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Fara Fasat

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  1. Most of us are painfully aware of the 2019 NDAA section 889 prohibition (implemented at FAR Subpart 4.21) against delivering telecommunications equipment to the government that is made by Huawei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company, or their subsidiaries or affiliates, or using such equipment in a contractor's operations. Does anyone know if any government agency maintains an updated list of the subsidiaries and affiliates, of which there are hundreds? There have been news reports that those 5 companies are constantly creating subsidiaries to get around this and being on the denied parties list. In addition, the prohibition extends to companies that the "Secretary of Defense, ... reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of [China]." Does DoD publish such a list?
  2. Joel, I really don't want to leave this hanging out there, unanswered. You have stated, pretty bluntly, that it was 'wrong' and 'dangerous' to state that there is no connection between the price you want and the data you submit, as Retreadfed asserted. You have said that the price must be 'based on' the data submitted. What does that mean? The references you cited all talk about the data that must be submitted, and say nothing about price. If we follow your logic to its conclusion, you seem to be saying that the price must be within a certain range of (i.e., 'based on') the costs. Are you suggesting there is a limit on profit? If a contractor's current, complete, and accurate data shows a cost of $10 to make a product, and the contractor wants to charge $20 (a 100% profit), what prohibits that? That price is 'based on' the costs, just as charging $12 would be. If the government doesn't like $20, start negotiating. It has the data, it's on an equal footing with the contractor, and the purpose of TINA has been met.
  3. Joel, you're usually on the mark, but I disagree with posting a link to a defective data training module in response to Retreadfed's assertion that there is no connection between the data and the price. I agree with Retreadfed. As long as the data is complete and accurate, the government has the same information that the contractor has, and they are therefore on equal footing in negotiations. That is the purpose of TINA. If the total cost of production is $10 and the contractor says its price is $20, the government knows that the contractor wants $10 in profit. There's nothing defective about that. Start negotiating. Assuming that the data is accurate, there is no issue of defective data.
  4. If you are looking to get email notices whenever a proposed or final rule comes out, try this: go to the federal register website at https://www.federalregister.gov/ create an account go to "advanced document search" at the top menu enter "acquisition" for the search term click the buttons for "rule" and proposed rule" in the field for "affecting CFR Part" enter 48 click on "search" You will now get results for several years. Ignore them (unless you are interested in a particular recent rule). Now go to the upper right of the page and click on "subscribe." Click on the "notify when published" button for email notifications. You should now receive an email notification when a proposed or final acquisition rule comes out. This has worked for me so far. I don't get extraneous federal register notices, and I believe I am getting all relevant acquisition-related rules. I'm comparing my results to other sources so I might have to tweak my search, but it seems to be giving me what I want.
  5. Thanks. I think we have covered my question. You can't invoice the government for more than the costs you incur, and there are various ways of handling that when there is uncompensated overtime.
  6. Well, we aren't talking about uncompensated overtime if they are only working the minimum, are we?
  7. Why? Because several posts above say that the rate has to be adjusted to an 'effective rate' when a salaried employee works more than a standard 40 hour week without additional compensation. Even if the employee works only one contract, you are billing at a lower effective rate when the employee works more than 40 hours on that contract. $1000/40 hrs = $25/hr. The same $1000 for 48 hours of work gives an effective rate of $20.83/hr.
  8. I think I am inartfully stating my conclusion, and that we are saying the same thing. A contractor can only invoice for the costs it has incurred. If it is not paying a salaried employee extra for working more than the standard hours on which the hourly rate is based, then the contractor must make an adjustment either to the hourly rate or to the hours. The end result must be that it can only invoice for the actual compensation paid to the employee. This applies to a CR contract of course. According to the GaN case, under a TM or LH contract, the contractor would be able to invoice for all hours performed regardless of the compensation to the employee. (Hope that sentence doesn't open up another can of worms)
  9. yes, but the employer was invoicing for all hours worked. Unless the employee's hourly rate was adjusted for the extra hours worked, wouldn't they be invoicing for more than the actual cost? In other words, if the hourly rate was based on a 2000 hour year, but they invoiced for 2050, that's 50 extra hours at the 2000/year rate.
  10. Retread -- if, over a year, a salaried employee works more than the standard work-week hours, and the employer invoices for all of the hours worked without adjusting the rate, wouldn't that result in a windfall to the contractor? Again, assuming a CR contract. It seems to me that the employer/contractor is invoicing for costs that were not actually incurred, because the employee was not paid more for those extra hours.
  11. Still confusing, but let me see if i have the basics: the key isn't invoicing for the hours worked; the key is the rate you charge for each hour, and therefore the costs you invoice. If the salaried employee works on one CR contract, and works normal hours every week for the full year, then there is no problem -- the invoiced charges equal the cost to the employer. If the employee works more than the standard hours, the hourly rate must be adjusted so that the invoiced charge represents the true cost to the employer. In other words, you would show the true hours worked, but the hourly rate would be adjusted lower. If the employee works on more than one contract, the adjustment becomes more complicated, but the principle is the same. Am I on track or have I hopelessly muddled it?
  12. Thanks Retread. I can't say I fully understand the answer, especially the term "abated." In your first example (working on only one CR contract) -- you're saying that the hourly rate is set by dividing the annual salary by the normal work week. Sounds fine, but that doesn't answer what happens when the employee works more than a normal work week. Does the company charge every hour worked, or does the company stop charging after 8 hours per day, even if the employee worked 9 or 10? Or stop charging at 40 hours for the week even though the employee worked 45 hours? Since the employee isn't getting paid more for the extra hours (as all of us salaried employees know), it seems that the incurred cost stops at 8 hours per day, 40 hours per week, etc.
  13. I'm not a finance guy so please cut me some slack on my use of the terms and the concepts. Feel free to educate me. This maybe could have gone under the newbie topic too, as I am new to CR contracting. Just not a complete newbie, so it's here under pricing and costs. On a cost-reimbursement contract, how do you invoice for the hours expended by salaried employees? Do you invoice for the hours worked on the contract during the billing period, even if the employee put in more than the standard 8-hour day a few times? That sounds right, but then what happens at the end of the year if the employee has put in 100 hours more than a standard work year? If the employee is on salary, he or she isn't getting paid more, so the company hasn't incurred additional cost. If the company invoices for all hours worked, wouldn't that result in a windfall for the company? Do invoices get adjusted to account for the actual cost of the employee, as opposed to the hours worked?
  14. The prime is an SBIR phase 3 contract. i don't know whether the government is treating it as commercial. I can only tell you that it is fixed price, and that the prime chose the CPFF over T&M for the subcontract. I don't think those things matter for the original question, but here they are. Joel - yes, deciding what clauses belong will be the outcome of the decision. It doesn't mean I am trying to reach one outcome or the other. Please don't read any motives into this.
  15. Omigosh, I thought pointing to (1) of the commercial service definition would get us away from the obsession over the rates, but look where it led! I'll say it again -- the services being performed are on commercial products, and are the same as those performed on similar products for commercial customers. That meets (1) of the definition. 'nuff said. Joel, Why do you insist that something can only be commercial if it complies with all of Part 12? Whether something is commercial or not is inherent in the product, not the contracting processes being followed. Furthermore, Part 12 does not apply to subcontractors; only those parts of it that direct a prime to do something, and that the prime subsequently puts in a subcontract. The original question was whether the prohibition against a CPFF contract at the prime level also applies to subcontracts. The answer from participants is no. Unless you can point to something that says a prime cannot do it, I think we have the answer. By the way, I'm not going through this exercise to 'get out of' some clauses. I'm trying to figure out the right thing to do.
  16. If it would make the discussion easier and allow us to focus on the original question, assume that the services meet (1) of the definition -- services in support of a commercial product. There is no mention of price or rates in (1).
  17. Thanks Don. This has been frustrating. I tried to keep us in a narrow lane -- subcontract, the same services that are performed commercially, at established rates. The only unknown was the amount required -- as I said before, would it take 3 tests or 15 tests? That's why it is being done on a CR basis. I suppose it could be T&M too, but this is what the parties agreed to do. Neil - I've said a couple times now that the services that will be performed are the same services that are sold commercially, at the same rates. I don't know why you think that doesn't meet the definition.
  18. I was trying to keep it simple and avoid debates that were not relevant to the question. The services being performed are performed for commercial customers, and are priced at standard rates. My statement of the facts did not imply that these services were noncompetitive or had no established price. The only uncertainty was how much of the services would be required. Think of it as 'we don't know if we need to perform 3 tests or 15 tests.' I was hoping readers would just accept the statement that the services met the definition of commercial, and focus on the actual question. Are you saying that being unable to estimate the amount or extent required disqualifies the services from being commercial? If that is what you are saying, I would be interested in hearing how uncertainty as to the amount takes those services out of the definition of commercial. I don't see that the definition requires certainty of the amount as being a necessary element of the definition.
  19. The services meet the definition, including the pricing requirements. I don't know where you got the "does not appear to meet..." from. The problem here is that the amount of effort required cannot be reasonably estimated, and the parties have agreed to use CPFF. I can provide no information on why the prime contract is FP. Wise or not, this is the situation as it stands.
  20. The prime contract is FP. I didn't mention it because it didn't seem relevant to the question and I didn't want the discussion veering off into other issues (as it inevitably did). Sure it's probably a bad arrangement for the prime, but I'm presenting it as it came to me. So far, I've heard that there doesn't appear to be any prohibition against a subcontract for commercial services using a CPFF contract type, and following the commercial item rules for all other flowdowns and clauses.
  21. We all know that CPFF contracts are prohibited for commercial product/services contracts with the government. What about subcontracts? Not looking for wisdom, recommendations, advice, etc. Just need to know whether there is a prohibition like there is for prime contracts. For background or context, all work will meet the definition of commercial services, but the effort required is too uncertain to price as FP. Both prime and sub agree to use a CPFF contract. The impact is this: if the prime can treat the subcontract as a commercial services subcontract even though it is CPFF, then it will only need to include the clauses applicable to commercial subcontracts. Flowdown requirements are generally stated as "when acquiring commercial products or commercial services ...", which says nothing about the contract type being used. I know some of you are already asking - why not just use a T&M contract, which is specifically allowed? I don't know why the businesses decided this; I was pulled in on the clause question. My thinking is that FP and CPFF are contract types, and have nothing to do with whether the things being acquired meet the definitions of commercial products/services. Using a CPFF contract does not change the services to non-commercial. The prohibition is against the contract type that can be used even if what is being acquired is commercial. Does that prohibition extend to subcontracts? I have checked the CPSR Guide and it says nothing about this. Same for the Commercial Item Guide. Nothing in the PGIs either.
  22. 1. Even though no products will be delivered, I don't know how the BAA/TAA handle property that the government gets title to. The government owns it, so technically it is an acquisition. 2. The WTO GPA does apply to services. See the table at 25.401(b) for the services that are covered or exempt. 3. It sounds like you are performing services, which the TAA does apply to. Find out from your CO why only the BAA clause is in your contract. Research and Development is one of the exempt services (see (5) in the table), so maybe your work is considered R&D.
  23. Either one is just a bit over the TAA threshold. 😏 Is 52.225-5 in your contract? If not I would check with your CO to see why. Maybe there's a reason this particular acquisition is only subject to the BAA. Now for a big caveat: this forum can only give general advice. For specifics you need to consult with someone experienced in the BAA/TAA so you can go over the details of your contract and the work you are performing. That said -- the end item is usually a line item deliverable, but not always. Sometimes it can be a system and sometimes it can be the individual products. Check with your CO and get confirmation of what the BAA/TAA will apply to. If your CO is unsure or will not commit to an answer (and many COs do not understand the BAA and TAA), you and your consultant will have to do the best you can. Document everything, including your communications with the CO. If in fact the TAA applies to your contract, then for a product the key is the country of origin of the end item. In most cases the origin of components does not matter, but make sure nothing comes from a prohibited source, as there are more and more prohibitions affecting acquisitions. For services, the origin is the country in which the entity performing the services is established. Good luck.
  24. Preliminary question -- what is the approximate value of each phase? The work sounds technical and complex, especially producing a new type of thermoelectric generator. The threshold for the applicability of the Trade Agreements Act instead of the Buy American Act is $183,000. If your values exceed that, your concern is the TAA not the BAA. And forget about whether you think a country is friendly to the US. Follow the BAA or TAA.
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