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Whynot

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Everything posted by Whynot

  1. I would be interested to know how your finance people are handling this situation. When the government finally deploys the equipment and the item at that time is found to be defective and/or not working (dead on arrival) will you 1) insist that the Government work through the warranty process to repair the item or will you 2) replace the item with a working one outside of the warranty process – perhaps take a new one from the depot that is not yet scheduled for deployment and put the defective unit back in the depot and have it repaired in the depot before it needs to be later deployed. Would this violate a prohibition of providing only new equipment? Are your finance people recognizing revenue upon delivery to the depot or are they setting up some kind of reserve for DOAs?
  2. Can an agency move right to a termination for default without first issuing a show cause or other opportunity to correct?
  3. I found this receent report from the DoD IG: http://www.dodig.mil/pubs/documents/DODIG-2013-063.pdf
  4. Your FAR reference is limited to the policy and procedures for performance-based payments under noncommercial purchases. See FAR Subpart 32.10 -- Performance-Based Payments. Conversely, under Subpart 32.2 -- Commercial Item Purchase Financing, the policies and procedures for commercial financing arrangements under commercial purchases are provided. There is no such limitation on payments. Contracts may provide for commercial advance and commercial interim payments based upon a wide variety of bases, including (but not limited to) achievement or occurrence of specified events, the passage of time, or specified times prior to the delivery date(s). The basis for payment must be objectively determinable.
  5. Hypothetically, if during the performance of a cost reimbursable contract, a prime contractor utilizes attorneys and charges the customer for their time, assume it is within scope, allowable and not part of termination or legal proceeding with the customer, and the attorney provides some attorney-client-privilege material to the prime contractor, does the customer because they have paid for the attorney’s time have access to this material or does the attorney-client-privilege remain intact. It is hypothetical make any assumptions you want that may impact your response.
  6. How do you derive "spending income" or "disposable income" to apply the differential?
  7. I would stay away from Contract Financing and look to getting permission to make monthly Progress Payments. Progress Payments are much more routine.
  8. Also, what exactly is unallowable, the direct and indirect expenses associated with procuring and delivering the item or the cost of the actual item itself? I would assume if the item is accepted and being used by the prime or customer then it might be allowable.
  9. I don’t know what side of this situation your client is on – prime or sub; but for a sub that did not perform an actual competition, perhaps they could still support their purchasing decision by comparing the price against prices based on adequate price competition. The comparison prices based on adequate price competition do not need to have been obtained through an actual solicitation/competition performed by the sub. The sub could rely on past solicitations/competitions either performed by themselves or others.
  10. With or without adopting the Christian Doctrine, the implications for the subcontractor appear to the same regardless.
  11. Am I reading this case correctly? https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2009cv1210-26 It is on Bob's blog. The hospitals have not provided any cogent reason why the government may impose terms on government contracts by operation of law but not on government subcontracts. They offer no persuasive explanation of why the same constructive knowledge of federal procurement regulations should not also be imputed to subcontractors who undertake to provide services that support a government contract.
  12. I know this horse has been beaten severely and appears dead, but in looking at some Davis Bacon requirements I came across this: 29 C.F.R. PART 4—LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS § 4.145 Extended term contracts. Sometimes service contracts are entered into for an extended term exceeding one year; however, their continuation in effect is subject to the appropriation by Congress of funds for each new fiscal year. In such event, for purposes of this Act, a contract shall be deemed entered into upon the contract anniversary date which occurs in each new fiscal year during which the terms of the original contract are made effective by an appropriation for that purpose. In other cases a service contract, entered into for a specified term by a Government agency, may contain a provision such as an option clause under which the agency may unilaterally extend the contract for a period of the same length or other stipulated period. Since the exercise of the option results in the rendition of services for a new or different period not included in the term for which the contractor is obligated to furnish services or for which the Government is obligated to pay under the original contract in the absence of such action to extend it, the contract for the additional period is a wholly new contract with respect to application of the Act's provisions and the regulations thereunder (see §4.143(). I know the application of this language is limited to Davis Bacon, but it does lend support that an option is a wholly new contract.
  13. The formula mathematically comes out to $67M, no way around it. However, I think the 0%/100% renders it meaningless. Just as putting in a percentage equal to the square root of -1. Nothing says you can’t but it doesn’t work - you will get two very different answers every time, with both being equally correct. In order for a cost to be allowable, it must be reasonable. You would think that incurring a poorly controlled cost (a cost above target cost on a contract that you have 100% responsibility) would not be reasonable and therefore unallowable. It certainly does not seem to pass the requirement at FAR 31.201-3(a). However, if the Government also has some responsibility for cost above target cost then it would seem that these costs are more reasonable and therefore allowable. If we consider that there is no other distinction to a given cost element than whether it is either under or over the target cost, then an over-run cost is as reasonable as an under-run cost. For example, what caused the contract over-run, the first hours worked or the last hours worked or some hours worked in between? You cannot tell. So we end up with a single cost element that could be arbitrarily sometimes reasonable and sometimes unreasonable. It would make a certain amount of sense that all allowable costs are billable (up to the contract ceiling) and it is the profit (which is not a cost) that becomes not payable. In this thread this would result in a final price of $68M. The incentive contract places an incentive for a company to increase profit and profit percentage at the expense of revenue. If you look at today’s stock market, and how investor’s react to earnings, you will find that many investors put more value on revenue (total price) and growth then on profit and profit percentage – up to a point of course. You would like to think that the lower cost is the result of increased efficiencies and that these now available (and unused) resources are available to do additional work. It would be a shame if these past incentivized resources sit idle and unproductive in the future – driving up overhead cost, putting the increased profit that was earned at risk of being quickly lost. It seems a better incentive would be one that also includes the award of additional work (more revenue) to the vendor.
  14. Presumably, an LOE solicitation would require the bidders to bid against a set of labor categories and hours. The government’s basis for those IDIQ categories and hours is based upon their own internal assessment of what is required to meet their needs. A bidder may have an innovative approach that would fully meet or exceed the requirements with a lower overall LOE. I would think it would be in the government’s interest to see if their needs could be met with fewer resources and award to a bidder that gives them the best chance to do so. I would prefer to explore ways to simply and properly evaluate this potential rather than avoiding it. If an un-priced alternative proposal is not a good way to go then we should try to find a better one. I think a CO would be better regarded by their customers if they work to solve their problems rather than being a road block with no detour.
  15. Maybe, some drawings could also include specifications. The drawings may state a value – say make this thing 10 feet 6 inches long and 4 inches thick, as opposed to the contractor having to measure a scaled drawing with a ruler and calculating a length and width – more precise.
  16. I believe that I am finding that materiality is ultimately determined by how it influences a claim for payment. I see anything from 2% to 5%. Same as found in the CAS Preambles. But, I thought an invoice to the government has to be 100% accurate, otherwise it potentially is a false claim, regardless of how much the inaccuracy. The invoice is either correct or not, not mostly correct. Therefore it seems that anything that creates an incorrect invoice (false claim) is material, the threshold goes to 0%. I don’t have access to the Karen Manos book According to FASB the evaluation of a particular item’s materiality is complex, involves quantitative as well as qualitative considerations and requires seasoned professional judgment; and that there are no prescribed thresholds – big help.
  17. I am interested in both as used in government contracting.
  18. Is there any additional established guidance on determining materiality/immateriality besides that which is presented at 9903.305 and at the Preambles to Cost Accounting Standard 407,Use of Standard Costs for Direct Material and Direct Labor, section 12?
  19. Thanks. I also found some supporting information on the WIFCON Protest Page under FAR 15.307.
  20. Can a request for Final Proposal Revision in a competitive procurement dictate to the bidder that changes are strictly limited to areas that were discussed, and further, that since price issues were not discussed, that the bidder cannot revise prices? Is this permissible, and what would happen if the bidder ignored this prohibition and revised their price in the FPR?
  21. Sounds like your new company may be using a value-added cost base whereby material and subcontract costs are removed from the base used when G&A expenses pertain more to the contractor’s in-house activities than to material and subcontract activity.
  22. Taiwan or Beijing? It might come in handy for some FMS contracting with Taiwan, always good to know your customer.
  23. Say I organize and hold a relatively large meeting on a project. Attendees are direct employees, both local and remote, and local hourly contractors. After the meeting the whole group at my invitation goes out to dinner and I pick up the tab. Is the cost of this meal allowable under the cost principles? The cost is well under the per diem and I have excluded alcohol and so on. I can identify individual meals to the individual on the receipt. I am not sure whether I should exclude 1) the local employees not on travel, 2) the local hourly contractors – not normally reimbursed for meals. There will be no duplication of costs with any individual travel expense report. Currently I have made the costs for the local employees not on travel, and the local hourly contractors unallowable. Does this meeting fall under Travel Costs, Entertainment Costs, or something else?
  24. It looks like the contract was for the services of a single person – probably by name for an annual fixed price. This person worked a normal year minus holidays, vacation and sick days. The customer probably did not contract for 2080 hours but contracted for a “full time person” – not an FTE for 2080 hours. The bookkeeper invoiced on a periodic monthly basis based upon actual hours worked (direct). What hourly rate the bookkeeper used we do not know. Did the bookkeeper divide the total annual fixed price by 2080 hours or did the bookkeeper divide the total annual price by 2080 hours adjusted for utilization (2080 minus holidays, vacation and sick). If the bookkeeper used the 2080 rate then the bookkeeper used a rate that was too low. It would be interesting to see some of the actual terms of the contract. I think you may be able to use the actual direct hours and re-invoice with an adjusted hourly rate.
  25. Maybe your technical evaluator counterpart is taking just the opposite approach and is giving the same vendor high marks for their extra CMMI efforts. So take HTH’s price reasonableness approach, and let the source selection authority decide if the extra effort and cost is a best value to the government.
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