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Posts posted by here_2_help

  1. 3 hours ago, rfpro said:

    -They don't need to use "PTO" hours for that time because they are exempt and still get paid the full day, so what code should be used to fill the 2 missing hours from Monday? Or, Should I make people use PTO for that time?

    I have been in this business since Reagan was President. I have had many employers and been a consultant to many, many more companies. I have never, ever, seen a Government contractor permit an exempt employee to avoid using PTO by claiming that they still get paid for the full day, so why should they use PTO when they don't have to? (I have seen Comp Time banks used, but that's not your scenario.) Employees can "make up" time by working OT on other days in the week, but the number of recorded hours in a work week is never less than 40 (alternately never less than 80 in a two-week pay period).

    Given your scenario, the impact of the practice of not recording PTO to a Fringe Benefit account is to artificially decrease the Fringe Benefit rate and to increase the cost of the other labor hours. Depending on the labor distribution and contract mix, that practice could be inflating costs charged to certain contracts while decreasing costs charged to other contracts. Maybe; it's not possible to say with any certainty from afar.

    If I found a contractor using that practice, I would advise them that their timekeeping system was not adequate for cost-reimbursement or T&M contract types.

  2. Funny that this is the exact opposite situation from uncompensated overtime, where employees record more hours than they get paid for. In this case, employees are getting paid for more hours than they are recording.

    Yes, exempt employees can get paid for partial work days; that's what "exempt" means with respect to FLSA. However, in my experience timecards for exempt employees must record 40 hours in a week (assuming that's the standard work week for them) regardless of how many hours they actually work. It's not a matter of proration, it's a matter of timekeeping accuracy and labor accounting. Remember, payroll is distributed based on those timecards. Your system appears to let employees avoid recording hours to PTO, which means that you are missing some indirect expenses. Why is the company averse to having an indirect expense for PTO?

    Because there is no PTO expense the company seems to be increasing the "cost" of the hours that the employee is actually recording and charging to cost objectives, which might lead to allegations of an inflated direct labor cost.

    Re: your LWOP question. The situation is complicated. There are Federal labor laws I'm not going to get into here (and I'm probably not qualified to discuss them). That said, typically an employee takes LWOP when the PTO balance is insufficient to cover time not worked. If an employee is on LWOP then they are actually not getting paid for that time.

    So this is, fundamentally, a labor law compliance issue more than a labor accounting issue. You need better advice than you will get here, and I suggest you pay somebody for it.

  3. 4 hours ago, PepeTheFrog said:

    Has anyone heard of specific thresholds (percentage ancestry) to qualify for the various race-based or ethnicity-based federal contracting preference programs?

    With respect to college grants and scholarships reserved for certain socioeconomic classes, many use the 25% test. E.g., if you are 25% Hispanic then you can claim to be Hispanic when applying for (many but not all) grants and scholarships.

  4. 1 hour ago, marcfgov said:

    Thank you for your responses.  I’ve come here for assistance four times since I became a member of this group in 2010.  I am a faithful follower of the topics and posts. I researched and went through the blogs before I posted my question.  And I read and respect all the answers and guidance.  

    Yes, some of the copy and paste came from the post I found on this site from 2002. I apologize if I came off as a newbie, ignorant or lazy by asking if there was clarification from the 2002 post .  I’ve read the contract, as I do  before I ask for help  I acknowledge that what I dont know is encyclopedic .

    Vern,you have always been gracious in providing guidance.   Based on my interpretation of your guidance, I’m going with the fact that this is a T&M contract, bill for hours worked ,do not bill the time 1/2 

    also, based on the responses, I believe that my question irritated more than intrigued an answer. Again for that I apologize again. I will move on.  I promise  no more questions from me.  

    As for the true newbies, please be a little less harsh and provide guidance vs assuming the are lazy and are just looking for an answer   Some are, but like me back in 2010 I was here to learn  

    Not a newbie, respectfully submitted,


    I sincerely apologize if I upset you. I hope you will continue to post questions because, obviously, these are issues that need to be addressed.

  5. 9 hours ago, Vern Edwards said:

    See Payments for Labor under Time-and-Materials and Labor-Hour Contracts: Are They Based on Incurred Costs?, The Nash & Cibinic Report, September 2012, discussing the ASBCA's decision in GaN Corp., ASBCA 57834, 2012 WL 2997037 (July 17, 2012).

    The fact that one of the government's arguments in the cited case was almost exactly what Marc said the prime's position was makes me think that the 52.232-7 language is not as well understood as Vern's 2nd post would indicate. (Yes, that is the legal decision to which I was referring in my 1st post.) If the interpretation of the language is "seemingly obvious" then I hope the government attorneys were sanctioned and otherwise disciplined for putting a contractor through unnecessary litigation and associated stress. I hope the CO who so completely misinterpreted the clause requirements had their warrant pulled.

  6. 2 hours ago, marcfgov said:

    Since our employees are exempt from FLSA, they do not receive additional compensation for the extra hours that they work. In accordance with DCAA guidance, our employees record all hours worked on their timesheets.

    Yes, this is correct. The DCAA CAM suggests several options for dealing with the difference between the amounts of direct labor recorded versus actual wages paid. You should read it.


    2 hours ago, marcfgov said:

    Our prime contractor reached out today and they suggested that there’s no FAR that allows for us charging time & half for overtime pay for non-exempt employees. Instead, he suggested that overtime premium needs to be baked into our T&M bill rates and not show up as a separate 1.5 X standard pay rate.

    Your prime is ill-informed and doesn't understand how T&M (sub)contracts work. I would suspect that you don't actually bill time-and-a-half but, instead, you bill for overtime hours as recorded at the contractual T&M billing rates. In fact, I'm surprised your prime has the information to distinguish between "standard" straight time hours and "overtime" hours, since all hours should look the same on the billing.

    2 hours ago, marcfgov said:

     CEO's stance is that under a T&M contract we can bill the government for all hours worked in direct support of the contract (within the stated ceiling price, of course), regardless of whether any extra hours worked results in increased costs to the company or not.

    Your CEO is correct and there is at least one legal decision that supports that position.

    2 hours ago, marcfgov said:

    ... our customer wants us to cap our billing at 160 hours. He says were entitled to 200 hours, given the nature of a T&M contract (it purchase hours worked, not costs incurred). They say they’ll reject the invoice if it’s for more than 160 hours.

    Assuming your contract has the standard 52.232-7 payment clause, your customer is ill-informed and the position conflicts with at least one legal decision.

  7. Related question:

    The WIFCON Home Page publishes news of interest to contracting professionals. Many of those news pieces are links to Department of Justice press releases, announcing such things as indictments, sentencing, and settlement agreements. Going back to the beginning of 2018, what percentage of DOJ press releases have been related to small business/socioeconomic status fraud?

    I don't know if it's easy or hard for Bob to answer that question. But my completely subjective perception is that it's been a fairly high proportion of the total.

  8. 2 hours ago, Retreadfed said:

    H2H, before you go down that path, have you compared 32.503-6(g) with FAR 52.232-16(c)?

    Yes. The contractor does not anticipate an at-completion variance greater than 20%. Unless I'm missing something, that means the CO should not reduce the progress payments on that basis. On the other hand, the contractor does anticipate an at-completion variance, some of which will be shared with the government customer. The question at hand is whether the loss ratio calculation associated with current period progress payment requests should anticipate the government's participation in the loss, which will reduce the final at-completion variance and thus reduce the loss ratio.

  9. FAR 32.503-6(g) addresses the situation where progress payments are being used for a contract that is in a loss position. ("If the sum of the total costs incurred under a contract plus the estimated costs to complete the performance are likely to exceed the contract price, the contracting officer shall compute a loss ratio factor and adjust future progress payments to exclude the element of loss.")

    Question: How does the loss ratio calculation work in a FPIF (firm target) situation? May the contractor use the agreed-upon formula to offset some of the estimated costs to complete for purposes of reducing the loss ratio, even though the final price has not yet been negotiated?

    I've looked through my reference library and couldn't find an answer to that question. I'm hoping others can assist.

  10. 3 hours ago, Hilarity_Follows said:

    I'm at a loss how to negotiate a CPFF award with this Agency and still preserve proposed fee. This new unwritten policy seems almost predatory forcing the firm to accept all cost risk under FFP. The FAR is pretty clear that CPFF is an appropriate cost type for complex R&D, though they aren't technically denying that we can have that cost type award - just as long as we forgo nearly all of the fee. I am only getting this type of negotiation feedback from a single agency, but unfortunately we do a lot of work with them. So, this new policy aims to also affect future awards. 

    Would it be beneficial to alter budgets going forward to show fee only as a total fixed dollar amount and try negotiate as a whole dollar figure instead of a percentage of cost?

    A couple of things that we know: (1) for R&D work, fixed fee is capped at 15% of total costs (FAR 15.404-4(c)(4)(i)(A)); and (2) when cost analysis is performed a structured analysis approach must be used to develop negotiation objectives.

    In my mind the best way to approach the negotiation is to use the structured approach (e.g., weighted guidelines or similar) to determine the fee you believe you are entitled to receive, then negotiate that dollar value, not the percentage. Avoid discussing the fee as a percentage of certain cost elements; attempt to discuss the fee as a dollar value--but use the results of the structured approach to support your position.

    All I've got. Hope this helps.

  11. If you have a Full CAS-covered contract and your cost accounting practices are consistently applied so as to make that contract compliant, then it doesn't matter whether a subsequent contract is subject to Full or Modified coverage. So long as the Full coverage contract is active, you will treat all subsequent contracts as being subject to Full coverage, whether or not the rules would formally apply Full coverage to those subsequent contracts.

    Because you have to be consistent. You can't have one set of practices for that one contract and another set of practices fore the other contracts. That's not how it works.

    Let me clarify: it will matter if you have a noncompliance with one of the Standards that only applies in Full coverage (e.g., CAS 403, 410, 418, etc.). If you are dealing with calculating the cost impact associated with a noncompliance, then it matters; otherwise, it does not.

    In my experience, it is rare for contractors or auditors to apply the kind of critical analysis to the CAS coverage regulations as Vern has done. Most people go right to the DCAA flowchart and that's the extent of things.

    Since so few people actually critically analyze the rules, I should think that im2 can argue any position that they feel to be advantageous to their organization, with little risk of contradiction. That's not saying what the technically correct answer is (if it matters, I think Vern is correct). What I'm saying is that I have yet to meet an active DCAA auditor (including a CAS Tech Specialist) or an ACO/DACO/CACO who has the ability to apply critical analysis to the question.

    My advice: Pick a position and advocate for it.

  12. In another thread somebody posted

    "Unallowable means neither G&A nor Overhead."

    Unfortunately that thread is closed so I'm posting a response here, realizing that many people "lurk" without posting.

    That quoted statement is wrong.

    Unallowable costs are still the same costs they ever were, only unallowable. If the costs were G&A then they are still G&A. If they were overhead they are still overhead. If they were direct costs, then they are still direct costs. Unallowable costs must receive their fair share of indirect costs, so you have to keep them in the same place.


  13. On 8/7/2018 at 6:53 AM, Corduroy Frog said:

    This is a general question with general answers expected.  Some large contractors may form elaborate service centers which encompass some or part of the above, but I'm hoping for general answers.

    The question, if not otherwise clearly stated, is "which pool are business development costs normally charged to - G&A or Overhead?"

    Interesting (to me) that "general answers" were expected but the best answer was a single word. Ah, well.

    As H. L. Mencken said, "For every complex problem there is an answer that is clear, simple, and wrong."