Jump to content
The Wifcon Forums and Blogs


  • Content count

  • Joined

  • Last visited

Everything posted by here_2_help

  1. Perhaps. Depends on the evaluation factors. If you create a LPTA competition then you are going to see quality sacrifices. The only case I know of a head-to-head competition is an audit of a FFRDC from several years ago. Both audits were independently performed and evaluated by [GAO or DoDOIG? can't recall now]. The public accounting firm did indeed make DCAA look bad in terms of quality. However, we didn't have comparable cost data. How much more did it cost to achieve public accounting firm quality standards? Would a buying command be willing to pay that price to achieve the higher quality? What's the trade space between cost and quality and speed with respect to "incurred cost" audits? That's the open question. You can bet that the public accounting firms who enter this market will have that trade space figured out in about 2 weeks. They already do that analysis as a routine part of financial statement audits. The thing is, DCAA has been performing such audits for literally decades and they have no clue about such trades. If they did, we wouldn't be having this conversation.
  2. You should not assume the small percentage of sustained findings means contractors are doing a good job in segregating unallowable costs. The result could come from a variety of factors, including (but not limited to): (1) DCAA counts as a completed audit "low-risk" audits for which an audit in not actually performed and the contractor's proposal is accepted on its face, (2) DCAA counts as a completed audit any contractor proposals it has determined to be inadequate; the assignment is closed and the problem is transferred to the CO, (3) DCAA auditors are more focused on creating solid working papers than they used to be, (4) contractors are better at hiding costs than they used to be, and/or (5) DCAA is inflating savings on other audits, including "forward priced" audits of contractor proposals that never result in a contract award. The problem, of course, is that everybody has difficulty in closing-out contracts (and subcontracts) before receipt of final billing rates. Generally speaking, the long pole in that tent is DCAA's ability to perform an audit of claimed costs. If you want to reduce the backlog of ULO's and suchlike, you need DCAA to perform more audits, faster. The agency published stats show it is slower year-over-year, not faster. In comparison to the agency's stats from 2005/2006, the current productivity stats indicate the auditors are moving slower than molasses being poured in the arctic. Not sure whether this is the answer -- or whether this answer will make it into the next NDAA. However, it's quite an interesting approach. Have DCAA compete in the open market for audit assignments, with the CO as the evaluator of who gets the work. Fascinating.
  3. H - clause vs FAR/DFAR

    Not that my opinion should carry much weight, but it says what it says. The parties' intention is murky and certainly has been in dispute for 4 years. The contractor is correct (as Don noted) that Section H has precedence over Section I. Thus, any ambiguity would seem to be latent not patent. Contra proferentem. Pay the contractor for any direct costs plus burden it incurs for the change in performance obligations and think about how to better word the clause in future contracts.
  4. H - clause vs FAR/DFAR

    This sounds a lot like the KBR situation. (Which one? I hear you asking. Granted, there have been quite a few.) On LOGCAP III, the Army wanted to have KBR propose its LOGCAP III demobilization and contract close-out efforts on a firm, fixed-price basis—as opposed to every other task order on that contract, which were proposed and awarded on a cost-reimbursement basis. According to a report at the time, KBR felt forced to file its own lawsuit (as plaintiff instead of defendant) “seeking to keep to the existing cost-reimbursable terms” of its contract, and arguing that “closeout tasks can’t be estimated, citing costs stemming from litigation with subcontractors and tort cases filed against KBR by military and civilian personnel as well as future unresolved audits.” Apparently KBR filed a bid protest at the Court of Federal Claims, which Google tells me was dismissed in August, 2014. Regardless of the outcome, the dispute led DPAP to issue a Class Deviation (2013-O0017) regarding demob costs.
  5. Could be worse. For example, I'm dealing right now with a client's (non-Federal) T&M contract that is being administered as a CPPC, with preliminary audit findings pertaining to the indirect costs used to build up the fixed-price hourly billing rates that were then escalated in accordance with written direction from the customer and written contract mod documenting the bilateral agreement as to escalated the hourly billing rates.
  6. Questions Regarding Net-60 Payment Terms

    SAP114, If you are a government contractor, are your government customers paying you in 30 days? If not, why not? If you look at your contracts, do any contain the clause 52.232-40? Hope this helps.
  7. Subcontracting with CPFF

    JC_One, From my perspective, your focus should be on people, not forms. Do you, a small IT firm, have the people in place who understand how to award and manage a CPFF subcontract? If not, get them. Now. You will not regret it. Second, processes. Do you have the processes in place to manage a CPFF subcontract? What will you do if you get a notification that the SubK has burned through all its funding early and is about to stop work? What will you do if you get a letter from the SubK stating that its billing rates are increasing? What will you do if you get a letter, years from now, stating that its final rates have been approved and here's an invoice for additional indirect costs? Are you prepared to review each invoice from the SubK each month in order to ensure that unallowable costs are not being billed and paid? That's just off the top of my head. If the answers to any of the above questions is NO or I DON'T KNOW then you need help. A consultant may be a good place to start. Hope this helps.
  8. I don't understand your point. In a DCI the impacts are calculated using individual contract Estimates-at-Completion (EACs). If Joan is calculating "zero increased costs in the aggregate" at the end of 5 years then she's using EACs. Period. Probability is irrelevant. You'll note she has time-phased the impacts and knows that the net cost impact changes year-by-year. I grant you Joan may be using imprecise terminology, but who knows? That's why I responded with "I'm confused." In any case, Joan seems to have left the building long ago. It's probable that she has found her answer(s) somewhere else.
  9. The pricing of repairs fascinates me. I've often wondered why the parties can't identify the types of repairs up front and develop a fixed-price catalog of services -- i.e., for this repair, FFP of $X, for that repair, FFP of $Y. Would it cover 100% of all activities? No. But I bet you could cover 80-90% of expected activities. (See: how any auto repair company prices its services.) Instead, we seem to approach these individual repairs in multiple steps in order to prove price reasonableness. There is an initial action that essentially covers inspection and then another action (possibly based on a contractor proposal or other estimate) that covers the actual repair. If expensive parts are involved, the contractor may have to obtain multiple quotes to support its pricing. I don't know. Maybe I'm missing something fundamental. I just seems so complicated to me. Can't we figure out how to streamline something that the commercial marketplace provides in abundance (even if in this case only two local firms can do the work)?
  10. Yet, given the instructions found at 31.205-7 for estimating contingencies, I have yet to find a single CO who will actually include a contingency for currently unknown risks in a contract price. Further, I have yet to find a single DCAA auditor who will not question such a contingency's cost in the contractor's proposal. Until the Federal government is willing to let contractors actually price risk contingencies into contracts, as permitted by the cost principle, contractors are going to tend to be "cry-babies" over surprise costs that the government would not price into the initial award. Granted in this scenario we have workers' costs changing, not contractor's costs; however, I think my point is still valid.
  11. Is the CPCM worth getting?

    The CPCM designation is well-regarded. As with any certification it's what you do with it after you get it that really matters. But for many potential employers it's a plus.
  12. 52.215-12 and Vendors

    Well, that would be what I'm missing, then. Thanks
  13. 52.215-12 and Vendors

    Maybe I'm missing something (as usual) but what would compel the prime to obtain certified CorP data for a subcontract modification made post-award that exceeded the TINA threshold, if the clause were deleted from the contract?
  14. Government Furnished Equipoment

    Not 100% sure what your concern may be. If it is providing past performance information, you can use the total contract value.
  15. 52.215-12 and Vendors

    Generally, I've always been told that if TINA doesn't apply to the prime, then it doesn't apply to the subKs. Let's set up a hypothetical, just for grins: Contract A's firm, fixed-price is determined to be fair & reasonable via price analysis alone, since competition was achieved. Contractor Z was the low-bidder and received the award. Contractor Z's proposed price included 2 subcontractors ("1" and "2"). Each of those two subcontracts' prices exceeded $750,000. Neither of them was awarded pursuant to competition. Question 1: Should Contractor Z have obtained certified cost or pricing data from Subcontractor 1 and Subcontractor 2, even though its prime contract was awarded pursuant to competition? My answer: I don't think so. Question 2: Should Contractor Z have performed cost analysis, in addition to price analysis, in order to ensure the two subcontract prices were fair & reasonable? Remember, its government customer was not performing cost analysis, so why should it bother? Remember, the contract award value is FFP, so why does the government care whether or not Contractor Z is paying fair & reasonable prices? My answer: Probably not, unless Purchasing policies call for such an analysis to be made. Now consider a post-award scenario where the government requests a proposal for an equitable adjustment via the Changes clause. Contractor Z's estimated costs are in excess of $750,000. Subcontractor 1's estimated change costs are in excess of $750,000. (Subcontractor 2 was not impacted.) At this point there is no competition because the contract has already been awarded. Question 3: Is Contractor Z required to submit certified cost or pricing data in support of its change order proposal? My answer: Yes. Question 4: Is Contractor Z required to obtain certified cost or pricing data from Subcontractor 1? Is Contractor Z required to perform cost and price analysis on Subcontractor 1's change order proposal? My answer: Yes and yes.
  16. 52.215-12 and Vendors

    I don't see how a clause that is not in your contract can be enforced, let alone be flowed-down to subcontractors under that prime contract.
  17. I'm confused. If the net cost impact after 5 years is zero, then the cost impact is zero. Right? If the net cost impact shows cost-type increase but offset by FP increase, then the net cost impact may be zero. Or it may not be, according to the ASBCA (Raytheon). Other than the thoughts expressed above, what are you looking for?
  18. Performance-based payments law vs. reg

    DoD has been ignoring the FAR, the statute, and the express direction from Congress for years.
  19. Vern, This was a short fused trip, up and back. I did manage to spend 2 hours at Powell's, but that was it for my free time.
  20. Vern, see 52.203-13, which does specify that only certain transactions are to be considered to be subcontracts, and not others. Second, in my 35 years of doing this stuff I have never, ever, seen DCAA audit for compliance with EEO clauses. In point of fact, that happens by DCMA during CPSRs. Third, I did respond and I asked Michael what his company policies/procedures said was required for those purchases. DCAA may expect to see ... something. A while ago DCAA expected me to provide a written contractual agreement associated with paying the bill from the local electrical utility. I didn't think then (nor do I now) that was a reasonable expectation to place on a contractor. Yet by the overbroad definition of Part 44, my local electrical utility was a subcontractor. So DCAA should expect the contractor to provide whatever its policies/procedures specify should be there, nothing more. If the procedures are deficient, that should be picked up in a CPSR. I was in your neck of the woods last week, and I enjoyed the Friday weather. It was my first-ever view of Mt. Hood. Majestic!
  21. Vern, when DCAA audits for cost allowability, they do so pursuant to FAR Part 31, not FAR Part 44. Thus, I disagree with you that any definitions restricted to FAR Part 44 apply to DCAA audits concerning compliance with FAR Part 31.
  22. If Michael11 cannot come back to explain what his company's policy position is regarding establishing price reasonableness, and what his company's procurement procedures require of its buyers, then I doubt anybody here can help him with his DCAA problem. Importantly, his company was put on notice of the DCAA interest in questioning costs in this area before he was even hired; presumably they enhanced policies/procedures in preparation for the next visit from government oversight officials. If they didn't do anything, then shame on them. Michael11 should find a more responsive and responsible company to go work for. Related and potentially interesting point: I know of a company -- a fairly large and well-established contractor -- that does not require anything special in terms of justifying price reasonableness if the procurement value is less than $25K. There is a drop down box on an electronic form that lets the buyer check why the price was considered to be reasonable; that's all the support that's required. The choices in the drop down box are fairly limited. *Shrug* That contractor keeps passing CPSR after CPSR....
  23. Have you had a recent CPSR? If so, what were the findings (if any)? If not, then what do your Procurement policies/procedures say? What I'm getting at is that some ODCs DO need agreements, while others do not. It's not a one-size-fits-all situation.
  24. Joan, 1. You seem to be on the right track regarding what CAS 405 says about "directly associated unallowable costs". A cost is a directly associated unallowable cost when it is incurred solely as a result of the unallowable activity. Without checking, I think there may be an Illustration at 405-60 that would help. Regardless, think of it this way: a lobbyist travels to Washington to meet with some Staffers. The labor is unallowable, of course. But so is the airfare, even though it was the lowest cost fare and meets all the requirements of 205-46 -- because the airfare would not have been incurred "but for" the lobbying activity. That's what directly associated means. 2. The 205-6 language you quoted refers to the cost of salaried employees. If I hire a Program Manager for an annual salary of $175,000, then that salary is what I'm going to pay. Mostly that PM charges time to programs. But once in a while, the PM has to review some technology related to a possible corporate acquisition, which is otherwise unallowable. But I didn't hire the PM as a M&A person, that's just a very small part of her job. That 205-6 language says I don't need to have the PM charge an unallowable account for the time spent performing due diligence, unless it's material in amount. A very long time ago DOD issued guidance that said anything less than 30% was immaterial. (Not sure people in power today would still agree.) With respect to your question, here is my view based on the info you provided. For FPRP purposes you only need to remove unallowable labor for salaried employees if expected to be material in amount. Separately, you do not need to prorate restricted stock awards that are otherwise allowable, especially if you book the incentive comp to a non-labor account. However, if you book it to a Fringe Benefit pool, and you allocate Fringes to labor, then of course a proportionate share of Fringes needs to follow the unallowable labor. Hope this helps.
  25. PTA above ceiling price — how big a deal, really?

    Amen, Couldn't agree more.