Jump to content
The Wifcon Forums and Blogs


  • Content Count

  • Joined

  • Last visited

Posts posted by here_2_help

  1. 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.

  2. Obviously, frequent flyer miles -- an intangible asset -- have value. But only when used to purchase a ticket. Not before. For example, if an airline will give you a coach ticket in return for cashing in 30,000 frequent flyer miles and you only have 10,000 miles, then your 10,000 miles are worth nothing. If you have 30,000 miles then you have something, but what? If you want to fly to Hawaii, probably not. You will need more miles. If you want to travel to a nearby city, then yes. You can, if you wish, value the FF miles at the coach fare for travel to that city. But what's the coach fare? It changes frequently.

    Because of the problems in valuing FF miles and the like (e.g., hotel membership points), accountants don't value them. The IRS doesn't tax them.

    "...the IRS will not assert that any taxpayer has understated his federal tax liability by reason of the receipt or personal use of frequent flyer miles or other in-kind promotional benefits attributable to the taxpayer’s business or official travel."


    A FF mile has no intrinsic value because it cannot be used in trade. Two miles have no intrinsic value. One thousand FF miles have no intrinsic value. By any of the three definitions you posted.

    In my hypothetical, above, it takes 30,000 FF miles to have any value, and that value varies by airline and by destination and by time of booking. Until the magical number is reached. the FF miles are worthless. And for most of us, by the time we reach the magical number the FF miles have expired.




  3. The title said "points" but the question asked about "$" not points. We answered the question, not the title.

    As for points, the analogy would be to frequent flier miles. Thus, they have no intrinsic value and need not be shared with the government, even if awarded based on usage that was charged to a government contract.

  4. 24 minutes ago, Vern Edwards said:

    It seems to me that the most complete answer to those questions is that if a credit card charge is allocable to a fixed-price incentive, cost-reimbursement, or T&M contract pursuant to FAR 31.201-5, 31.205-26, FAR 52.212-4, 52.216-7, 52.216-16, 52.216-17, or 31.232-7, as applicable, then the contractor must credit the Government for any rebate from that charge.

    Joel, H2H, correct me if I'm wrong or if my answer is incomplete.

    You've quoted the correct contract clauses but missed the point that the contractor has discretion in how to comply with them. See DCAA Contract Audit Manual 6-203.

  5. 11 hours ago, joel hoffman said:

    Failure to disclose a known fact during negotiations concerning rebates or discounts is dishonest.

    May we please avoid pejorative terms such as "honest" or "dishonest." If the contractor was required to, and failed to, disclose a fact that would reasonably be expected to significantly/materially affect the negotiated price, then it has failed to comply with the solicitation terms and the government has a remedy. The term "dishonest" implies intent, which may or may not be the case. Speaking as one who has worked at several contractors over the course of a career, many times the right hand has no idea what the left hand is doing.

  6. 3 hours ago, Corduroy Frog said:

    A company receives several hundred $ in promotional credit card rebates every month.  The rebate approaches 1% of the entire bill.  Which of the following describes the best treatment?

    1. The company must allocate the rebate proportionately over all charge numbers during the monthly billing period. 
    2. The company may simply put the cash in the bank and not allocate to anything.
    3. The company may let the cash accumulate, and apply it to a free airline ticket at some point.  They have to allocate the credit to the charge number of the airline ticket.
    4. Does the answer to any of the above change if some of the charges are for a cost-type contract?

    Joel answered the question correctly. The government must share in the rebate to the extent it reimbursed the original expense. The contractor has discretion regarding methodology. I will note that the government doesn't share in the rebate to the extent costs were incurred on an FFP contract; however, if the original solicitation was subject to TINA and the contractor failed to disclose it was getting a 1% rebate on costs it was estimating and pricing, then the government may have a remedy available.

  7. 38 minutes ago, Vern Edwards said:


    Help, you don't consider it a form of "capping" or putting a "ceiling" on indirect costs?

    Not as described. It was described as "only apply indirect rates to the first 2,080 hours" not "only bill the indirect rates applied to the first 2,080 and eat the remaining indirect rates that were applied to the additional labor hours out of profit". The latter is analogous to a rate cap but the former is fragmenting the base by picking and choosing certain portions of costs to apply burdens to.


  8. I'm assuming (but would like confirmation) that the prime would flow the limitations down to the subcontractor via Ts & Cs.

    Your question presupposes the methodology would be acceptable to DCAA. I don't believe it would be. What is described is called "fragmenting the base" and it's generally frowned upon, absent a compelling rationale. (Note: Trying to be more competitive would not be that compelling rationale.)

    If the prime decided to BILL only indirect costs allocated only to the first 2,080 hours of work, and eat the remainder out of its profit, that might be acceptable to DCAA.

    If implemented, are there negative ramifications for the subcontractor? Absolutely. First and foremost, the subcontractor has its own cost accounting practices and it needs to apply those practices consistently across every single one of its contracts. There are others but that's the big one.

    Look, I could pick a dozen nits with this plan. It smells strongly of marketing trying to get cute. It does not seem to have been planned by a government accountant--or, at least, not a good one. There are legitimate ways to become more cost competitive with OCONUS work; I don't think this is one of them.

  9. Almost impossible for me to get through because of the way it's organized, but I still managed to find a couple of nuggets. I noticed that the micropurchase threshold would be $25,000 if using a commercial e-portal. I noticed that Title 41 would have a standardized definition of "subcontract". I noticed that a study of the roles/responsibilities of DCMA and DCAA was required. I noticed the changes to "commercial products" and "commercial services" that we've discussed here in another thread. I didn't see any changes to the TINA threshold.

    Did I miss anything of significance?


  10. 2 hours ago, Mayonayze said:


    a company is bidding a contract which, if awarded, will triple its direct labor base. The company has forward pricing indirect rates, but those rates do not accurately represent the true indirect cost realized if the program is awarded. Can the company request DCMA to allow them to bid a ‘win-only’ adjusted set of indirect rates to use in calculating cost and price on the program? If so, what is the process? Does it vary based on contract type?

    Some thoughts for your consideration.

    1. Having an FPRA does not relieve the contractor from the necessity to provide accurate, complete, and current cost or pricing information if the cost estimate is valued at $2 million or more. (FAR 15.403-4, and provision 52.215-10, as modified by recent Class Deviations). Thus, it is very likely your company will be required to disclose the impact of the additional business base to your indirect rates.

    2. To my knowledge, you do not need DCMA's "permission" to update your existing FPRA based on new circumstances.

    3. The rate calculation is not normally the full impact of the contract award, because you may not win. Normally, the win probability ("pwin") is used to factor down the impact. For example, if you are looking at potentially tripling your business base but the pwin is only 30%, you would only add one-third of the maximum award to your base.

    4. Contract type doesn't matter but if you are going to stick with the former (higher) FPRA rates for your FFP bids (to protect margin) and are going to use your "win-only" rates for cost-type proposals, then you may be leaving yourself open to the allegation of defective pricing.

    5. if the government is performing a cost realism analysis then your disclosed pwin-adjusted rates should be used by the evaluators, regardless of what the FPRA rates are.

    Hope this helps.

  11. Quote

    Despite [past reform] efforts, commercial buying has not become as widespread in DoD as Congress had hoped. Only 18 percent of DoD’s total obligations in FY 2017 were for the acquisition of commercial items, and commercial item spending actually declined by 29 percent between FY 2012 and FY 2017. Congress has continued to enact changes to commercial policies, and DoD has continued to evolve its policies, training, and tools; however, the commercial marketplace is evolving at a much faster rate. DoD’s commercial buying practices require a comprehensive reevaluation to fulfill the promise offered by FASA 24 years ago.

    DoD’s commercial buying has stagnated for multiple reasons. The acquisition workforce has faced issues with inconsistent interpretations of policy, confusion over how to identify eligible commercial products and services, and determining that prices are fair and reasonable. DoD contracting officers have received increasing criticism and oversight from both the DoD Inspector General (IG) and the Government Accountability Office (GAO). This confusion has resulted in frequent promulgation of legislative revisions as Congress seeks ways to encourage DoD to access the commercial marketplace, as well as agency‐level policy and local guidance intended to improve the workforce’s ability to buy commercially.

    The FAR has been amended more than 100 times to address various aspects of commercial buying, making commercial buying policies more difficult to navigate. The majority of FAR amendments related to commercial buying policy were administrative in nature, although others were driven by statute and agency‐level policy related to contract type, the applicability of various statutes, and pricing. Since FASA  was implemented, the number of DoD-related commercial buying provisions and clauses has increased by 188 percent, and  the number of commercial clauses that may be flowed down has increased five‐fold. In 1995, the FAR and DFARS contained a combined total of 57 government clauses applicable to commercial items. Today there are 165 clauses, with 122 originating in statute, 20 originating in executive orders, and 23 originating in agency‐level policies.

    Section 809 Panel, Volume 1 Report, Section 1. Internal footnotes omitted.

    Or: Where Rep. Thornberry is coming from.

  12. 2 hours ago, napolik said:

    While DAU courses are important to reducing the lack of knowledge among contract personnel, I believe OJT is equally, or more, important. One can learn concepts in DAU courses offered in classrooms or on line, but the true meaning of the concepts and their application can be learned only on-the-job. The actual application of concepts, policies and procedures via the conduct of a procurement creates knowledge, not the viewing of Power Point slides in a classroom or on a computer screen.

    From my experience, very few, if any, contracting offices have an OJT program.

    I'm not disagreeing with you, but my point was a bit different. Having taught a course or two in my time, I've learned to start every class with a request (essentially a demand) that the students ask questions. I can provide the class with a lot of theory and a lot of rules, but I cannot provide each student with the ability to apply that knowledge to their particular job. Only they can do that, and the only way they can do that is to ask questions about how to apply the theories/rules to their unique circumstances. Moreover, I would urge DAU and other training centers to better tailor what is taught to what is actually needed by the student. Some people don't need to know cost-reimbursement contracting (right now) because they aren't doing it. Teaching the theory and the rules before the knowledge can be applied just wastes the limited RAM in peoples' heads. It's like learning a foreign language: if you don't practice speaking and reading and writing the language, the knowledge just atrophies.

    Now that I write this, I feel this post might be seen as disagreeing with what Bob just posted above me. He seems to be exhorting everybody to learn everything. I agree with that! Intellectual curiosity is a rare trait that identifies high performers.* But timing is important. Learning information without the ability to apply that information doesn't help. In fact, most of us will need to relearn that information downstream when it comes time to use it.



    * I recently heard somebody say of Vern that he is "the most intellectually curious man I've ever met." The person who said that is a well-respected government contracts attorney.

  13. 4 hours ago, napolik said:


    In a related note, I have discussed with Don what I think is an omission in the CON curriculum. He didn't agree it was a big deal (or perhaps he suggested it was covered elsewhere). I agree with him that, unless you deal with the topic, it would be at most a technical point. But if you deal with the topic, you had better know your stuff. Regardless, I learned last week that certain government contracting personnel are coming to us (contractor) to be trained in the topic because they perceive we know it better than anybody else. (Or perhaps they think we know it better than anybody else they have access to.)

    I don't mean to be coy but I won't identify the specific topic in a public forum. Don already knows it (if he recalls our discussion). The point is, many in the government acquisition team know their knowledge gaps and they are trying to fill them ... any solution to the knowledge gap needs to include the means of providing individual learning that is tailored to individual need, rather than focusing on a one-size-fits-all approach.

  14. 3 hours ago, kevlar51 said:

    if only there were some sort of statute about truth in negotiation...

    Granted, but it doesn't apply to many types of negotiations. For example, it is not applicable to the negotiation of final indirect cost rates subsequent to a DCAA audit report that questions certain contractor costs, even if the aggregate total of the questioned costs is in excess of $2 million.