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Under a CPFF Task Order, is it "illegal" to use the excess in the labor budget for other direct costs (without CO approval) if there are not specific CLINS in the Task Order ? In other words, if we have $10k remaining from the labor side of the budget, can we use it on additional ODC's without CO permission or will it be disallowed ?The PM's in my office view the CPFF task order as one big pot of money to get to the end result so long as the Total Estimated Cost is not exceeded. Is there anything wrong with this viewpoint if there are no CLINS and the task order is not funded by CLIN?

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Under a CPFF Task Order, is it "illegal" to use the excess in the labor budget for other direct costs (without CO approval) if there are not specific CLINS in the Task Order ? In other words, if we have $10k remaining from the labor side of the budget, can we use it on additional ODC's without CO permission or will it be disallowed ?The PM's in my office view the CPFF task order as one big pot of money to get to the end result so long as the Total Estimated Cost is not exceeded. Is there anything wrong with this viewpoint if there are no CLINS and the task order is not funded by CLIN?

Hi wayforward,

In my view, the estimated cost is, indeed, "one big pot of money to get to the end result" so long as the money is spent on efforts or items necessary to accomplish the SOW, and is reasonable in amount, and is allowable and allocable to the Task Order. If your PMs think they can withstand an audit that would hold them to those standards, then I tend to agree with their POV.

Hope this helps.

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The only glitch is some COs/agencies use different CLINS for labor vs ODCs (perhaps due to their financial systems) and you might run into a problem that way. Two suggestions - take a look at the task order and see if there are two CLINS and ask the CO.

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Guest Vern Edwards
Under a CPFF Task Order, is it "illegal" to use the excess in the labor budget for other direct costs (without CO approval) if there are not specific CLINS in the Task Order ? In other words, if we have $10k remaining from the labor side of the budget, can we use it on additional ODC's without CO permission or will it be disallowed ?The PM's in my office view the CPFF task order as one big pot of money to get to the end result so long as the Total Estimated Cost is not exceeded. Is there anything wrong with this viewpoint if there are no CLINS and the task order is not funded by CLIN?

I assume that the "budget" in question is an internal company budget and not something agreed upon between the company and the government. I also assume that the the cost of "additional ODC's" is essential to contract performance and unavoidable. You must not spend money just because you have it, but only because it is contractually necessary and unavoidable.

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I assume that the "budget" in question is an internal company budget and not something agreed upon between the company and the government. I also assume that the the cost of "additional ODC's" is essential to contract performance and unavoidable. You must not spend money just because you have it, but only because it is contractually necessary and unavoidable.

No, not an internal budget. We submit the CPFF budget with the technical response. Due to the rapid response environment and nature of the work, the budget is not as detailed as it could be at time of submission due to time constraints.

In other words, it may be labor hours and rates, $700k and estimated ODC's $100k. The CPFF budget and our proposal are incorporated by reference into the task order and the task order has the CPFF value of $800k. I would not state that the ODC's are necessary, essential, and unavoidable in all cases.

For example, if we proposed to the SOW that we were going to demolish the 500-1000 structures (example), but there were only 700 structures to demolish and the program folks think the locals need more training then we would take the amount saved in labor by demolishing 800 structures vice 1000 and provide additional training. Essential? no. Within Scope ? yes, for the most part. Unavoidable? yes.

Have we done something "illegal"? in the very hypothetical example?

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Within Scope ? yes, for the most part.

Have we done something "illegal"? in the very hypothetical example?

Not necessarily illegal but perhaps unallowable for reimbursement of that portion not within scope.

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I would not state that the ODC's are necessary, essential, and unavoidable in all cases.

Have we done something "illegal"? in the very hypothetical example?

The standard for cost allowability is NOT "necessary, essential, and unavoidable". See FAR 31.201-2. Cost allowability may turn on "reasonablenes" which has a longish definition that includes the phrase "that which woudl be incurred by a prudent person in the conduct of competitive business". In another part of the definition, there is the phrase: "the type of cost generally recognized as ordinary and necessary for the conduct of the contractor's business or the contract performance."

If wayforward's program team can look a Government auditor in the eye and say, with a straight face, that all claimed expenses incurred were necessary for contract performance, then they are good to go.

H2H

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Years ago I learned to write contracts with "estimated" on CLINs rather than NTE, and leave the NTE for the bottom line, so that the contract specifically allows cross-CLIN funding without further administrative effort, which can be pointed out to the paying and auditing folks. Of course, this assumes no "color of money" problems, and always included documentation up front of the rationale for the decision.

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If wayforward's program team can look a Government auditor in the eye and say, with a straight face, that all claimed expenses incurred were necessary for contract performance, then they are good to go.

H2H

I would add 2 clarifications to say , "If wayforward's program team can look a Government auditor in the eye and say, with a straight face, that all claimed expenses incurred were necessary for performance within the contracts scope, then they are good to go, unless other contract language precludes shifting funding without authorization."

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Guest Vern Edwards
If wayforward's program team can look a Government auditor in the eye and say, with a straight face, that all claimed expenses incurred were necessary for contract performance, then they are good to go.

H2H

That is wildly untrue.

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Guest Vern Edwards

I assume that "good to go" means that the contractor is on solid ground with respect to the allowability of the cost. If you meant something else by the phrase you should have said so.

That said, I know of no standard of allowability in general or reasonableness in particular, in regulation or case law, that turns on whether a contractor's representatives can look an auditor in the eye or say something with a straight face -- and neither do you.

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I assume that "good to go" means that the contractor is on solid ground with respect to the allowability of the cost. If you meant something else by the phrase you should have said so.

That said, I know of no standard of allowability in general or reasonableness in particular, in regulation or case law, that turns on whether a contractor's representatives can look an auditor in the eye or say something with a straight face -- and neither do you.

Vern, you clearly took my words out of context; Joel did a good job of augmenting my reply to assist others.

To be even more clear, every single contractor employee who interacts with a government official had better be well aware of the False Statements Act and its requirements. My response "with a straight face" was clearly meant to imply a standard of honesty which is more than expected -- it's absolutely required -- in the performance of a government contract. To say my response was "wildly untrue" is, well, wildy inaccurate.

H2H

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Not necessarily illegal but perhaps unallowable for reimbursement of that portion not within scope.

Well, the Agency involved is quite liberal in comparison to say, DoD. So, if we have a new contracting officer from a DoD background advising us it is "illegal" to use excess amounts or funding in the labor portion of our budget for Other Direct costs, is it because she is letting her backround and experience influence her judgment. We assume she/he is use to lots of color of money issues, and CLINS and ACRNS. Again, our customer does not use CLINS, maybe one ACRN for the entire CPFF budget.

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Guest Vern Edwards

Don't give me that "out of context" bull. Here is the entire comment you posted:

The standard for cost allowability is NOT "necessary, essential, and unavoidable". See FAR 31.201-2. Cost allowability may turn on "reasonablenes" which has a longish definition that includes the phrase "that which woudl be incurred by a prudent person in the conduct of competitive business". In another part of the definition, there is the phrase: "the type of cost generally recognized as ordinary and necessary for the conduct of the contractor's business or the contract performance."

If wayforward's program team can look a Government auditor in the eye and say, with a straight face, that all claimed expenses incurred were necessary for contract performance, then they are good to go.

Your "good to go" comment directly followed your comments about the standard for cost allowability, which was the context that YOU provided. If you meant some other context you should have stated what it was.

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