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Navy_Contracting_4

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Everything posted by Navy_Contracting_4

  1. What you're saying is that even though the application of the new WD causes the contractor to pay out $1,100 more than he otherwise would have to, you want to adjust the price by only $1,000 -- is that right? If so, then we definitely disagree.
  2. Do I infer correctly that you are not currently performing on either of the two orders you received? And that you competed performance on both of them in February 2016 (or earlier)? When do the 2 remaining options expire?
  3. You fail to understand that that's precisely what this method does. It dopes merely "remove the Government mandated wage minimums (to the extent that they actually impact the contract) from the risk equation." It definitely does NOT "remove all effort (hour) risk from the contractor." It does NOT price in year to year adjustments to hours. In my example, pricing in a year to year adjustment to hours would result in adjusting the price to $23,100, but the method I describe results in an adjustment to only $21,100.
  4. You received the two orders within the ordering period of the contract, right? Oh, I forgot, the contract doesn't include FAR 52.216-18. Well, what does the contract say about time of performance? Are you currently performing under the two orders with remaining options?
  5. Paragraph (d) would establish an outer limit, beyond which the government may not require you to furnish services. In the absence of this limit, what does the contract say that restricts the government from exercising the options?
  6. By the way, are you sure you're not confusing the "period of performance" with the "ordering period," which is set forth in paragraph (a) of FAR 52.216-18 (you do have that clause in your contract, don't you?) In my experience, the "period of performance" is usually set forth in individual task orders.
  7. How can you have an Indefinite Delivery, Indefinite Quantity contract without the clause "Indefinite Quantity"?
  8. Does the Government not need the services anymore, or is there an ongoing requirement?
  9. If people withheld comment in this forum until they knew what went on, there would be hardly any comments posted.
  10. Vern, If you want to take issue with my use of the word "foolish," fine. Point taken. Nevertheless, I think it unlikely that the government would add a manpower reporting requirement and simultaneously make the costs of doing the reporting unallowable. My point, which I obviously didn't communicate well, was that "at no additional cost" probably didn't mean that the costs would be unallowable, and I suggested an alternative possible meaning that made more sense to me.
  11. Vern, Of course, compared to yours, everyone's experience is limited, but, in my limited experience, negotiating an advance agreement capping indirect rates does not add any work to a contract. Further, in my experience, limited as it may be, caps on indirect rates do not necessarily make expected costs unallowable. They have been used as protective devices to motivate the contractor to pay close attention to his indirect expenses, and to prevent the government from getting stuck with a huge bill for indirect rates that unexpectedly grow. In the instant case, we're talking about adding some direct work to a contract and then specifically saying the direct costs of doing that work are unallowable. Now, you may disagree, but that makes no sense to me, and I question whether that was the intention in the OP's case.
  12. An advance agreement capping indirect rates is not an example of adding a requirement to a contract and then making the cost of doing the work unallowable.
  13. In my opinion, it's foolish to think that addition of the contractor manpower reporting requirement could be incorporated into the contract with no additional cost. Likewise, it makes no sense to add a requirement to a cost-reimbursement contract and then make the costs of doing that added work unallowable. Could the mod be saying that the requirement is being added at no increase to the estimated cost of the contract?
  14. Absolutely not. No one has suggested that the contractor should refund any of his additional margin, however, I think it would be improper to adjust the price for hours that the contractor is not expected to incur.
  15. H2H and Retreadfed, I'm good with everything you're saying, but I was trying to make sense of the OP's situation, where the company was "issuing POs for direct charge parts and materials where multiple contracts are charged to one PO. However, rather than noting the allocated amount being charged to each contract's project number, we are assigning a percentage value of the cost of each line item that is to be charged." There may have been some valid reasons for the allocation scheme in the example, and my only point was that there had better be a good explanation for why the percentages are what they are.
  16. Don, Maintaining the contractor's profit/loss position is not a principle I espouse. It was merely an observation I made to counter people's possible objection that my adjustment method might somehow help the contractor get some kind of windfall.
  17. DON- I don't necessarily believe you have to use the actual labor hours in the prior period to estimate the cost impact in future periods; if you have reason to believe that the contractor encountered a one-time snag in the first year that he'll avoid in year 2, then, by all means only adjust for the hours you believe the contractor will actually incur in year 2. My point is that you should make an adjustment for the hours that you expect will be incurred, regardless of what may have been proposed at some earlier point in time. Say, for example, the contractor needed 1100 hours to complete the work in year 1, but in the process, discovers some great innovation that will allow him to complete the year 2 work in 800 hours. In that case, I'd argue that "the Contractor's actual increase.... in wages and fringe benefits...made to comply with" the new WD would be $800. In my example, for the sake of simplicity, I assumed that the contractor would need the same number of hours for year 2 as he incurred in year 1, but that's not always the case..
  18. DON- My example is definitely NOT an equitable adjustment, in which the contractor would get an adjustment to account for overhead, G&A and profit. My example deals only with the labor related costs. In my example, I consider the impact of the WD on the contractor's labor-related costs. I compare his projected costs without the new WD-required wage rate ($22,000) with his costs with the new WD-required wage rate ($23,100) and the result ($1,100) is "the Contractor's actual increase.... in wages and fringe benefits...made to comply with" the new WD. I don't understand why you think it's fair to reduce his profit even more than it's already being reduced by his inefficiency or poor estimating.
  19. Don, I don't understand. Please explain. The contractor is still going to lose the same $2,000 in Year 2 as he did in Year 1. Int he absence of a new WD, the contractor would expend $22,000, losing $2,000 again, but now the new WD causes the contractor to have to expend $23,100. I think he should still lose the same $2,000 he would have, but not the additional $100 that is due not to his inefficiencies or poor estimating, but due solely to the new wage requirement.
  20. Read your OTA agreement and find out what your responsibilities are. OTAs should address the issues you're asking about, if they were contemplated during the negotiations. If it isn't addressed in the OTA agreement, does your company have procedures in place for subcontracting? Above all, be smart and use good business judgment. There are reasons for using OTAs and they frequently revolve around some of the issues you mention, so those issues are usually addressed in the agreement.
  21. H2H, I understand that that's how they generally are seen, although it doesn't say as much, but how about 31.201-4 (which applies to (a), (b) and (c))? All I'm saying is that for the costs to be allowable, they must be distributed in a way that reflects the relative benefits received by each contract.
  22. I don't think that it could have possibly constituted a valid contract between the US Government and Mrs. Ross because there was no US Government at the time. :-)
  23. The evaluation adjustment contemplated by FAR 45.201(c) is not for the purpose of comparing apples-to-apples, it's for the purpose of removing any unfair competitive advantage one offeror may have over others due to their being in possession of government property that other offerors may not have access to. If all offerors have equal access to the property, if they choose, then no one has an unfair competitive advantage, so no adjustment is called for.
  24. H2H, Where does it say that FAR 31.201-4 applies only to indirect costs?
  25. You presented the situation as being similar to yours, so there was an implication that some money was being furnished through some means other than normal financing terms, whereas, as I read it, the government would fund the public partner separately, and furnish the work product to the prime as GFS/S. No money goes to or through the prime for the public partner efforts.
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