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Don Mansfield

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Everything posted by Don Mansfield

  1. Don't get discouraged. Remember the Code of Ethics for Government Employees:
  2. airborne94, Your instincts are good. Pass this article around your new office and see if anybody sees the light: http://www.wifcon.com/anal/analcomproc.htm
  3. I don't know how the donations would not be "miscellaneous receipts".
  4. When taking a class on the Cost Accounting Standards (CAS) last year, I came across a DCAA rule that made perfect sense to the auditors, but left some of the contracting officers scratching their heads. The rule deals with how to calculate the cost impact of a CAS noncompliance or accounting change on a cost-plus-award-fee (CPAF) contract. Chapter 8 of the DCAA Contract Audit Manual (CAM) contains guidance on how to evaluate cost impact proposals submitted to the Government as a result of a CAS noncompliance or cost accounting practice change (see CAM 8-503). The CAM outlines a five-step process, which is shown in an abbreviated form below: Step 1 Compute the increased/decreased cost estimates and/or accumulations for CAS-covered contracts and subcontracts. Step 2 Combine the increased/decreased cost estimates and/or accumulations within each contract group. Step 3 Determine the increased/decreased cost paid by the Government for each contract group, using the net impact on cost estimates, accumulations and profits/fees. Step 4 Determine the increased costs paid by the Government in the aggregate by combining across contract groups the increased/decreased costs paid by the Government for both contract groups, as determined in step 3. Step 5 Negotiate a settlement with the contractor. The guidance stated under step 3 for determining increased costs to the Government states the following: There is a similar guidance for determining decreased costs to the Government. Thus, the assumption is that the Government would have negotiated a lesser fixed, target, or incentive fee but for the contractor's CAS noncompliance or accounting practice change that caused the cost estimate to be higher than it should have been. For example, let's say a contracting officer negotiates a cost-plus-fixed-fee (CPFF) contract for an estimated cost of $1,000,000 and a fixed-fee of $100,000. The contractor completes the contract and is paid the fixed-fee of $100,000. However, it's later discovered that the contractor used a noncompliant estimating practice that caused the cost estimate to be higher than it should have been. If the contractor had used a compliant estimating practice, their estimated cost would have been $900,000. It is assumed that had the contracting officer known this, he/she would have negotiated a fixed-fee of $90,000. This may not be true in some cases, but it is reasonable as a general assumption. This guidance is based on an interpretation in the FAR Appendix at 9903.306( c ), which states: So far, so good. What's puzzling is the guidance stated in the last sentence of the above-quoted paragraph from the CAM: Thus, the assumption is that, in the case of CPAF contracts, a contractor's cost estimate has no effect on the amount of award fee that a contractor is eventually paid. To illustrate this, let's say a contracting officer negotiates a CPAF contract with an estimated cost of $1,000,000 and an award fee pool of $100,000 (assume no base fee). After performance, the Government determines that the contractor is entitled to 100% of the available award fee and pays the contractor $100,000 (the typical practice is to determine award fee entitlement by applying the earned percentage to the award fee pool?this is a required practice in DoD). It is later found that the contractor used a noncompliant estimating practice which caused the cost estimate to be higher than it should have been. If the contractor had used a compliant estimating practice, their estimated cost would have been $900,000. In this case, it is assumed that had the contracting officer known this, he/she still would have negotiated an award-fee pool of $100,000. This may be true in some cases, but it is curiously inconsistent with the assumption made when calculating the cost impact on a CPFF contract. Is it reasonable to assume that a contractor's estimated cost has no affect on the size of the award fee pool that a contracting officer negotiates? While it is true that a structured approach to developing prenegotiation fee objectives, which relies heavily on prenegotiation cost objectives, is generally not required when developing a prenegotiation award-fee pool objective, it's quite a stretch to assume that prenegotiation cost objectives have no effect on the prenegotiation award fee pool objective (or the size of the award fee pool negotiated). Official guidance on negotiating award fee pools acknowledges that estimated cost can be a consideration. The Air Force Material Command Award Fee Guide offers the following guidance for establishing the award fee pool: [bold added]. The Navy-Marine Corps Award Fee Guide offers almost identical guidance. In my experience, as well as that of some of my colleagues, a contract's estimated cost was a significant factor (if not the most significant factor) in negotiating the size of award fee pools in CPAF contracts. I would be surprised if my experience were atypical. I'd be interested in hearing to what extent my readers consider estimated costs when negotiating an award fee pool for a CPAF contract. Let me know your experience.
  5. here_2_help, I thought this entry would get your attention. A couple of questions for you: 1. Why not assume that the award fee paid would fluctuate in proportion to the amount of the under/over estimate? In other words, make the same assumption for AF contracts that is made for CPFF contracts? 2. You wrote: Why should award fee deltas be considered immaterial, but fixed-fee deltas considered material?
  6. here_2_help, I agree that the current definition of contractor-acquired property is broader than the old definition of facilities. Having said that, are you suggesting that equipment did not fall under the old definition of facilities?
  7. Mary_D, You need to read the rule again. It says: A similar rule used to be in the pre-FAR 45 rewrite at FAR Part 45.302-3( c ): When FAR Part 45 was rewritten, this limitation was removed. Now it looks like they want to re-establish the rule. I also didn't like the way the proposed rule was written and submitted a comment suggesting that they remove the "profit or fee on..." business and just say to exclude the cost of contractor-acquired property from pre-negotiation cost objectives when developing a prenegotiation profit/fee objective (similar to what it says about excluding FCCM from prenegotiation cost objectives).
  8. Vern, I don't disagree with what you wrote in your last post. I just disagreed that an agency's failure to order the contract minimum in the first year results in a violation of the Bona Fide Needs rule, per se. I think you agree with me on that point.
  9. Right. My point is this: just because an agency fails to order the contract minimum in the first year of an IDIQ contract, that does not mean that they have violated the Bona Fide Needs rule. Another example would be if an agency failed to order the contract minimum in the first year of an IDIQ contract, but met the minimum in subsequent years by issuing orders and obligating current year funds (i.e., funds available at the time the order was issued). Again, no Bona Fide Needs rule violation.
  10. Vern, Let's say an agency awards a five-year IDIQ contract with a contract minimum of $50,000. At the time of contract award, they anticpate being able to meet the contract minimum. In the first year, they issue orders totaling $20,000. After the first year, they don't issue another order for the life of the contract. Did the agency violate the Bona Fide needs rule?
  11. Vern, You missed my question about this statement you made: Why must the Government order the minimum during the first year of an IDIQ contract?
  12. Yes. What Vern is describing is not a multiyear contract--it's a multiple year contract.
  13. If you are in DoD, see DFARS 217.204: I can remember having the IDIQ w/options debate at a contracting office that I used to work at. My relatively inexperienced PCO, who liked to try new things, started to structure his IDIQ contracts with five-year ordering periods instead of the traditional one base year plus four one-year options (he probably got the idea from reading something Vern wrote on Wifcon or said in a training class). Despite the obvious advantages of this approach, none of the other "experienced" PCOs could bring themselves to do it. They really didn't have a good argument for using IDIQs with options, other than that was what they had been taught, that is what they had been doing for years, and that is what they felt comfortable doing. Whenever I teach special contracting methods, I always challenge my students to come up with a good reason to award an IDIQ with options. I get a lot of "that's just the way my office has always done it." The best argument that I've heard, which is a practical one, came from an attorney where I used to work. He said that having an IDIQ contract is like having a special sales license. This license allows contractors greater access to get on base and hassle the technical folks in an attempt to drum up business. If you have a contractor that turns out to be a turkey, you could take away their license by not exercising their option. However, if their contract had a five-year ordering period, you could not take away that license as easily. Best argument I've heard, but not persuasive.
  14. Vern, Assuming you mean that you must order the minimum during the first year with the funds of that year, why is that so?
  15. In DoD, it's the program manager's responsibility. DFARS 207.103(g): If you're not in DoD, then check your agency supplement.
  16. Did you ever wonder about the type of debate that goes on before an acquisition rule becomes final and is incorporated into the Federal Acquisition Regulation System? This information can be found in the Background section of the final rule when it appears in the Federal Register. I make a point of reading this section whenever a new rule comes out because it tells the story behind the rule?who the rule is going to affect, who is happy about the rule, who is upset about the rule, who thinks it should be scrapped, what the rule makers were thinking when they created and revised it, etc. This section is also a valuable reference when you are trying to interpret a rule in the FAR System that is unclear or ambiguous. Typically, the comments received range from pointing out errors in the rule to blatantly self-serving statements from private parties either praising the wisdom of the rule or explaining how the rule will inevitably bankrupt small business concerns, cost the Government more money, and lead to a widespread malaise in the country. The rule makers' responses to the comments range from nonresponsive or evasive to well-written explanations of why the comment is or is not valid (I've generally had good responses to comments that I have submitted for consideration). DoD recently issued a final rule revising the existing rules on the restriction on the acquisition of specialty metals (DFARS Case 2008-D003). The rule contained a straightforward definition of "high-performance magnet" in the new clause at DFARS 252.225-7009, Restriction on Acquisition of Certain Articles Containing Specialty Metals, as follows: Apparently, the Background statement pertaining to this definition that accompanied the interim rule drew criticism from a number of interested parties. The comments received went so far as to suggest that the definition, as written, would pose a threat to national security: DoD's response to these comments brought me back to high school physics class (God bless you, Mr. Michel). Here is an excerpt: I don't know if that is right. However, I did learn a new word (anisotropy) and I now know something about the magnetic properties of rare earth metals and transition elements that I didn't know before. You may ask: "what good is knowing this?" Other than trying to make someone think that you are smarter than you actually are, there may be no value. However, as evidenced by the discussion in the Background section of the rule, there was a great deal of deliberation about the final definition. A contracting officer may encounter situations where he or she needs to apply the new rule and knowing that the definition of "high-performance magnet" is very narrow will help. Take a look at the Background section of an acquisition rule the next time one comes out (FAC 2005-036 was just issued last week). Not only will it add some life to the rule as it appears in the regulation, you may learn something.
  17. Read this for some ideas: http://www.wifcon.com/anal/RecommendedReading.pdf I also hope that you encourage your new hires to become members of the Wifcon forum. They'll always have someone to ask questions.
  18. Here are some problems pertaining to Trade Agreements (FAR 25.4) I'm posting for those of you who like puzzles. Have fun. Assume that you work for DoD when answering (i.e., DFARS applies). First one to get them all right wins something (we can negotiate what that is). Vern, you must wait 24 hours before answering. Scenario 1 You have a requirement for research and development of weapons. The estimated value of the acquisition is $208,110. The acquisition will be conducted using full and open competition. Will trade agreements apply to the acquisition? Scenario 2 You have a requirement to buy furniture. The estimated value of the acquisition is $362,144. The acquisition will be conducted using full and open competition. Will trade agreements apply to the acquisition? Scenario 3 Same as scenario 2, except the requirement is for the purchase of base quantity of furniture with an option to purchase more. The estimated value for the base quantity is $181,072 and the estimated value of the optional quantity is $181,072. Will trade agreements apply to the acquisition? Scenario 4 Same as scenario 2, except the acquisition will be set aside for competition by service-disabled veteran-owned small business concerns. Will trade agreements apply to the acquisition? Scenario 5 You have a requirement for a landing craft (a type of ship). The estimated value of the acquisition is $54,177,000. The acquisition will be conducted using full and open competition. Will trade agreements apply to the acquisition?
  19. OLG, Good point. I was thinking about mandatory flow-downs when I posed the question (Vern's category 1), not nonmandatory flow-downs that the prime includes to protect its own interests (Vern's category 2). I have never seen a requirement in the FAR for a mandatory flow down that is conditioned upon whether the subcontractor would be delivering an end item. The Buy American Act (52.225-1) and Trade Agreements (52.225-5) clauses don't contain such a requirement.
  20. I don't follow. Why should the fact that the sub is delivering an end item affect which clauses get flowed down?
  21. If a contract contains an option clause that permits the Government to exercise the option "within 30 days of contract expiration", then the Government can exercise the option within 30 days of contract expiration. The fact that the original contract expiration date has changed is irrelevant. However, I can't answer the question about your specific contract without reading it.
  22. What does the option clause say regarding when the Government can exercise the option?
  23. Vbus, No, a task order is not a UCA per se. However, if a task order were unpriced, then it would be a UCA. Yes. If you are placing a task order in FY10, then you need to fund it with FY10 funds (assuming annual appropriations). This would be true even if you awarded the IDIQ contract in FY09, obligated FY09 funds, and had not yet met the minimum. Think about it. Imagine if an agency were allowed to use the funds obligated to cover the IDIQ minimum from a prior fiscal year to cover its current fiscal year's needs. What would stop the agency from awarding IDIQ contracts in one year with inflated minimums as a way to "park" funds to be used on task orders in future years?
  24. Why not? What would be inappropriate about providing the information to whoever asks for it, even if only one offeror ends up asking for it?
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