here_2_help

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.

The "human capital" issue has been in play for more than a decade. Which is to say, more than 10 years ago, leaders were told to expect a dramatic uptick in workforce attrition, driven primarily through retirements of aged workers. I was quoted in an Aviation Week article on this topic (again, more than a decade ago). Any leader who hasn't been preparing for this for a long time isn't much of a leader, in my view.

Prediction: The vaccination requirements will be enforced through the action of private attorneys general, acting through the False Claims Act.

This is October, 2021. Six years ago was October, 2015. The audit report was issued September, 2015. Sign the ICRA. Submit zero dollar close-out vouchers. See what happens.

I don't think that's the issue. The contractor billed at certain indirect rates during the period of contract performance. Then the books closed for the last year of performance and, six months or so later, the contractor submitted is final billing rate proposal IAW 52.216-7. The proposal was audited and an audit report was issued. The government customer subsequently (a decade later) issued a final indirect cost rate agreement at the audit-recommended rates. There is no indication that the contractor ever adjusted the rates it used for billing to match the recommended rates in the audit report. (We don't know whether the rates were adjusted or not, to be clear.) However, we really need to know the date of the audit report. If the audit report was issued more than six years ago, and if the audit-recommended rates were different that what the contractor had been billing, then neither party has the ability to assert a claim for any differences at this late date, because the Contract Disputes Act's Statute of Limitations would have expired. If the audit report were issued less than six years ago, then one party might have the basis to assert a claim for the difference. If no claim can be asserted, submit the final voucher at the incurred cost rates -- i.e., a zero dollar final voucher. See what happens.

Thanks for the link, Don

I'm not sure there will be a lot of pushback. It's likely that government contractors will lose employees over this mandate. How many? Probably not a lot; but some. I expect manufacturers to be the hardest hit; but the E.O. doesn't seem to be pointed at them, so we'll have to see. A colleague and I were discussing this issue yesterday and we wondered where those people who choose to depart, rather than get vaccinated, will go? Certainly not to another government contractor that will be subject to the same mandate. Thus, it seemed to us that the people who choose to depart a contractor essentially will have made the decision to depart the industry altogether, and will end up somewhere in the commercial sector. To my way of thinking, the E.O. vaccination mandate is not too different from the Drug-Free Workplace Act, in that you agree to more stringent rules/restrictions on your personal conduct as an employment requirement with a government contractor. Doesn't matter what State law permits; you're subject to Federal law by virtue of your employment with a contractor that has accepted the contract clause.

I see from the WIFCON front page that DoD has issued its Class Deviation, to be effective immediately.

Agree to disagree. The basis of our disagreement seems to be a misunderstanding of the difference between negotiated profit and realized gross margin.

Vern, Yes, the core of my disagreement is your theoretical position that the amount profit does not provide a contractor with incentive. I believe that it does. I do believe that establishing higher contract prices or fixed-fees during contract negotiation will motivate contractors to do better during contract performance. You ask for evidence, and all I can offer is anecdotal data. One such anecdote is the (true) story of a prime contractor who entered into a FFP subcontract where the margins were so tight, the only way the subcontractor could make any money was to assign only its most junior technical folks to the project. Unsurprisingly, the junior folks made a lot of junior-folks-type errors along the way, resulting in a Level III CAR from DCMA--assessed against the prime, of course. That's all I've got.