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I have an issue with a recently awarded contract where my CO has established a CLIN structure which does not differentiate between fee bearing and non-fee bearing costs. In other words, my labor is performed on a CPFF basis while my material/travel/ODCs are on a Cost Reimbursable basis. Unfortunately, my contract simply plops the money on a single CLIN and then in the descroption field delineates the breakdown between labor & non-labor. My finance dept is telling me that this setup creates a major problem from an accounting perspective and our billing system can't accumumlate costs properly because we would be combining labor and non-labor costs together. We have proposed the following: CLIN 0005 - Labor (CPFF) CLIN 0006 - Mat'l (Cost) CLIN 0007 - Travel (Cost) CLIN 0008 - ODC (Cost) OR CLIN 0005 - Labor (CPFF) CLIN 0006 - Non-Labor (Cost) To date, my PCO has not been receptive to make any changes to the current CLIN Structure and segregating CR and CPFF dollars. Has anyone encountered this problem before and what was the outcome? As always, thanks!

After further consideration, our company has decided to pay the $500 and move on. Thanks again for everyone's comments.

Yes, I am fully aware of that. Thanks for the input, H2H.

Thanks everybody for their input regarding this topic. Yes, Velhammer, this is the same CO that I have posted other topics about. He is quite a handful. I, too, would love to hear/read Vern's proposed response regarding this matter. Just more background regarding this subject. The mod (that the USG wants us to pay for) is related to identified labor costs which are associated with contractor personnel who were (previously) charged in T&M labor categories that they did not qualify for. As a result of DCAA findings, the Gov't questioned non-conforming labor costs and requested a credit from us (the contractor). We did an analysis and was able to demonstrate that if we were to re-classify personnel (downward) the reduction in cost was much less. Based on my phone call with the CO on Friday, he believes that the contractor's actions (of billing unqualified personnel) warrants an additional (penalty) fee since the Gov't must now complete a mod de-obligating the residual funds due to the re-classification. I like Velhammer's point about asking the CO under what authority can a CO require the contractor pay the Gov't for their administrative costs. I have discussed with my mgmt and they do not want to pay the $500 and we're preparing a letter stating such. Thanks!

I encountered a unique situation today when my CO sent me a letter asking that I (the contractor) pay the Gov't $500 to cover the "administrative costs for modification processing". The background of this request was due to the contractor processing a credit voucher which resulted in residual funds being on contract which now need to be de-obligated. I spoke with the CO after receiving the letter and he stated that the costs associated with processing a mod are actually much higher, implying that I was getting a bargain and I should just pay the $500. Th CO went on to say that if the Contractor's actions caused the Gov't to incur costs (which wouldn't have been incurred if it weren't for us) that the Gov't is entitled to reimbursement of those expenses. This is new to me and I'm wondering if their is a basis for this claim against us. Has anyone encountered this before and should my company be pushing back or should we just pay it? Thanks!

Thanks everyone for providing their input on this topic. I discussed with our Contracting Office (specifically the Reviewing Official) and she agreed that the Assessing Official mistakenly included a rating for Cost Control since this contract was done on an FFP basis. We asked for a change/removal of the SAT rating and the Reviewing Official is proceeding in that manner. FYI, our subcontract was FFP and the Gov't became aware of the overrun based on discussions during one of our Program Reviews. The Gov't rep recalled that and basically thought they should rate us as SAT. Thanks again!!!

Navy_Contracting_4, that's a very fair point and I will bring it up to my Sourcing dept. Thanks!

It's unclear (to me) why the SubK overran.

I recently received a CPAR on a FFP contract with a Satisfactory rating for Cost Control citing that the prime's (sub)contractor did exceed their funded levels but the prime contractor did not seek reimbursement of the additional expenditures. We (the prime) billed the entire FFP amount, so how can the Gov't ding us for overrunning the contract price, but not charging the Gov't? Shouldn't I be entitled to a rating better than "Satisfactory"?

Nothing.

As an answer to your question, the staffing agency is for the sole purpose of the contract we have with the Gov't. So in that case, they are a "subcontractor". In addition to FAR 52.244-2, my contract stipulates that subcontracts within the simplified acquisition threshold do not require prior written consent from the CO. How can the CO object to the addition of a subcontractor of such a small value?

My contract does contain 52.244-2.

My CO became aware that my company was utilizing a staffing agency for the filling of vacant positions on a temporary basis until our company could hire a permanent employee. My CO objected to this approach and stated that the use of a staffing agency "was not within the scope" and he intended to disallow any costs associated with the staffing agency because we did not obtain his consent when adding them to the contract. I don't agree the CO's determination that this is unallowable. However, I need some help here in pleading my case. The costs of the "temp-to-perm" is not very high (~$75K) so I was going to cite (in my response) that it's below the simplified acquisition threshold and therefore we do not need the CO's written consent to subcontract to this staffing agency. Does this sound like a good approach to take with my CO? Thanks!

My CO issued a Stop Work Order on a FFP (services-oriented) contract for a period of about 2 months. When they lifted the Stop Work, the USG approached us regarding a downward adjustment for the "missed" time providing support to the customer since we were under the stop work. Can the USG do that? We encountered additional costs as a result of the Stop Work so we thought if anything there would be an UPWARD adjustment, not downward.

My Contracting Office is notorious for inadequately funding my fixed fee pools on my CPFF (Completion Form) contracts. Currently, I have several which have recently ended or are coming to an end and my fee pool is nowhere near fully funded. I send letters/emails, make phone calls to my CO and I am consistently told the "funds are coming" or "the customer has no additional funds presently available." How do I avoid this problem from continuing to occur? What avenues do I have which will lead to the Gov't getting the majority (if not all) of my fixed fee funds up front? Thanks!

I was reviewing the POs that my firm executes with our subcontractors on a Cost-Plus Fixed Fee basis and I became concern that our Sourcing dept is not specifying the fixed fee we negotiated with our SubK and the vendor is simplying invoicing (and we're paying) a fee % of their invoiced cost. With no mention of a fixed fee amount or NTE amount for fee anywhere on the PO, has my company inadvetrantly slipped into a CPPC arrangement? If so, will a simple admin mod to the PO clearly identifying the fixed fee amount, rectify the problem? Thanks!

The Basic Contract includes the older version of the payments clause. Not Feb 2007. That supports my position that SubKs can be included as an ODC, no?

I appreciate the quick response! Thanks very much!

I have a Time & Material IDIQ Contract with a list of specified "teammates" with rate tables (for each company) incorporated at the prime contract level. Within this IDIQ, we have task orders where we have needed to utilize a new subcontractor who did not have rates on contract so we were told by the Contracting Officer (at that time) to simply propose these subcontract costs under our ODC section of our cost proposal. Those proposals were evaluated and ultimately approved by the USG. Several years later, we have a new Contracting Officer who is questioning the allowability of Subcontractors as an Other Direct Cost. During my conversation with the (new) Contracting Officer, I mentioned that his predecessors have condoned this practice and actually were the ones who recommended that we handle subcontractors in this manner. A couple of questions: Is anyone else familiar with Subcontractors being treated as a non-labor expense under ODCs? Can the Contracting Officer simply undo what a prior CO allowed/authorized in the past? Thanks!

In a CPFF arrangement, my organization has always viewed both cost and fee invoiced by our subcontractors as a cost to us (the prime) therefore we do not segregate a subcontractor's cost and fee in our billings to the customer. The fixed fee stipulated in our prime contract is the fee that is payable to us only. Does this approach seem correct and consistent with how other firms handle CPFF Subcontracts? This topic came up in conversation with one of our customers and they objected to this concept, stating a contractor was not allowed to apply fee on fee. I checked our prime contract and I could not find any language that supported our customer's position. How do I know if I'm on solid footing here? Thanks!

I think the PWS lends itself to the Completion form and that is our preference. Appreciate the feedback! I'm new to the forum and I am already hooked on it and learning from such experienced professionals. Thanks again!

Vern, Thanks for the response. I've been an admirer of your work for some time now. Yes, my contract does include 52.216-8 however the contract does not mention payment of fee. In that case, I will contact my CO and request he write that into the contract to clear up any remaining uncertainty on my company's end. Also, this CPFF contract does not specify whether it is Term or Completion. The contract does not specify a level-of-effort so my initial thought was that it was intended to be Completion. But then I was reminded that our cost proposal was incorporated into the contract and that does include a level-of-effort and the Gov't may be planning on holding us to performance of our proposed LOE (which is highly unlikely to occur because we rarely perform exactly to how we proposed). Is this another conversation that I need to have with my CO or is the Completion form assumed if Term is not referenced? Thanks again!

My company has recently begun to do work on a CPFF basis and my contracts are not specifying the payment schedule for our fixed fee pool. When I discussed this topic with my colleagues, I was told fee should be invoiced/paid based on a percentage of costs incurred. This method did not seem right to me as it sounded an awful lot like a CPPC arrangement which I know is illegal. I am looking for some guidance on how fee should be setup from a billing/payment perspective. Thanks!