Corduroy Frog

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.

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

10 hours ago, Vern Edwards said:

Not sure its against the law? Holy cats! Really? Not sure?

 

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.

I'm learning quite a bit from your comments.  Does the complexion change if this is a sole-source award and not competitive?

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.

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.

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.

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?

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?

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.

20 hours ago, C Culham said:

CF - Just in case you did not dig into the CFR regarding your questions here you go as it may help....

Thanks to both of you for responding.  Mr. Culham, thank you for abstracting the verbiage.

On forums such as this, many responses provide links to regulations, or direct quotes such as the above.  The problem is that unlegal minds such as mine cannot digest the intense language or mine the passage and come to any conclusion.  For example, the regulation quoted above did not mention "sick leave" anywhere in the narrative.

I think I have a better understanding of what to include in pricing for H&W and appreciate the responses.

"Corduroy Frog"....

 

 

Thanks Retread.

If I can condense your answer, my understanding is:

1. If the contract is subject to the Executive Order for 56 hours of sick leave, it cannot be considered as a Health &Welfare benefit for pricing purposes.
2. If the contract is NOT subject to the Executive Order, the sick leave may be considered as H&W unless required by State Law.

Have I understood this correctly?

Thanks to all who have responded.  I am pricing enough hours to fill 1920 hours and told the project manager that the hours have to be delivered (with part-timers if need be) or we will be noncompliant.  There is also the possibility that the contract can be negotiated to a T&M hours billing.

In cases of SCA-required furnishing of H&W:  Is Sick Leave counted as an element of H&W?

In recent years, companies have been enamoured with replacing Vac/Sick with "PTO" in order to eliminate the distinction.  If the distinction no longer exists, can sick leave still be counted as an element of H&W?

Keep in mind that under the infamous executive order, some contracts will require 56 hours of annual sick leave which cannot be commingled with Vacation.  Many of us thought this executive order would be reversed, but doesn't look like that is going to happen.

I'll add some more to help paint the picture.  From the responses, there is overwhelming emphasis that if this is really a level-of-effort contract, the contractor is obligated to deliver the hours or be non-compliant.

It is my opinion that the contracting office who designed this RFP is not competent.  Mr. Edwards made reference to the possibility that this may NOT really be a LOE contract in spite of what they call it.  The COR is young and not very well versed (for that matter, neither am I).  They are expecting us to bill on a fixed-price format:  Hourly Rate X 1920 divided by 12.

The RFP is not on the street.  It is small and we are expecting a sole source award.  I'm afraid as long as the contract is defined as a FPLOE then we will be in violation if the positions do not deliver a full 1920 hrs.  I hope this clears up the misinformation. 

Your comments are welcome, and even better would be suggestions as to how to clear this up.

From everyone's responses it appears the overwhelming sentiment is that the govt will expect delivery of the specified hours.  In my experience the govt awards the specified hours and rates, and then accepts billing on a fixed price monthly amount. 

A microcosm of the situation:  One Position, the pricing CLIN shows 1920 hrs X $50 = $96,000.  Monthly billing amount is $8,000.  The position has 100 hrs vacation, 80 hrs holiday, 40 hrs sick leave.  The environment is not conducive to 60 hours overtime.  How can the govt expect 1920 hrs from this position? 

Mr. Edwards I appreciate your experience, but I am obviously not going to reveal too much about my client's proposal except in very generic terms, so I doubt I could ever supply you with enough information to expect an accurate response.

I believe from all the responses that I probably have the option of factoring down my hourly rate if the level-of-effort specifies more hours than will be spent.   In order to price a competitive bid where govt insists on pricing 1920 hours for people who can only deliver 1860, then I can factor down my hourly rate by 1860/1920.  If my hourly rate is $50 based on 1860 expected hours, that I can reduce my hourly rate to $48.4375.  In other words $48.4375 X 1920 = $93,000 and $50.00 X 1860 also = $93,000.

Thanks to all...

Thanks Guys.  The govt will expect a fixed price billing, even though an hourly rate was used to calculate the price.

And the overage does not stop with the bid.  The govt will use the extended dollars to award a contract value and fund accordingly.  That's why the billing will include the overage.  [HR rate X 1920 divided by 12]

Govt calls this bid opportunity a "fixed price level of effort."  Quite common.

The specified positions consist of an hourly rate multiplied by 1920 hours annually.  Yet there is no possible way the people can actually deliver 1920 hours due to vacation, holiday, sick leave, and any number of other situations which require time off the job.  Effectively, this creates an overpricing.

Once on a bid I factored the hours down in order to be realistic and the govt adjusted the price in order to "bring my pricing to an equal footing to the other bidders."  The "real" hours expected to be delivered was closer to 1860, and they adjusted my total price upward by a factor of 1920/1860.

My question:  How to submit a competitive and realistic total price with the govt taking the position that they insist??

And going down the road to the award:  The overinflated extended values become a fixed price billing, usually a total price divided by 12 months.  So the contract will be funded with this additional inflated amount of money, and billing will be allowed.

We have substantial IT installation work which is "rotted out" by virtue of being too old.  We can probably go after and win a commercial contract under the appropriate NAICs Code to revive past performance.  The technology has not changed much in 4-5 years for this type of work.  Still involves networks, audio/visual, etc.

What impact (if any) does a past performance in a commercial environment have in a Federal evaluation?  Must a past performance be on a Federal contract only, or is there any credence given to commercial past performance?

GSA Contracts require the prime contractor to pay 0.75% to GSA for their IFF.  However, if the ultimate customer is GSA itself, does this have to be added?  I wouldn't think so, but with imbedded agencies I'm not sure.