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About here_2_help

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  • Birthday 12/17/1960

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    No special interests, really. Kind of a jack-of-all-trades/master-of-none kind of person.

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  1. Fee on Negotiated Changes

    Granted, but it doesn't apply to many types of negotiations. For example, it is not applicable to the negotiation of final indirect cost rates subsequent to a DCAA audit report that questions certain contractor costs, even if the aggregate total of the questioned costs is in excess of $2 million.
  2. Let me add that I know for a fact that some contractors treat the "recruitment and retention incentives" as labor costs while others treat those expenses as ODCs. Related question to DOECPA -- If you are using a DSSR model, how will the offerors treat overtime?
  3. Fee on Negotiated Changes

    I feel your contempt burning me through the screen. I'm sorry I disappointed you.
  4. Fee on Negotiated Changes

    I don't condone lying. I do condone attempting to undermine the confidence of the other side of the table by making arguments that may not be entirely valid if somebody examines my premises carefully. In my experience, very few negotiators do that.
  5. DOECPA seems to be trying to force-fit the cost accounting practices of individual contractors into a one-size-fits-all template. Typically, that approach doesn't work very well.
  6. In my opinion, you can treat the "excess" direct labor you pay the PM as an unallowable cost. If you did that, the indirect costs would be allocated to both the allowable and unallowable direct labor.
  7. Fee on Negotiated Changes

    Examples of negotiation tactics where short term goals overcome long term objectives: 1. Government CO says DCAA audit report supports the position that contractor is ineligible for contract award. The DCAA audit report expressly disclaimed an opinion--i.e., stated in writing that the CO could not rely on it. (GAO B-403214; B-403214.2, Oct, 2010) Did the CO misrepresent the DCAA audit report? Yes. 2. Contractor says CDA statute of limitations prevents government from asserting a claim. The facts are cloudy and may not support the contractor's assertion. In litigation, motion for summary judgment denied. (Many cases.) Did the contractor misrepresent the application of the SoL? Perhaps. 3. COFD issued based on "plainly invalid legal theory" originated by an auditor, despite contractor's attempts to negotiate resolution. (LMIS, ASBCA No. 59508) Did the CO misrepresent the validity of the government's position? Perhaps. 4. USAF refuses to accept contractor's information and insists on holding its PNM goals, unilaterally definitizes UCA when negotiations stalemate. (L-3, COFC). Did the USAF misrepresent the reasonableness of the contractor's pricing? Or did the contractor misrepresent the reasonableness of its own pricing? To be determined. To my knowledge, nobody paid any price for such tactics. Thesis, antithesis. Synthesis. It's how the world works.
  8. Fee on Negotiated Changes

    Okay. Whatever.
  9. Fee on Negotiated Changes

    Perhaps I simply don't agree with your characterization that, if I made such an argument, I would be "misrepresenting the facts." Facts and judgments are two different things. In any case, enjoy your moral superiority.
  10. Fee on Negotiated Changes

    You're hilarious. Government negotiators do it routinely.
  11. Fee on Negotiated Changes

    Vern, 1. It doesn't matter whether my argument holds water since we are negotiating. Any argument that gets the other side to hesitate, to blink, to lose confidence, is a valid argument. 2. I really really hope your last comment ("Omar lives!) was not a reference to Omar Mir Seddique, the Pulse nightclub shooter. Please tell me you were referring to something else.
  12. Fee on Negotiated Changes

    Why? The answer to this question will impact my answer to your other question, which is below. In this case, the counter argument is that the contractor has floated the government a loan for the costs of the changed work, since the contract wasn't modified timely to include the additional funds. Therefore the contractor wasn't able to bill its additional costs and had to go borrow the funds, paying unallowable interest on its loan. This assumes the government is at fault for taking "well over a year" to negotiate the value of the contract mod for the changed work. If the cause for the delay is something the contractor did or did not do, then my counterargument won't work.
  13. Limitation of funds notice requirements

    The SF 1408 establishes the requirements for an "adequate" contractor accounting system. There are 12 criteria. One criterion states that an adequate accounting system must be able to provide "identification of costs by contract line item and by units (as if each unit or line item were a separate contract) if required by the proposed contract." Thus, the key question is what does the contract require? Another question (as Joel posted above) is what did the parties intend? If, as 2bit posted, there is no express requirement in the contract to manage funds at the CLIN level, then he might have an argument. But as Joel has noted, there may well have been a patent ambiguity that should have been resolved before performance started. Given the various colors of money (e.g., FMS funding by CLIN) it seems fairly obvious that the correct level for funds management should be the CLIN. But who knows? Seems like the contractor and CO need to get together and resolve this quickly.
  14. Maximum Profit per FAR??

    Be careful what you believe. Most of what you "hear" is nonsense. I suggest you research rather than rely on what you hear. In this case, I'll do your homework for you. See FAR 15.404-4(c)(4). There are no other maximum profit levels.
  15. Paying for Proposals

    You are missing the point on many levels. Let me try to help you understand where you are going wrong. 1. The RFP instructions that state the government will not pay for proposal prep costs are there to tell bidders not to include proposal prep costs as estimated direct costs in their cost proposals. There is absolutely no prohibition on including proposal prep costs in a B&P pool allocated on the same base as is used for G&A expense allocations. (Ref. FAR 31.205-18.) One reason you don't include your proposal prep costs as estimated direct costs in your cost proposal is that you might not win. And then you have to absorb those costs out of profit. But if you include them in your B&P pool then you recover them along with your G&A expenses, against active contracts. 2. "Overstated OH and G&A" is a strange phrase to use. Please stop using it. The cost pools and associated indirect cost rates are not overstated if they are based on budgetary estimates (or actual costs). Do you mean forward-priced, estimated, OH and G&A indirect cost rates? You said "we have a five-year forwarding averaging plan on file with DCAA" which is another unclear phrase. Do you mean you have submitted a Forward Pricing Rate Proposal (FPRP) that has become an Forward Pricing Rate Agreement (FPRA)? Most small companies don't do that, so I'm not sure where you are at with DCAA. Regardless you should use the indirect cost rates in your proposal that are the most accurate estimates of the indirect rates you expect to incur. To me, that would mean (at a minimum) including the proposal prep costs in the appropriate indirect cost pool and including the contract award in your business base that is used for cost allocation. You don't "overstate" your indirect costs, you estimate them as accurately as you can. 3. If you add your proposal prep costs to your G&A expense pool, you do not "spread that cost over several bids." Instead, you will allocate your B&P expenses plus your G&A expenses to all active contracts you have during the year. To be clear: B&P and G&A expenses are period expenses, meaning you can only allocate the costs you incur during your fiscal year to contracts that are active in that same fiscal year. You can increase your out-years' estimated indirect rates based on budgeted (future) spending, but you can only recover actual spending against the actual contracts on which you are performing. 4. To answer your question: NO. The company does not "absorb" the proposal prep costs because it allocates the costs to its active contracts. If you have only FFP contracts and the actual G&A expense rate is higher than you bid, so sorry. You should have budgeted better and forecasted an increase in proposal prep costs. 4.a Also, you forgot the profit component you get to add to your cost estimate, which is not nothing. Further, you forgot the possibility that you might underrun your FFP contract, which has been known to happen from time to time, especially at contractors whose business base is growing. When the large defense contractors laid off thousands in the mid-nineties, their top-line revenue dropped but their bottom line profits shot up because their indirect costs dropped suddenly, and those costs were allocated to FFP contracts. 5. From a financial statement perspective the contract's margin, if it is awarded, is the difference between costs incurred and costs billed. By "costs incurred" I mean costs before G&A is allocated, because (as noted above) G&A is a below-the-line period expense for financial statement purposes; it is not included in Cost of Sales. So if you do a good job forecasting your expenses (including indirect expenses) then the margin equals G&A expense plus profit (it excludes OH because OH is part of Cost of Sales on financial statements). If you underrun, you make more margin; if you overrun, then so sorry. 6. It is a rational approach to add the costs of preparing a proposal, supporting fact-finding and audit, and negotiating with the government and then compare that number to the expected margin that will be earned if the contract is awarded. If the math indicates that the cost is more than the expected margin, then you should not bid. That's the business decision that needs to be made. Hope this helps.