here_2_help

No worries. I don't mean to be a complainer -- your annual analysis of Title VIII is an invaluable resource ... very much appreciated!

Thank you gentlemen. Much appreciated. Bob, FYI, your NDAA analysis has links to the conference reports, but no active link (that I could find) to S.2943.

Can you point me to the Title/Section that discusses the reorganization? I've looked and I cannot find it. Thanks

Who is the "we" in the sentence quoted above? Is your question about per diem (lodging + M&IE) or about lodging? What is the contractor's standard practice with respect to reimbursing employees for lodging expense? Does that standard practice comply with 31.205-46? Is this just a one-off anomaly, or is this how the contractor intends to operate going forward?

Love this. Thanks for taking the time to write it up. I've always been on the contractors' side of things and I appreciate getting another viewpoint. From the contractors' side, we work diligently to avoid litigation, which is costly and takes a very long time to resolve issues. On the other hand, I sometimes think the COs welcome litigation because it takes the burden of making a difficult decision off their shoulders. It's very interesting to me that Rule was willing to make the tough decisions; his obvious courage is admirable.

That seems weirdly specific. Especially including the dollar amount cited. Somebody needs to tell this story.

The mind whirls with possibilities ... as to just what in the blue blazes the drafters were thinking.

I agree with ktr1999. If I've learned anything from reading WIFCON it's that the definition of "subcontractor" depends on the context. The definition found in Part 44 is different from the definition found in Part 3. Because of that, if you call the software supplier a "subcontractor" for purposes of complying with FAR Part 19, it doesn't mean that your accounting system needs to burden the transaction the same way it would for a "real" subcontractor.

No ire for the contractor that stole government property?

Go tell it to Judge Dyk. Rumsfeld v. UTC, Jan. 2003

C Culham, We could have a very interesting discussion regarding the definition of "cost" and the distinction between "incurred" and "recorded" ... one that I am sure would bore many WIFCON lurkers to death. At the end of the day, it is the common dictionary language that defines these terms of art, because the Court of Appeals, Federal Circuit, said so. I thank PepetheFrog for coming to my defense. S/He represents me well! To add to his/her points, in my experience many (most?) DCMA contracting officers are afraid to make a decision regarding contract interpretation without extensive consultations with legal. Legal's inclination is to take a very conservative stance in order to protect the government's interests if the matter comes to litigation. Thus, if somebody were to ask the CO, it would take some time to get an answer, and the answer would tend to favor the government's interests as opposed to the contractor's interests. Let's agree the contract terms are ambiguous. Your position is that there is a right answer and the CO will provide it. That does not necessarily jibe with my experience in such matters. The CO will tend to interpret the language to support the government's interests. All things being equal, I would prefer to construe the ambiguity against the drafter (government) because that's the legal doctrine.

The actual cost is the amount recorded by the contractor as a cost on its books -- or the amount "incurred" by the contractor. See 31.201-1. Costs are supported by documents, including (in this case) employee expense reports requesting reimbursement for M&IE costs along with an employee certification. Depending on the amount of costs for which the employee is seeking reimbursement, a receipt may or may not be required to substantiate the legitimacy of those costs. Not dramatically different from what a government employee would expect when submitting a TDY expense report.

Others have suggested you consult the CO and that is absolutely a viable plan. On the other hand ... perhaps you should consider implementing a policy telling your employees to expect reduced reimbursements when/if they receive a free meal. (Note skipping a meal is not grounds for a reduced M&IE reimbursement.) Have your employees identify any free meals on their expense reports. The FTR tells you how much to reduce the M&IE reimbursement for each meal (breakfast, lunch, or dinner). Use that value. It's not particularly hard to implement.

It's not just a matter of contract interpretation -- though that's obviously a key aspect of the problem. The issue nobody has yet raised is ... what are the contractor's disclosed or established practices? And how was the contract proposed? If the contractor has an established practice of paying its employees the max M&IE locality rates and it proposed the contract that way and the negotiated estimated costs were agreed-to using that methodology, then as far as I'm concerned that's the end of the discussion, since 31.205-46 permits the practice.

Vern, Per the language of the -46 cost principle, the contractor has choices regarding reimbursement of M&IE expense. The locality rates establish a ceiling over which any reimbursement amount expressly may not be found to be either allowable or reasonable. Generally, reimbursement amounts under the locality rates are routinely found to be allowable and reasonable, absent unusual circumstances. In my experience, if a contractor employee gets one or more free meals, or does not have a full day of travel, then those are considered to be circumstances in which reimbursement of the full locality rate results in an unreasonable -- and thus unallowable -- cost.

PepetheFrog, My comment was based on 1st-hand experience with DCAA and contracting officers. Also, see 31.201-5, Credits: "The applicable portion of any income, rebate, allowance, or other credit relating to any allowable cost and received by or accruing to the contractor shall be credited to the Government either as a cost reduction or by cash refund."

It is always good advice to discuss patent ambiguities in contract language with the contracting officer, unless it's not. It's not a good idea when you might not like the answer you receive. Instead, one might consider interpreting the ambiguity in a reasonable manner and subsequently establish a course of dealing that reinforces your interpretation. If nothing else, then contra proferentem.

Well, not really. What the cost principle does say (in part) includes the following-- (a) Costs for transportation, lodging, meals, and incidental expenses. (1) Costs incurred by contractor personnel on official company business are allowable, subject to the limitations contained in this subsection. Costs for transportation may be based on mileage rates, actual costs incurred, or on a combination thereof, provided the method used results in a reasonable charge. Costs for lodging, meals, and incidental expenses may be based on per diem, actual expenses, or a combination thereof, provided the method used results in a reasonable charge. (2) Except as provided in paragraph (a)(3) of this subsection, costs incurred for lodging, meals, and incidental expenses (as defined in the regulations cited in (a)(2)(i) through (iii) of this paragraph) shall be considered to be reasonable and allowable only to the extent that they do not exceed on a daily basis the maximum per diem rates in effect at the time of travel as set forth in the [FTR or JTR, as applicable]. [Emphasis added.] Thus the use of 31.205-46 as "authorization" gives the contractor permission to choose one of the three permissible methods expressly called out in the cost principle. H2H

Yes, except for partial travel days and those days when somebody else other than the traveler pays for one or more meals. In those circumstances the max locality M&IE rate must be reduced.

22.6% is a huge jump ... nearly double last year's bid protest sustain rate. Is this an anomaly or something else? I have an opinion but I would like others to offer their opinion first. To help spur thinking .... 1. BBP included a focus on improving "tradecraft." Does the sustain rate mean that BBP failed in that regard? 2. Is there any accountability for a sustained protest? What is it? H2H

Bob, Thanks again for supporting WIFCON. it's become a significant part of my daily routine. I hope 2017 is a good year for you! Best, H2H

I noticed in the new (interim) rule on contractor sick leave the following: (1) Contracting officers shall include the clause in bilateral modifications extending the contract when such modifications are individually or cumulatively longer than six months. (2) In accordance with FAR 1.108(d)(3), contracting officers are strongly encouraged to include the clause in existing indefinite-delivery indefinite-quantity contracts, if the remaining ordering period extends at least six months and the amount of remaining work or number of orders expected is substantial. I read the 1.108(d)(3) and it says: Contracting officers may, at their discretion, include the changes in any existing contract with appropriate consideration. So I was wondering what would be considered "appropriate consideration"? I know "it depends" but I was looking for thoughts as applied to this specific situation. In order to comply with the new rule, presumably a contractor will incur more costs than originally planned. Those additional costs may or may not be allocated to the contract as a direct cost; more likely the change will result in an increase to contractor fringe benefits. I'm fairly confident that, to accept a bilateral change, the contractor will want to be made whole from it. Is that the essence of "appropriate consideration" or am I missing something? Thanks for your thoughts

Back in the day, we (contractor) ALWAYS used the DOD weighted guidelines. We used them to support our proposed profit/fee. Naturally, we maxed-out everything we could, whereas the government always minimized the factors. But it worked, in the sense that we were both negotiating from the same set of parameters. Nobody was taking an "out of the box" approach, and that typically led to agreement sooner rather than later. On the other hand, I once had a client who made some widgets that were covered by a number of patents and so it was the only game in town. These widgets were absolutely necessary and nobody else could make them. Period. That contractor routinely asked for, and received, profit rates in excess of 40% on costs, on its FFP contract awards. If the government customer wanted to execute its mission, then that was the price that needed to be paid. Obviously, that contractor was an outlier.

sjanke, You didn't type whether you are developing a master plan or an individual contract plan -- or both. Regardless, there is no "template" as such. Instead, there are certain elements that need to be described in order for the plan to be compliant and to have it be approved by the CO. In addition to the required elements, the actual plan "goals" are typically based on historical values adjusted for the current procurement. Hope this helps.

52.216-7 or equivalent is just about the ONLY clause that makes a cost-reimbursement subcontract as cost-reimbursement subcontract. Without that clause (or equivalent) there is no ability to "true-up" provisional billing rates to final billing rates. Without that clause (or equivalent) there is nothing to invoke the FAR Part 31 cost principles. Without that clause (or equivalent) there is nothing that makes a subcontractor submit a proposal to establish final billing rates for audit. Crafting a cost-reimbursement subcontract without that clause (or equivalent) and then defending oneself by saying it's not a mandatory flow-down would not win a subcontract manager any brownie points in my shop. In fact, it would be likely to move that individual on the fast-track to gainful employment elsewhere.