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here_2_help

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  1. None. While it has forced many contractors to enhance policies and procedures, and do more training, which are not bad things, the primary result of the rule is to create a new layer of government oversight and a new cottage industry of consultants who support contractors. The amount of fraud and waste deterred by the rule, to the extent it can be quantified at all, is effectively zero. Instead, contractors have ramped-up their overhead spending in order to assure compliance.

    Thus, my assertion is that there has been a negative ROI, to the extent an ROI can be calculated.

     


  2. Vern, I'm fairly sure they are calendar days but it doesn't really matter, does it? DCAA productivity, as measured by the agency's own published statistics, is abysmally lower than it was a decade or more ago.

    To me, the interesting aspect of the GAO report was the discussion of "low-risk" audits. Those are audits that are not performed, but claimed as being completed audits. DCAA stated that performing audits on small dollar-value submissions isn't a good use of taxpayer funds. DCAA is "completing" such assignments at a 2-for-1 rate against full-scope, GAGAS-compliant, incurred cost audits. In other words, for every full-scope audit the agency completes, it issues two non-audit completion memoranda. That's why the backlog drops even though it takes nearly three years to audit one year.


  3. 3 hours ago, Vern Edwards said:

    Those assertions are not just false, they're absurd. The decision to get field pricing support is not merely a matter of CO personal choice when definitizing large UCAs.

    I deeoly respect your knowledge of government contract costs and pricing, but it has failed you in this matter. You clearly do not understand bureaucratic and programmatic practice within government contracting activities. You're in over your head in this topic, and there's no reason to further entertain or debate your ideas about it.

    You are right. I don't understand them. All I have to go on is the FAR. I accept that's limited knowledge but what else can I go on, since I'm not a government employee?

    "The contracting officer is responsible for evaluating the reasonableness of the offered prices. ... The contracting officer may request the advice and assistance of other experts to ensure that an appropriate analysis is performed. ... The contracting officer should request field pricing assistance when the information available at the buying activity is inadequate to determine a fair and reasonable price."

    I don't see any imperatives in the quote above. In my opinion, the FAR language gives the CO discretion. If agency policy takes away that discretion, then that's a problem. If the CO has discretion but uses it poorly, that's a problem

    Further, I accept my modest proposals in this thread may seem absurd to contracting professionals ... but we have to start somewhere. I would start by empowering the CO and then holding the CO accountable. I realize the PM has a critical role to play, so I would hold the PM accountable as well.

    We have to start somewhere. Saying that we need to start with Congress, all 535 of the legislators, is just as absurd as anything I've posted.

    Vern, I accept that you are done debating these points. Honestly, I never expected to gain any serious traction. Acquisition reform is too hard because the system is too complex and the practitioners are too entrenched in the way it's always been done.


  4. On 9/29/2017 at 10:15 AM, REA'n Maker said:

    One other legitimate UCA circumstance where "no one was at fault" was what we had to deal with in the 1990's:  defense contractors constantly being bought/sold /merged, which caused havoc in the negotiation process.  You could hardly crack a proposal open before it was pulled back because guys like GE Aerospace became Martin Marietta became Lockheed Martin over a time frame measured in months (test gear for the F-14 IRST in my case, i.e., not even terribly complicated).  All of whose C&P data required some level of DCAA blessing before we could conclude negotiations.  Hence, a UCA until the CAS issues were resolved.

    Adam Smith's fault I suppose?

    In the 20 year-old anecdote that you put forward to justify the status quo, the fault was the CO. Instead of negotiating the CO relied like a crutch on DCAA to tell them what to do. ("... C&P data required some level of DCAA blessing before we could conclude negotiations.") No, it didn't. The CO was under no obligation to request field pricing assistance. That was a choice. And it was obviously a poor one.


  5. You know how contractors have to certify things like accurate, current & complete cost or pricing data? Or that the indirect costs in the final billing rate proposal are free of expressly unallowable costs?

    I'm proposing that every UCA issued from now on must contain a certification, signed by the CO and one level higher, that the UCA is NOT being issued because of concerns about expiring funds, and that the signatories agree that they will use best efforts to definitize the contract within the statutory limits. Under penalty of perjury.

    Would that be too overwhelming of a step? Or is the status quo just fine with everybody?


  6. 3 hours ago, Vern Edwards said:

    You can't hold COs personally liable (or responsible), because they must rely on others in their own and the contractor's organization during the definitization process in order to reach a settlement. COs lead the government definitization team, but they don't have dictatorial powers. And unilateral decisions will probably lead to litigation.

    Definitization may involve more than just price and time settlements. There may be unresolved technical issues. It is not just a matter of processing paperwork.

    COs should not be judged on the basis of outcomes that they cannot control through their personal performance.

    So since everybody is responsible, then nobody is responsible. I'm not buying it for a second. Who has the Certificate of Appointment?

    The statute says what the statute says. If the CO and PM are not willing to comply then they shouldn't issue a UCA. If they do so then it's on them to comply with the statute.

    And please do not give me that hoary line about how somehow the contractor didn't do something and now everybody gets to blame the contractor for not doing their jobs. If the contractor submits a definitization proposal then it's fulfilled its responsibility and everything else is on the government team.

    ***

    Hey, look at that reservation way over there!


  7. I'm glad to see that time has not diminished your sense of cynicism, Bob.

    Further, I suspect you missed the role of the FAR Councils, whose job it is to focus and aim all that hot air so that it hits the wrong island. And then to blame the contracting folks for being on the wrong island.

    And perhaps you missed the role of Fort Lee, whose job it is to build bridges between the islands where there are no contracting folks.


  8. 4 hours ago, kevlar51 said:

    It's curious that they went through negotiations with you (did you agree to a price?) and then decided against it. But it's far from unheard of, especially in the last two weeks of September.

    I have a theory in search of evidence that more bad contracting decisions are made in September than in all the rest of the months of the year, combined.


  9. So now I've been doing this long enough to notice the swings of the pendulum.

    Today Bob published (on the main page) a link to recent SECDEF comments. With respect to reforming defense business practices, the DoD press release quoted SECDEF as follows: "Transforming the enterprise, the secretary said, 'will require delegating decision authority in many cases to the outer edges of the enterprises to unleash the great ideas we find among our bright and committed airmen. It's also important to integrate this across the joint force, because the real strength we've exhibited over 16 years of war is jointness.'"

    I seem to recall that DCAA blamed a focus on decentralization in the 1990's (the Kelman approach) as the root cause for many of its problems, and thus has been moving toward a more central control since the early 2000's. Now, perhaps, we'll see the pendulum swing back to empowering COs without the need for Boards of Review....


  10. On ‎9‎/‎14‎/‎2017 at 12:55 PM, lotus said:

    Is my interpretation correct, these should be accounted for a direct costs?

    There is no right or wrong answer. The company chooses its cost accounting practices and then follows them.

    I will add that, according to CAS 410, G&A expenses are those that benefit the business as a whole. Any expense that does not meet that test likely should not be part of the G&A expense pool. On the other hand, CAS gives contractors a pass for immaterial costs that are included in the pool.


  11. 1 hour ago, Mesut Özil said:

    The contract specialist that prepared the contract package is retired and a new specialist has determined that this was not the correct way to award this contract  and therefore declared the contract as being invalid and will not let the originator use the contract anymore.

    Does the contract contain a Termination for Convenience clause? Has it been exercised?


  12. Maybe I'm missing something, but doesn't the CO have to enforce the clauses in the contract? Are you saying that the CO has a duty to object to the inclusion of an official agency clause when the agency directs that clause to be incorporated into a contract, or that the CO must refuse to enforce the contract as agreed-to by the parties? If that's what your position is, I'm thinking it's a tad bid unrealistic.

    My position is that the contract must be enforced as written and agreed-to. Whether the clause is sound policy or not is above the CO's pay grade. Whether the agency obtained a FAR Deviation or not is above the CO's pay grade.

    So the beef, if any, is with the agency not the CO.

    What am I missing, please?


  13. 3 hours ago, joel hoffman said:

    The industry is pushing for a way to do this but isn't going to go to the effort and expense to sponsor FAR revisions if nobody in the government would understand when or how to use it.

    Speaking for myself here, industry has learned through many years of futile effort that the FAR Councils, and especially the DAR Council, don't really give a darn about what industry thinks. Members are primarily focused on following the policy agenda established by their supervisors, and then doing what Congress tells them to do via implementing public laws in the regulations. (The latter is a distant second.)

    I would strongly suspect that any innovations that made sense to the people in the trenches, actually trying to accomplish projects, would be either (a) ignored or (b) killed in an ad hoc committee. I support my assertion by reference to the regulatory history of DOD's attempts to kill Performance-Based Payments or DOD's attempts to kill commercial pricing or the DAR Council's embarrassing response to recommendations contained in http://www.acq.osd.mil/fo/docs/Eliminating-Requirements-Imposed-on-Industry-Study-Report-2015.pdf


  14. Thinking about it this morning, there is a provision in CAS 420 that requires both IR&D and B&P expenses to be allocated to the segment that benefits from them, regardless of where the costs are incurred. So ... it's possible that what the OP was hearing was that B&P incurred on behalf of a foreign segment must be allocated to that segment in proportion to the benefit that the foreign segment expects to receive from the awarded contract.

    That's a lot of supposition and interpretation of the original question, but I wanted to be thorough in my response.


  15. Not meaning to derail this very interesting thread, but I wanted to mention that when negotiating contracts with the UK MoD, the parties are supposed to discuss contingencies and, through a relatively complex probability analysis using Monte Carlo simulations, develop a probable contract cost for the contingency. That probable cost is added to the contract price as an allowable cost and, thereafter, it's the contractor's risk. In a FFP-like contract, the contractor has been compensated for that contingency whether or not it occurs, or regardless of to what extent it materializes. Obviously things are a bit different in a CP-like contract environment because funding is involved, but my understanding is that the contract profit/fee would not be adjusted for that particular contingency, regardless of actual cost incurred related to it.

    "Risk that can be estimated and modelled may be an Allowable Cost within the contract price if agreed by the [MoD]. Costs associated with compensating the contractor for such risk should be evidenced, be appropriately modelled, and only be recovered once." (Emphasis in original.)

     

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