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Posts posted by here_2_help

  1. Recently I participated in a discussion where it was asserted that technology is moving faster than (government) contracting can keep up with it. I'm not going to give any specifics. Suffice to say that there were certain, known, threats to military assets that we had the technology in our hands to address, but we could not get it to the requiring activity quickly enough to address the threats. The assertion was that the contract SOW didn't permit it, or that the modification process took too long (because of the need to determine price reasonableness), or some other perfectly understandable acquisition-related requirement. It was frustrating to the technical folks, who had the right solutions but who were prohibited from providing them.

    I'm not complaining; I'm posting this because it's a commonly held belief that the limit on innovation is found in the acquiring activity and not in the requiring activity. In this particular discussion, I was not able to disagree with that belief.

  2. The DoD and other Class Deviations implemented the threshold change in advance of formal rule-making. The Class Deviations expressly provide that prime contracts awarded before the effective date of the threshold change may be modified to comply with the higher threshold, with no consideration required. The prime simply has to request it. If you are awarding a subK between July 1 and the date on which your contract is modified to comply with the higher threshold, you may want to stick with the lower threshold. Or you could get a letter from the Prime contract CO giving you permission to use the new threshold while the mod is being processed....

  3. eager,

    Your questions are really not all that difficult to answer. The problem is that you are seem to be looking for an education on the topic, and this forum isn't really a good place to get an education; it's a better place to get specific questions answered. Bottom-line (for me) is that nothing you posted shocks me or presents a challenge that cannot be overcome. Do you have access to a seasoned contracts professional who can give you the time necessary to educate you on the topic?

  4. Re: Section 4 (CAS). I counted ~ 20 recommendations and all of them would be great steps forward. However, there is nothing in there about significant rule-making efforts. E.g., concurrent changes to cost accounting practice and the definition of "increased costs in the aggregate." So ... baby steps in the right direction.

  5. To add to Vern's point, Don's problem has omitted significant information regarding the probability distribution of the contractors' costs. Don has provided a probability estimate that the actual value may be $20 million higher than the most probable cost (which I assume is the mean of the distribution), but he has omitted a probability estimate associated with an actual value that is $20 million lower than the most probable cost. We need the distribution around the mean, and the standard deviation, if we are going to play probability games.

  6. 3 hours ago, tjsmith57 said:

    My Company [does] not have a corporate plan. ... advice on how best to respond.


    Section L. Small Business Utilization (required from Large Business Offerors only)

    Provide the offeror’s current fiscal year corporate subcontracting goals for small business concerns, veteran-owned small business concerns, service-disabled veteran-owned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, and women-owned small business concerns and the offeror’s compliance with their subcontracting goals

    My best advice is to either (1) tell the customer that you don't have a corporate SB plan and have no metrics, or (2) develop a corporate SB plan and submit that, saying you have no metrics but will have some in the future.

    Also, and this is gratuitous advice, if you are going to hunt with the big dogs, you need to have a corporate SB plan, just like they do. Otherwise, you may be perceived as being not ready for prime time.

  7. The appropriate wrap-rate methodology is the one that follows the contractor's unique cost accounting structure. The structure will vary. For example, some contractors add Fringes to Direct Labor when calculating their Overhead allocation base; others do not do so. Other contractors allocate G&A on a Total Cost Input base; others use a Value-Added Base or even a Single Cost Element base.

    One size will not fit all and I suggest you not try to force fit all contractors into one methodology.

  8. 17 hours ago, Barb F said:

    Does the transfer at "standard cost"  qualify as something "other than cost" for commercial work?  I am assuming the intent of #1 is actual cost, not standard or other.  #2 has been met through the claim of commerciality and no contracting officer has deemed the cost of the item, nor its ultimate price to be unreasonable. 

    I don't like your stated assumption. It's usually a mistake to assume much, if anything, in this environment.

    I don't know if anybody has ever asked, or thought about, or addressed your question before. Therefore, without any support whatsoever I'm going with "Sure. Why not?" The phrase "other than cost" means exactly what it says--something other than actual, allowable, cost. A standard cost without variance may well fit into that phrase.

    Make the auditors prove you wrong. I'm fairly confident they will not be able to do so.

  9. Three other thoughts, FWIW--

    1. Every time I priced, back when I priced, management had a "bogey" they wanted me to hit. I think the kids call it "Price2Win" these days. It didn't matter that the pricing followed inevitably from the estimating input; they always wanted the bottom-line number they wanted to see. I learned to deliver the number regardless of my opinion regarding its predictive accuracy.

    2. One time I did some consulting work for a DOE contractor who was remarkably effective at winning new contract awards. Its secret? When the solicitation contemplated a cost-type contract, they bid it FFP. The government was delighted to award on an FFP basis, as it was perceived to lower the risk. I was called in to consult on a T4C. I was surprised to find that the company was losing money on every single DOE contract it had. Apparently there was a reason the work was let as cost-type and not FFP. Anyway the only contract that contractor made money on in that year was the one that had been T4C'd. At least, it didn't lose as much on that one as the others. Unsurprisingly, that contractor is no longer in business.

    3. I knew this company--a Beltway Bandit--that fired its entire estimating staff as a cost-cutting measure. PMs kept complaining that the estimators didn't give them sufficient budget to perform the work. So the company fired the estimators and put the PMs in charge of the estimates and associated pricing. Then those same PMs would run the job after award. No more complaints, right? Unfortunately, the PMs knew next to nothing about estimating and pricing. One example: 4 commercial plants in 4 different CONUS locations; each bid FFP. Brilliant PM idea: detailed estimate for the first plant, then replicate for the others, cutting out 10% for learning curve efficiency. Guess what? Each location had a unique site with unique geology and unique environmental conditions. Each location had a unique governmental permitting and regulatory oversight process. Oops! Unsurprisingly, that contractor is no longer in business.

    Hope these anecdotes amuse somebody out there.

  10. 12 hours ago, TenaciousC said:

    If updating rates and factors was the only update the contractor provided in their "Price ReDetermination" then I wouldn't be so bothered.  It's the updating for more hours (and subcontractor) costs that disturbs me.

    I understand your point about additional hours. One might reasonably think that the hours were captured at the time, if the contractor had an adequate timekeeping system. It calls into question the system's adequacy.

    Further, your comment about "subcontractor costs" interests me. Apparently, the subcontractor incurred hours in preparing the ECPs and direct-charged them to its subcontract. Your predecessor funded the subcontractor's ECP prep costs in a separate prime contract CLIN. I can see why one might do so (in some cases) but, before I did so I would want to be sure that the subcontractor had a practice of direct-charging certain proposal prep costs. After all, it's not a mandatory practice. It would be bad if the subcontractor were charging the contract both for direct-charged proposal prep costs and indirect-charged proposal prep costs in violation of FAR 31.202(a) and CAS 402. If the subcontractor is a large, well-established, defense contractor then it's probably not a big deal; but if the subcontractor is a smaller or more commercial type of contractor, then I might be a bit more worried.

    If the additional subcontractor costs are indirect costs getting finalized, then oh well. But if the additional costs are also labor hours, then I smell something fishy myself and you are right to be concerned. Somebody is messing about with labor hours.

  11. 20 hours ago, TenaciousC said:

     Just recently, the Contractor comes back and sends us a proposal for “overrun” costs attributable to proposal preparation only (relative to the ECPs in 2011).  They updated the amount of actuals incurred — 6 years later! 

    Gosh, have you checked how far behind DCAA and DCMA are with respect to finalizing billing rates? I'm not saying that's the problem, but it would not surprise me at all if the root cause was that rates were finalized 6 years later and the final, negotiated, rates caused an overrun.

  12. It seems fairly clear to me at the IFF is a "fee" paid to GSA for the privilege of selling stuff on a Schedule contract. You actually have to pay it to the GSA; it's calculated as a percentage of sales, isn't it? Accordingly, I think that when you are trying to calculate sales, the IFF should be excluded--i.e., subtracted from actual billings. I am not certain but I believe you pay the IFF on all billings, regardless of whether it was priced into every element.

    I hope this helps. Your question was a bit "vague" so I had to interpret.

  13. 3 hours ago, Vern Edwards said:

    I do not understand that argument. Does anyone?

    As I said on my first post on this thread, I'm not making an argument and I'm not trying to convince (or even persuade) anybody. I'm sorry if that disappoints you (or anybody else). You and I have been down this road before and we are, I suspect, largely talking past each other. For example, I use the phrase "competitive advantage in the marketplace" and your response is that "if there is competition there is no requirement for cost or pricing data." Non sequitur. It's obvious that I'm not communicating well and I take responsibility for that.

  14. 51 minutes ago, PepeTheFrog said:

    For everyone reading this thread and thinking about TINA sweeps...

    Consider what it's like to have skin in this game, which precludes federal employees. PepeTheFrog is talking about the contractor employees who are responsible for defective pricing and false claims issues. 

    You're the Director of Important Things at Giant Defense Contractor (GDC) and you certify cost and pricing data for GDC. Consider the cases Vern Edwards shared, and consider the immense risk and liability with certifying. You preside over five divisions in five different states, and you're now told that your TINA sweep must be five days. Does that change your opinion of this memo? (Even if Shay Assad, one person who used to have skin in this game and now sits in a federal employee position at Department of Defense, wrote the memo?)

    It should be apparent that the ability to conduct effective, timely, TINA sweeps is a competitive advantage. That has always been the case, but the recent Assad memo should make it blindingly clear.

    Litigation avoidance as a competitive advantage in the marketplace. Think about it.