Jump to content
The Wifcon Forums and Blogs


  • Content count

  • Joined

  • Last visited

Everything posted by here_2_help

  1. Revenue Recognition

    You will not find the answer in the FAR. You will find the answer in authoritative AICPA guidance. SAB 104 or whatever the kids are calling it these days. The answer, as I recall from days long gone, is that you recognize revenue when you have performed all the actions required by the contract. From my point of view, you have performed all required actions when the item has arrived at the customer's receiving dock, since it was already inspected. However, I understand there's a risk that the item may have been damaged in transit, in which case ...? Whether you need "proof" that all actions were taken would seem to be a matter for your Controller and your external auditors to discuss. To reiterate: you will not find your answer in the FAR.
  2. "Throwing more money at the problem isn’t the answer and, in fact, may be a contributor to the problem. Require internal change through a clearer, straighter path on the acquisition highway; not more expensive pavement on today’s circuitous road." https://www.federaltimes.com/opinions/2018/01/02/yes-it-can-be-done-expediting-defense-acquisition/
  3. IDIQ VS. Requirements

    Thank you. (Sincerely.)
  4. IDIQ VS. Requirements

    I don't think prime contractors award enough Requirements subcontracts. I bet if they really looked at them, they might find some attractive features. Hmm, I feel an article a-brewin'.
  5. Blanket Task Order

    Question (in multiple parts) from the peanut gallery: Assuming you award the contract vehicle as (vaguely) described, how will individual tasks be priced? Will they be called out and priced in the overall Blanket Purchase Order? Where is contractor Program Management priced? If yes, then what happens if the contractor encounters differing site conditions? What happens if the (urgent) need is for a service that is not covered by the listing of priced tasks? What happens if the need is on a weekend or holiday--how is that priced? What happens if the contractor needs a different skillset from the one it priced? What about escalation of labor costs over time? If not, then who pays for the costs of proposing and negotiating the individual orders? To me, there would need to be a PM task order that funded proposal preparation/negotiation costs because those costs would be direct-charged to the contract. Thanks for any answers you would care to share with the peanut gallery.
  6. Interesting questions. I would boil 'em all down to: what was your rationale for issuing a CPFF subcontract? Did you know what you were doing when you did so?
  7. Sunnyo It is becoming clear that you need professional help. Your intent of gaining an understanding of the risks before contracting is admirable, but you need to face the fact that you cannot do this alone. You need guidance and support from somebody(s) with experience and expertise. I strongly recommend you find such body(s).
  8. Don't confuse labor hours/FTEs and associated costs with profit. Profit is the difference between the costs incurred and the amounts billed/reimbursed.
  9. Yes. Normally that's how it works. The subcontractor makes profits only on its costs and the prime makes a profit on its costs plus often on the subcontractor's costs as well. In a JV relationship things are different; the overall profit may be shared in accordance with a specified formula.
  10. Profit

    Sunnyo, The hourly labor rates on a T&M contract are essentially firm fixed price (FFP) rates. You are allowed to bill a rate per hour (per labor category). That rate is fixed. Doesn't matter if the hour is an overtime hour or a straight time hour; you still get to bill only one rate per hour (per labor category). That FFP rate must include all your costs and all your profit. How do you calculate profit? The same way you would on any FFP contract. You propose something and you negotiate it and eventually the contract is executed. The executed contract specifies the FFP rate per hour per labor category. Your costs are still your costs. The difference between your costs and the amounts you bill is your profit or loss.
  11. 1. Yes. You should have an enforceable contract now that obligates the Prime to award to you a subcontract consistent with your expertise. You can agree on a fixed number of FTEs, a number of labor hours by category, or a percentage of the Prime's FTEs/hours -- or whatever other metric makes sense. 2. You seem to be reaching for a Joint Venture relationship, where the profits are shared, instead of a Prime/SubK relationship. The profit paid to the SubK in a T&M contract is paid on the SubK's labor hours (see 52.232-7). You normally don't see any more profit distribution than that. But that's not to say that you can't ask for something else on top of your profit-per-labor hour. Hope this helps.
  12. How to price option years?

    1. Yep. You are in for the long haul. 2. No it is not typical to see much higher prices quoted for future years, unless the goods/services being provided are subject to a lot of cost volatility. In theory, if your company is much bigger four years from now then the marginal cost of providing your goods/services should actually decrease, because your General, Administrative & Selling costs shouldn't scale linearly with revenue growth. 3. Typically they look at the whole enchilada but your solicitation should tell you exactly how your bid will be evaluated. 4. You need a good advisor. This forum is a good place for answers but you need your own person who understands your business. Hope this helps.
  13. If by "revenue" you mean G&A allocation base dollars, then that makes better sense to me. Thanks
  14. government recovery

    Readers may want to check out the recent ASBCA decision in Assessment and Training Solutions Consulting Corp. (No. 61047. Oct. 3, 2017). It discusses an interesting argument between government negligence versus faulty contractor maintenance.
  15. Yes. This. Also, the only reason that the LOE hours were burned faster than anticipated is because the contractor's labor was more expensive than anticipated. Either (a) the wages paid to direct-charging employees were higher than budgeted/bid, or (2) the indirect rates actually experienced were higher than budgeted/bid. (Or a combination of 1 and 2.) The story may well turn out to be that the small business didn't do a good job of forecasting indirect rates and actuals came in higher than anticipated (for whatever reason), which caused the LOE hours to be burned faster than planned. Happens all the time. Next question for Justice1: for purposes of complying with the Limitation of Cost/Funds clauses in your contract, did you use your provisional billing rates or did you use your YTD actual indirect rates or did you use a combination of YTD actual rates plus a forecast of where you expected those rates to be at year-end? One of those choices is wrong, one is right, and the other is kind of in the middle.
  16. Yes. I got that. I was just trying to be nice. Also thinking about other readers, who may be facing a situation closer to the one I described.
  17. Vern is correct. That said, whether or not you can recover increased indirect rates allocated to in-scope work, in excess of funding, will turn on whether the rate increases were truly "unanticipated"--which is to say, a complete surprise. Given your scenario, I'm skeptical. I cannot see a connection between the situation you describe and an increase to indirect rates. The direct labor that you charged to the CLIN in excess of funding will still receive applicable indirect burdens. Consequently, I don't see how that "extra" labor is in any way connected to your increased indirect rates. Had you stopped work when you reached your funding limits, you might be on stronger ground, because then you could argue that your provisional billing rate calculations were based on a full year's worth of direct labor, and the resulting shortfall in direct labor led to higher indirect rates than originally calculated. But given your scenario, I'm not seeing it. Hope this helps.
  18. Invoicing for unworked hours under a FFP TO

    Not sure the fault lies fully with the contractor on this one.
  19. Tracking LOE in FFP subcontracts

    My opinion is that you made a poor choice in selecting the subcontract type. My opinion is that you used a subcontractor to bypass your prime contract LOE restrictions, and the COR caught you doing so. Too late to change the subcontract now, I guess. In future, similar, situations you may want to consider a Fixed Unit Rate subcontract where each day has an associated FFP amount and each day counts as 8 hours against your LOE restrictions.
  20. FFP Contract Maximum Increase?

    When you prepare your J&A, will you note that market research shows that Contractor2 can supply the item(s) required, and that Contractor1 is no longer the sole source?
  21. Sounds to me like the prime wants your commissions to be a direct cost of its contract; hence it names you subcontractor. I agree with the others that that designation does not necessarily make sense.
  22. FFP Contract Maximum Increase?

    Who is the customer for Contract1? How does the contractor get paid? Does it get paid for orders on its ID/IQ contract that were placed by Contractor2? I'm guessing that once the contractor has fulfilled its maximum under Contract1, it's done. It doesn't matter who ordered what. If so, then if the customer has additional demand then it needs to add funding to Contract1. Period. Or the customer can go to Contractor2 and order items and pay for them. Should be the same result if I've parsed the situation correctly. Either add funding to Contract1 or else use that funding to buy from Contractor2.
  23. The question I would ask myself is what recourse the prime has, if I do not accept the prime's offer? If the prime can go elsewhere I might make a counter-offer closer to what my break-even rate is. If the prime cannot go elsewhere then I might simply reject the offer and ask to speak to the prime's small business liaison officer about the unreasonable offer.
  24. The contractor Business Systems oversight regime is flawed. It was flawed when the DAR Council implemented it in 2011 and it's still flawed today. One of the flaws is that "acceptable" and "approved" are synonyms, just like "unacceptable" and "disapproved" are synonyms. (Primarily turns on which system is being discussed). Officially, DCMA is responsible for reviewing/assessing three systems (Purchasing, Property Control, EVMS) and DCAA is responsible for auditing/assessing three systems (Accounting, Estimating, MMAS), but of course the cognizant ACO/DACO/CACO makes the official determination. (See DCMA Instruction 131). Government reviewers have been evaluating property, purchasing and estimating systems for as long as I've been in this crazy business. I've never experienced--or even heard of--a contractor pushing back, asserting that the government lacked authority to perform those reviews. I believe a contractor would be afraid to make that assertion, fearing what the repercussions would be. Easier to staff up (typically on overhead) and support government reviews. And then pass on the additional expense to the buying commands. Per DCMA Instruction 131 (at 3.1.2)