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SITUATION: I work for the Department of Defense (DOD), and my office executes a healthy number of time-and-materials/labor-hour (T&M/LH) determination and findings (D&Fs). My leadership has decided, at legal counsel's suggestion, that the requirements of DFARS 212.207(b)(iii) can apply to all commercial T&M/LH D&Fs, including those done under the authority of FAR 8.404(h)(3). The upshot is that nearly all such D&Fs require Head of Agency (HOA) signature, since nearly all are defined under paragraph (6) of the "commercial item" definition. As you can imagine, this has created an administrative inconvenience. (The idea of delegating this approval authority to the Head of Contracting Activity (HCA) has been raised and rejected.) QUESTION: My question can be phrased specifically or broadly: Specifically, should HOA signature on commercial T&M/LH D&Fs, in accordance with DFARS 212.207(b)(iii), be required when using FAR 8.4 procedures? Broadly, where FAR 12 specifically instructs the reader to defer to FAR 8.4 on a topic, can DFARS 212 "override" FAR 12? DISCUSSION: I suspect that the answer is "no" (acknowledging that my response is at least partially biased). Part of the challenge here is that for DOD employees, there are no less than 5 different regulatory parts that provide T&M/LH guidance. I will attempt to address each in a logical order in walking through my thinking on this: FAR 16.601(d) provides general guidance for a D&F, and directs the reader to FAR 12.207(b) for "further limitations" when purchasing commercial services. Diverting for a moment to FAR 12.102(c), this assigns precedence to FAR 12 over conflicting FAR parts when purchasing commercial items. FAR 12.207(b)(1) and (2) provide commercial item D&F guidance; however, 12.207(b)(4) states: "See 8.404(h) for the requirement for determination and findings when using Federal Supply Schedules." In my opinion, this language unambiguously intends for the reader to exclusively defer to 8.4 for T&M/LH D&F guidance when using 8.4 procedures. (Compare the language in (b)(4) to the "additional approval" language in (b)(3).) Based on #3, there is no conflict as described under #2. FAR 12 defers to FAR 8 on this specific topic. As promised, 8.404(h) creates its own set of D&F requirements. Significantly, the highest stated approval authority here is HCA. Strangely, DFARS 208 is silent on the topic of T&M/LH contracts. DFARS 212.207(b), however, creates additional limitations when using T&M/LH contract types for commercial items. Specifically, (b)(iii) requires HOA approval when paragraph (6) of the "commercial item" definition applies. DFARS 216.201(d) provides additional limitations and guidance for T&M/LH D&Fs. My opinion is that if DFARS intended to impact the FAR guidance to defer to FAR 8 in these situations, it should have unambiguously done so by addressing it under DFARS 208 (as it did under DFARS 212 and 216). The most compelling counter-argument I've heard is that this reading would nullify the intent of NDAA for FY 2008 (on which DFARS 212.207(b) is based), which views T&M/LH contracts with skepticism and attempts to limit their usage. I agree that it would have been odd for DOD to intend to allow for a FAR 8.4 T&M/LH loophole, but in effect I believe this is what it did by neglecting to address the topic under DFARS 208. What say you, Wifcon community?
I support a program with contracts defined as firm-fixed price (FFP), labor hour (LH), time and material (TM), indefinite delivery indefinite quantity (IDIQ) with economic price adjustments from collective bargaining agreements (CBAs)/ wage determinations (WDs). The contracts were awarded under FAR 15 with adequate price competition. Due to some security aspects in the SOW the effort is considered non-commercial and agency described as design/detail. Historically, the program has considered these contracts exempt from Cost Accounting Standards (CAS) per the exempted category (15) below, as there was always adequate price competition and they have not collected cost or pricing data with the offers. Is this interpretation correct? (b) The following categories of contracts and subcontracts are exempt from all CAS requirements: (1) Sealed bid contracts (2) Negotiated contracts and subcontracts not in excess of $500,000. For purposes of this paragraph (b)2 an order issued by one segment to another segment shall be treated as a subcontract (3) Contracts and subcontracts with small businesses. (4) Contracts and subcontracts with foreign governments or their agents or instrumentalities or, insofar as the requirements of CAS other than 9904.401 and 9904.402 are concerned, any contract or subcontract awarded to a foreign concern. (5) Contracts and subcontracts in which the price is set by law or regulation. (6) Firm fixed priced and fixed price with economic price adjustment (provided that the price adjustment is not based on actual costs incurred) contracts and subcontracts for the acquisition of commercial items (7) Contracts or subcontracts of less than $7.5 million, provided that, at the time of award, the business unit of the contractor or subcontractor is not currently performing any CAS-covered contracts of subcontracts valued at $7.5 million or greater. (8-11) [Reserved] (12) Contracts and subcontracts awarded to the United Kingdom contractor for performance substantially in the United Kingdom, provided that the contractor has filed with the United Kingdom Ministry of Defence, for retention by the Ministry, a completed Disclosure Statement (Form No. CASB-DS-1) which shall adequately describe its cost accounting practices. Whenever that contractor is already required to follow U.K. Government Accounting Conventions, the disclosed practices shall be in accord with the requirements of those conventions. (See 9903.201-4(d).) (13) Subcontractors under the NATO PHM Ship program to be performed outside the United States by a foreign concern. (14) Contracts and subcontracts to be executed and performed entirely outside the United States, its territories, and possessions (15) Firm fixed price contracts or subcontracts awarded on the basis of adequate price competition without submission of cost or pricing data.