Hybrid CLINs on COST/CPFF Contract?

[LM_ABITWT]

I have an issue with a recently awarded contract where my CO has established a CLIN structure which does not differentiate between fee bearing and non-fee bearing costs. In other words, my labor is performed on a CPFF basis while my material/travel/ODCs are on a Cost Reimbursable basis. Unfortunately, my contract simply plops the money on a single CLIN and then in the descroption field delineates the breakdown between labor & non-labor.

My finance dept is telling me that this setup creates a major problem from an accounting perspective and our billing system can't accumumlate costs properly because we would be combining labor and non-labor costs together. We have proposed the following:

CLIN 0005 - Labor (CPFF)

CLIN 0006 - Mat'l (Cost)

CLIN 0007 - Travel (Cost)

CLIN 0008 - ODC (Cost)

OR

CLIN 0005 - Labor (CPFF)

CLIN 0006 - Non-Labor (Cost)

To date, my PCO has not been receptive to make any changes to the current CLIN Structure and segregating CR and CPFF dollars.

Has anyone encountered this problem before and what was the outcome?

As always, thanks!

[poisonivvy]

The CO and the specialist working our contract now have some sort of strange feelings/phobias against using CLINs. We are given "pots" of money and have to internally break them down. Guess that's what you get when the majority of folks have a M&O mentality. We have had several conversations, sent a few letters, but now are just hoping we can make good informal suggestions and convince the folks of the better tracking and reality before any option years...otherwise we may have to wait for contract end or retirement and a new eager beaver CO. We shall see!

Does your corporation have rules on how your contracting system must mirror the contract? Is there any reasons you can't internally break down tasks into to discreet items that people charge against to separate but then the accounting invoice back to the government can consolidate?

[Retreadfed]

I have an issue with a recently awarded contract where my CO has established a CLIN structure which does not differentiate between fee bearing and non-fee bearing costs. In other words, my labor is performed on a CPFF basis while my material/travel/ODCs are on a Cost Reimbursable basis. Unfortunately, my contract simply plops the money on a single CLIN and then in the descroption field delineates the breakdown between labor & non-labor.

My finance dept is telling me that this setup creates a major problem from an accounting perspective and our billing system can't accumumlate costs properly because we would be combining labor and non-labor costs together. We have proposed the following:

CLIN 0005 - Labor (CPFF)

CLIN 0006 - Mat'l (Cost)

CLIN 0007 - Travel (Cost)

CLIN 0008 - ODC (Cost)

OR

CLIN 0005 - Labor (CPFF)

CLIN 0006 - Non-Labor (Cost)

To date, my PCO has not been receptive to make any changes to the current CLIN Structure and segregating CR and CPFF dollars.

Has anyone encountered this problem before and what was the outcome?

As always, thanks!

I'm not sure I understand what the problem is. Do you have a job cost accounting system that permits you to identify the costs that are allowable and allocable to the contract? If you do, from a cost accounting perspective, what is it that is causing you problems? Also, is the CLIN structure you are describing the same structure that was in the solicitation?

[Guest Vern Edwards]

LM_ABITWT:

I presume that you are a contractor employee.

Under a CPFF contract, if fee is to be paid only for labor and not for providing materials, for traveling, and for other elements of the work (what you call ODC), then materials, travel, and ODC should be segregated from labor and placed in one or more separate line items in order to make it clear that:

1. reimbursement for materials does not entitle the contractor to any payment of fee under the Fixed Fee clause,

2. fee withholding under the Fixed Fee clause is not related to material and travel,

3. fee is not subject to adjustment based on changes that affect only materials and travel costs, and

4. in the event of termination for convenience or default, materials and travel will not be considered in any fee adjustment pursuant to FAR 52.249-6, Termination (Cost-Reimbursement), paragraph (h)(4).

There may be additional reasons for segregating materials and travel from labor, depending on the terms of the specific contract.

Materials, travel, and ODC can be in the same line item if the estimated cost is supposed to cover both without any particular budgetary allotment. If, on the other hand, the government wants to budget for them separately, then they should be in separate line items with separate estimated costs in order to protect the government against a budget overrun in any one of them.

I don't know why you asked about the experience of others. I don't know what that's got to do with anything. The proper approach to CLIN structuring should be apparent to anyone who understands cost-reimbursement contracting, regardless of what others have done. If you are with industry and are trying to persuade the CO to change the CLIN structure, send a letter explaining the problem. If you get no response or a rejection, develop a work around and document your file. What else can you do? Keep one thing in mind --- your accounting problems are just that, yours.

[woops85]

LM - In your accounting system, you should be able to establish SubCLINs that allow you to track the fee and non-fee bearing parts separately for your internal purposes and still allow you to bill at the single CLIN level as specified in your contract. Get the person in accounting who is smartest on the ins and outs of your system - they should be able to come up with a solution.