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  1. See DCAA Contract Audit Manual Chapter 6-802.1 which states the following: "Flexibly priced contracts include all cost-type, fixed-price-incentive, and fixed-price-redeterminable contracts, orders issued under indefinite delivery contracts where final payment is based on actual costs incurred, and portions of time-and-material and labor-hour contracts."
  2. The "Information for Contractors" link on DCAA's public website may contain useful information to you. http://www.dcaa.mil/DCAAP_7641.90.pdf
  3. Can someone please be kind enough to offer their opinion on what this sentence means? "affiliates of the contractor under a common control" (FAR 31.205-26(e)). Would either of the two joint venture partners be considered affiliates of the contractor under a common control? Thanks,
  4. I probably didn't describe that well enough. The JV has no employee's of its own. The joint venturer (Company X) has employees that do the joint venture's accounting, billings, and subcontract management (all indirect expenses). These expenses are tracked by Company X and invoiced to the Joint Venture. So they are indirect expenses. Not subcontract expenses incurred in performing on the contract.
  5. Hello. I did consider those services to be covered by FAR 31.205-26 ( e ) since they are services (G&A) transfered from Contractor X and Contractor Y to the Joint Venture (which is made up of Contractor X and Contractor Y). Was I wrong in this assumption? For example, the JV issues a letter subcontract to Contractor X for Contractor X to provide G&A services to the JV. The G&A services include a 5.9% fixed fee. The letter subcontract was signed by John Smith, who is the Financial Officer of the Joint Venture, and Jane Doe, SR. VP. of Contractor X. John Smith is also a VP of Contractor X (as well as being the financial officer of the JV). Hope this wasn't too confusing. Thanks,
  6. Hello All, I have searched this topic on the forum and have found lots of useful information/threads on the topic. However, I would still like to get other's input who are more knowledgeable on the topic. FAR 31.205-26(e) states the following: "Allowance for all materials, supplies and services that are sold or transferred between any divisions, subdivisions, subsidiaries, or affiliates of the contractor under a common control shall be on the basis of cost incurred in accordance with this subpart...." DCAA CAM Chapter 7.1810.1 ( b ), FAR Compliance, states the following: "Material/Service Costs and Venture Control. When one of the venture participants exercises majority control over the joint venture, FAR 31.205-26(e) specifically provides that the transfer of material costs or service costs from any of that company's segments to the joint venture should be on the basis of cost incurred, unless competitive or catalog prices are involved. In the event that the venture members appear to be equal participants, the provisions of FAR 31.205-26(e) still apply, if the auditor can determine that one of the members actually exercises predominant control over the venture. To help make this determination the auditor should look at the venture agreements to ascertain if any member has significant risk or underwriting responsibility in disproportion to the others." May I kindly request other forum user's input on the following scenario? A Joint Venture is formed between Contractor X and Contractor Y. The joint venture subcontracts out all the contract effort to Contractor X, Contractor Y, and numerous other subcontractors. The Joint Venture incurrs no direct or indirect costs of its own. The Joint Venture only has one indirect pool (G&A) which includes only costs invoiced up from Contractor X and Contractor Y for subcontract management costs. On paper (the JV agreement) it appears that both venturers are equal participats (e.g., equal votes on the board, etc.). However, in actuality it appears that Contractor Y excercises more control over the JV (e.g., the JV program office is at Contractor Y's location, Contractor Y is responsible for the JV's accounting and billings, the JV program and financial manager are Contractor Y employees, etc.) (1) Is it allowable for Contractor X to place fee on its subcontract costs billed to the Joint Venture (assuming the JV in turns adds the contractual fee rate to the subcontract costs before billing the costs to the Gov't)? Is it allowable for Contractor Y to place fee on its subcontract costs billed to the JV (assuming the JV in turns adds the contractual fee rate to the subcontract costs before billing the costs to the Gov't)? (2) The G&A services billed up to the JV by Contractor X and Contractor Y include fee on the G&A services. For example, Contractor X bills $1,000 in G&A services (Subcontract management) costs up to the Joint Venture plus a 5% fee on the G&A services. The JV places the entire $1,050 in its G&A pool which is applied to the direct subcontract costs. Is the fee on the G&A services an allowable expense? (3) If Contractor X and Contractor Y appear to be equal participants and we cannot determine with certainty that one of the contractors excercies predominant control over the JV, does that make FAR 31.205-26(e) not applicable? I appreciate any input the readers may offer and I apologize for the lengthyness of this post. Thanks.