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Corduroy Frog

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  1. It is worthwhile if we can justify loading a $30,000 deposit with something. There are multiple jobs attached to this one which also could make it worthwhile. I will become more clear and simply ask the question: Can a cash deposit be loaded with indirect or fee? A cash deposit, after all, is not a cost. The deposit is required to cover risk.
  2. Negotiation going on with a customer. Situation: $30,000 cash deposit required for security reasons. There is $10,000 more work. Looking for a $40,000 contract, including $30,000 cash deposit. Strange. Labor gets loaded with fringes. Labor & Fringe get loaded with Overhead. Labor, Fringe, & Overhead get loaded with G&A. etc. etc. I don't believe a cash deposit can get loaded with anything except possibly interest - and with today's interest rates this won't amount to much. There are not enough indirect & fee bearing elements to make this contract worthwhile if we can't load the cash deposit with anything except a 5% annualized interest rate. Floor is open for suggestions, or authoritative FAR excerpts.
  3. That pretty much answers the question, and I agree. Thanks to all...
  4. Retread, thanks for your usual help. My question is really "when" is the cost incurred. The contractor has a legal obligation to pay when a purchase order is entered, and this is recorded as an expenditure for non-profit entities. However, the obligation to pay is a future obligation and is subject to availability, quality, and delivery of goods. The quote you present from the FAR is not in question, but the definition of "actual cost experience" is subject to interpretation and thus my question. My general feeling, and somewhat supported by your response, is that the incurred cost needs to be more solidified than the simple issuance of a purchase order.
  5. A non-profit records committed purchases as expenditures prior to receiving goods and title. Even though the purchases account shows the expense, the cost hasn't really been incurred in the sense that we normally consider. Does their incurred cost submission need to remove such expenditures in the calculation of incurred cost?
  6. Matthew, thanks for your response, but the Forbes examples are all in the commercial world. The contractor in question is a disadvantaged government contractor.
  7. Retread, we are indeed talking about an 8(a) contractor. Since I brought the subject up, the situation has gotten even worse. SBA is telling the owner that she must pay herself more than absolutely anyone who works in her company and gets a W-2. Contractor has maybe a half dozen employees who are I.T. specialists, such as CyberSecurity Architects, Oracle Database Engineers, and the like. One of these makes in excess of $180,000 per year. In spite of these high-level employees (the cost of whom are covered by contract revenue), there are not enough contracts to support an indirect salary of $185,000 without the company incurring a loss. $185,000 is more than all other indirect costs combined. Why would SBA want to insist that this contractor incur a loss by requiring the owner to pay herself this much?
  8. Thanks for the responses. In the event none of the CAS or FAR prompts such as reclassification, may the contractor do so unprompted and of his/her own volition? "Here2Help" thanks for the conversation. We have explored many alternatives, but the executive salary is the elephant in the room. Officer contends that the SBA is requiring payment over and above everyone else in the company.
  9. Excessive Officer salaries have been considered Unallowable Cost. One of the figures I've heard would be an excess of $400,000. Can a salary be considered excessive under other conditions, e.g. more than 10% of revenue, or something similar? I would like to move some Officer salary to unallowable to reduce G&A rates...
  10. Contract Type is relevant. If this was a fixed price contract, you may not suffer as you think. Leaving out Vacation, Sick, Holiday would mean the fringes were understated, but your Direct Labor would be overstated by a significant number of hours and dollars. What you "lost" in fringes would be "gained" in direct labor and cost. If you completely left out your payroll taxes and worker's comp, your contract amount is truly short by what would be proper. Your RFEA should include the increase in labor, increase in fringes, and payroll taxes/workers comp in proper amounts whether they were bid correctly the first time or not.
  11. I'm certainly willing to do so. I believe others are using innovative approaches, whereas I am strictly dependent on math. I have heard some fallout where one lady had her salary cut from $45K to $30K and quit. I don't know how to price massive cuts like this and get away with it. Another instance was a single FTE where the Q&A indicated the specific Labor Category on the WD, with specific H&W and Sick Pay. Got underbid by 30% on that one too somehow. In most cases, the "line items" are no more than 12 months with a FFP on Schedule B, so being able to see line items won't help a lot. Thanks for the discussion.
  12. Thanks - I didn't know the awarded contract could be available under FOIA. Thanks also for not offerring that I'm making math errors. I am not. I might be making errors in my approach.
  13. I have been underbid three times this summer, which shouldn't raise any eyebrows. But all of these have WD released with Labor Categories defined, and fringes defined as well. The FTE requirements were such that bidding fewer people would have been next to impossible - in fact one of these was a defined hours level-of-effort. And I have been underbid 25-30%. The winner has to bid the same WD wages and fringes as I do, and there is no wiggle room for FTEs. Indirects do exist but are not high enough to warrant this kind of difference. Any idears about how this is happening? My stacking and math are quite accurate, please take this possibility off the table.
  14. Joel, the captioned quote was from me. A more accurate statement might be: "Unallowable costs are not chargeable to either a G&A pool or an Overhead Pool." Regards, Corduroy Frog
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