Neil Roberts

@_KB_ by the way, target cost is not a ceiling. In CPAF contracts for example, you might have an award fee based on how much under the estimated cost you are at any given time. In that case, you would be harming your company by depriving it of more award fee if you lowered it. Estimated cost can not be raised or lowered without consideration, such as the deletion or addition of work.

@formerfed, if the contractor agrees to contractually reduce the contract funding, can you point out a normal contract provision or law applicable to the government that mandates the government unilaterally increase the contract funding to the previous higher amount when reimbursable costs exceed the contract funding? Or, are you saying that the government reduces the funding of the agency internally within the government, and it has nothing to do with the contract funded amount. If that is the case, why does the government ask the contractor if it's "ok" to do so?

To my knowledge, Alpha contracting does not change or delete applicable FAR or DFARS requirements. If yours does so in writing signed by a contracting officer, then you should expect your prime contract to be consistent with the absence or change of such requirements. You may request the Government contractually mandate your named suppliers/subcontractors, but I don't think that is going to happen. Rather, the normal expectation of your purchasing system is compliance with -7001 and -5. Thus, naming a particular suppliers should mean it was a supplier competitively selected or not competed with adequate justification. If you did not do so during the proposal/negotiation process, you should be doing so after award of the prime contract. Teaming agreements, which many times are not competed, need to be justified with adequate rationale for the exclusion of competition.

For these two clauses, you may be able to discern potential intent for DFARS "pairing" the DFARS with the FAR clause by reading the Federal Register proposed and final regulatory history for -7001. Offhand, I would be surprised if the intent was to either intentionally confuse or clarify "maximum extent practicable" and "maximum practicable extent." Instead, I believe it may just have just been drafting preference or transposing confusion.

If FAR 52.232-22 is included in your contract, it states in part: "The Contractor agrees to perform, or have performed, work on the contract up to the point at which the total amount paid and payable by the Government under the contract approximates but does not exceed the total amount actually allotted by the Government to the contract." The amount "allotted," is normally the funded amount, and normally the Government would not reimburse a contractor for amounts in excess of the funded amount.

Also not clear to me what "unused ceiling" is. Assuming this ceiling is a contract stated amount of dollars, it would require a contract change and consideration. What is the consideration? I would not agree to change contract amounts unless there was some consideration that made sense to your company.

@HigerED004, paying faculty wages during the summer does not strike me as something new even in the world of government contracts/grants. I believe your university should consider bench marking other large research universities for possible solutions. Large research universities seem to maintain an office of contracts and grants to assist proposals and financial execution of grants and contracts.

@HigerEd004, my take is as follows: Costpoint appears to have some kind of programming software of its system for deferred compensation. Have you presented your detailed scenario to them and if so, what was the response? If not, perhaps installation of it resolves the matter. If you already have installed this Costpoint deferred compensation programming, and the accounting system was reviewed and found to be adequate, whatever results it yields as to recorded/incurred costs and employee timekeeping entries/timing should yield acceptable deferred compensation results that comply with 52.216-7 (when it is included in a contract.) Ask them if it does and the extent to which Cost Accounting Standards 48 ECFR 9904.415-50 may be applicable and included in its deferred compensation program.

@HigerEd004, your post now seems ready for a response. There are some members on this site that are experts at contractor accounting systems and allowable cost and payment requirements.

@HigerED004, can you explain with an example, what the problem or issue seems to be? There are several different concepts mentioned in your post. Examples: use of the word "allowable" infers a cost reimbursement arrangement, Grants are different from FAR federal contracts (are your "projects" federal contracts?), total time accounting system for recording hours does not, to me, have a clear relationship with "deferred pay" (and who is being paid on a "deferred" basis, your entity from the Government or a supplier to your entity).

Tzarina, Your company could solicit advice from the CO, but blind following of the advise is not recommended for a prime contractor in my opinion. By way of example, C. Culham indicated that legal help is a subcontract. It may be for the federal government, when it purchases. However, unless the prime contract directs your company to obtain legal services, it is not a subcontract in my opinion, and furthermore, does not belong in supplier management as a procurement. It should be contracted for by another function such as an existing law department of the company, Contracts, the President, or the Board of Directors, etc.

I have found that companies that "automatically" send all "buy" item requisitions to supplier management because supplier management buys, leases, etc, do not properly address the issue you are writing about. Contracts and financial management functions should be involved with understanding and addressing the issue you are grappling with because it involves the contract and impacts the entire company. Are they? The major prime contractor where I worked eventually came to a company level understanding with respect to consultants, interdivisional work and other situations, and embodied this in company and supplier management procedures. Pushback from supplier management and suppliers helped.

I wonder if anything has changed since this 2016 WIFCON discussion https://www.wifcon.com/discussion/index.php?/topic/3573-definition-of-subcontractor/.

To my knowledge, I know of no applicable law or regulation that "contractor with a fixed price government prime contract shall not enter into a cost reimbursement contract with a subcontractor for a commercial item or service.".. If this is the language your people are looking for. FAR 52.244-2 if included in the prime contract, may require consent for the contemplated cost reimbursement contract. There may be other business risks for entering into such an arrangement including but not limited to CPSR perception.

Fara, I am not comfortable leaving the impression and/or advising that a required commercial service effort that is too uncertain to price as fixed price, is a market or catalog price. If there were some facts provided to me that support a contrary conclusion, other than two parties said it is a market or catalog price, then maybe it is a commercial service.

I do not agree with either of you (Don/Fara). I think the words of the definition speak for themselves, whatever that means to you and whatever case law or intellectual discussion reveals. Yes, Fara, I did understand that you wanted to know only whether a commercial service can be a cost type contract. I couldn't divorce myself from examining what a commercial service is in trying to answer the question. I understand it came to you that way but I don't know your role and whether your silence would be understood by others as agreement as to whether it is a commercial service and the extent to which it matters to you, so I veered from your specific request.

I said "does not appear to meet" because of the definition of commercial services as follows: "(2) Services of a type offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions." I did not see anything in the definition that lead me to think that non competitive commercial services that have no established market or catalog price, and can not even be estimated, are commercial services.

...If you want to call it a commercial service when it does not appear to meet the pricing requirement for commercial services per 2.101. I think the request made of you to search for a specific "prohibition" generally regarding commercial services and contract type, is too narrow.

Hi Joel: FAR 52.215-12 and -13 is flowed when incorporated into the customer's contract, with an alteration that substitutes company or its representative for Contracting Officer or its representative. FAR 52.215-10 is flowed when incorporated into the customer's contract, with alteration that adds "or Buyer" after "Government", "Contracting Officer" or "United States." In addition, company flows a standard term that it may recover from subcontractor an amount equal to related price reduction of company's contract with the customer and any penalty or interest.

FAR 15.406-2 Certificate states as follows: ***Insert the day, month, and year of signing, which should be as close as practicable to the date when the price negotiations were concluded and the contract price was agreed to.

In the absence of clear direction from your contracts functional management, in my experience, I would ensure that the plan is developed and timely submitted to your contracts function for the total IDIQ dollar amount, indicating in the plan that it assumes being awarded all task orders at this point. See FAR 19.705-1 (b)(1) and (b)(2).

You could look at at one company did to get the gist of it and then do your own research regarding your company's prime contract clauses and solicitation provisions. See for example, https://www.meggitt.com/resources/Meggitt_FAR_DFARS_Supplier_Certifications_August_2022.pdf

How did your company fill out the certificate in 52.225-2 in its proposal to the Government?

The Certificate of Current Cost Pricing Data includes rate agreements with the government.

Can you clarify why this was cited for the poster's prime/sub situation?