back and absorb more before trying to stick my two cents in again. Mr. Edwards' last post is, as always, as lucid, logical and I'm sure accurate a description as can be had.
  16. Many thanks for your observations. I apologize that I wasn't clear. I wasn't suggesting that our clients wouldn't be charged directly for salaried direct labor hours, but rather that since the burdened annual salary, though spread across a finite quantity of annual hours, doesn't increase even if the hours worked increase (the nature of "salary" as opposed to "wages"), increased hours don't result in increased cost. I also didn't mean to imply that this is the best or the only way to handle "additional" hours worked by salaried employees. Generally speaking, in our accounting system administrative support costs which are allocated to one specified contract only are overhead expenses. Support costs which share multiple costs objectives are G&A expenses. I'm not intimately familiar with our disclosure statement, but I think our G&A expense is always an indirect cost whereas OH is sometimes charged directly, depending on contract requirements. I suppose that how another company would address these costs would depend on their disclosure statements. Anyway, my probably oblique point, right or wrong, was that if it is a salaried employee who expends "unprogrammed" time fulfilling a client's request, it's possible that the contractor's cost of performance isn't necessarily increased commensurately, and nobody has to "eat" the cost.
  17. My company is in the final option of a GSA Multiple Award Schedule fixed price service task order, which option was exercised subject to definitization of a 52-222-43 price adjustment proposal for wage increases. The task order as written contains FAR 52.232-18 Availability of Funds "Applicable to Options". The final option was exercised "Subject to Availability of FY 11 funds and is subject to the provision under FAR 52.232-19 Availability of funds for the next Fiscal Year". We have occasionally worked "at risk" - rendered unfunded services - for a few days at a time - while an agency processes their Purchase Requisition for funding allocations based on last minute Continuing Resolutions. Doing so is somewhat hair-raising, but is assumed as a calculated risk, our understanding of the risk being that if funds are not ultimately made available to the KO, we have donated the unfunded services. Our service is an essential service and our experience is that KOs try to move mountains to avoid ANY period of unfunded services, and PRs for our contracts have historically been processed and the contracts modified within days of passage of a CR. We have been providing unfunded services under the subject task order for a month. (This has become a chronic situation during this option period; the KO has encouraged us to render invoices for unfunded services, and then resubmit them after they're returned for lack of funding; the incremental funding has been being obligated after the initial invoice rejection). The KO and specialist avoid my status calls for the most part and when I catch them, merely tell me they don't have funding from the CR yet. (The last CR was signed in early December.) I've been told that for present my price adjustment proposal is not being entertained. I've read that the Republican Congressional leadership has been considering retroactive budget cuts. I'm afraid this is way too much context for my questions, which are: Have I misunderstood our position in terms of financial risk? If it comes to it, MAY I cease rendering services? How would such a thing be implemented in terms of notifying the government? If I do cease rendering services, will I ever get another government contract? I would appreciate any insight and guidance.
  18. In my company anyone working at the PM level, or any level that allows them to estimate pricing, is salaried, and time spent pricing additional or modified in-scope performance doesn't add to contract cost. If the undertaking is complex enough to require back office pricing support or review, that support is built into the G&A rate.
  19. If the contractor escalated wages in the outyears in violation of its 52-222.43 warranty, I think it may be vulnerable to False Claims allegations, to the extent that the escalation exceeds any price adjustment (thank you, I didn't know there was a distinction) entitlement, and was invoiced. I think both premises may be true: that the contractor is entitled to price adjustment for the WD (& allowable related costs) differential, and the government is entitled to recovery of the escalation differential invoiced. Calculating the difference might be the most pragmatic way to settle things.
  20. If the contractor's proposal escalated SCA wages for the outyears in contravention of 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" - I wouldn't think the contractor is entitled to equitable adjustment (the wage was adjusted through the escalation) - except to the extent that the delta between the precedent WD (assuming that is the wage that was actually paid) and the subsequent WD (same assumption) exceeds the escalation. No adjustment is available for voluntary wage payments exceeding the WD minimums. It's possible that the escalation exceeded the equitable adjustment entitlement and the contractor was overpaid. If there is a remaining equitable adjustment entitlement, why wouldn't one construe the FARs and CFR literally? Since there was no Government notification regarding increase/decrease 30 days has not elapsed since notification and no time period has tolled. Similarly, no DOL decision of wage violation was issued - again 30 days has not elapsed since decision and no time period has tolled. In my experience a revised WD and request for an REA proposal ordinarily arrive with a 52.217-9 "Notice of Intent". One occasionally sees a non-FAR provision governing notification re wage increase/decrease in Section H of the uniform contract format.
  21. What is it about M&O contracts that would allow DOE to fiat freezes that are not circumvented by the SCA or a signed, priced contract with management/professional salaries escalated for outyears? Just strong-arm renegotiations or something?
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