Supra

Thanks, for the response. Sub claims govt responsible due to lack of timely OFI and OFE. Very likely the case. My question goes more to the standard of review a prime must employ before issuing any cost and price cert.

Hypo: Sub presents invoice to Prime under cost-reimbursable K. Sub's costs include inefficiencies . What level of scrutiny does Prime have to apply? Is it simply whether the costs are allowable and allocable under cost reimbursable guidelines in FAR? Or does Prime have obligation to force sub to prove inefficiencies not due to their own fault? What if Prime beleives sub's are self-inflicted costs? Thanks in advance.

Joel: I agree with your reading of the GE decision. I was not trying to necessarily make a point, but rather seek advice from others who have dealt with this issue from a real-world perspective .. beyond the black letter of the cases and FAR clauses. I’m dealing with a subcontractor on a fed govt project who received a claim from its sub-sub. The subcontract required that the sub-sub “comply” with the FAR’s claim certification language. The sub-sub tracked the FAR claim language verbatim with one exception: it changed “Government is liable” to “ is liable”. Again, the rest of the claim certification tracks the FAR certification provision precisely. The sub believes it is not liable for the sub-sub's claim, but that the government is ultimately liable. Question: does the sub-sub’s certification using “ is liable” instead of “government is liable” preclude the sub from passing that claim up to its prime, who presumably would then pass it up to the government? Presuming the sub believes the claim has some merit and is appropriately supported, doesn’t the sub have an obligation to the sub-sub to pass the claim up even if the sub-sub’s certification uses “the sub is liable” language in its certification? I personally don’t think the sub-sub’s modification is a material deviation. The sub-sub, after all, is still on the hook for a FCA violation whether it thinks the government or anyone else is liable. Thoughts? And, thanks for your time.

Thanks, Joel. For those interested, and for posterity, review: US. v. GE, 727 F.2d 1567 (Fed. Cir. 1984) et al.

Second tier sub has a claim on fed. procurement project. His subcontract requires that he provide a certification per 52.233-1. Subcontractor provides certification per the FAR, but changes “government is liable” to read “subcontractor X is liable.” Sub X is second tier sub's contractual party. Any thoughts on whether this is sufficient? Couldn’t the prime simply issue their own certification stating that the Government was liable? Isnt the purpose and intent not to assess blame or liability, but rather to assure that the subcontractor/contractor is presenting valid, accurate costs in support of their claim? Any practical, real-world experience on this issue? Thanks in advance.

Expected that answer. I presume you rely on FAR 16.403-2(a)(v) as authority. While I understand the ceiling must mean something, it does describe the maximum amounts that “may be paid”, not “shall” be paid. The other camp argues FAR 16.403-2( B ) and FAR 16.403-2(d)(4) are more appropriate for our situation. In the situation where there is a failure to establish a FFP or it is “inappropriate,” the final price is established by the specified, prescribed formula. The formula specifically contemplates that the final negotiated cost receives: “an adjustment for profit or loss, determined as follows….(ii) if the total final negotiated cost is greater than the total firm target cost, the adjustment is the total firm target profit, less (assume 25%) percent of the amount by which the total final negotiated cost exceeds the total firm target cost.” Their read on this is that if the total negotiated final costs are above the ceiling (which is clearly contemplated here where there is no FFP established), the contractor may lose some if not all of his profit, but there is nothing in the FAR that says he should be penalized to eat the costs above the ceiling too. That would make it akin to a FFP contract, which is exactly what the parties were unable to achieve. And if the purpose of this contract is to shift the risk to the govt on costs due to the illdefined nature of the work, then why should the contractor bear costs above the ceiling if there is no FFP negotiated? I referenced the previous post from you guys a few years back in my original post above, I didn’t follow whether the consensus is that if the profit calc produces a negative number that the costs should be ‘adjusted’ down. By the way, I’ve read your Nov. ’09 Briefing Paper on these contracts and the NASA/DOD guide from ‘69. Both very helpful.

Background: We have fixed price incentive (successive target) contract; Firm Target Price was negotiated and agreed to; Ceiling price set; No Firm Fixed Price set (negotiations broke down); Adjustment formula set; There have been disputed changes that parties can’t agree on; Project costs are projected to exceed ceiling. Questions: Does this contract operate as a cost reimbursable contract until a FFP is set, shifting cost risk to contractor only at that point (FAR 16 seems to suggest that)? Is contractor obligated to continue incurring costs beyond ceiling if no FFP set? If so, are those costs incurred beyond ceiling recoverable (recognizing that profit above ceiling may not be)? By the way, I’ve reviewed the previous discussion that went ‘to the supreme court’ as to how the profit adjustment was applied. Thanks for that, very helpful.

Just wanted a sanity check, and you provided it. Thanks again.

Pre-award, offeror files a GAO protest challenging solicitation. The plain language of the applicalbe rules/regs provide that the agency can't award the contract. It appears they can continue to "negotiate," however. What can/cant the agency do while pre-award protest is pending? I've seen a decision where the agency can negotiate with other offerors to extend their offers so that they don't have to re-do. Can the agency do more than that? Can it continue with its due diligence leading up to an award? Or, must it stop essentially all procurment activities (note the exception listed above), subject to agency justification to continue on (urgency/need/emerency/etc.)? Can the agency contact other potential offerors and try to generate interest in protested procurement? Thanks in advance.

Thanks, Vern. It seems every time this issue has come up its always been when the contractor fails to provide the CDA cert and breaks up his claims into separate, multiple claims - all under the $100k threshold, thus not requiring the CDA cert - to avoid CDA requirements for cert. The cts and boards look at the underlying facts, and if they are all the same for each claim, the court aggregates them and then determines a CDA cert is required and bounces jurisdiction if none was filed. I've not seen it argued the other way where the KO requires individual certs for each of the underlying claims. It makes sense to me reading the FARs that as long as the contractor certifies all the costs, it doesnt matter whether he issues a single or multiple certs (it becomes form over substance at that point).

If a contractor has multiple claims on a project, some below $100k and some above $100k, does FAR 33.207 require/mandate the contractor submit a CDA certification for each claim over $100k separately? Or, can the contractor aggregate all his claims under one single certification? Any cites or references would appreciated. I’m at a loss. Thanks in advance.