Vern Edwards

According to an unofficial communication from DOD: "[T]here is no exclusion for commercial services." NASA has expressly applied the E.O. to commercial services. See Procurement Class Deviation 21-03A, Oct. 1, 2021, Updated Nov. 8, 2021, CLASS DEVIATION FROM THE FEDERAL ACQUISITION REGULATION (FAR) FOR EXECUTIVE ORDER 14042, ENSURING ADEQUATE COVID SAFETY PROTOCOLS FOR FEDERAL CONTRACTORS: Emphasis added. The attached clause reads as follows: You can find the entire text of the class deviation at https://www.hq.nasa.gov/office/procurement/regs/pcd/pcd21-03A.pdf. I do not know what other agencies are doing.

No. The Administrative Procedure Act (APA) is at 5 U.S.C. 551 et seq. 41 USC 1707, "Publication of proposed regulations," provides in part as follows: The rule-making provisions of the APA do not apply to matters pertaining to contracts. See 5 USC 553(a)(2). However, 41 USC 1707 requires that agencies follow the public notice and comment requirements of those procedures under certain circumstances.

Not necessarily. Generally, see Congressional Research Service, Executive Orders: An Introduction, March 29, 2021. https://crsreports.congress.gov/product/pdf/R/R46738 See also Manheim and Watts, "Reviewing Presidential Orders," University of Chicago Law Review (Nov. 2019), 86 U. Chi. L. Rev. 1743: https://chicagounbound.uchicago.edu/uclrev/vol86/iss7/5/ For an in-depth discussion of executive orders and the force and effect of law, see Raven-Hansen, "Making Agencies Follow Orders: Judicial Review of Agency Violations of Executive Order 12,291," Duke Law Journal (April 1983), 1983 Duke L.J. 285. https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2836&context=dlj

Published today in Bloomberg Government"

Reuters: "From Boeing to Mercedes, a U.S.worker rebellion swells over vaccine mandates" https://www.reuters.com/world/us/boeing-mercedes-us-worker-rebellion-swells-over-vaccine-mandates-2021-11-02/

What's interesting is that in the same document DOD says: So the policy is that the parties must negotiate a fixed price to "reimburse" the contractor for indirect costs, even though they cannot anticipate costs with any reasonable degree of confidence. They came up with that policy because, as stated in the Federal Register, they didn't want to reimburse commercial item contractors for actual costs, since that would have imposed the cost principles in FAR Part 31, which wouldn't be very commercial. But they couldn't use a rate-based policy, because that would violate CPPC. If the prospect of an excessive or unfairly low "reimbursement" bothers you, one obvious solution is to negotiate a schedule of fixed prices for varying ranges in the amount of materials costs. Are there any other solutions?

Duplicate post deleted.

@Don MansfieldI had considered the use of a maximum, and that may be a solution. In any case, I think the idea of a single lump sum amount is problematical if there is a large degree of uncertainty about materials cost. The idea is to "reimburse" the contractor for indirect costs, or at least to approximate those costs. In my opinion, an amount that might be significantly disproportionate to the amount of actual materials costs cannot be fair and reasonable. I must point out that CorduroyFrog's opening post descried what he saw as a tendency to refuse any compensation for G&A on travel. This discussion about what to put in the blank of 52.212-4, Alt. I, (i)(1)(ii)(D)(2) does not address that issue. I don't know whether the problem is that COs are refusing to pay indirect costs specifically on travel or more generally. Thanks to Formerfed for his response to my question. One last thought about the clause. It says: "The Government will reimburse the Contractor for indirect costs on a pro-rata basis over the period of contract performance at the following fixed price..." I think that is ambiguous. The term "pro-rata" could be read as referring to the method for measuring the amount to be reimbursed, rather than the method of paying the reimbursement. Such a method would be a rate. But use of the phrase "fixed price" is contradictory. The entry "$0.10 for every dollar of actual materials cost" could a way to resolve that ambiguity, since $0.10 is a fixed amount. But a CO would have to be aware of the GAO's interpretation of the cost-plus-a-percentage-of-cost (CPPC) prohibition in order to avoid a prospective problem. For a description and analysis of the GAO's interpretation of CPPC as applied to indirect costs, See Mr. James White, Assistant General Counsel for Finance and Litigation, Office of the General Counsel, Department of Commerce, GAO decision B-252378, Sept. 21, 1993. In that case the rate applied was a percentage: "54 percent". Would GAO consider "$0.10 per dollar" to be a percentage?

@formerfedWhat worries me about a single fixed amount of $2,000—based on a materials cost estimate of $20,000 and a 10 percent G&A rate—is that we'd be using a T&M contract because we would not be sure of what work would have to be done and what the costs would be. What if it turns out that the contractor actually needs only $5,000 in materials? A "reimbursement" of $2,000 for indirect costs would be too much. In fact, it wouldn't really be a "reimbursement." What if the contractor actually spends $30,000 for materials? The $2,000 "reimbursement" would be too small. So why not fill in the blank with something like "$250 for materials costs up to $2,500; $500 for anything up to $5,000; $1,000 for anything up to $10,000," et cetera? In other words, why not provide for the possibility that actual materials costs might be less or more than estimated and thereby minimize any over or under payment? Another thought is to fill the blank with something like "$0.10 for every dollar of actual materials costs." That would be a fixed amount per materials dollar, which would provide for perfectly proportionate reimbursement of the 10 percent G&A rate with little or no risk of over or under reimbursement. But I suspect that scheme might be considered cost-plus-a-percentage-of-cost?

@formerfed Two questions: 1. Must the "fixed amount" be a single lump sum? 2. What would a "pro rated payment schedule" look like—to what would payment be proportional?

@C CulhamThis was my question: You did not answer it. Maybe I wasn't clear. What amount does the contractor insert? If there are many possibilities, choose one. Remember, it must provide for pro rata payment. Your answer need not come with a lot of palaver (explanation). One short sentence will do. If you like, assume a one-year T&M contract and that the estimate of materials costs at the time of award is $20,000.

I wonder: Does everyone understand how 52.212-4, Alt. I, paragraph (i)(1)(ii)(D)(2) is supposed to work? Does everyone understand: Emphasis added. If the contractor's G&A rate is 10 percent and it wants to recover that amount on materials costs under a commercial T&M contract, what "fixed price" schedule does the contractor insert in the blank? Ron Jordan (CorduroyFrog), what do you say?

Perfectly legal, if both parties can agree to the nature and amount of travel.

Thanks for letting me know. Now, delete your address. Very unwise to post it on the internet. Crummy example.

Please cite that "general accounting principle," and then explain how it applies to the pricing of a government contract. Here is what the clause says: Since the clause expressly states how the government will pay for indirect costs, please explain how the contractor can include indirect costs in the other direct costs. By the terms of the clause, travel is an ODC.

I would refuse to sign a release.

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@ji20874Let it go. I think you are dealing with more than mere disagreement.

A T&M contract for commercial items MUST include the clause at FAR 52.212-4, Alt. I. Paragraph (i)(1)(ii)(D)(2) requires (1) a pro-rata fixed amount and (2) a payment schedule as the basis for payment of indirect costs. The parties can agree to $0. COs who insist on $0 are taking a tough, perhaps unreasonable, stance in negotiations. But they are within their rights.

The parties must AGREE to a pro-rata fixed dollar amount in paragraph (i)(1)(ii)(D)(2) for indirect costs and a schedule of payments, rather than a percentage rate. (The FAR councils thought that inserting a percentage rate would violate the cost-plus-a-percentage-of-cost prohibition. The frog seems to be ignorant of that prohibition.) The amount might be $0. It doesn't matter who proposes the amount—contractor or CO. They ultimately must AGREE to an amount if they want a contract. (That's Contract Law 101 for professionals.) There is no reason for a professional to be confused. As a CO conducting a procurement for a commercial item T&M contract, I would invite the prospective contractor(s) to propose an amount and a schedule of payments. If I were determined not to pay any amount, I would insert "$0" and tell the prospective contractor(s) that the amount is non-negotiable. As for accepting "true examples," even if the frog's example is "true," which I question, there is no reason to accept it. Only a fool of a CO would do or agree to do such a thing. And if the CO's agency has a competent review function they would reject any attempt to do it and cancel the CO's warrant after stamping it FOOL. As for the sources of confusion, much of the confusion in this thread has been caused by people who wrote sentences like this: Such writing is not associated with any reality of which I am aware.

Not sure? Really? So a contracting officer writes a T&M contract for commercial items and includes a cost-reimbursement CLIN for travel? Why on earth would a CO do that? To get around the pro-rata fixed amount in 52.212-4, Alt. I? And that would not be a FAR deviation? And then, in connection with the cost-reimbursement CLIN, the fool of a CO negotiates a fixed lump sum amount to cover indirect costs? And you are not sure that's absurd? Yes. In confused, absurd, and ignorant minds.

From today's Washington Post: https://www.washingtonpost.com/nation/2021/10/28/covid-delta-variant-live-updates/

@Corduroy FrogIt's a good thing for your consulting practice that you are not posting under your own name, because you clearly don't know enough about the issue to provide advice to anyone, especially not for money. That "example" is absurd. If it's real, cite the contract number. If your point is that COs are not negotiating fair deals with contractors, you have made it. Enough from you is enough. And read the article about contract line items that was posted to Wifcon a few days ago.

@C CulhamIf you are buying a commercial service, why are you asking questions about what is included in the rates? Why aren't you doing a price analysis of the rates, instead of a cost analysis? Why should you care whether beer is included if the rate is fair and reasonable based on market pricing? See, this is why reforms don't work. People who learned old techniques cannot let them go.

@formerfedWhy does it seem to be a mutual error mistake? Because NewbieFed doesn't understand? Who made what mistake? According to NewbieFed, the order said that the price included duties. Did the seller miss that because it didn't read the order before it started to perform? Was that the mistake? Someone, please, straighten me out.