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kevlar51

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Posts posted by kevlar51


  1. 16 minutes ago, Retreadfed said:

    H2H, how is the contractor to know when price agreement will be reached?  Just because negotiations are to take place on a certain date, does not mean that agreement on price will be reached on that date.

    Right. The company will be wide open to the potential for defective pricing. Especially if a sweep takes a long time. Or even five days. By the time a sweep is done, it could be already be inaccurate with no way of knowing. But then you agree to price and sign the cert?

    Sweeping after the agreement on price allows the contractor to apply a firm cutoff date for the sweep. That way the contractor can legitimately say whether cost or pricing data existed that was not disclosed prior to the agreement on price. And if new data exists, the Government is entitled to re-open negotiations. That stinks from a schedule standpoint, but it happens. And since no cert has been signed yet, the contractor isn't open to a defective pricing action.


  2. On 6/12/2018 at 10:34 AM, joel hoffman said:

    In  my opinion, the heart of the matter is that, according to Assad, contractors should update available cost or pricing data after initial submission, if necessary, up to the time of agreement on price. That is consistent with the Instructions for Table 15-2, which are incorporated by reference in the applicable contract clause for submission of cost or pricing data. 

    There's unfortunately little incentive for the contractor to conduct multiple sweeps during the negotiation process, because no matter how many they perform during negotiation, they are still going to need to conduct a sweep after agreement on price and before certification. And if their sweep process is correct, it's not going to take any less time or be any less complete simply because they already performed sweeps along the way.


  3. I'm with Vern--this 5-day policy is based on flawed assumptions. Cost or pricing data that might pop up in a sweep are not limited to what might be included in a specific proposal or negotiation, nor roll into a specific estimating system. Perhaps that logic would have worked within Raytheon? No clue, but I do know all business systems are not created equal. I can think of several large mostly commercial item companies who have done non-commercial work for the Government. Sweeps take weeks because a nationwide review of pricing for similar offerings is required in order to certify.

    I'm not sure the Government quite understands the legwork that goes into a certificate of cost or pricing data.  

    For the five-day window to have any merit, I think a better definition of what data requires disclosure is necessary. Otherwise you're still stuck with the contractor guessing what the Government might find useful in a negotiation. And now it all has to be completed in five days.


  4. 23 hours ago, PepeTheFrog said:

    PepeTheFrog agrees with both Matthew Fleharty and Retreadfed as possible reasons.

    Here's another example of the government getting travel costs  wrong. Have a written travel policy. Understand the JTR applies to federal employees, not contractors. Be willing to push back. 

     

    The Joint Travel Regulations (JTR) apply to federal employees, not to contractors. 

     

    A few years ago, when I first ran into "no G&A on travel" from a Gov't client, the CO's position was "JTR doesn't permit G&A on travel, and per Agency counsel opinion, we won't pay it."

    This was during contract negotiation. We pushed back. Of course JTR doesn't address contractor G&A--it wasn't written for contractors. We were met with dug-in heals. The CO had no issue negotiating hours and scope, but G&A travel was apparently the third rail. 

    At the end of the day, it was an insignificant portion of the total contract value, so we made the business decision to let the issue drop, rather than spend more money to negotiate it than we'd actual recoup in G&A billings. But on principle, it was an annoying "loss."


  5. GAO issued a report (07-599) on undefinitized contract actions in 2007 in part finding DOD wasn't doing this enough (i.e. factoring the lack of risk from completed performance into the profit analysis).

    For a negotiation position, you could look at the DOD weighted guidelines described at DFARS 215.404-70 and 215.404-71. Internally run through the analysis to figure out how little the Government thinks your effort is worth :) But the main takeaway is just to get a feel for what the Government is looking for in their profit analysis, and what levers they consider that you can spit back at them. I have no clue if your dealing with DOD, but this is good practice for dealing with any agency.

    In the end though, like Vern said, this is a negotiation. Come up with your best arguments for why you deserve what you deserve, and help them out with talking points for their negotiation memorandum so that they can show they made a proper effort (they've already started that part by reducing your fee due to decreased risk).

     

    [EDIT--removed commentary on UCAs since they aren't really relevant to the specific topic]


  6. Just make sure the "indirect" function isn't really a "direct" function that someone doesn't feel should be direct. This has been an area of surprisingly consistent frustration in my career. I'm not talking about areas where mischarging is clear (e.g. where an employee working exclusively on program A charges to program A work to program B), but rather when time for a direct-charge (per disclosure statement) contracts, finance, or program management employee is invoiced and a COR rejects the invoice because in the COR's view "back-office" employees should be indirect (and thus included in the rates). It's an issue that should be easily resolved by a quick review of the disclosure statement and proposal/negotiation (for good measure) that included funding for contracts/finance/PM.  But it's rarely that easy thanks to under-trained CORs who feel that the only contractor employees who contribute to a contract are those who are visible on a day-to-day basis, coupled with overwhelmed COs who effectively abdicate responsibility to the COR.


  7. You might want to look into hiring a consultant. Government contractors who deal with Government property on a large scale basis have full time employees whose sole job is to manage Government and contractor property (to give you an idea of the complexities involved). Articles and books aren't necessarily going to teach you everything you'd want to know to establish an adequate procedure that gets Gov approval.

    EDIT: Just want to add that those large companies who have full time Gov property administrators still manage to screw up the handling of Gov property.


  8. 4 minutes ago, here_2_help said:

    The purpose of performance-based payments is to tie contract financing payments to measurable technical performance. Period. There should be zero tie to incurred costs, at least with respect to payment request approval. (You can always have DCAA review costs after the fact.) If you are going to insist that contract financing payments must have a relation to incurred costs, then please use cost-based progress payments. Then you can reimburse the contractor for spending money instead of making technical progress. (Hello, any A-12 folks in the room?)

    In this case, for some reason, the government contracting officer accepted event values that were not commensurate with actual value. Okay, that was wrong, but the damage is done and the values are in the contract. Either you continue to pay the contractor for accomplishment of contractually agreed-upon milestones or you suspend PBPs and try to reform the contract.

    The other option, in my view, is to get ready for a contractor claim that you breached the contract by failing to make payments when agreed-upon events were completed.

    That was my gut reaction when I started reading the OP's post. But how do you reconcile that with the DFARS clause 252.232-7012 that Joel quoted? Payments cannot exceed cost incurred (in this DOD contract, at least).


  9. Michele G: Is the following along the lines of what you're explaining:

    Payment milestones for a Four-Legged Dinner Table (total price $1000):

    1. $600 upon ordering screws

    2. $200 upon ordering wood

    3. $100 upon assembly

    4. $100--final delivery

    And the contractor can't invoice for the first payment event because they've only incurred $5 in costs. So instead, they're basically submitting monthly cost reimbursable invoices on whatever other work they do up until they hit $600?

     


  10. As others have said, nothing is contractually/legally stopping vendors from proposing wages higher than what might be in a wage determination. But competition (especially in a LPTA procurement) will generally keep them from doing so. You can put language in there about allowing for escalation, but it's not necessary for the reason I just stated (i.e. it's already allowed).

    A awardee later coming to you to explain why the rates they proposed under a FFP solicitation aren't sufficient is a different issue. They can certainly still pay their staff more, and they have to run their own cost/benefit analysis before deciding to submit proposed pricing. And "bid low to win and get the Gov't to increase the price later" isn't a sound plan.

    All that considered, if staff turnover is enough concern, then perhaps LPTA isn't the best approach for you.


  11. On 3/9/2018 at 8:03 PM, here_2_help said:

    It really doesn't matter to you, the subK, whether you get the work through the large, long running contract with your prime or directly from the government customer. It's the same work and it should cost you exactly the same to perform, regardless. If that's the case, why do you care? Why are you trying to help out the government customer and the CO?

    I agree with the bulk of your post except, generally, with this part. I can think of plenty of reasons why a vendor might rather be a prime, than a sub. Large primes especially tend to have rather inflexible one-size-fits-all purchasing systems that place a great deal of administrative burden on their subs--without regard to whether the government places similar demands on the prime. 


  12. It's certainly possible, and I'd like to think the CO should know how to accomplish this. We don't have anywhere near enough information on your client's contract to know the correct path.

    Some words of caution:  Be careful about going around your client's back to talk to the end customer, especially to cut out a chunk of your client's business. Also be prepared to potentially not get award of the new, separate contract (assuming it gets competed).


  13. FAR 36.606(b) places the proposal request (i.e. price proposal) in the "negotiation" phase (i.e. after determination of the  most qualified firm). Though FAR 36.606(b) uses the term "ordinarily," so it appears to be far from mandatory.

    That being said, I'm not sure how many A-E firms have bench contracts, but you'll be pissing off the bulk of them by having to expend unnecessary efforts and cost to prepare pricing proposals that will never see the light of day. Expect those costs to creep into indirect rates and your agency will start seeing higher prices.


  14. I don't have background to point you to. But at a basic level, the Government assumes the cost risk in a cost-reimbursable contract. So if an issue arises that would have given rise to a warranty claim under a FFP contract, the Government would be paying for the work under a CPFF contract.


  15. If it's sole source, then their justification for adjusting your hours to put you on equal footing with other bidders makes little sense.

    Agreed with Joel--you're in a much better position in a sole source environment to negotiate and reach a clear meeting of the minds. Discuss your concerns with the Government, and figure out their concerns. Then resolve them in the contract document.


  16. 20 hours ago, Vern Edwards said:

    You should charge the government for all of the work that you must do to fulfill its request, not just the cost of the laptop.

    This bears repeating. More often than you think, Government program management won't be expecting an invoice for higher than the laptop's sticker price. Be prepared to fight them on this, because procuring material has additional costs associated with it, and if you only bill the laptop sticker price, then you're losing money. And I don't know if your contract type allows profit on materials.

    This whole deal can be a slippery slope. You might buy the laptop now, and then the program team decides it's a lot easier and quicker to have you buy their equipment rather than their contracts office. That's not a good position to find yourself in, and it's made significantly worse if you're losing money on every purchase. I suppose an extra benefit to billing actual costs is the Gov't might be less inclined to come back for more due to sticker shock (not always the case).


  17. 47 minutes ago, Vern Edwards said:

    I'm not sure it makes a difference. Remember, the contract is cost-reimbursement. The contractor invoices on the basis of allowable cost incurred to deliver the level of effort. not by the hour at a fixed rate. There could be more to the cost of the level of effort than direct labor hours. If the subcontract cost is allowable, then the contractor invoices for it and the government reimburses up to the estimated cost or the total funds allotted.

    All fair points. And with that, I'm now more confused at what the OP is concerned with "losing."  Though the chances of an overzealous COR are high, at which point it's hard to apply the rules when the "rules" are all in one person's head.

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