here_2_help

The BLS escalation rate is (unsurprisingly) associated with labor (salary & wages), right? Does the Green Book cover the same thing or does it cover something else? What costs are you applying the escalation factors to--labor only, or labor plus something else? Regardless, it seems to me that whatever escalation factor you get will be the result of whatever you negotiate. As with all negotiations, I would start with the higher value (6.8%) and see what you can obtain. What would your bottom-line break-even price be (regardless of how you get there)? At what point would you decline the option because the price was too low? My two cents.

The CO doesn't get to approve the contractor's cost accounting practices; however, the CO gets to determine what costs will be accepted in the contract price (or reimbursed). The contractor has appeal rights. If the contractor performs multiple contracts, the logic breaks down. A cost that benefits multiple cost objectives is likely to be an indirect cost, not a direct cost. Also, if a particular CO insists that facilities cost must be indirect when the contractor had elected direct allocation treatment, then the contractor should execute 52.230-7 in Section K of its proposal.

There is no problem for a non-CAS-covered contractor to change its accounting practices (well, other than compliance with Truthful Cost or Pricing Data requirements). The former practice was to charge the cost of facilities as an indirect charge; the changed practice is to allocate facility costs to benefiting cost objectives (contracts) based on occupied square footage, assuming that certain employees charge only one contract for the majority of their time. This can be done.

Is the contractor subject to Cost Accounting Standards?

From DCAA Contract Audit Manual (CAM) Chapter 12. (Emphasis added.)

There's that pesky word again.

Sounds as if our OP has received the advice they were looking for. So this post is not aimed at Vel; it's aimed at Joel, since he called me out and invited me to correct him. Joel, notice the part I bolded in your post (above). You yourself used the word "generally." That word implies exceptions, doesn't it? The fact of the matter is that I do not know whether the costs in question are direct or indirect costs for the contractor. Only the contractor knows. And I believe the FAR is permissive in this area, only requiring that the contractor must be consistent in application after making its decision regarding how the costs are to be treated. I've been doing this thing I do for nearly 40 years now, and I will assert that, based on my experience, the direct vs. indirect decision is more challenging and more nuanced than anybody outside of accounting would believe. Allowable vs. unallowable is an easier call to make. So, no. I don't know how the costs in question are treated and I don't believe you do either. You can't -- because you are not the contractor.

Wondering about those contracts where the parties agreed to incorporate the vaccine mandate clause (or where the mandate clause was added unilaterally). Can that clause be enforced, given the injunction?

It's hard to see how it would be, absent a contract clause that invoked it. Was that your point?

Maybe I'm missing something (as usual) ... but we're not talking about the original contract award any more, right? We're talking about a non-competitive contract price adjustment based on government-caused delay (defective drawings). If I'm right then I agree a new cost analysis and price reasonableness determination must be made. To the original question, the consistency requirements pertains solely to cost accounting practices and not to how prices are determined and billed. The latter is a matter for negotiation. Or so it seems to me.

Scathing and quite on point.

Adding for the benefit of all -- There are certain circumstances where it is literally impossible for a contractor to comply with the prescriptions found in the FAR or the travel regs. I first experienced this situation when we were dealing with FUDS (formerly utilized defense sites) in the wilds of Alaska. There were places where people wouldn't take credit cards or even cash. What they wanted was groceries -- a barter. In other places, no lodging was available, at any price. We had to improvise. In those circumstances, an understanding CO was key to negotiating employee per diem payments that were acceptable to the employees and both contracting parties. When the auditors showed up and were befuddled by what they found, the CO backed us up. My point is ... not every answer is found in the regulations.

Note that special or unusual situations are fairly well defined in the travel regs. It's not something that I would expect a CO to assert during negotiations, unless circumstances matched or were close to what the regs say.

No. The CO lacks authority to direct the contractor's cost accounting practices. This is particularly true where the FAR states that a contractor has discretion to choose its own practices, as it does in the sentence you quoted. The contractor should price its proposed costs in accordance with the cost accounting practices it intends to use during performance, as required by 9904.401 (CAS 401). That is not to say that the CO can't negotiate prices based on what they believe is reasonable. But direct the actual practices that a contractor uses to reimburse its employees for travel expenses? No.

It's found in the FAR, not the JTR. 31.205-46 Emphasis added, of course

If I'm reading this correctly -- and I am not sure that I am -- then the contractor will accept a no-fee service extension IF the customer agrees that it has earned all previously negotiated fixed fee for the original scope? Is that correct?

T Smith, Have you ever dealt with a termination for convenience? Have you ever submitted a T4C settlement proposal? If not, you may want to consult with somebody who has. Basically--and simplistically--the clause requires the contractor to be able to calculate its termination settlement costs each month, so that the government can make sure funds are available to pay such costs if necessary to do so. This requires the contractor, for example, to understand what its subcontractor and other supplier settlement costs might be, should the suppliers be terminated. It's not particularly easy, but it can be done, especially if the contractor has a robust accounting system that tracks open supplier commitments and a robust EV system to which suppliers input accurate data timely.

In my view, this thread of posts does not belong under the Forum topic "Polls." I believe it is more properly related to the COVID topic, and should me moved there. I'm going to request that Bob move it.

Most of my professional work life has been mundane and repetitive, punctuated with terrifying business challenges that make my head hurt.

Without reading the RFP, I assume that the request is for actual labor escalation history experienced by the contractors and subcontractors. There are some variables involved, such as whether or not to show total company escalation or only escalation related to direct-charging employees. That's your call to make, based on your reading of the RFP. That aside, you have employees who get paid (some hourly, some salaried). They get paid $X in Year 1. In Year 2, they get paid $X+Y (where Y = raise), and the same for Year 4. Y/X = the escalation rate for the year.

I think you may be right, but I didn't want to attribute it, as I wasn't sure how widely it was distributed.

Quoted from email received today (10/15/2021)

"It depends." It depends on what G&A allocation base the prime contractor uses. And it depends on whether or not the prime contractor is subject to the requirements of CAS 410 -- i.e., subject to "Full" CAS coverage. Assuming CAS 410 is applicable: In a Total Cost Input (TCI) base, then yes--absolutely the prime must apply G&A to all of its subcontractors' costs, including Travel. In a Value-Added Base, then no -- absolutely the prime must not apply G&A to any of its subcontractors' costs. In a Single Element G&A base, then whether G&A is applied will depend on what cost element the prime has chosen as its G&A allocation base. If CAS 410 is not applicable, then the prime is only required to elect a G&A allocation base and then use it consistently. The prime would have a wide latitude in possible allocation bases; the one chosen need not be among the three required by CAS 410.

I agree with Patrick, and will add that you must submit an incurred cost submission when you have any contract, prime or subK, that includes 52.216-7. The clause requires the submission.

I made a prediction without a date, which (as you know) is the best kind of prediction. To your point, I agree that the legal settlements will start occurring years from now. I believe the suits (filed under seal, I expect) will come sooner, perhaps in 2023 or even as early as 2022. It only takes one impliedly false certification to give rise to an action (at least, that's what I've been told). FYI, the legal webinar I attended yesterday asserted that the Vaccination Mandate clause would likely be found to be material under the Escobar implied false certification test.