Allowable Costs for an Overrun

[amthomf]

Background Information:

This sole source CPFF effort was originally placed on contract in 2005 and was funded with FY05 3010 BP10 and 3600. The Contractor delivered the items on the CLINs funded with FY05 3010 BP10 in 2007. During this 6 year time span since the award of this effort the contract has been modified several times and the overall effort is schedule to complete in 2012.

Recently I received an overrun funding request for this effort from the Contractor. Within this overrun request the Contractor group several of the CLINs on contract together (3010 and 3600) making the amount of additional funding needed indistinguishable between CLINs (the contractor will have to revise this). The overrun funding request includes several 3010 funded CLINs that delivered in 2007.

Question:

Are there any regulations that discuss the timeframe the Contractor is allowed between delivery on a CLIN/effort and an overrun request for that effort?

I believe my first step is to require the Contractor to better define/breakout their overrun request by CLIN, not groups of CLINs. Once I have this information I can begin to determine whether the costs are allowable, allocable, and reasonable. Any insight is much appreciated.

[Guest Vern Edwards]

Background Information:

... The Contractor delivered the items on the CLINs funded with FY05 3010 BP10 in 2007. During this 6 year time span since the award of this effort the contract has been modified several times and the overall effort is schedule to complete in 2012... Within this overrun request the Contractor group several of the CLINs on contract together (3010 and 3600) making the amount of additional funding needed indistinguishable between CLINs (the contractor will have to revise this). The overrun funding request includes several 3010 funded CLINs that delivered in 2007.

I don't understand any of that. Moreover, it is not clear what you mean by "overrun."

Question:

Are there any regulations that discuss the timeframe the Contractor is allowed between delivery on a CLIN/effort and an overrun request for that effort?

I assume that the contractor performed and got paid and is now asking for more money. If so, then I can think of two possibilities. If the request is for additional compensation based on the changes you mentioned, then under existing statute (the Contract Disputes Act of 1978) the contractor has six years from the date that the basis for any claim "accrued." See FAR Subpart 33.2. Otherwise, if there is any limitation on the "timeframe" it might be in your agency regulations.

[amthomf]

I don't understand any of that. Moreover, it is not clear what you mean by "overrun."

I assume that the contractor performed and got paid and is now asking for more money. If so, then I can think of two possibilities. If the request is for additional compensation based on the changes you mentioned, then under existing statute (the Contract Disputes Act of 1978) the contractor has six years from the date that the basis for any claim "accrued." See FAR Subpart 33.2. Otherwise, if there is any limitation on the "timeframe" it might be in your agency regulations.

Some other posters here are going to point out that you did not state the contract type. They'd be right to ask. However, I'm not sure that it makes a difference.

I'll try this again and see if I can be a little clearer. This effort began in 2005, it is still ongoing. It has been modified 10 times since its inception under the authority of Far 52.243-2. The effort has been funded with 3010 and 3600 money (i.e. some CLINs funded with 3010 & some with 3600). Several of the CLINs on this effort delivered (DD 250?d) in 2007 and now the Contractor is requesting to be reimbursed on the portion of the effort they ?overran? on. As stated in the first sentence of my original post, the contract type is Cost-Plus-Fixed-Fee (CPFF).

For the sake of this post, overrun is the difference between the latest revised (agreed upon) baseline cost estimate (original estimate if no revisions have been applied) for the work to be accomplished and the actual cost of the completed work.

Thank you for your patience Vern.

[joel hoffman]

I'll try this again and see if I can be a little clearer. This effort began in 2005, it is still ongoing. It has been modified 10 times since its inception under the authority of Far 52.243-2. The effort has been funded with 3010 and 3600 money (i.e. some CLINs funded with 3010 & some with 3600). Several of the CLINs on this effort delivered (DD 250’d) in 2007 and now the Contractor is requesting to be reimbursed on the portion of the effort they “overran” on. As stated in the first sentence of my original post, the contract type is Cost-Plus-Fixed-Fee (CPFF).

For the sake of this post, overrun is the difference between the latest revised (agreed upon) baseline cost estimate (original estimate if no revisions have been applied) for the work to be accomplished and the actual cost of the completed work.

Thank you for your patience Vern.

I assume that one of the Limitation of Cost clauses (52.232-20 or 52.232-22) is in the CPFF contract, which require the contractor to provide advance notice of an expected "overrun".

So, the Government has no liability to pay and the Contractor isn't entitled to any payment for an overrun of the cost limitation, right? Then there would no basis for a "claim" for payment due. Thus, this is merely a "request" for the Government to consider adding funding and allowing payment, correct? Are you asking if there is some regulatory or statutory limit on when it may request to be reimbursed for something that occurred years ago? Or stated another way, is there a time limitation on when the government may entertain a request for payment on something that occurred years ago?

[Guest Vern Edwards]

I assume that one of the Limitation of Cost clauses (52.232-20 or 52.232-22) is in the CPFF contract, which require the contractor to provide advance notice of an expected "overrun".

So, the Government has no liability to pay and the Contractor isn't entitled to any payment for an overrun of the cost limitation, right? Then there would no basis for a "claim" for payment due. Thus, this is merely a "request" for the Government to consider adding funding and allowing payment, correct?

No, not correct. First, you cannot say that the Government has no liability to pay just because the contract contains a limitation of cost or funds clause, since some boards of contract appeals and the Court of Federal Claims have found that the issuance of a change order might constitute a waiver of the limitation of cost or limitation of funds clauses, depending on the facts. See Nash and Feldman, Government Contract Changes 3d ? 8.14 (2011). Your "no liability to pay" statement goes too far. While the LOC and LOF clauses usually protect the government, they do not always protect the government.

Second, your "request" idea is groundless in any event. A contractor can always assert a claim and the CO cannot refuse to treat is as such because he thinks the claim is groundless. The contractor has six years to assert a claim. If he does so within the time limit the CO must treat it as a claim pursuant to the Disputes clause. Whether the claim is valid or not is a different matter entirely.

The question has been answered. There is a six year deadline, in accordance with FAR Subpart 33.2.

[joel hoffman]

Yes, I agree.

[amthomf]

I assume that one of the Limitation of Cost clauses (52.232-20 or 52.232-22) is in the CPFF contract, which require the contractor to provide advance notice of an expected "overrun".

So, the Government has no liability to pay and the Contractor isn't entitled to any payment for an overrun of the cost limitation, right? Then there would no basis for a "claim" for payment due. Thus, this is merely a "request" for the Government to consider adding funding and allowing payment, correct? Are you asking if there is some regulatory or statutory limit on when it may request to be reimbursed for something that occurred years ago? Or stated another way, is there a time limitation on when the government may entertain a request for payment on something that occurred years ago?

Yes the Limitation of Cost clause 52.232-20 is in the contract. However, for the entire effort (all agreed upon cost including options, changes/mods, etc.) the Contractor is below the agreed/negotiated cost (?under running?), but for certain individual CLINs they are ?overrunning?. Therefore, I am unsure if this clause applies since the ?overruns? are on individual CLINs and not on the overall effort.

Until I have a clear understanding if the Limitation of Cost clause (52.232-20) applies to individual CLINs, my question concerning if there is a time limitation on when the government may entertain a request for payment on something that occurred years ago, may be inconsequential.

[Retreadfed]

Yes the Limitation of Cost clause 52.232-20 is in the contract. However, for the entire effort (all agreed upon cost including options, changes/mods, etc.) the Contractor is below the agreed/negotiated cost (?under running?), but for certain individual CLINs they are ?overrunning?. Therefore, I am unsure if this clause applies since the ?overruns? are on individual CLINs and not on the overall effort.

Until I have a clear understanding if the Limitation of Cost clause (52.232-20) applies to individual CLINs, my question concerning if there is a time limitation on when the government may entertain a request for payment on something that occurred years ago, may be inconsequential.

Does your contract say anything about the application of the LOC clause to individual CLINs? When different funding sources are used to fund separate CLINs on a contract, sometimes the contracting officer includes a clause applying the LOC clause to the separate CLINs.

[amthomf]

Does your contract say anything about the application of the LOC clause to individual CLINs? When different funding sources are used to fund separate CLINs on a contract, sometimes the contracting officer includes a clause applying the LOC clause to the separate CLINs.

No, the contract states nothing about the application of the LOC clause to individual CLINs.

[Guest Vern Edwards]

The applicability or inapplicability of the LOC clause is a separate matter. The easy question to answer is how long the contractor has to ask for the money. That is the original question in this thread. The answer is six years from the date on which the basis for the request accrued. Now suppose that the contractor asks for more money. The next question is whether it asked for it within the six year deadline. If it did, then comes the question of whether the government is liable in light of the LOC clause. Both the "did it meet the deadline" question and "is the government liable under the LOC" question are going to be very complicated to answer because the answers are very fact dependent. Good luck getting an answer to either question here. Sit down with a lawyer and all of the facts and try to figure it out.

[amthomf]

In the works. Thank you all for you help.