Jump to content
The Wifcon Forums and Blogs

here_2_help

Members
  • Content Count

    2,022
  • Joined

  • Last visited

Posts posted by here_2_help


  1. Can we agree that this issue can be negotiated? Can we agree that Sunstrider can use the historical pricing he has as his negotiation objective? Or perhaps go even lower if prices are trending down in the supplier's industry? To me, it seems straightforward. Sunstrider simply declares that the government won't pay any more than X. Put the pressure on the prime to justify why X is too low. That justification may well include the information that Sunstrider needs. If it doesn't, then Sunstrider can reject the prime's justification as being inadequate (for all the reasons mentioned in this thread) and stick to X.

    Post-award, if Sunstrider believes it's warranted, he can request a review of the prime contractor's estimating system. Post-award, Sunstrider can request a post-award (defective pricing) review by DCAA.

    My point is, Sunstrider has a strategy available to overcome the barriers erected by the prime contractor.


  2. Quote
    “Cost or pricing data” (10 U.S.C.2306a(h)(1) and 41 U.S.C. chapter 35) means all facts that, as of the date of price agreement, or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price, prudent buyers and sellers would reasonably expect to affect price negotiations significantly. Cost or pricing data are factual, not judgmental; and are verifiable. While they do not indicate the accuracy of the prospective contractor’s judgment about estimated future costs or projections, they do include the data forming the basis for that judgment. Cost or pricing data are more than historical accounting data; they are all the facts that can be reasonably expected to contribute to the soundness of estimates of future costs and to the validity of determinations of costs already incurred. They also include, but are not limited to, such factors as-

     (1) Vendor quotations;

    (2) Nonrecurring costs;

    (3) Information on changes in production methods and in production or purchasing volume;

    (4) Data supporting projections of business prospects and objectives and related operations costs;

    (5) Unit-cost trends such as those associated with labor efficiency;

    (6) Make-or-buy decisions;

    (7) Estimated resources to attain business goals; and

    (8) Information on management decisions that could have a significant bearing on costs.

    Emphasis added.

    Please show me where in the FAR definition of "cost or pricing data" suppliers' names are included. Certainly the suppliers' names are facts, but I contend that suppliers' names are not any kind of facts that prudent buyers and sellers would reasonably expect to affect price negotiations significantly. Therefore the names do not meet the definition of "cost or pricing data" and do not need to be disclosed for TINA compliance purposes.


  3. Joel, would you agree that if the prime had adequate price competition, it could use price analysis to determine that the proposed subcontractor's price was fair and reasonable. Assuming that was the case, what else does the government need to know? What other information could reasonably be expected to affect price negotiations significantly? Please identify which cost or pricing data the prime has not provided with respect to its proposed subcontractor cost.


  4. I tend to agree with Neil Roberts on this one.

    The government wants to negotiate a sole-source FFP prime contract. As part of its proposal, the prime has submitted a proposed price for a subcontractor. The prime determined the price to be fair and reasonable based on obtaining adequate competition. The prime has provided the source evaluation and selection notes to the government as part of its cost or pricing data. The government is concerned that the source evaluation or selection notes are not robust. In particular, the apparent winning subcontractor is not identified by name.

    The issue is not compliance with TINA as the prime has obtained adequate price competition (or asserts that it has done so). The issue is whether or not the proposed price for the subK is fair and reasonable. This is a matter for negotiation. Perhaps start by saying that you will accept the low bid rather than the one the prime has chosen to support its price (assuming the chosen subK is other than lowest price). See what the prime does in response.

    As Neil Roberts noted, the government will have post-award audit rights to see whether or not the proposal was defectively priced because the prime didn't include all cost or pricing information. I agree that the government should use those rights. In the meantime, negotiate hard using the lack of information as the basis for mitigating the government's risks.


  5. 2 hours ago, rsenn said:

    Why do you assume that 40 hours must be the basis for salary distribution?  It is easy to imagine someone who works less than 40 hours each week for a salary.

    Because of FLSA requirements regarding overtime.

    Look, I'm done discussing this. I've given you my best answers. I am not a labor law attorney and, if you want to discuss FLSA requirements, I suggest you hire one for a consultation. Why don't you do what you want to do and let us all know how it turns out. If DCAA (or the Dept. of Labor) buys off on your practices, you can post here and I will admit I've been wrong!


  6. 1 hour ago, AndiiM said:

    The Government has accepted and paid these invoices, and the employee in question was on the program roster the entire time, so they were aware she was billing to the contract. 

    Interesting you bring up acceptance as a defense. In the January 2016 edition of Government Contract Costs, Pricing & Accounting Report (Volume 11, Issue 1), authors Jerome Gabig and Michael Steen argue that whether or not the government can "revoke its acceptance of the services" is governed by FAR 46.501 and the contract's acceptance clause (which may be 52.246-6, Inspection-Time-and-Material and Labor-Hour). The authors point to paragraphs (e) and (j) of that clause. The authors assert that "after acceptance, the Government has relinquished its right to question whether the services were performed by unqualified personnel unless otherwise 'specified in the contract'."

    The authors note that, if the government has not relinquished all post-acceptance rights, the parties would look to 52.246-20, Warranty of Services, if it is in the contract. The assert that if the clause, or one similar to it, is not found in the contract (it's not mandatory), then "there is no exception to the acceptance [of services] being conclusive without any right of the Government to challenge the qualifications of the employee performing the work." If the clause, or one similar to it, is found in the contract, then "rather than disallow the entire cost incurred by the Government for the services performed by the unqualified employee, the Government is entitled only to the difference between the labor category charged and the correct labor classification of the employee who actually performed the work." In this case, it seems the government would be entitled to nothing as there would presumably be no price difference between a properly trained employee and the one who performed the work.

    Hope this helps.


  7. Fascinating thread. The focus is (properly) on the contracting issues, but will somebody please think of the poor accountants who have to submit invoices on this charliefoxtrot? Who is incurring the costs and who is billing the customer? Who gets to record the revenue? How is profit calculated? Who is paying the IFF?

    Even in the best of circumstances, novations are challenging for the contracting folks and they are a nightmare for the accounting folks. This scenario is far from the best of circumstances.

     


  8. 35 minutes ago, Cewheaton said:

    I am reading that FAR 15.215-11 and it states that

     

    This clause shall become operative only for any modification to this contract involving a pricing adjustment expected to exceed the threshold for submission of certified cost or pricing data at FAR15.403-4, except that this clause does not apply to any modification if an exception under FAR15.403-1 applies.

    We take exception to certified pricing data based on the award being a result of a competitive basis... so maybe I am running down a worm hole!

    Even if we as the Prime do not have to certify our costs, I have a manager stating that regardless of what we do at the Prime, if we have a sub that exceeds TINA they still have to certify to us regardless... which I don't feel is correct either... ughh

     

    Cewheaton,

    As others have said, even if the contract was awarded on a competitive basis, any MODIFICATIONS to that contract will not be. Since you have the contract in hand, any modifications will be made on a sole/single source basis. Accordingly, pricing for mods is not exempt from (certified) cost or pricing data requirements.

    Looking at your subs, if you are awarding a subcontract and no TINA exception applies to that award, then you have to obtain (certified) cost or pricing data for that subcontract action. If you don't, your subK managers will have difficulty passing their next CPSR.


  9. 6 hours ago, Don Mansfield said:

    Yes. The costs were allowable as fringe benefits if certain conditions were met: https://www.acq.osd.mil/dpap/policy/policyvault/2005-1405-DPAP.pdf

    However, joel is correct that the contractor only gets paid for hours worked, at least under a Government T&M contract. We don't know the exact payment terms in the subcontract, but if they are essentially the same as the FAR clauses for T&M payment then the contractor would not be entitled to payment for hours not worked. Presumably, these costs would be recovered through the hourly rate, which should include indirect expenses. 

    Which is why I answered the original question the way I did. The subcontractor would not be paid for hours not worked; but the rate per hour worked would be adjusted (to the extent necessary) to compensate the contractor for the additional indirect costs incurred. A rather imperfect analogy would be unabsorbed overhead costs recovered in a stop-work situation.


  10. Joel,

    The Changes clause would be the authority. The subcontract was constructively changed when the subK was directed to go home instead of working. The subK was on site, working, and then was sent home.

    Does anybody else here remember how the government handled the (huge) impacts on the Gulf shipyards from Hurricane Katrina? I don't think the remedy was limited solely to schedule impacts. Same principle here.


  11. This quandary is why the terms "recorded" and "incurred" are not synonyms. The question speaks to the timing of when the contractor records the expense, not when the cost is incurred in the sense that cash has been credited. Accruals are perfectly acceptable -- and, indeed, often required -- means of recording costs prior to actual payment.


  12. Sometime in the past 12 months or so, a forum (ASBCA or CoFC, I believe) issued a decision regarding the elements necessary for the allowability of a contractor's pre-contract costs. As I recall, the government argued that specific pre-authorization was required, and the court held otherwise, using a strict reading of FAR 31.205-32. I've drawn a blank trying to remember that decision. Does anybody know of it?

    Much appreciated.


  13. Contractors have discretion regarding the timing of recording material costs, so long as they are consistent. Options include:

    1. When orders are placed

    2. When both the material and invoice are received

    3. When the material is issued or released from inventory

    4. When invoices are paid

     


  14. 15 hours ago, joel hoffman said:

    You may be correct, Retreadfed. I just reread contractsmgr’s clarification.  The clause provides for a cost adjustment; CM states that the government required the contractor to perform additional precautions that were not in the approved heavy weather plan .

    looks like they will pay costs but no sub or prime profit on any of the work, including the “additional precautions”. 

     

    Let me get this straight. Are we saying that a prohibition on paying profit that is found in the prime contract would be enforceable in the subcontract between the prime contractor and its supplier(s)? Wouldn't that depend on whether or not the prime flowed the clause down to the subK?

    When considering your answer(s), don't forget that the prime contract is FFP.


  15. 4 hours ago, ji20874 said:

    I want to agree with Don, but with a few caveats...

    1.  However, the price paid by the Government for the contract modification to pay for the HWP has to be fair and reasonable, and there might be a need for certified cost or pricing data for this sole-source modification (depending on dollar amount and commerciality and so forth).

    2.  However, the contracting officer has to agree with the contractor's claim alleging a constructive change.  See FAR 1.602-3(b)(5).

    I want to agree with ji20874, but with a caveats...

    1. However, the costs of preparing the REA and proposal, including the cost of preparing cost or pricing data and supporting any fact-finding/audit thereof, are also reimbursable contract costs.


  16. lotus, suggest you start with FAR 2.101 definition of "certified cost or pricing data" which discusses what "facts" the government is concerned about. The purpose of the index is to help the government navigate through the (certified) cost or pricing data; the goal is to prevent a contractor from dumping a lot of paper and claiming that it has complied with the disclosure requirement, and then forcing government personnel to find a metaphorical needle in a haystack.

    Constructing an index isn't really very hard if your narrative clearly explains the facts and assumptions used to arrive at the proposed price. In fact, here is a narrative template for you to consider using to create your index, provided free of charge:

    1. General Background

    2. Key Assumptions

    3. Direct Labor

    4. Direct Material

    5. Subcontractors

    6. Other Direct Costs

    7. Indirect costs

    8. Other Matters

    I like to use "other matters" for stuff like M&A activity, efficiency studies, and the like.

    Hope this helps.

     

×