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Corduroy Frog

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About Corduroy Frog

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  1. Charging with Coverage

    Thanks Pepe for this rousing display of support.
  2. Paying for Proposals

  3. Maximum Profit per FAR??

    I have heard there is a FAR clause that regulates this, but I don't know what it is, or if it even exists. The purported clause limits the amount of profit a company can make on a contract - as a percentage of the work. I've heard the percentage varies with the contract type - cost plus/ T&M/ Fixed price. I have heard the profit for Fixed price is limited to 30%. Fee is calculated as a percentage of cost, not percentage of the selling price. Example: Fixed price contract has $25,000 in direct cost plus another $20,000 in fringe/overhead/ganda for a total cost of $45,000. Revenue on the contract is $75,000 meaning the Fee (or profit) is $30,000. Since $30,000 is 67% of $45,000, if the FAR ceiling is 30%, then profit would be limited to $13,500. Under this purported FAR clause the contractor would have to give $16,500 back to the government. Is there such a FAR clause that limits profit? If so, have I applied it correctly? Does such a FAR clause have to be "invoked" upon the contract to be effective?
  4. Paying for Proposals

    It is (apparently) not the intent of the government to pay for rfp bid & proposal costs. Many rfp's state so. At issue is a small $28K bid. The "margin", including Fee and overstated OH and G&A, amounts to some $7000. Since the anticipated OH and G&A are nebulous and not as "free" as often purported, we think the absolute most the company can realize out of this small bid is only $7000. As you must realize, the size of this effort is tiny in the spectrum of contracts. However, meeting the requirements of the rfp requires much intensive effort, likely to be $8,000. It is obvious to us that the rfp was not written for this small effort, but is probably the result of some overdeveloped government boilerplate. The scope of work (PWS) is only four pages long, and is the only thing which matches the small effort. The remainder of the rfp is some 59 pages long, and contains trivial detailed instructions causing the production of the response to be unduly expensive. And of course, the government doesn't want to pay for any of this. We have a five-year forwarding averaging plan on file with DCAA, but this effort doesn't go beyond year 1. One idea I had was to increase the annualized G&A by an estimated $8000 in B&P cost, thus spreading the cost over several bids, or better yet, focusing to this one bid by adding a few percentage points to our bid G&A rate. Great numbers in the idea, but does this not effectively cause the government to pay extra because of an inflated G&A rate? The contract will be fixed-price, so the G&A/OH rates are static and not reimbursable once established. Question: Is this situation so stark that the company is left with no alternative except to absorb the B&P cost, and effectively perform the contract for nothing?
  5. Charging with Coverage

    Good recommendations, Mr. Edwards. I guess I did not realize how much of a beginner I was, and will try out the beginner forum for my next question. I am not quite the neophyte in the area of preparing pricing, but I have quite a bit to learn about strategy, and what is allowed and what is not. I am much ill-informed when it comes to contracts. I will be on the beginner's forum before the evening is over.
  6. Charging with Coverage

    Not interested in whistleblowing contact people and acquaintenances whom I know. Or anyone for that matter. If that's the way I have to make money I'll do without. The IRS has a whistleblower arrangement as well which is supposed to be "confidential". But they don't simply take your information - they expect you to furnish all sensitive information (in effect make their case for them). The nature of the sensitive information lets the perpetrator know that no one else would have this information except you. So much for their "confidential" treatment. Apologies to those who believe that a sense of "right vs. wrong" equates to the same thing as "legal vs. illegal." Most lawyers would take issue with this.
  7. Charging with Coverage

    Obviously, if I am still asking these kind of questions, I have not been trained. But speaking truthfully, I've been associated with a half-dozen contractors, and all of them do this to one degree or another. Thanks for everyone's input. Corduroy Frog
  8. Charging with Coverage

    Mr. Edwards - from what I've seen, the practice is so commonplace in my environs, that I have no idea whether any laws are being broken or not. I had a right to ask the question without being made to feel like an idiot. My expertise is not in this area - my background is in math and in tax work. I ask questions which may appear infantile and elementary to most of you, but I appreciate the feedback on this forum, and have learned quite a bit.
  9. Defective Pricing

    I'm learning quite a bit from your comments. Does the complexion change if this is a sole-source award and not competitive?
  10. What is the penalty for defective pricing, aside from giving the money back? Are there any penalties or criminal considerations? And what is the additional effect (if any) if the FINA threshhold calls for Cost and Pricing Data? Example: Contractor uses geographical surveys to pay salaries for Labor Categories I, II, and III. This is a competitive fixed price bid. Salaries according to the geographical surveys are $30/hr, $50/hr, and $70/hr. At the time of the bid, it was known that the contractor was going to pay $24, $40, and $55 respectively. Contractor wins the bid, but is paying $25,000 less in loaded labor than was bid. Government accepts the bid and awards a fixed-price contract accordingly. Contractor's actual profit margin on the job is obscene compared to the bid. Will this result in defective pricing, and if so what are the penalties. Are there additional considerations if the award is within the FINA requirement for Cost and Pricing Data, except the customer never asks for it. The situation as presented in the example is to minimize the effect because it was competitive, and a fixed price contract.
  11. Charging with Coverage

    Thanks for your comments "Here2Help". I detect that you are in an advanced environment, and deeply engrained in cost-type and T&M contracts. In recent years, the government has migrated to Fixed-Price contracts, even acknowledging that cost-plus contracts would be cheaper. DCAA for whatever reason is bogged down in minutia and is not even calling on small contractors in a fixed-price environment. Given the fact that these small contractors never interface with DCAA or any enforcement, it's hard to convince them that violations such as 52.203-13 are worth their effort to correct. I've lived through several pendulum swings, but do not see a return to cost-plus awards except in extreme situations where the contractor can't deal with the risk. It may not sound like it, but I know what overhead and G&A are. They are real costs, but only in cases where they are reimbursed do they become billable beyond bid rates. Over-charges to fixed-price contracts do not affect the customer, who couldn't care less since they don't have to cough up any money.
  12. Charging with Coverage

    Thanks gentlemen for your response. The incidents of which I speak are many and rampant, but the one I singled out for going to a seminar was clearly with a company not subject to CAS, nor has a disclosure statement been submitted. The contract was fixed price, bid with labor categories and specified numbers of hours and rates, but "overcharging" the contract does not result in any additional revenue. Furthermore, no hours report will be submitted because the customer is not DoD. The incident is clearly "questionable" but I'm wondering whether it is illegal or breaks any DCAA protocol.
  13. Not sure this is a "bidding" question, but certainly an "operational" question. Everywhere I've been, and everywhere I've seen, personnel working on indirect efforts charge a job directly when there is funding to cover. In many cases the indirect function may have nothing to do with the contract they are charging, but will do so because charging indirect comes out of the bottom line and is not covered by Revenue. I've even seen this in cases where the employee was at a venue where charging the contract would not have been possible. Recently an employee was at a seminar and physically not available to do contractural duties, but he charged the contract anyway. I'm sure the "purist" response would be "Everyone needs to charge where they are working." But I've seen departures in cases where there is coverage under direct cost for a contract, and funding was adequate. I'm not sure this is against the law, but I do believe the practice is rampant and sometimes blatant. I'm not sure this is illegal, but I do believe there is a difference if the contract is cost-plus, or T&M. Charging a fixed-price contract is relatively harmless as far as a customer is concerned. Comments?
  14. Deltek is the universal software for government contracts because of its provision for contracts and pool. All software, regardless of application, changes quite frequently to boost sales for a new and improved product. The products are often not improved, and they often attempt to "force" users to change by removing products that are in use. In recent months, Deltek has discontinued support for its immensely popular Premiere product. And then after offering "Time and Expense" as an add-on to their ultimate CostPoint software, they now make it mandatory. The result is that what they offer now is user-hostile or can only be operated by users with advanced training. I throw the question out to the group: "Is there a better alternative with the conventional features Deltek has offered through the years?
  15. Fixed Price Level of Effort

    Vern Edwards has concluded correctly. I am not an employee, but an "at large" consultant working for myself. I have 3 and sometimes 4 customers for whom I do incurred cost submissions, pricing proposals, and tax work. Most customers limit the people who can talk to the customer - usually it is owners/officers and contracts people. I rarely talk to CORs and COs, and only by request of my own customers. I've noticed in recent years the quality of government contracts people has markedly declined. Maybe the Civil Service has rushed to turn the 50+ year-old people out to pasture, leaving contractors to talk with GS-6 people instead of GS-13 folks. Another conversation, but the quality and cryptic questions arising out of RFPs is another casualty. For those who don't know who I am - we can settle that. I am Ron Jordan, from Manchester, TN, with customers in Oak Ridge, Tullahoma (TN) and Huntsville (AL) and a commercial customer in Nashville.
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