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Posts posted by here_2_help

  1. My impression is that the Judge went to great lengths to deny the government's motion to dismiss, including invoking the Christian doctrine. To me, this was the Judge saying the case will be heard on its merits and creating a rationale for doing so. I wouldn't get too worked up about the rationale. We will have to see what the decision is when the facts are established and the case decided.

  2. 23 hours ago, ElBarz said:

    One of our subcontractor's trips was canceled by the Government.  It is the policy to buy the cheapest ticket.  The ticket was canceled once the trip was canceled.  The subcontractor waited to see if the FTE could reuse the ticket for another trip.  However, a year passed with no trip, and the credit was forfeited.  The subcontractor wants to bill for the ticket which in turn the prime would want to bill the Government for the ticket.  Is this cost allowable?

    Yes, the cost of the ticket that was not refunded to the subcontractor, and that could not otherwise be used, is an allowable expense. The subcontractor should have billed the cost immediately and not waited to see if the ticket credit could otherwise be used. See the promulgating comments by the FAR Council associated with the regulatory revision that updated the travel cost principle with respect to "lowest-priced available airfare."

  3. On ‎10‎/‎17‎/‎2018 at 6:59 AM, pat said:

    Does the term services mean only services associated with transfer of materials and supplies such as material handling or does it mean profit is not allowed between subsidiaries for any element of direct cost even on services type contracts.

    The cost principle applies to any transfer of goods or services between affiliated entities under a common control.

    On ‎10‎/‎17‎/‎2018 at 6:59 AM, pat said:

    I am being told that any subcontract between subsidiary companies cannot include profit.

    As Retreadfed correctly noted, the cost principle contains a general rule and an exception to that rule. You are stating the general rule. Further, it is possible for a performing entity to bill profit if the responsible entity does not apply profit to the transaction. In addition, the "cannot include profit" general rule applies to government contract costing and billing. It is possible for profit to be billed and then treated as an unallowable cost for government contract costing and billing purposes. Note, however, that any profit between affiliated entities under a common control would be "eliminated" during consolidation of the books for financial reporting purposes.

    On ‎10‎/‎17‎/‎2018 at 6:59 AM, pat said:

    I question that since this language is under a clause titled material.

    Using the title of something to interpret the substance of the language below the title is not typically the way you want to go. Instead, I suggest looking at the language itself.

  4. 5 hours ago, Corduroy Frog said:

    I would like to move some Officer salary to unallowable to reduce G&A rates...

    Contractors certainly have that option and the government will, generally, thank them for the voluntary reduction. However, I'm of the opinion that there are better ways to reduce G&A rates besides reducing bottom-line profit. For example,

    -- Review the G&A base to make sure it complies with CAS 410 requirements

    -- Review the G&A expense pool to make sure it complies with CAS 410 requirements

    -- Create a deferred comp plan for executives

    -- Move marketing to a commission-based paradigm

    -- Reduce executive office space

    Hope this helps.

  5. A smart boss I had once told me that he shot for an 80 percent win rate. He said that if the company was winning less than 80%, then the bid/no-bid decision process wasn't working properly. He also said that if the company was winning more than 80%, then it wasn't stretching enough.

  6. 7 minutes ago, rfpro said:

    Mostly I am curious about this What FAR or CAS clause would you use to support the 40 hours recorded time-sheet requirement? Or would you just say the system is not adequate? (i.e. does not have proper segregation of direct and indirect costs?) 

    Thank you, rfpro, for the courteously phrased request for more information. Let me try to amplify.

    The interesting thing about timekeeping and labor accounting requirements is that they have, generally, sprung from the minds of DCAA auditors. Most of the control activities in these areas are found in the DCAA Contract Audit Manual and related audit programs, but nowhere else. To my knowledge, nobody has ever challenged DCAA's notions of what constitutes an "adequate" timekeeping and/or labor accounting system.

    That said, there are a few rules that might have bearing on this discussion. First, CAS 408 discusses measurement of employee entitlement to "compensated personal absence." In this particular situation, I believe there may be a disconnect in the calculation of the employees' entitlement, since PTO is accruing each period (based on the standard work week, I assume) but the company is telling its employees that they don't actually have to use the PTO if they work less than the standard work week.

    Second, DFARS 252.242-7006(c)(9) and (10) are similarly relevant to this discussion. (9) requires "a timekeeping system that identifies employees’ labor by intermediate or final cost objectives," and (10) requires "a labor distribution system that charges direct and indirect labor to the appropriate cost objectives." From what I've seen posted on this thread, an auditor might assert, with reason, that the company does not comply with those requirements, because it allows employees to not report PTO hours (which would be charged to an intermediate cost object) in certain circumstances.


  7. 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.

  8. 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.

  9. 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.

  10. 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.

  11. 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.

  12. 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.

  13. 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.