Navy_Contracting_4

Se FAR 15.404-1( c)(1) - "Cost analysis is the review and evaluation of any separate cost elements and profit or fee in an offeror’s or contractor’s proposal, as needed to determine a fair and reasonable price or to determine cost realism, and the application of judgment to determine how well the proposed costs represent what the cost of the contract should be, assuming reasonable economy and efficiency." [emphasis added.]

Don, Thank you for catching my mistake. I allowed myself to be misled by the context of the language at 15.404-1(d)(1), (d)(2) and (d)(2)(ii) where it mentions "...each offeror," and the "competitive" language in (d)(3), and concluded the entire subsection on cost realism analyses covered competitive situations only. My mistake. Vern, Notwithstanding my oversight, noted above, regarding when cost realism analyses are required, the "rigorous cost analysis" that I pointed out "is normally conducted" in a non-competitive environment will certainly disclose if the offeror's proposal is "high enough," but in my experience with non-competitive proposals, that has never been a problem. I do agree with you that it's essential to assess that aspect of the proposal, but I question your concluding aspersion about "most COs." I'd venture to say you don't know "most COs," so it's presumptuous of you to state that "most COs aren't normally very competent," as if it's a fact, or something that you know.

An IDIQ contract must have some funding on it, even if just to cover the guaranteed minimum, unless, as is typical these days, the guaranteed minimum was satisfied with the issuance of the first order. An option item may or may not require funding, but it cannot be "unpriced." Don't confuse funding with pricing. Typically, option items on IDIQ contracts include unit prices (for fixed-price supplies) or other pricing arrangements/procedures (for services or any T&M/LH type of effort.) You will need to read the contract carefully to determine whether any funding is required. Sometimes, there are annual "guaranteed minimums," which must be funded; sometimes not.

Generally speaking, cost-realism analyses are performed only on competitive proposals for cost-reimbursement contracts (or fixed price type contracts as described in FAR 15.404-1(d)(3)). In a non-competitive environment, a cost-realism analysis is not required, however, a rigorous cost analysis is normally conducted, but it's more with a view towards identifying excessive proposed costs, as opposed to identifying underbids, as is typically the case with cost-realism analyses.

Vern, I'm not sure you're right that final indirect cost rates must be established for FPI contracts. As a matter of fact, the clause seems to contemplate not waiting for them. Paragraph ( c)(1) calls for submission, within some specified number of days after delivery of the last unit of supplies or completion of services, of a statement of costs incurred, along with an estimate of costs of further performance. Paragraph (d) requires the contracting officer, upon receipt of this data, to "promptly establish the total final price," by negotiating (see paragraph (d)(1)) the total final cost and making the adjustment for profit or loss as specified in paragraph (d)(2). As I expect everyone knows, final indirect cost rates are rarely established promptly enough to have them available for use in this scenario, unless the number of days specified in ( c)(1) has 4-digits. I also note that paragraph (e) says the total final price "shall not be subject to revision, notwithstanding any changes in the cost of performing the contract," clearly implying that the total final price will likely be established before the total costs of performance are fully known with audited certainty. I, too, read FAR 42.703-1( c)(2) to say that if a contractor has negotiated final indirect cost rates it must use those rates for establishing total final cost for FPI contracts, but do you think the language ". . . and in other situations requiring that indirect costs be settled before contract prices are established" implies that it is required for FPI contracts, too?

Doesn't FAR 52.216-16, INCENTIVE PRICE REVISION--FIRM TARGET, require submission of an ICS? See paragraph ( c)(1), "...the Contractor shall submit in the format of Table 15-2, FAR 15.408,... [a] detailed statement of all costs incurred..."

Mr. Gordon's paper is available now through the Social Science Research Network. If you're not already registered, you may be asked to register and provide some information before you can download it.

Well, we now know what Vern thinks of the argument, and if you want to know what the WIFCON community thinks, I'm reasonably confident that the vast majority will agree completely with Vern's Post #8. Actually, I'd be surprised to hear an opposing position on this site at all.

Yes. No, unless your reliance on -43 implies that you’re bidding the WD minimums, and the actual situation is that filling some positions will require a premium over the minimums. In that case, your proposal could be downgraded based on “realism,” assuming that this was addressed in the stated evaluation factors. I doubt I would “reject” a proposal in this situation, unless the lack of realism was such that it reflected a clear lack of understanding of what was required to do the job. Noting your reliance in the bid would not be necessary, but I can’t imagine how it could hurt . My answer to 2a wasn’t “yes,” and I agree that inclusion of wage escalation when your rates are based on the WD minimums would not allow you to honestly warrant “that the prices . . . do not include any allowance for any contingency to cover increased costs for which adjustment is provided under” -43. I imagine in this scenario, you could be downgraded for realism, since the only means for price adjustment is -43, and in this case, you’re saying that -43 wouldn’t provide any adjustment, since you’re already above the minimums. I think adjustment would be available only if it’s specifically provided for in the contract. The opinions expressed herein are only my own, and do not represent any official position of the Navy, or of any other individual Navy contracting officer.

FAR 52.212-4 and 52.229-3 both say "The contract price includes all applicable Federal, State, and local taxes and duties." 52.212-4 is required in all contracts for commercial items. 52.229-3 is required in contracts if -- (1) The contract is to be performed wholly or partly in the United States or its outlying areas; (2) A fixed-price contract is contemplated; and (3) The contract is expected to exceed the simplified acquisition threshold. If your contract contains one or the other of these clauses, it doesn't leave much room for paying anything additional, absent a "mutual mistake," see FAR 33.205. But, see: - FAR 29.302(a) -- "Generally, purchases and leases made by the Federal Government are immune from State and local taxation. Whether any specific purchase or lease is immune, however, is a legal question requiring advice and assistance of the agency-designated counsel," - FAR 33.205(a) -- "In case of a question whether the contracting officer has authority to settle or decide specific types of claims, the contracting officer should seek legal advice," and - FAR 33.205( -- "Due to the complex legal issues likely to be associated with allegations of legal entitlement, contracting officers shall make written decisions, prepared with the advice and assistance of legal counsel, either granting or denying relief in whole or in part." Looks like you may need to spend some time with your attorney.

The "miscellaneous receipts" statute (ch. 110, 9 Stat. 398), 31 U.S.C. § 3302( states: "Except as provided in section 3718( of this title, an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim." [emphasis added.] Do you think that in ktr1999's scenario, the company would be "receiving money for the Government"? It seems to me that the solicitation and receipt of funds would be conducted totally outside the scope of any government contract, so any monies received would not be considered "for the Government." But in any case, as Vern suggests, the best course of action is to consult with the government, advise them of your (or your subcontractor's) plans/desires, and see if they have any objection/concern with the planned solicitation and use of the funds.

You are, of course, correct, but in that circumstance, I would recommend a concurrent notification to the unacceptable offeror(s), in accordance with FAR 15.503(a)(1) -- "The contracting officer shall notify offerors promptly in writing when their proposals are . . . eliminated from the competition." The companies thus eliminated should not be left hanging to wonder what's going on.

An agency should not ask to have some offers extended and not others, unless a competitive range determination has been made. If a competitive range determination has not been made, and offers are about to expire, they should ask all offerors to extend the validity of their offers. I can think of no "benefit" of simply letting bids expire. I can imagine, though, that someone who is about to determine a competitive range and initiate discussions may not worry about bid expiration, since there will be a request for final proposal revisions, which will entail a new, extended validity period.

Maybe I'm being thick, but why do you say the limit is $550K vice $650K in light of FAR 19.702(a) saying $650K?

Only if the mod itself exceeds $650,000, which is part of the "criteria in 19.702."

Why would you think -8 could be read into the contract? It's not a required clause.

Per FAR 1.108, I would calculate "the highest final priced alternative to the Government." Unless your pricing arrangement provides for cumulative pricing, I would assume the 15 units all might be ordered in lots of 1-5. Then I would multiply 15 x the unit price adjustment for 1-5 units, and compare the result to the CC/PD threshhold. If the contract provides for cumulative pricing, then I would multiply 15 x the unit price adjustment for 11-15 units.

Carl, I think you're giving more credit to the questioner than may be deserved. Too many times over the years, I've gotten similar questions -- usually from people who hadn't read the whole RFP, and just asked first and read the RFP (or not) later. The mere fact that someone asks a question doesn't necessarily mean that the document isn't crystal clear.

H2H, I interpret FAR 52.216-7 to require as a condition of reimbursement that a cost must be a recorded cost paid, or incurred, even if not paid yet. You apparently think otherwise, but don't explain how you reconcile that position with the plain language of the clause. Until someone can explain how a "price," that admittedly is NOT a cost, fits into one of the categories in FAR 52.216-7, paragraph (, Reimbursing costs, we will remain in disagreement.

Researching, Are you familiar with FAR 1.108 FAR Conventions? And particularly, 1.108(c ) Dollar thresholds?

h2h, It may not be titled "Definition," but, as I pointed out in Post #7, FAR 52.216-7, pretty much defines it in paragraph (b )(1), to wit-- "...the term "costs' includes only-- (i) Those recorded costs that, ... the Contractor has paid...for items or services purchased directly for the contract; [and] (ii)...costs incurred but not necessarily paid, for [purchased supplies and services, materials, labor, travel, ODC and associated indirect costs.]" Under which of these are you suggesting the commercial license fees be claimed?

I was thinking otherwise because the OP said that "the SW licenses are NOT a cost," so I'm having difficulty understanding how one can bill such items under a CPFF contract. I understand how a FFP subcontract is a cost, but I don't understand how "the price becomes the contractor's cost" for commercial license fees. In my perhaps simplistic view, I read FAR 52.216-7, paragraph (b )(1), which says "...the term "costs' includes only-- (i) Those recorded costs that, ... the Contractor has paid...for items or services purchased directly for the contract; [and] (ii)...costs incurred but not necessarily paid, for [purchased supplies and services, materials, labor, travel, ODC and associated indirect costs,]" and I don't see where the commercial license fees fit.

If jpaynehydroid has a CPFF contract, how is commericality of the software license going to help? This is a cost-reimbursement contract, under which the contractor may bill only for actual incurred costs. It isn't obvious to me how the software license being "commercial" helps. Additionally, except for the limited circumstances in which a time-and-materials type of contract is authorized, aren't agencies required to use fixed price contracts for the acquisition of commercial items? Are suggesting that there's a way to acquire commercial software licenses under a CPFF contract?

Well, throwing in the $45/hr proposed rate didn't help clear things up, but it seems clear to me that if you have a cost-reimbursement contract, you may bill for your actual cost, and only that. Thus, if your employee actually worked 60 hours and was actually paid $1,600, then you should bill for 60 hours and $1,600. If the employee's actual salary is $1,520, then you should bill for 60 hours and $1,520. This only really becomes an issue when the employee works on two jobs during the same week. For example, suppose the employee gets $1,600/week and worked first on Job A for 40 hours and then on Job B for 20 hours. Do you bill Job A for 40 hours and $1,600? No, you bill Job A for 40 hours and $1,066.67 and you bill Job B for 20 hours and $533.33. Of course, even then there isn't a big problem if both Jobs are cost-reimbursement, but what if Job A is cost-reimbursement and Job B is fixed price? Does that change things? I hope I don't need to say "No."

Have you read FAR 3.103-2(b )(2)?