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I have searched the forums and blogs on WIFCON and generally searched the web with Google and cannot find anything that speaks specifically to our issue. The situation is as follows: DoD has facilities in England, many of which have been there for a very long time. In England there is a standard fee that all owners and users of a television must pay. Additionally, when using the TV, if the user decides to record content and potentially re-view the content later, there is an additional licensing fee. In the UK this fee is viewed as a tax by their Government. After speaking with our OGC and that of the Air Force, we feel that the SOFA does not allow us any option other than to pay the fee. If we refuse to pay the bill (even though no one obligated the GOV) then we cannot use the TVs in the facilities, let alone record content from them. The problem with the fee is that it is essentially automatic. At one point in the past the UK tax authorities began billing our organization for these television related fees. The bill comes at the beginning of the year each year, automatically because they know we have TVs and that we record content. The real issue here is that our organization is trying to pin the billing on someone as an Unauthorized Commitment which I do not believe is correct. My apologies if my question is unclear and for my rambling, I'm relatively new with limited experience in contracting and this is my first post to the Wifcon site. Thank you in advance for any clarification or guidance that anyone can provide. -
What is the best way to structure "pass-through" expenses like reimbursement for utility charges? HYPOTHETICAL: Let's say the agency has a mission to take care of foreclosed properties. The agency has a requirement for property management services. The agency has a bunch of foreclosed properties. The agency is trying to do a solicitation to get a contractor to take care of these properties. The KTR will have to do maintenance, mow the lawn, paint the house, etc. Spruce up the property and get it ready for sale. In doing this, the agency anticipates that the KTR will encounter "pass-through" expenses such as the following: - Lead Based Paint stabilization - Repair caused by Vandalism (agency will require the KTR to do this repair) - Wood destroying organism (termites) and other damage that agency will require the KTR to repair - Utility Charges for Occupied Properties - Homeowner Association Dues A colleague of mine, who is a federal contracting professional, believes that these "pass-through expenses" are the same as the "pass-through charges" referred to in FAR 15.408(n), FAR 52.215-22, Limitation on Pass-Through Charges-ID of Subcontract Effort, and FAR 52.215-23, Limitations on Pass-Through Charges. I disagree. My colleague contends that, the agency's solicitation should be categorized as a cost-reimbursement contract type, and that these FAR clauses on "pass-through charges" must be included. I disagree. When I read theses FAR clauses on pass-through charges, I don't see how the fact pattern I just described fits the definition of "pass-through charges" in FAR 52.215-23(a). It sounds to me that "pass-through charges" refers to a subcontractor's costs. The situation described in the fact pattern does NOT concern costs by a subcontractor. These seem to me like DIRECT COSTS that the agency must reimburse the contractor for, just like TRAVEL COSTS. Travel Costs are often viewed as Other Direct Costs (ODCs). QUESTIONS: Is my colleague right that these expenses are "pass-through charges" per FAR 15.408, and that this must be done as a cost-reimbursement contract type? Can anyone suggest the best way to structure the pricing of these "pass-through expenses"? Should the solicitation just present them as ODCs like Travel Costs? Since they are unknowns and cannot be predicted with any accuracy, then, for fairness, would it be best for the solicitation to simply set a NTE CEILING, just like with travel costs? What do you think about the agency just figuring out an estimate for these ODCs, like X amount of dollars, and applying it equally to each proposal that is received?