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Navy_Contracting_4

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Everything posted by Navy_Contracting_4

  1. I wouldn’t say that the COR should not be reviewing vouchers; just that the COR should not be in the critical path for processing vouchers for payment. Witness this excerpt from the DOD COR Handbook – “The COR’s responsibilities begin with understanding the contract and establishing the COR file. Monitoring the contract includes such activities as evaluating and maintaining data, documenting performance, and review/verification of invoices.” [emphasis added.]… “Typical COR post-award responsibilities include: … Monitoring contract performance; Training; Travel; GFP Personnel and labor; [*]Inspection and acceptance or rejection of deliverables; [*]…”
  2. Vern has said no such thing. As a matter of fact, here's a quote from his post #48 - "you add the adjusted profit to the total final negotiated cost in order to get the total final price." [emphasis added.]
  3. Well, the clause does say to subtract an amount from the total target profit, but without using the word "adjust." If you want to characterize that as adjusting, that's OK. No argument. But, who said anything about "changing the total final negotiated cost"? Not I. The clause requires that an adjustment be applied to the total final negotiated cost, and that's what I stated. "The wording of the clause seems to suggest that the total final negotiated cost is adjusted"? [emphasis added.] It clearly says "The total final price shall be established by applying to the total final negotiated cost an adjustment for profit or loss..." [emphasis added.] I think it does more than seem to suggest.
  4. What source can you cite for the statement that "incentive contracts do not permit adjusting profit to less than zero"? The clause doesn't even discuss "adjusting profit." It talks about applying an adjustment to the total final negotiated cost. Profit isn't being adjusted; profit ("or loss") is what constitutes the adjustment.
  5. I would suggest that he apply the same logic to the situation where the actual final negotiated cost equals the target cost and see how he applied the adjustment.
  6. Of course, it means adding or subtracting. I think my example makes it perfectly clear how I interpret/define adjustment, and that's exactly what I would tell a judge. What do you think a judge would say to me in response? Here's an example from a more representative type of FPI arrangement: Target cost --- $60M Target profit -- $ 7M Share ratio over and under -- 50/50 Ceiling price -- $70M So, in the case of an overrun, the final negotiated price (X) would be the final negotiated cost (W) adjusted by the total target profit (Y), less 50% of the of the amount by which the total final negotiated cost (Z) exceeds the total target cost. Or, X = W + Y - 0.5(Z-W) Now assume the final negotiated cost was $64M. X = $64M + $7M - 0.5($64M-$60M) In this example, X = $69M Do you agree? If not, where did I go wrong? If so, apply the formula to the OP's scenario, thusly -- X = $68M + $7M - 1.0($68M-$60M) The result is X = $67M
  7. You have read the clause wrongly. Nowhere does it say to "deduct" from the total final negotiated cost an amount that is equal to the total target profit minus 100 percent of the overrun. It says to apply an adjustment to the final negotiated cost. When you apply the -$1M adjustment to the final negotiated cost of $68M, you get $67M.
  8. I think the result is $67M, not $68M or "$ 68M - (- $ 1M)." The total final price (X) shall be established by applying to the total final negotiated cost (A) an adjustment for profit or loss, as follows... (ii) If the total final negotiated cost is greater than the total target cost ($ 60M), the adjustment is the total target profit (B ), less 100 percent of the amount (C ) by which the total final negotiated cost exceeds the total target cost. So -- X = A + B - C Thus, for the given case, X = $68M + $7M - ($68M-$60M) X = $67M.
  9. If the total final price is established by applying to the total final negotiated cost an adjustment for profit or loss, as follows... (ii) If the total final negotiated cost is greater than the total target cost, the adjustment is the total target profit, less 100 percent of the amount by which the total final negotiated cost exceeds the total target cost. Then: $ 68M Total final negotiated cost + $ 7M Total target profit - $ 8M Amount by which the total final negotiated cost ______ exceeds the total target cost $ 67M So Don is correct, but only so far as $67M will always be the result if there's an overrun. If there's an underrun, the total final price will be the total final negotiated cost plus $7M.
  10. Vern referred to 52.232-22(i). See his posts #5 and #7 above. 52.232-22(i)(2) is associated specifically with cost-sharing contracts.
  11. There may or may not be an overt act. We don't know yet. In Post #9, the poster said "I think the specialist will need to dig a little deeper to find out if our program people requested that the contractor continue working, or if the contractor decided to work in excess of the allowable hours on its own accord." I think that's an essential fact to know before deciding on the appropriate or acceptable course of action.
  12. It sounds to me like the customer is not sure what his real requirements are. If that's the case, it may be premature to issue a solicitation. Perhaps it's time to drop back and do some market research and/or issue an RFI to solicit industry suggestions for alternative and innovative approaches.
  13. By "issues a sole source award," do you mean a unilateral "acceptance" of the proposal, or was a bilateral contract signed? I would guess the latter, because the proposal that had long since expired couldn't legally be accepted. In either case, though, you haven't addressed what exception to the statutory requirement for certified cost or pricing data might apply. Were the prices "based on adequate price competition," see FAR 15.403-1(b ) (1) and ( c)(1)? Were they set by law or regulation, see FAR 15.403-1(b )(2) and ( c)(2)? Were the items being acquired commercial items, see FAR 15.403-1(b )(3) and ( c)(3)? Was a waiver granted, see FAR 15.403-1(b )(4) and ( c)(4)? If the answers to these four questions are all "no," then aren't you left with FAR 15.403-4(a)(1), "The contracting officer shall obtain certified cost or pricing data . . ."?
  14. What does the contract say about delivery of the licenses? Is there a separate FFP line item in the contract? Does the contract include, or reference, the terms of the license agreement (see FAR 27.405-3 for civilian agencies or DFARS 227.7202-3 and -4 for DOD contracts)?
  15. And even a FAR deviation is not adequate cover for not complying with the law (i.e. the Service Contract Act.) See FAR 1.402 - "Unless precluded by law, . . ."
  16. Anyone want to place any bets on whether GAO will do any better at finding if this authority is effective than the last couple of times they looked? See Benefits of Simplified Acquisition Test Procedures Not Clearly Demonstrated, GAO-01-517, Apr 20, 2001 and No Reliable Data to Measure Benefits of the Simplified Acquisition Test Program, GAO-03-1068, Sep 30, 2003.
  17. StillTrucking, Sorry, I forgot to mention DFARS Subpart 225.74 -- DEFENSE CONTRACTORS OUTSIDE THE UNITED STATES, and the clauses mentioned in DFARS 225.7402-5 and DFARS PGI 225.7402-5. These are very important.
  18. Is the price adjustment process required by law, or is it something DOECPA could get around with a FAR deviation?
  19. Other than the Service Contract Act, I'm not aware of any regulation addressing what the successor contractor must pay individual employees. If the contractor can find people willing to accept the minimum rates in the WD, then I don't think there's anything that stands in the way of the contractor hiring and paying them at those rates, notwithstanding that they may have been paid more on the predecessor contract. In that circumstance, I would not be surprised to see increased interest in forming/joining a union.
  20. Apparently, the bureaucrats in DoD disagree with you. Yesterday, DPAP issued a class deviation to incorporate the new expiration date.
  21. Plus, all those folks who didn't realize the authority had expired, and continued doing business like they always had, are retroactively forgiven, by the inclusion of the phrase, "Effective as of January 1, 2012, . . ."
  22. For starters, you may want to review FAR Subpart 25.3 and DFARS 225.3 - and the clauses required by FAR 25.301-4 and DFARS 225.301-4. You should also be familiar with FAR 28.305.
  23. Yankees2009, Have you looked at this thread?
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