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here_2_help

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  1. Client received a UCA with funding in excess of $750,000 from a DOD component via Form 1155. The UCA contained only the following clauses: 52.230-20, 52.216-24, 52.216-64, and DFARS 252.217-7027. There were no other contract clauses in the UCA. Am I supposed to read-in required clauses via Christian Doctrine? For instance, should the CAS clauses be read into the contract? If not, why not? If yes, which clauses are assumed to be part of the contract and which ones were intentionally omitted? Thanks
  2. UCA - Required Contract Clauses

    Thanks all. The sequence of events went like this: Me: I want to see the contract, especially Sections H and I, to see what it says. Client: Here's the contract (Form 1155). There is no Section H or Section I. Me: ?? Client: That's what we received. Me: WIFCON help me. WIFCON: Read the BOA Me: Thank you.
  3. UCA - Required Contract Clauses

    Vern, Good question. Block 17 of the 1155 says "delivery/call" and references a BOA. I guess I'll go read the BOA to see if there are more contract clauses that should be read into the UCA. Thanks
  4. Cost Monitoring Plans

    Yeah, DCMA thought so, as well. They were wrong, though. To my knowledge there were NO "cost saving projects". Period. There were, however, many upon many process improvement and production efficiency initiatives.
  5. Cost Monitoring Plans

    FAR 16-301-3(a)(4) requires that, in order to award a cost-reimbursement type contract, adequate government resources must be available to implement "appropriate government surveillance during performance ... to provide reasonable assurance that efficient methods and effective cost controls are used." I'm not 100% sure, but I believe that DCMA Instruction 123 "Cost Monitoring Plans" tells DOD CO's how to do that. DCMA Instruction 123 (at 3.2.1.13) specifies a review of contractor cost reduction or savings initiatives. It states "The CMS shall review the contractor’s strategy for influencing and monitoring cost reductions or savings initiatives to ensure that associated cost reductions or savings are included in the forward pricing rates." If I've missed something, please let me know. But if I've gotten it right, then here are my questions. (1) What solicitation provision or contract clause requires the contractor to have a strategy for executing savings initiatives or cost reduction efforts? If the contractor does not have a strategy, what would prevent a contractor from simply telling the government "N/A"? (2) Other than TINA requirements, what solicitation provision or contract clause requires a contractor to provide any information regarding its savings initiatives or cost reduction efforts to the government? In other words, assume the contractor is compliant with TINA -- i.e., accurate, complete and current information is being provided -- then what requirement compels a contractor to make an additional report to its ACO regarding such programs?
  6. Cost Monitoring Plans

    I have first hand experience with DOD "should-cost" audits where this has been a topic of discussion (2 for 2) and the team was disappointed to learn that the contractor had nothing to report. To be very clear, the contractor was relentlessly focused on performance improvement and manufacturing efficiency and technical excellence; the company simply didn't measure the resulting savings and thus there were no results to report. There were no spare heads to dedicate to the effort of measuring results. I'm reminded of the Toyota production philosophy that the most efficient production system is also the cheapest. But Toyota didn't need bean-counters to measure the amount of savings generated from process improvements. It was intuitively obvious to those running the plant. I just thought I would explore the topic. I would be happy to hear from active ACOs if they would care to chime in.
  7. Cost Monitoring Plans

    Vern, I suspect you're arguing with a point I didn't make, though I admit I'm having trouble articulating what my point may be. I'm not arguing that Facebook and Google and Apple aren't concerned with their products' costs. Of course they are. What I'm trying to say is that Apple and Google and other tech companies do not, to my knowledge, hire people whose job it is to go around and monitor cost-reduction efforts and then collate the information and then report it to a DCMA ACO. Perhaps I'm wrong. But I've worked for Top 5 defense contractors as well as mid-tier contractors as well as tech-focused companies, and I've consulted to many more in diverse industries including bio-pharma and telecomm. All I can say is that some of those companies had such a focus and such a reporting bureaucracy and, for the others, it would be a head-scratching moment. Defense contractors are happy to establish that function and add it to their overhead rates because their customer is happy to pay for it. The others do not embrace the need. Of course you are correct that companies that don't focus on cost reduction don't last. Except for those companies that are sole source providers to the DOD.
  8. Cost Monitoring Plans

    Thanks for the replies so far ... I hope to hear from others as well. A recent GAO report pointed to barriers that impede "non-traditional" defense contractors from entering the defense marketplace. You know the companies: Apple, Google, etc. My thought -- or half-formed assertion, if you will -- is that these types of companies aren't focused on "cost reduction." Instead, they are focused on innovation and delivering product to market. Assuming they were contracting with DOD, and an ACO requested information regarding cost-reduction initiatives, I strongly doubt the companies would (1) have anybody who could answer knowingly for the company, (2) would have anything to report, or (3) would consider developing a cost-reduction reporting bureaucracy a prudent use of company resources. To my way of thinking, the requirement stems from a foundational assumption that contractor's products cost too much. That may well be true for mature, established defense contractors who have been in the market for decades. I strongly doubt the assumption is true for start-ups or for companies trying to enter the defense market. Those companies aren't (necessarily) focused on reducing costs, but on developing products that work. In other words, I'm thinking that the one-size-fits-all approach isn't consistent with reality. Since I'm not feeling as if I'm necessarily on solid footing on this issue, I'm looking for input. The three replies so far have helped. As noted, I hope for more, especially from active ACOs who may have to deal with this issue.
  9. The Problem of Proposal-Based Competition

    But if the government takes this advice and eliminates the essay-writing competitions, what jobs will be left for the people who graduate college with degrees in creative writing?
  10. Contract Closeout under 752.245-71

    My reading of the clause, based on the parts I bolded above, leads me to think that the Cooperating Government and the contractor work together to decide property disposition. Subsequently (after disposition), the inventory schedule (showing disposition) is submitted to the CO. I have a hard time seeing how the COR and CO would have authority to pre-review the disposition, since the property is titled to the Cooperating Government. Where's the privity?
  11. You wrote a check to the consultants equal to 25% of the tax savings received. The taxes would have been allowable costs. You reduced allowable costs and saved the government money. The consultants' fees are allowable.
  12. I think you are so off-base on your response, that it hurts me to type this. 1. Revenue = sales. At the end of the day, Revenue = billings. Billings are comprised of both direct and indirect expenses (rates). Indirect expenses are an unknown until finalized. When you base a share ratio between prime and subK on revenue, you have introduced variables that simply cannot be effectively managed. To be clear: the final share ratio cannot be calculated until the final billing rates have been calculated. As we all know, that can take years (unless the prime is savvy enough to negotiate final rates with the subK in advance of official government rate finalization, and even then it will be a matter of months). 2. Basing the share ratio between prime and subK on revenue does NOT impact schedule whatsoever. There is simply no relationship. Zero. None. 3. You seem to think that the TA share ratio agreement is some magic formula. Wrong. Instead, it is a number that the parties work toward, hopefully in good faith. Some months the subK might get more work than planned; other months it may get less. The parties watch the actual ratio like a hawk, but at the end of the day, so long as the prime is making a good faith effort o meet the terms of the TA (and subsequent subcontract) then the final number will be what the number will be, and the subK has little if any recourse. 4. Basing a share ratio on billings absolutely, incontrovertibly, does NOT "encourage efficient subcontract management". Instead, it encourages billing more per subcontractor labor hour incurred. The subK has the incentive to be more expensive in order to maximize its share of the pie. 5. Basing a share agreement on labor hours is (1) easier to manage, (2) easier to track, and (3) encourages the lowest cost per labor hour so as to maximize the number of labor hours for both parties. since if parties are burning the available funding more slowly there is more funding available for both. Going to go soak my fingers now in warm water.
  13. I will concede that the FAR is not applicable to contractors unless incorporated into a clause. That said, contractors may still have to pass a CPSR and or submit a subcontract for advance consent. I have never seen nor heard of a cost type commercial item services subcontract that passes government o eyesight scrutiny. But I am forced to concede that the regulatory basis for disapproving such a subcontract would be weak. Assuming there was a prime contractor willing to litigate that point.
  14. That's not the basis of my position. My position is that if the prime wants the benefits associated with a commercial item award then it must consistently treat that award as a commercial item. Last time I checked the FAR didn't permit cost type commercial item awards. If I'm wrong on that point then I will agree with Vern.
  15. Vern I don't agree with you. A prime contractor awarded a subcontract. In order to avoid scrutiny and the need to perform cost analysis, it declared the subcontract to be a FFP commercial item. Subsequently the subcontractor wanted to be treated differently and be reimbursed for actual costs incurred. I dont believe that behavior should be condoned.
  16. Let me see if I've got this right. 1. Prime issues aFFP SubK for commercial services that includes an amount for travel. 2. SubK says more people travelling than bid. Prime agrees to a price increase associated with additional travellers. 3. After travel, SubK says travel costs were higher than anticipated. SubK wants to be paid for actual travel costs, which may include unallowable costs because SubK doesn't have an adequate accounting system. The question is which, if any, price increases should be permitted and whether the second Mod request converted the FFP SubK into a cost reimbursable SubK. If I've parsed the situation correctly I think the first Mod is legit but not the second, because the second request was based on actual costs incurred.
  17. Basing workshare on revenue instead of hours was a big mistake. Just my point of view.
  18. Vern, remember our last dinner conversation about treating interorg transfers as subcontracts and all the associated problems that came with that decision? Neither you nor I could help that company with its legal problems because of that policy. SAP114 seems to have it worse and I wasn't sure that was possible. Good luck Sap114. I think you will need it. To be clear: companies that insist on treating interorganizational transfers as subcontracts are making a huge policy mistake. Huge.
  19. For what it may be worth, I concur with your assessment. If the fees are mandatory then I would have evaluated the total amount and not the internal elements. However, each auditor is an individual with an individual application of judgment, so what can you do? There may be some helpful language in the DCAA CAM regarding annual memberships in organizations that perform a de minimis amount of ancillary lobbying, if you care to go look for it. On the other hand, for $999 maybe everybody should just let it go or agree it's unallowable without being expressly unallowable? Hope this helps.
  20. Would you be willing to enter into a FFP/LOE contract (or CLIN) for a fixed number of certain engineering hours for the sole purpose of monitoring a Bill of Material in order to identify technically obsolete parts and then, for those parts, identify potential technical solutions to mitigate that technical obsolescence? Because in that case there would be no finished product or specification. Indeed, if no instances of technical obsolescence were identified during the PoP there would be nothing to show for the efforts, other than they occurred.
  21. "Breakdown Activities" for the Contracting Workforce

    Ability to distinguish between valid requirements and the way it's always been done?
  22. A made-up contract structure from an entirely fictitious solicitation: CLIN 001: Installation/Repair/Maintenance services - fixed hourly rates by category CLIN 002: Purchase of parts necessary for repairs/maintenance -- cost reimbursement, no fee CLIN 003: Provide ___ labor hours for each of the following engineering labor categories for a fixed period of performance. Purpose of this effort is to review repair/maintenance activities, perform root cause analysis, recommend process improvements/changes so as to minimize future needs for repair/maintenance services. NSP associated CDRL: Quarterly report submitted to COTR showing analysis results. Firm Fixed Price/Level of Effort Are you saying that structure would not be acceptable?
  23. Doesn't the prime normally perform cost/price analysis and then submit that analysis as part of its own (certified) cost or pricing data?
  24. Many companies -- especially small businesses -- have trouble with shoehorning their existing labor force with its existing compensation structure into rigid T&M hourly billing rates. This is a valid concern. As we all know, DCAA loves to question billed labor costs under T&M contracts because the individuals didn't meet the hourly billing rate qualifications. And once the existing salary bands have been mapped to the hourly billing rates then somebody has to maintain them. People get raises. People get promoted. People depart and are replaced with new hires. That's certainly a painful situation to manage. But it's required. Many companies -- even small businesses -- successfully rise to the challenges of T&M contracting through diligent management and proper staffing of the PM and HR and compliance functions. H2H Edited to add: Also if a company's accounting system cannot accurately map costs to CLINs then it is by definition an inadequate accounting system. See the SF 1408. If that is the case, the contracting officer should not award that contract to the contractor.
  25. Yeah, I'm frequently told I'm psychic. Or is it psychotic? I get confused.... In any case, what's your concern? Are you concerned you cannot map your costs to the CLIN structure? Are you concerned about billing? What risks are you seeing? You are asking about our views regarding your ability to account for contract costs, but how can we answer that if we don't know your company or its accounting system? How strong are your PMs? How granular is your Chart of Accounts? The point is, only you can answer the question because only you know your company.
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