here_2_help

1. Depends on the contractor's standard practices and who performs the work. If the work is performed by direct-charging personnel and the contractor consistently charges same or similar reporting labor as direct costs, then yes - direct labor. 2. No. The prohibition would only apply to direct labor. On the other hand, if the indirect labor amount was large enough to impact the contractor's indirect cost rates, then maybe somebody could make an argument the labor was unallowable. I would not make that argument (unless the personnel performing the reporting were 100% dedicated to the reporting), but somebody else might. That being said, if the contractor would normally charge the labor as direct labor and only charges it now as indirect labor to avoid the contract prohibition, then that would be a big no-no.

Don, This is not particularly my area of expertise, so I defer to you. On the other hand, the FAQ you cite as the basis for your answer contains the following language: "This page does not necessarily contain an exhaustive or current treatment of the DBA and should not, under any circumstances, substitute for a party's own research into the statutory, regulatory, and case law authorities on any given subject addressed by the following FAQs. The FAQs are an informational tool, not a final authority, and should not be cited or otherwise considered an authoritative statement of agency policy."

If a contractor employee, based in the United States, goes TDY to an overseas location during the course of performance of a DoD service contract, does the Defense Base Act (DBA) apply? If the clause is not in the contract the contractor did not procure DBA. If the contractor did not procure DBA then there is no coverage. I believe that the contractor's normal insurance would cover the employee.

Would it violate the rules of government contracting to create a hybrid contract, where certain CLINs are CPIF and other CLINs are CPAF? If not, that's what I would do. I would have the CPIF CLINs follow the usual sharing and standard incentive fee clause, and the CPAF CLINs have the award fee criteria based on the desired performance specs. Hope this helps (somebody).

Navy, No and you're wrong. Sorry, not trying to be a jerk about this. In addition to being wrong, you are ignoring the phrase "OR OTHER EQUITABLE RELATIONSHIP which clearly identifies that "relative benefits received" is not the only acceptable criterion that identifies an acceptable cost allocation. *Shrug* Don't know what else to say. I wouldn't argue with you about a Part 15 best value trade-off analysis ... I would hope you'd give me some of the same respect in return. H2H

I think we've pushed this rock about as far up the hill as it's going to go. So I'm going to excuse myself from further discussion. My last comment pertains to the statement that this employee has a "unique skillset" that may justify some of this special treatment. Okay. Whatever. It's possible, I suppose. If the skillset were so unique it might even justify a sole-source award to this contractor! On the other hand, I've been doing this work for a very long time and I have only very rarely seen any individual employee with such a unique skillset that said employee could not be replaced if enough money were on the table to attract a replacement. For instance, if one were to add up the annual reimbursement for travel and lodging and M&IE for this employee and convert it to salary, who knows what that level of compensation might attract?

Retreadfed, I believe you are taking a myopic view. I agree with Joel. If the company is paying for an employee's commuting cost, then that is not company travel. it's reimbursement of a personal expense.

Bob7947, We acknowledge receipt of the solicitation amendment. Here is our response. 1. You get the software you want. No more, no less. Options are pre-selected for each employee stratum. 2. Internal WiFi cards are no problem. We'll install them in the factory before shipping. 3. I don't know what "organizational software" means but we'll ship directly to the IT group that's associated with each employee. You will have to identify the IT Group that's associated with each employee and provide a shipping address. Government acceptance will be deemed to have taken place not later than 7 calendar days after the IT group receives the equipment. 4. 1 year warranty is standard and already priced-in. If you want an extended warranty period, it is available but will cost more. 5. We only ship what is ordered. If you don't want bags, let's not make them an option for your employees to order. 6. No I don't think you will. Either the building has it already or else GSA can provide it. Or the employees can go to the local Starbucks and get it for free. We look forward to executing the contract and equipping your workforce with the equipment they have told you they need.

So here's how it works "in the real world" (or Silicon Valley tech companies if you prefer). 1. A standard configuration is decided-upon by IT in conjunction with finance. The standard configuration is stratified by job level and function. For example, a mid-level manager gets [blank] but an engineer gets [blank+]. Everybody gets Windows 10 (unless everybody gets Apple's IOS because the company is standardizing on Apple products). Cell phones options are similarly mapped to employees by job level and function. And it's not like there's only one choice. There are options but the options are limited. If an employee believes they should have more than the standard that goes with their stratum, then they can request a deviation and, if the right level of management signs-off, then they get it. 2, A supplier/distributor is chosen -- could be multiple based on what the configuration options are. A per-each price is negotiated. Could be the current catalog price discounted for expected volume, but could also be the Dell or Lenovo or whatever catalog price already offered to the entity. 3. Steps 1 and 2 are all done in the background. When an employee shows up for the first day of work (or in this case it's the first day of the technology refresh) then they go to a website and they enter their employee information and the pre-selected choices appear. The employee clicks the appropriate boxes for hardware, software, and phones. The checkout process involves routing any requested deviations to the appropriate management level. Approval/rejection for requested deviations is obtained via check box. It takes the employee less than 15 minutes to check the boxes and there is a delay of maybe a day if management deviation approval is requested. 4. The choices are routed electronically to the vendor/distributor, who fulfills the order (including loading requested software on the laptops) and who then drop ships to the employee (or the local IT group) at the employee's location. Ideally, the employee opens the package and plugs-in the laptop, and voila! If necessary the local IT support, supports. Application of the foregoing to Bob's situation: My agency--about 20,000 people around the country--wants lightweight laptops with some (tell me how many we would need) external DVD R/W drives. I'm not telling you how many you need because the demand will be established as the employees order what they are pre-approved to order. For pricing purposes, let's assume all 20,000 employees get everything. In any case, we'll only bill you for what is ordered by the employees. The website will track who ordered what, and when. Also when it was delivered. Each confirmed delivery will generate a unique invoice. You've used Amazon, I presume? Just like that. I want MS Excel and Word to be installed in the laptops when they are delivered. I don't want MS IE since it was abandoned by MSFT now that it is pushing its new browser--Edge--to Window's 10 users and Edge won't work on earlier Win operating systems. Each employee will be able to customize the software load for their laptop. We'll bill based on the individual loads. I have plenty of printers compatible with Win 7 and I am concerned about compatibility issues with Win 10. Don't be worried. Let us introduce you to Windows Printer Driver wizard. However, I want a free Win 10 upgrade if we go with Win 7 Professional as the operating system. If we go with Win 7 as the operating system, make sure it is Win 7 Professional. You get Windows 10 because everything is Windows 10 these days. I want cell phones with the android operating system and I want to be able to download the free apps from the Google Play Store on my phones. Yeah, no problem. If you can get WiFi you can download. I don't want apple or Ios. Remember IBM? I want state of the art items. My laptops should have the 6th Gen Intel Core i7 Processor with at least 8GB of memory, 17" screen and at least 1 Tb of solid state drive. I want a wireless mouse and separate keyboard with each laptop too. If that's the standard configuration we pre-load on the ordering website then that's what you'll get and that's what we'll price and bill. I want you to begin installing the laptops on my desk and the phone in my pocket within a month after you award the contract. Can you do this for my agency while avoiding the problems quoted above? Yeah, we'll install everything before it leaves our site and your employees can just plug in the laptops when they get them. Order fulfillment takes about 2 weeks. We'll work with your IT group for local support and we'll also establish a customer service hotline call center for your employees (actually we already have that but we'll give your employees a special number because it won't cost us much and it will make you feel special). [And that's where my head is at.]

This is so sad and funny at the same time. I remember having this same discussion about 20 years ago with Dee Lee (not that she would remember me). I tried to explain how simple it could be, based on how tech companies did it. I could not get through. Let me know when the time is right for me to post "how it's done in the real world" because I don't want to spoil the thought exercise.

Yes bob7947, that's the one I was thinking of... Thank you, again

Vern, Don't forget the language at 31.205-6(f) -- (f) Bonuses and incentive compensation. (1) Bonuses and incentive compensation are allowable provided the— (i) Awards are paid or accrued under an agreement entered into in good faith between the contractor and the employees before the services are rendered or pursuant to an established plan or policy followed by the contractor so consistently as to imply, in effect, an agreement to make such payment; and (ii) Basis for the award is supported. In addition, there has been a least one article discussing whether or not a "special allocation" under 9904.410-50 or under another CAS Standard is, or is not, a cost accounting practice.

Scorpimouse, So the primary business objective here is to get the miscellaneous crap that's accumulated over decades off the Air Force's books. You are looking at options as to how to best make that happen and you want to make it the new O&M contractor's job. I like your second option and I think it makes sense for the taxpayers. Are you contemplating a separate CLIN where the contractor bids a credit (negative cost) for the miscellaneous crap? Or perhaps its Not Separately Priced? In any case, you probably need a listing of what the crap is (which is not all that different from an inventory and upload, right?). I'm guessing a site visit and bidders' walk won't be sufficient to identify all the crap the bidder is getting, unless you have it all separately located and identified. If you do, then I think this is the way to go. Another option is simply to abandon in place but, as noted above, that involves paperwork and a list of what's being abandoned. I get that you want to avoid inventorying the accumulated crap. Another option might be to have all bidders show a price reduction of $XX.XX uniformly. Just put that value in the pricing instructions. That way there's no competitive advantage from "mis-estimating" the value of the miscellaneous crap, and nobody can say the government was unjustly enriched because they were misled into exchanging money for nearly worthless crap like buckets of rusty screws. After award, the new contractor takes title for the contractually specified price. Another option might be to have a mandatory task to inventory all the crap and then auction it off, with the government receiving the funds. This approach assumes the cost of inventory and auction is not dramatically more than the amount to be received. (It probably will be.) If I know my O&M contractors (and I do) then the O&M will want a cost-reimbursement CLIN because the scope of the effort can't be known up front. Which means lots of expensive labor hours (probably at SCA rates). Just my random thoughts on an interesting challenge. Hope this helps.

Navy, I'm saying that the three types of allocation discussed in 31.201-4 correlate to; (a) direct costs, (b) overhead costs, and (c) G&A costs. You are conflating (a) allocations with (b) allocations.

Vern, CAS and FAR use the phrase "disclosed or established cost accounting practices" when discussing the topic (see FAR 30.604). You can have a noncompliance with company policy based on an actual practice that violates policy. I would argue that's where the reasonableness standard comes in. You can have a CAS or FAR noncompliance between FAR/CAS requirements and disclosed practices (whether disclosed via policy or via Disclosure Statement). You can have a CAS or FAR noncompliance between actual practices and disclosed practices. Or you can have a noncompliance between estimated practices and disclosed/established practices. They are all noncompliances and have different contractual remedies associated with them.

Vern, Yes. Practices are documented in policies/procedures and the like, or else they are established though consistent repetition. Retreadfed, I continue to disagree. In my view the workplace -- which is the only workplace the employee has -- is the permanent duty station not a temporary duty station.

Retread, You and I are normally on the same page, or close to it. In this case I pretty much disagree with you 100% on all points. Specially, 31.205-46 does not work the way you say in your paragraph 1. (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 subparagraph (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 subparagraph) 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 -- (i) Federal Travel Regulations, prescribed by the General Services Administration, for travel in the contiguous United States, available on a subscription basis from the -- Superintendent of Documents U.S. Government Printing Office Washington, DC 20402 Stock No. 922-002-00000-2; (ii) Joint Travel Regulation, Volume 2, DoD Civilian Personnel, Appendix A, prescribed by the Department of Defense, for travel in Alaska, Hawaii, and outlying areas of the United States, available on a subscription basis from the -- Superintendent of Documents U.S. Government Printing Office Washington, DC 20402 Stock No. 908-010-00000-1; or (iii) Standardized Regulations (Government Civilians, Foreign Areas), Section 925, “Maximum Travel Per Diem Allowances for Foreign Areas,” prescribed by the Department of State, for travel in areas not covered in (a)(2)(i) and (ii) of this subparagraph, available on a subscription basis from the -- Superintendent of Documents U.S. Government Printing Office Washington, DC 20402 Stock No. 744-008-00000-0. See the bolded part? The FAR cost principle requires the contractor to comply only with the lodging, meals and incidental limits -- i.e., those limits are invoked as ceilings on allowable costs. This the contractor has done. In addition, the contractor has invoked the rest of the requirements. The contractor didn't have to do it; it was a choice. Now that the choice has been made, the contractor has to live with it and cannot use a contract clause to make allowable costs that would have been unallowable because they violated company policy. Regardless of the above, the costs in question are unreasonable because they violate the company's policy and the FAR definition of reasonableness states that deviations from policy may be unreasonable. In this case they are unreasonable because nobody running a competitive business would allow an employee to live more than 100 miles away and then pay for the POV mileage and put the employee up at a hotel, just to facilitate the employee working at the Permanent Duty Station. Further, in this case the reason it's being done by the company is because they found a sucker higher-tier contractor who would pay for it, along with profit. ETA: Also note that transportation costs are limited by the cost principle to amounts that are reasonable. H2H

Retreadfed, The contractor's policy was NOT inconsistent with the FAR. It was consistent with the requirements of 31.205-46 and, in addition, established additional requirements on its employees not specifically required by the FAR. The additional requirements were similarly not prohibited by the FAR either. Once it established those additional conditions, it had to abide by them consistently. I think that if you go back and think about what the OP is saying, you come to the conclusion that an employee's normal commute from home to the permanent duty station was treated as TDY and reimbursement for mileage, lodging, and per diem/M&IE was claimed. Looking solely at the FTR/JTR and 31.205-46 is a mistake, in my view. Looking solely at the subcontract language is similarly a mistake. You also need to consider IRS rules. (No the contract doesn't invoke the IRS rules but wouldn't you be worried that something prohibited by IRS rules was being claimed as an allowable reimbursable expense? I would.) In sum the OP is correct that this doesn't pass the smell test and is likely to be flagged by auditors. The employee should have been relocated if the daily commute was too much. Failing that, the employee and company seem to be claiming personal commute expenses as TDY and I bet the company is claiming that as a business deduction for tax purposes. Not good.

Navy, I suspected you were going to go there. You may not accept this answer, but you are conflating rules for allocation of indirect costs with rules for allocation of direct costs. I recommend you review the DOD Indirect-Cost Management Guide, Chapter 2. "Simply stated, costs are designated as direct costs because they are traceable to, and identified with, a specific contract." You are properly quoting the rule for allocability of overhead expenses to contracts, but not direct expense (nor for that matter G&A expense). H2H

Vern, Why quote the SBA regulations? Because I find it helpful to review the actual language of the regulations, rather than to rely on somebody's summary of what they think the regulations say. The OP stated "A section from a publication summarizing a recent SBA Final Ruling has concerned management in my company" and I wanted to make sure the person had the actual regulatory language to address those concerns. The stuff from FAR 16.601 was just red herring, to my way of thinking. H2H

13 CFR Section 121.103 (f) -- (1) Firms owned or controlled by married couples, parties to a civil union, parents, children, and siblings are presumed to be affiliated with each other if they conduct business with each other, such as subcontracts or joint ventures or share or provide loans, resources, equipment, locations or employees with one another. This presumption may be overcome by showing a clear line of fracture between the concerns. Other types of familial relationships are not grounds for affiliation on family relationships. (2) SBA may presume an identity of interest based upon economic dependence if the concern in question derived 70% or more of its receipts from another concern over the previous three fiscal years. (i) This presumption may be rebutted by a showing that despite the contractual relations with another concern, the concern at issue is not solely dependent on that other concern, such as where the concern has been in business for a short amount of time and has only been able to secure a limited number of contracts. (ii) A business concern owned and controlled by an Indian Tribe, ANC, NHO, CDC, or by a wholly-owned entity of an Indian Tribe, ANC, NHO, or CDC, is not considered to be affiliated with another concern owned by that entity based solely on the contractual relations between the two concerns.

Client has an issue because it violated its own travel policy. See 31.201-3(b)(4). Full stop.

I'm unclear as to the relationship between the incumbent contractor and the government's inventory. How did the government acquire title? Is the inventory contractor-acquired (and reimbursed) under a cost-type contract? If not, what's the story? Does the winning contractor need to acquire title, or can it simply be permitted to use the government's inventory at no cost (which would be a cost avoidance)? Hope this helps.

You know, according to WIFCON's bid protest database -- and THANK YOU BOB FOR SUCH A GREAT RESOURCE -- there are remarkably few protest decisions with respect to FAR Part 30 requirements. As we all know disappointed offerors will protest at the drop of a hat ... so I wonder why CAS administration is so rarely used as the impetus for a protest?

Awesome!