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Vern Edwards

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About Vern Edwards

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    Portland, Oregon

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  1. Why not write an option to increase the maximum if the government exercises the -8 option?
  2. What does that mean? Did you propose the fee as a dollar amount or as a percentage? Are you asking how to work DOD weighted guidelines or a similar system used by a different agency?
  3. The clause says nothing about increasing the maximum quantity. In fact, the clause expressly states that exercise of the option extends the contract "within the limits... specified in the contract." Ask those who claim that the clause increases the maximum to show you the words that do so. It would be different if the contract stated the maximum as a rate, say, a max of $10/month. But I've never seen that.
  4. That violates the canon of regulatory interpretation that says you must interpret a regulation as a whole. See Lengerich v. Dept. of Interior, 454 F.3d 1367 (Fed. Cir. 2006): If the regulation applied full coverage only to the current accounting period, would it say so? That doesn't make sense to me. Take a look at the DCAA flow chart and note that it includes language that is not in the regulation. It's not a regulation. It's for DCAA internal use. Having said that, if it works in your best interest, use it.
  5. I'm going to play devil's advocate. Here is the coverage rule in its entirety as it applies to commercial organizations: Let's interpret that rule through the use of a scenario. Suppose we have a business unit that has received a $50 million CAS-covered contract with a five year performance period. Start with paragraph (a). According to (a)(1), if a business unit receives just one CAS-covered contract worth $50 million or more, then full coverage applies to the business unit immediately. Not just to that contract, but to that entire business unit. The rule does not say full coverage applies to the business unit during the accounting period in which the contract was received, but to that business unit. Period. No time limit stated. Of course, the contractor will be under no further obligation to the government with respect to cost accounting standards once the contract has been completed and the contract has been closed out, unless it wins more CAS-covered contracts. So let's say that full coverage applies to the business unit while the contract is in effect. What about (a)(2)? Well, forget about it, because it's either/or. If (a)(1), the single contract rule, applies, then (a)(2), the "net awards" rule doesn't add anything. If the single award rule does not apply, but the "net awards" rule does, then the business unit will be subject to full coverage during the next accounting period. CAS defines "net awards" at 48 CR 9903.301 as follows: So let's suppose that two accounting periods after the award of the $50 million contract, and while that contract is still in effect, our business unit wins a $30 million CAS-covered contract. Full coverage or modified coverage? Look at paragraph (b). According to (b)(1): That refers to the "net awards" rule in (a)(2). Well, okay. But what does that rule have to do with anything? Full CAS-coverage already applies to the business unit by virtue of (a)(1), with no specified time limit, and the $50 million contract is still in effect. You can't just ignore (a)(1). Reading the rule as a whole, paragraph (b)(1) rule says only that if the business unit were not already subject to full coverage by virtue of (a)(1), and if it did not cross the (a)(2) "net award" threshold in its previous accounting period and were not subject to full CAS-coverage on that basis, then the new contract award valued at $30 million would not be subject to full CAS-coverage. $50 million is the tripwire that applies full coverage to a business unit. Once across that boundary, the business unit is subject to full coverage. Period. The (b)(1) rule protects a contractor that has received several small CAS-covered contracts during a cost accounting period that were individually worth less than $50 million, and worth less than $50 million in total, by preventing the government from aggregating across accounting periods. Now look at (b)(2): If at the outset of an accounting period the business unit has not already tripped the $50 million wire, either by virtue of (a)(1) or (a)(2), then any CAS-covered contract worth less than $50 million it receives in that accounting period is subject to only modified coverage. But if it receives a single covered contract worth $50 million or more during that period, then all further awards during that accounting period will be subject to full coverage regardless of dollar value. So what about the next accounting period? See (a)(1). I'm not sure that I'm right. And I'm not sure that inquiring mind2 is wrong. I'm just trying to think it through.
  6. @inquiring mind2 The DCAA flow chart seems clear. But it is not a regulation. Whether it's right or not, I don't know. The real problem here is that you are dealing with a secondhand report of what a consultant supposedly said. My advice is that you call the consultant and work it through with him. No matter what any of us say, you've still got that consultant to deal with. Right? If your company paid the consultant for his advice, why would your higher manager care what any of us nobodies thinks? A 30 minute conversation might clear this up for you.
  7. Well, that's what I asked. It appears that the consultant is interpreting 48 CFR 9903.201-2(a)(1) to mean that once you have received a $50 million+ CAS-covered contract that is subject to full coverage, every CAS-covered contract awarded thereafter must be subject to full coverage, without regard to the accounting period in which the first full-coverage contract was awarded. I don't know if that is right or wrong, and I can't tell from the language of the regulation. Furthermore, I can't find any guidance that specifically addresses the issue. I would want to ask the consultant what are the grounds are for his/her interpretation. Or ask a different consultant.
  8. Here's part of the relevant rule from 48 CFR 9903.201-2(a), Types of CAS Coverage: Is the issue the interpretation of paragraph (a)(1)? Is the consultant interpreting (a)(1) to mean that once you receive a CAS-covered contract with full coverage all subsequent covered-contracts are subject to full coverage, regardless of dollar value or accounting period? Or is he/she literally saying that full coverage applies to all new covered-contracts, regardless of dollar value and accounting period, if you are currently performing a fully covered contract, no matter when it was awarded?
  9. Vern Edwards

    Material Cost Adjustment

    Maybe you shouldn't enter into a five-year contract in a time of high price volatility.
  10. Vern Edwards

    new category of software rights

    Thanks for the explanation. I admit missing the citation of 52.227-15. But until you get the government's explanation, I think it's too early for laughs or tears.
  11. Vern Edwards

    new category of software rights

    @Fara Fasat I think you should explain to us why we should smile or weep. See DFARS 227.7203-5, Government rights. Note the bolded text.
  12. Vern Edwards

    new category of software rights

    Is the agency part of DOD?
  13. Vern Edwards

    Multi-year Service Contracts?

    Multiyear (multi-year) or multiple year?
  14. Vern Edwards

    Commercial Product Definition

    Yes, but it is also due to the fact that there were many thousands of such specs and industry complained that most were out of date because the responsible agencies did not have the resources necessary to update them.