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here_2_help

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Posts posted by here_2_help


  1. 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.


  2. 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.


  3. 2 hours ago, Retreadfed said:

    H2H, I don't know what you mean by this.  The certificate requires two dates, the "as of" date, i.e., the date by which the cost or pricing data must be current complete and accurate, and the date the certificate is executed, i.e., signed by the contractor.  See the form of the certificate at FAR 15.406-2.

    15.407-1 Defective certified cost or pricing data.

    *****

    (b)(1) If, after award, certified cost or pricing data are found to be inaccurate, incomplete, or noncurrent as of the date of final agreement on price or an earlier date agreed upon by the parties given on the contractor's or subcontractor's Certificate of Current Cost or Pricing Data, the Government is entitled to a price adjustment, including profit or fee, of any significant amount by which the price was increased because of the defective data.

     

    The first date is the date of price agreement; the second date is the effective date on the CCCPD. The dates do not have to be the same. For example, if the date of price agreement was 1 June but the contractor's final sweep was 28 May, then the parties could agree that the certification date is 28 May ... and any new cost or pricing data that arises between 28 May and 1 June is irrelevant to a determination that the contractor defectively priced.

    I don't know why this is hard. It doesn't have to be.


  4. 53 minutes ago, kevlar51 said:

    Right. The company will be wide open to the potential for defective pricing. Especially if a sweep takes a long time. Or even five days. By the time a sweep is done, it could be already be inaccurate with no way of knowing. But then you agree to price and sign the cert?

    Sweeping after the agreement on price allows the contractor to apply a firm cutoff date for the sweep. That way the contractor can legitimately say whether cost or pricing data existed that was not disclosed prior to the agreement on price. And if new data exists, the Government is entitled to re-open negotiations. That stinks from a schedule standpoint, but it happens. And since no cert has been signed yet, the contractor isn't open to a defective pricing action.

    Gosh fellows. I have been involved in several negotiations in my time, and we always knew when we were close to agreement. Further, we were frequently sweeping with subKs and ourselves during negotiations, seeking to see if we should update our pricing. It was always good news when we could deliver a cost savings during negotiations, through updated pricing. The customers always liked that.

    But please don't think I'm trying to persuade you of anything. You do you. By all means, proceed with your post-agreement sweeps, if that's what you feel you have to do. Take as long as you need.

    Finally, your comments don't address the difference between the effective date of the CCCPD and the date of price agreement. Two dates; not one.

     


  5. 1 hour ago, kevlar51 said:

    There's unfortunately little incentive for the contractor to conduct multiple sweeps during the negotiation process, because no matter how many they perform during negotiation, they are still going to need to conduct a sweep after agreement on price and before certification. And if their sweep process is correct, it's not going to take any less time or be any less complete simply because they already performed sweeps along the way.

    Vern and I have debated this issue (privately) in the past. I maintain that post-price agreement sweeps are essentially worthless because they don't mitigate defective pricing risk, which ends on the date of price agreement. Accordingly, I assert that a contractor must perform its final sweep just before the final price agreement is reached, and that date becomes the effective date of the Certificate of Current Cost or Pricing Data.

    As to "incentive" -- would a Level 3 CAR on the Estimating System provide adequate incentive? I would think that it would.


  6. I'm fairly active on LinkedIn under a different user name, and every week somebody wants to connect with me. I don't accept every invitation; there needs to be a reason for us to connect. There needs to be a mutuality of interests and skills and network connections. Recently several erstwhile DoD employees have sent me invitations to connect, and I've rejected them. I know there are many Federal employees who visit this site, and perhaps some might be looking to transition to the private sector. Obviously, LinkedIn is a huge recruiting resource and, if you are looking to make a move, you will want to use it. I thought I would share some thoughts about how to use it effectively -- and how not to use it.

    One recent invitation was from a veteran and long-time "contacting officer" for the Air Force. Literally, each job he listed under "experience" was some variety of "contacting officer". He had been a USAF "contacting officer" for many years and had progressed through different postings, each one strangely without any details as to what the job entailed. Either "contacting officer" is an official position (perhaps analogous to a WalMart greeter?) or else the individual didn't know what he was talking about. I suspected the latter. Upon further investigation (no picture, contact details vague, activity primarily consisted of negative comments about certain ethnic groups) I concluded he was nobody I wanted to connect with. I rejected the invitation and reported the profile to LinkedIn as a possible fake.

    Another recent invitation came from somebody in San Antonio who does "contracting for the United States Air Force." There were zero further details. He might work at Brooks AFB but no posting location was provided. He might be a Contracting Officer but it doesn't say that. He might be a Contracting Specialist but it doesn't say that. There is literally no work experience on his profile. Just "contracting". No education noted, not a DAWIA Level or even any DAU courses taken. Yeah, no. The guy could be legit but it didn't seem that way to me. Pass.

    If you are going to use LinkedIn -- and you absolutely should if you are looking to enter the private sector -- you need to approach your profile like it is a resume. Make sure it's complete and that it represents your professional public face. I know there are legitimate concerns about data security but you can be vague about certain details if you need to be. The point is to create a profile that showcases your experience, education, and potential value-add to a recruiter. Believe me, recruiters are looking.

    Hope this helps.

     

    Edited to add: I just accepted an invitation from a Senior Contracting Specialist who listed "FAC C Level III Certification" and "FAC PPM Level III Certification". Retired from USAF after 21 years. Postings are listed.


  7. Jenkins83,

    You keep using the term "ODC" but I'm not sure you are using it correctly. If your question is whether the program office should have acquired hotspot services via an already existing BPA versus asking the contractor to provide, then the answer does NOT turn on what you or the contractor call the hotspot services. Totally separate issue.

    However, if you have concluded that it is appropriate to ask the contractor to provide hotspot services, then you may reasonably ask how the contractor should account for the cost of the services and bill them to the government. If that is the question before you, then what you are asking encompasses questions about the contractor's disclosed or established cost accounting practices. For example, you could reasonably ask how the contractor has accounted for such services in the past, when charged directly to a government contract. Does the contractor consistently treat hotspot services, when charged direct, as a "subcontract" or as a material item or as an "ODC"? Those are reasonable questions that the contractor should be able to easily answer.

    So which is it?


  8. 4 hours ago, Vern Edwards said:

    Who said you should? I agree that you shouldn't. I wouldn't.

    I disagree with here_2_help when he says that a contractor is allowed to make a profit on costs. That is wrong. There is no such statute, regulation, or policy. A contractor is entitled to a profit for its work effort and the risks that it takes in undertaking that effort. In some structured approaches to calculating a prenegotiation profit objective costs are used as a measure of contractor work effort, but that is not a policy saying that a contractor is entitled to profit on its costs.

    The contractor in your case is making no work effort with respect to the subcontractor's profit on its warranty, other than agreeing to pay it. When developing your prenegotiation profit objective, exclude the proposed profit on the sub's profit on the warranty. But don't do it because of your concern about profit on profit. Do it because it does not reflect any work on the part of the contractor. Do it as a matter of business judgment, not because of FAR 52.215-23.

    The prime contractor is responsible for execution risk on the contract. If the subcontractor doesn't perform the warranty work, who does the government hold accountable? Not the subcontractor ...

    When costs are incurred, they are recorded into allowable and unallowable categories. The contractor uses profit on allowable work to pay for its unallowable costs. When you deny the contractor profit on its costs then you are not allowing the contractor to cover its unallowable costs. I'm not in favor of such a situation.


  9. 1 hour ago, FrankJon said:

    Is there a specific period for preliminary notice that you think is generally reasonable for a service contract (e.g., 30 days, 60 days, etc.)? What are some primary indicators that a CO should look at when considering whether to push the notice period higher or lower?

     

    Earlier is better, especially if the customer knows the funds are (or will be) available. Why play coy? Just let the contractor know so that the workforce can be notified. Vern listed other considerations.


  10. Finally found time to access my Manhattan Project library to accurately quote one of my favorite government audit stories. From the book "Now It Can Be Told," by General Leslie Groves:


     

    Quote

     

    Du Pont refused to accept our first letter of intent because it contained the standard proviso that, in addition to being reimbursed for costs, it would receive a fixed fee to be computed in accordance with the usual government procedures. ... Du Pont did not want any fee or profit of any kind for this work, and wanted furthermore to be certain that the company would receive no patent rights. ... Du Pont expressed a desire to have it [the revised letter of intent] approved by the Comptroller General, particularly with respect to the provisions covering reimbursement and indemnification, in order to make certain that the basic intent of the contract to provide full reimbursement of expenses without profit would not at some later date by upset by his office. ... One of his principal assistants ... opposed the idea very strongly, pointing out that it was contrary to all existing procedures, that it would open the door to similar requests in the future and thus would completely upset the orderly conduct of business in his office ... Without further ado, Mr. Warren [Comptroller General] replied: 'I promised General Groves to do it and I see every reason why we should and none why we should not.'

    At du Pont's request, Dr. Bush forwarded a letter to the President outlining the circumstances surrounding the assumption by the United States of all responsibility for the unusual hazards involved in this work. Mr. Roosevelt initialed his approval on the latter and a photostatic copy of it was given to du Pont. ...

    For purely legal reasons, provision was made for a fee of one dollar.

    Although the expected duration of the contract was stated, as is usual, soon after V-J Day du Pont was paid the entire fee of one dollar. This resulted in a disallowance by government auditors, since the entire time of the contract had not run out. Consequently, du Pont was asked to return thirty-three cents to the United States.

     

     


  11. FrankJon,

    When a contract has options, the contractor is almost always praying that those options will be exercised. Same thing for a contract extension. Please, proceed. (A rare exception would be if the contract was in a loss position and extending it would exacerbate the loss.)

    From my perspective, providing advance notice helps the contractor retain staff. Otherwise, as the end of the PoP nears, we are polishing resumes and going on interviews and trying to keep the paychecks flowing on another contract. To your point, there's not a lot of value to be had other than that, because why wouldn't the contractor keep the gravy train chugging along? But please do consider that retention is a real concern and the government can help the contractor by providing advance notice that there is no reason for the staff to start looking for new jobs.


  12. 40 minutes ago, Retreadfed said:

    When the contractor submits its certified proposal to establish final indirect cost rates, the contractor will not have to eliminate the unreimbursed portion from its proposal as an expressly unallowable cost.

    Yes it will. Schedule H will show the full amount of G&A being allocated to the contract and it will show the amount claimed as allowable contract-absorbed G&A being less than the full amount allocated. The difference will be the amount of G&A allocated to travel, because the contract made those allocated costs unallowable. As Vern correctly noted, the G&A allocated to travel is "expressly unallowable" by contract terms.


  13. 2 hours ago, joel hoffman said:

    This thread concerns separate travel line item for an indeterminate amount of travel, presumably.  The reason that profit is not allowed for this separate line item, in my opinion, is that it could amount to a cost-plus percentage of cost situation, which is prohibited by law.

    I have seen  where, but cannot remember the case, a decision discussed where adding G&A or other indirect costs to actual direct travel costs could also amount to CPPC.  That situation might be a reason for reluctance to alllow G&A on indeterminate amount of travel costs. I think that the question concerning whether allowing G&A on reimbursable travel costs  amounts to a cost plus percentage of cost situation has been discussed in a previous thread in this forum.  However, I do not have time to research the whole forum archive history 

    Joel, if you could find that case I would be very interested, because that conclusion would surprise me. In my view, adding an indirect burden does not create a CPPC situation. It simply adds more costs.

    26 minutes ago, C Culham said:

    Conclusion (reaching admittedly) - Before an agency can provide that G&A does not apply to direct travel they must first seek a deviation to make it so.

    Carl, I think the issue here is that the agency is saying that G&A allocated to travel costs is unallowable, not that it is unallocable.


  14. 1 hour ago, Vern Edwards said:

    H2H:

    The anti-G&A thing has fascinated me, but not enough to prompt me to investigate its origins. Do you know anything about the history of the movement to include contract terms that make G&A unallowable?

    Sorry I do not -- maybe ask Jim Nagle?

    From my (biased) point of view, it's part of a long-standing attempt to cut contractor costs, piece by piece. But I don't know the origins of that movement.


  15. It's a common thing, not so much with regard to contracts with Federal agencies, but more with state/local government contracts. And -- to be clear -- the G&A expense must be allocated to all costs in the input base. The G&A allocated to travel cost is not billable; it is unallowable by the terms of the contract.

    Contractors who don't want to accept those contract terms should not bid on the work.

    Or -- and this is a piece of advice I normally charge for -- they could consider changing their G&A expense pool allocation base.


  16. Retreadfed,

    I feel as if I've sufficiently answered your question. In your hypothetical, the contractor is NOT REQUIRED to use the accumulated points to purchase a discounted airfare. It can choose to pass on the allocable portion of the value of the accumulated points in one of several different ways. THE CONTRACTOR HAS DISCRETION REGARDING THE METHODOLOGY IT CHOOSES.

    If I'm still unclear on my position, please forgive me. I cannot do any better.


  17. 4 hours ago, Retreadfed said:

    The points were earned in the performance of cost reimbursement and T&M contracts for non-commercial items.  As stated in the hypothetical, the current contract requiring air travel is a cost reimbursement contract.

    52.216-7 requires that the government share in the allocable portion of any rebate, income, or credit related to a direct or indirect cost that it originally paid. Thus, in your hypothetical the government has to share in any discounted fare(s) for which the points are used to achieve the discount. HOW to do that is, generally, left to the contractor's discretion (subject to audit). If the contractor wants to purchase a discounted fare and let the government share in the discount by charging the discounted fare to a current cost-type contract, that would generally be acceptable.

    If what you're driving at is a potential different mix of contracts/customers between when incurred/earned and when taken (a la Hercules tax refund) then I would say we're talking about $250.00. Nobody cares. If we are talking about $250,000, then that nuance becomes more valid.


  18. 9 minutes ago, Retreadfed said:

    Contractor X has a credit card account that provides for the accumulation of usage points.  The points can be used for airfare.  The contractor has accumulated sufficient points to allow it to reduce the cost of air travel.  Over 90% of the points were earned in the performance of government contracts.  The contractor needs to travel by air in performing a cost reimbursement government contract.  If the points are used to reduce airfare, the cost would be $250.  If they are not used, the airfare is $500.  If the contractor does not use the points to reduce the airfare, would the $500 be reasonable and allowable under FAR 31.201-3 and 31.205-46?

    I bolded a part. Please specify the contract type.

    Assuming contract type was FFP then the contractor does not need to use the points to purchase a reduced fare. The full $500 would be allowable.

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