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LuketheNuke

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  1. Here_2_help, No problem, this is a place for CIVIL DISCOURSE. As for #1. I do see your point, at 52.216-7 (b)(1)(ii)(A) thru (F), a proper invoice will have have all those individual cost elements broken out, and DCAA will verify. I may have taken a short-cut in my argument, of course each of those may have its own 'rate', however it is easier when working with it every day to speak in terms of the composite rate or the billing rate. On fixed price incentive contracts I do only see one number for 'cost'. We did get side-tracked, from the original post, the question remains why just looking for only DL rate? As for #2. You do make a good point here as well, the allocation base for indirect costs needs scrutiny from time to time to ensure it is in step with current production methods. But, direct labor is still a large part of many acquisitions. Think big engines from Caterpillar, or Pratt & Whitney, or smaller areas like an airplane cockpit and all that instrumentation, and back to large projects like shipbuilding, all are labor intensive.
  2. Billing rates allow KTR to recover both the direct and indirect costs at the same time, with a single rate often called a 'fully burdened rate'. The 'burden' part is the indirect cost rate on top of the direct cost rate. What one sees is rolled up into the one billing rate is actually the sum of :direct labor rate + OVHD rate + G&A rate + FRINGE rate. There are variations on this theme, by substituting 'material costs' for the direct labor in the equation above. For example, a KTR may choose to recover (spread the costs over the production run) the indirect costs associated with running its shipping, receiving, warehouse, parts inventory system etc. by using material dollars, other KTR may choose to use direct labor dollars. Which ever way makes the most sense to allocating the indirect costs to appropriate cost objectives. Think pool over base. The pool(s) are the indirect costs and the base can be direct labor dollars, direct labor hours, or material dollars (just to name a few). It depends how sophisticated is the KTR with its costs accounting system. In manufacturing, it is easy to see the logic in using direct labor dollars, the more touch labor used, the more indirect costs used (electricity, steam, tooling etc.) .
  3. Here_2_help--yes you're right, I have made a wrong turn. This is more confusing, if one has 'provisional rates', which usually means a 'fully burdened rate', and which is the sum of the (direct labor + the indirect labor rate) = fully burdened rated, then why don't they know the direct labor rate. Provisional rate is also referred to as the 'billing rate', they are the same thing. There are three rates, 1- Incurred Cost (what the rate was last year, determined thru a DCAA audit, negotiated with KTR),2- the Billing Rate (the rate this year) and 3- Forward Pricing Rate, rates to be used pricing proposals into the future. What does one allow the KTR bill the gov't, in the current accounting period (this year), on cost type contracts? Answer is : allowable costs plus fee. Allowable costs is direct material and direct labor. The question is what rate to allow the KTR invoice. The provisional or billing rate is used (direct labor + OVHD, G&A and Fringe) until DCAA can audit the KTR's Incurred Cost submission for that year. Hopefully, you as the ACO set the rate close to where the KTR will end up for the year, low enough to protect gov'ts interest for known unallowables, but high enough as not to put the KTR into a position of 'starving for cash'. Maybe the original post , Caitlin, doesn't realize, the provisional rate contains the direct labor rate.
  4. I most certainly did read the post above. I don't disagree with the point made about there being several ways to account for a 'full year' relative to the amount of hours worked, however those calc's have more bearing when turning hours into full time equivalent heads (number of employees). I don't think we have the full story from the original post, as provisional billing rates are 'fully burdened rates' not just the direct labor rate. But that is all we have to go on at the moment. We can assume we operating under FAR 52.216-7 Allowable cost and Payments, and so the challenge is to set a billing rate for the expected full year rate FAR 42.704 Billing Rates. And the gov't will pay invoices for all allowable costs. Direct labor dollars are allowable costs, so the gov't is going to reimburse what the KTR is paying its employees. Ask the KTR's payroll department and they will tell you the direct labor rate. That direct labor rate being paid is likely the prevailing wage for the market, and agreed upon between the KTR and the employee in an employment contract ahead of time, checking the boxes for allowability per FAR 31.205-6 Compensation for Personal Services. With that being said, the mystery still remains, why an ACO would be setting billing rates based only on the DL rate and not the fully burdened rate (OVHD, G&A, FRINGE).
  5. Why not just ask KTR's Payroll dept., they can tell you that, it is done all the time. Get the employee badge number, that way you keep the names out of it. On T&M contracts, using a select group of employees with specialized skill sets, KTR supplies the badge numbers of the employees, we verify the DL rates with, payroll. Done.
  6. Yes there are several ways in FAR that protect the gov'ts interest and allow a way for the ACO to re-coup monies from a KTR. Instead of getting tangled in the argument to prove FRAUD, consider the other situations in which final rates have been settled but then, later, it is determined there are issues with costs to see the parallels to your circumstances. For example, in the case of CAS Non-compliances outstanding, one can still settle indirect rates, because in resolving the CAS Non-compliance a 'cost impact' must be determined. If there is a resultant cost impact to contracts the KTR will have to allocated those costs back across the contracts, and re-run Schedule "H" and "I", and then re-submit invoices which reflect the cost impact. The other avenue is that at contract close-out process the file shall not closed if the contract is in litigation or under appeal (assuming you do have an actual legal proceeding due to the FRAUD). Let's say your choice of words "fraud", was a little too strong, but instead it is an cost accounting error (on purpose maybe), one can look to 32.6 Contract Debts. See 32.601 (a)(8) Duplicate or erroneous payments. Which can lead the ACO to 32.604 where a 'Demand for Payment' letter is issued to the KTR. This does happen where mistakes are made, sometimes with less than honorable intent, and sometimes its as simple as the person who was responsible for making those journal entries retired, and never told anyone how to do it and so it was overlooked. So whether it is ''real fraud', a CAS Non-compliance or just an 'OOPS', it can be fixed. Of course as it was said by the others above, check with your Legal team and DOCUMENT DOCUMENT DOCUMENT the file.
  7. Thanks to everyone, your comments are helping me to connect the dots. The KTR's travel in question is to Hawaii, and this is the reason for zeroing in on the JTR rather than the FTR. I couldn't see (back in the years 2014-2017) where in the JTR the reduced per diem rates are discussed (in section 4250 Long Term TDY Flat Rate Per Diem), and I couldn't see where in FAR or the JTR those reduced rates are applicable to gov't contractors. The answer is those reduced rates are not mandatory for gov't KTRS. The key for me was shown above by Here2Help, within 31.205-46, at paragraph "(a)(4) Paragraphs (a)(2) and (3) of this section do not incorporate the regulations cited in paragraphs (a)(2)(i), (ii), and (iii) of this section in their entirety." There it is ...' of this section do not incorporate the regulations cited', only the 'definitions' in the JTR is applicable and the sections dealing with special situations. That doesn't mean the KTR can incur lodging at whatever rates they want and expect the gov't to find those costs allowable, there are still several wickets to get through. There are locations where it may not be possible to get lodging at gov't per diem rates, like Pearl Harbor, but the KTR still needs to get the gov't's buy-in see "(a)(3)(iii) If it becomes necessary to exercise the authority to use the higher actual expense method repetitively or on a continuing basis in a particular area, the contractor must obtain advance approval from the contracting officer." Thanks again
  8. Perhaps the Appendix A is only invoking the 'definitions' for lodging, meals and not necessarily the per diem rates.
  9. Well aware of the 31.205-46(a)(2)(ii), however, I am having trouble locating JTR Volume 2, ( I do see the JTR I don't see a volume 2) and Appendix A is 'definitions', I don't see where the 'definitions' provide guidance to invoke per diem rates on the KTR.? The DOE reference above would be outside of my sandbox. It then becomes how does one 'parse' maximum rates (on a daily basis), is it the maximum show in JTR (which would not have any decrement applied for length of stay) or is the maximum rate for the length of stay?
  10. Regarding FAR 31-205.46 Travel Cost: The issue before me pertains to 'maximum per-diem rates' for a given destination a gov't contractor can claim as allowable. In the past I have used the schedules found in the Joint Travel Regulations, ran down the table to find the location, lined up the dates of travel, read across the table for the lodging, meals and incidentals. Done, one of the simplest cost elements of a proposal to determine allowability & reasonableness. So I thought. In the 2014 -2017 time period, the JTR tables were broken down by the length of stay 0-30 days, beyond 31 days, and beyond 180 days. With the longer length of stay the max per diem rates were reduced, the expectation that one will get a better rate for staying longer. The tables for + 180 days reduced rates by 55%, it makes sense. The tables were changed after 2017 and they no longer show those discounts for longer stays. However, in this instance I am working with contractor costs for those years 2014- 2017. Then I ran across the following in a well respected gov't contracting reference " Some gov't personnel have attempted to apply FTR/JTR rules to reduce the published per diem rates for a trip that exceeds beyond 31 days. They have used the JTR or FTR to question TDY assignments in excess of 180 days. The regulations that apply to civil service and military (not contractors) set the reimbursement at 55% of the per diem rate. This is not required of contractors by the FAR. However, contractors seeking to reduce travel costs may find fertile ground in the FTR/JRT rules". This well respected gov't contracting reference was released in 2021, but it doesn't exactly point to where in the JTR that it doesn't apply to contractors. I know I must be missing something, as I cannot connect the dots to show me where the in JTR it allows the contractor to incur whatever.... Does the JTR apply to gov't contractors or not? Or is it a matter of what parts apply to contractor?
  11. That's a good idea. I will check the DFARS Business System criteria for both the Accounting System and Purchasing.
  12. The conversation is veering away from my original line of inquiry, which is focused only on the PRIME. I get it that FAR states it is the PRIMES' not the Gov't job to get the ball rolling, "the Contractor shall submit a completion invoice or voucher to reflect the settled amounts and rates". But what if the PRIME isn't moving forward to meet this responsibility. Have others taken the aforementioned actions : :Suspend interim financing payments on other contracts • Disallow or recoup previously paid costs • Decrement bidding/billing rates Ideally the ACO would only do this just once to send the message to the KTR.
  13. That Contract Closeout Guidebook is going to be very helpful! thanks
  14. Yes, lets assume the contracts are flexibly priced type, and there are settled indirect rates, the bottleneck is in the steps listed in FAR 4.805-5, contractor is not getting through all the internal sign-offs to meet steps 1 thru 15. Ktr may have already billed for all of the work, and thinks there isn't any more $ to collect so why bother submitting the close-out package. Are there pre-emptive steps the ACO can take like a with-hold or a rate decrement that brings the Ktr back to the table?
  15. What about on the flip side of this topic. How can the ACO motivate contractors to close-out contracts (assuming final indirect rates are settled and work is complete)?
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