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Arguably this question should be in the beginner's forum. I have read many older threads that touch on pieces of it but wanted to ask in a new way.

when contemplating a cpff award it seems there are various different ways you can propose (as a contractor) and evaluate (as the govt) the direct labor part of the award. Let's forget about indirect costs for a second. Contractors could submit "bid" rates for each position they expect to use in the absence of knowing all the staff that will work on a project. Or they could submit the current actual salaries of the known staff. The government could ask to verify the actual salaries with things like pay stubs and i expect to justify the estimated bid rates one would have to provide a more compelling justification in the absence of empirical data of the salaries. to price a future year of the contract, let's assume an option year, the contractor can build in an assumption that the labor rates will increase a certain percentage. Let's say 3%. The government evaluates that escalation for reasonableness. On its face 3% seems reasonable but 10% likely wouldn't fly with the government, would be deemed unreasonable.

My question is what, if anything, controls, caps, or surveils the direct labor costs the contractor can charge in performance of the award, if it is silent in the award document? Other threads here would suggest the "contract" would dictate that, meaning if a proposal to an eventual contract said, "salaries will increase 3% per year" or "direct labor rates are capped for each contract year as stated in the proposal" or "direct labor rates will not increase by more than 5% per year". Whatever. What if the contractor just says for purposes of determining a price, we assume salaries will increase 3%. It is not a promise, just an assumption. If market conditions change during the third year of a five-year contract, and an engineer being paid $30 per hour negotiates a raise for themselves to $50 an hour. What, if anything, prevents the contractor from charging the time, business as usual? Would not notifying the government be operating not in good faith, assuming there is no breach of contract? Possibly this could depend on whether the award was made competitively or if the contract submitted certified cost and pricing data - let's assume the contract award was made by a competitive RFP. 

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1 hour ago, Needforspeed said:

My question is what, if anything, controls, caps, or surveils the direct labor costs the contractor can charge in performance of the award, if it is silent in the award document? ... What, if anything, prevents the contractor from charging the time, business as usual?

Quote

31.201-2 Determining allowability.

      (a) A cost is allowable only when the cost complies with all of the following requirements:

           (1) Reasonableness.

           (2) Allocability.

           (3) Standards promulgated by the CAS Board, if applicable, otherwise, generally accepted accounting principles and practices appropriate to the circumstances.

           (4) Terms of the contract.

           (5) Any limitations set forth in this subpart.

(Emphasis added.)

Quote

31.201-3 Determining reasonableness.

      (a) A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business. Reasonableness of specific costs must be examined with particular care in connection with firms or their separate divisions that may not be subject to effective competitive restraints. No presumption of reasonableness shall be attached to the incurrence of costs by a contractor. If an initial review of the facts results in a challenge of a specific cost by the contracting officer or the contracting officer’s representative, the burden of proof shall be upon the contractor to establish that such cost is reasonable.

      (b) What is reasonable depends upon a variety of considerations and circumstances, including-

           (1) Whether it is the type of cost generally recognized as ordinary and necessary for the conduct of the contractor’s business or the contract performance;

           (2) Generally accepted sound business practices, arm’s-length bargaining, and Federal and State laws and regulations;

           (3) The contractor’s responsibilities to the Government, other customers, the owners of the business, employees, and the public at large; and

           (4) Any significant deviations from the contractor’s established practices.

Quote

31.205-6 Compensation for personal services.

      (a) General. Compensation for personal services is allowable subject to the following general criteria and additional requirements contained in other parts of this cost principle:

           (1) Compensation for personal services must be for work performed by the employee in the current year and must not represent a retroactive adjustment of prior years’ salaries or wages (but see paragraphs (g), (h), (j), (k), (m), and (o) of this subsection).

           (2) The total compensation for individual employees or job classes of employees must be reasonable for the work performed; however, specific restrictions on individual compensation elements apply when prescribed.

           (3) The compensation must be based upon and conform to the terms and conditions of the contractor’s established compensation plan or practice followed so consistently as to imply, in effect, an agreement to make the payment.

           (4) No presumption of allowability will exist where the contractor introduces major revisions of existing compensation plans or new plans and the contractor has not provided the cognizant ACO, either before implementation or within a reasonable period after it, an opportunity to review the allowability of the changes.

           (5) Costs that are unallowable under other paragraphs of this subpart  31.2 are not allowable under this subsection 31.205-6 solely on the basis that they constitute compensation for personal services.

 

           (6)

(i) Compensation costs for certain individuals give rise to the need for special consideration. Such individuals include:

                     (A) Owners of closely held corporations, members of limited liability companies, partners, sole proprietors, or members of their immediate families; and

                     (B) Persons who are contractually committed to acquire a substantial financial interest in the contractor’s enterprise.

                (ii) For these individuals, compensation must-

                     (A) Be reasonable for the personal services rendered; and

                     (B) Not be a distribution of profits (which is not an allowable contract cost).

                (iii) For owners of closely held companies, compensation in excess of the costs that are deductible as compensation under the Internal Revenue Code ( 26 U.S.C.) and regulations under it is unallowable.

b) Reasonableness-

(1) Compensation pursuant to labor-management agreements. If costs of compensation established under "arm’s length" labor-management agreements negotiated under the terms of the Federal Labor Relations Act or similar state statutes are otherwise allowable, the costs are reasonable unless, as applied to work in performing Government contracts, the costs are unwarranted by the character and circumstances of the work or discriminatory against the Government. The application of the provisions of a labor-management agreement designed to apply to a given set of circumstances and conditions of employment (e.g., work involving extremely hazardous activities or work not requiring recurrent use of overtime) is unwarranted when applied to a Government contract involving significantly different circumstances and conditions of employment (e.g., work involving less hazardous activities or work continually requiring use of overtime). It is discriminatory against the Government if it results in employee compensation (in whatever form or name) in excess of that being paid for similar non-Government work under comparable circumstances.

           (2) Compensation not covered by labor-management agreements. Compensation for each employee or job class of employees must be reasonable for the work performed. Compensation is reasonable if the aggregate of each measurable and allowable element sums to a reasonable total. In determining the reasonableness of total compensation, consider only allowable individual elements of compensation. In addition to the provisions of 31.201-3, in testing the reasonableness of compensation for particular employees or job classes of employees, consider factors determined to be relevant by the contracting officer. Factors that may be relevant include, but are not limited to, conformity with compensation practices of other firms-

                (i) Of the same size;

                (ii) In the same industry;

                (iii) In the same geographic area; and

                (iv) Engaged in similar non-Government work under comparable circumstances.

(Emphasis added.)

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4 hours ago, Needforspeed said:

[W]hen contemplating a cpff award...

Contractors could submit "bid" rates for each position they expect to use in the absence of knowing all the staff that will work on a project. Or they could submit the current actual salaries of the known staff...

If market conditions change during the third year of a five-year contract, and an engineer being paid $30 per hour negotiates a raise for themselves to $50 an hour. What, if anything, prevents the contractor from charging the time, business as usual? 

 

4 hours ago, Needforspeed said:

My question is what, if anything, controls, caps, or surveils the direct labor costs the contractor can charge in performance of the award, if it is silent in the award document?

Nothing, unless you negotiate something. It's a cost-reimbursement contract. Read FAR 52.216-7. 

You could ask the contractor to agree to capped rates—rates that would be the maximum for which the contractor would be reimbursed.

Good luck with that in today's economy.

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Thank you, Vern and Help. The piece on determining reasonableness is interesting. The burden of proof is on the contractor to demonstrate reasonableness. So, in my example where an engineer's hourly pay rate (post award) goes from $30 to $50, if the CO cannot be convinced the increase is reasonable, and the contractor's justification is weak or lacking, the government will potentially disallow payment? I am not in the corner of the contractor or the government, just seems so broad to rely on something like reasonableness to affect such a pivotal aspect of cost control. And among all the clauses we put in a contract, it is up to the CO to (personally) enact contractually binding measures that can control a contractor's costs, like caps in escalations, salaries? It seems there should be contract terms that can adequately control a contractor's costs on their own, with the exceptional CO being the one to craft their own language to hold contractors accountable. To your point, Vern, what is reasonable anyway, in this economy? Inflation, pent up demand in qualified labor, the great resignation? Is paying someone 30% or 40% more than the job required just two years ago reasonable? It is possible - but could it be defended to the government?

Are there cases where the government disallowed unreasonable increases in contractor direct labor...

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10 hours ago, Needforspeed said:

So, in my example where an engineer's hourly pay rate (post award) goes from $30 to $50, if the CO cannot be convinced the increase is reasonable, and the contractor's justification is weak or lacking, the government will potentially disallow payment?

The government may disallow all or some of the cost.

10 hours ago, Needforspeed said:

I am not in the corner of the contractor or the government, just seems so broad to rely on something like reasonableness to affect such a pivotal aspect of cost control.

10 hours ago, Needforspeed said:

Are there cases where the government disallowed unreasonable increases in contractor director labor...

Yes, there are such cases. But you are delving into a topic of extraordinary depth and complexity that has a long history and comes with mountains of regulation, guidance, case law, and expert commentary. See, for example, Manos, Government Contract Costs & Pricing, an $871.00 three-volume treatise. See, particularly, 1 Government Contract Costs & Pricing § 13:4, Reasonableness. See also, Murphy, Guide to Contract Pricing, 5th ed. And see Cibinic & Nash, Cost-Reimbursement Contracting, 4th ed., Chapter 10, Special Cost Items, Section III, Compensation and Other Personnel Costs. I'm sorry to say that all such texts are very expensive.

You asked several questions in the third paragraph of your opening post.

On 10/8/2022 at 4:14 PM, Needforspeed said:

What if the contractor just says for purposes of determining a price, we assume salaries will increase 3%. It is not a promise, just an assumption. If market conditions change during the third year of a five-year contract, and an engineer being paid $30 per hour negotiates a raise for themselves to $50 an hour. What, if anything, prevents the contractor from charging the time, business as usual? Would not notifying the government be operating not in good faith, assuming there is no breach of contract? Possibly this could depend on whether the award was made competitively or if the contract submitted certified cost and pricing data - let's assume the contract award was made by a competitive RFP. 

I can't write a short response to that inquiry, but I find writing long answers with explanations awkward and time-consuming in this format. Your inquiry suggests that you might benefit from a review of basic policy and procedure. Take a look at FAR 31.301-3, Determining reasonableness. See the online DAU Contract Pricing Reference Guides, Volume 3, and the Defense Contract Audit Agency (DCAA) Audit Manual, Chapter 6. They are online and free.

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Vern, thank you for this, very helpful. I read what I think are the equivalent sections in the Cibnic & Nash Cost-Reimbursement Contracting 2nd edition -- Chapter 5 Section 5 on Reasonableness and on page 730 are some good cases cited as well as on page 799 in the Specific Cost Items section. Eye opening stuff. Do you happen to know where i can find those cases? 

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13 hours ago, Needforspeed said:

The burden of proof is on the contractor to demonstrate reasonableness. ... Are there cases where the government disallowed unreasonable increases in contractor direct labor...

Yes, the burden is on the contractor to demonstrate reasonableness if challenged. Normally, the contractor points to market survey data. Also, as part of an "adequate" accounting system, the contractor should have an adequate compensation system. In other words, a CO can rely (generally) on a contractor's accounting system adequacy rather than review every single wage rate actually paid. In addition, there are "salary caps" or ceilings that form an absolute barrier for labor cost allowability. (31.205-6(p).)

Of course, if the CO disallows any costs (including labor) the contractor has the right of appeal. 

To your other question, I am not aware of any cases. I did a quick review of the Manos chapter on compensation, and the only cases I saw that discussed disallowance were focused on specific elements of compensation (e.g., severance or bonus) and not on general reasonableness.

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Thanks, Help. The cases cited in C&N that look appealing are Grumman Aerospace Corp NASABCA 673-8, 76-1 BCA 11,671 (not familiar with citing these things or searching for them). There it seems contractors can use "best judgement" in incentivizing employees to stay on a contract using financial means. Also, Lionsgate Corp, ENGBCA 5393, 88-2 BCA 20,770 and Isotopes, Inc. ASBCA 5486, 60-1 BCA 2479 all seem to deal with modifying or increasing an employee's compensation as it coincides with contracting actions or funding.

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57 minutes ago, here_2_help said:

Normally, the contractor points to market survey data.

Help, would you extend this to job application data, as well? For example, you have a job posting for said engineer. You priced this engineer in your cost reimbursement proposal that was accepted for award at $30 per hour. Two years go by. Now present day you absolutely need to fill the position to complete the work, due to turnover. Job applications to the vacancy are few and far between. It is a fantasy to think you can retain someone now at $30 per hour. All qualified candidates are $60 plus per hour. You end up hiring someone at $50 and put that person on the contract. The gov't "may" disallow some or all of the cost - but would that be reasonable? If people are recruited and retained for what the market will bear, that is what the market will bear. The cost of labor is more expensive. That makes the cost to perform the contract...more expensive. I don't necessarily see anything wrong with this, to pass this increased labor cost to the government. Does the government want the contractor to perform the work or not? The contractor shall not be burdened with the increased cost, that is why they accepted a cost-plus contract in the first place. 

Vern, you already cautioned talking about a topic of extraordinary depth and complexity; hope that doesn't make my hypothetical too reckless.  just trying to frame this in a way using lay terms.

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1 hour ago, Needforspeed said:

Help, would you extend this to job application data, as well?

I have used the rate of applicant turn-downs (i.e., the ratio of offers made to offers accepted) to show government auditors why we needed to jump the pay rate for certain positions. I should say that I have "tried" to use the ratio, because I have had mixed success in doing so.

Generally speaking, most government folks are used to OPM scales/locality pay rates and have trouble accepting that contractor pay doesn't really work that same way.

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@Needforspeed

1 hour ago, Needforspeed said:

Help, would you extend this to job application data, as well? For example, you have a job posting for said engineer. You priced this engineer in your cost reimbursement proposal that was accepted for award at $30 per hour. Two years go by. Now present day you absolutely need to fill the position to complete the work, due to turnover. Job applications to the vacancy are few and far between. It is a fantasy to think you can retain someone now at $30 per hour. All qualified candidates are $60 plus per hour. You end up hiring someone at $50 and put that person on the contract. The gov't "may" disallow some or all of the cost - but would that be reasonable? If people are recruited and retained for what the market will bear, that is what the market will bear. The cost of labor is more expensive. That makes the cost to perform the contract...more expensive. I don't necessarily see anything wrong with this, to pass this increased labor cost to the government. Does the government want the contractor to perform the work or not? The contractor shall not be burdened with the increased cost, that is why they accepted a cost-plus contract in the first place. 

The allowability of the $50 depends in part on whether $50 is reasonable. If $50 is reasonable and otherwise allowable, then disallowance would be breach of contract by the government. Of course, the contractor would have to prove breach, which means it would have to prove that the government's determination that $50 was unreasonable was itself unreasonable. That will likely depend on labor market data.

If the contracting officer will not yield, the contractor can yield or will have to submit a claim to the contracting officer and demand a final decision. If the contracting officer issues a final decision that $50 is unreasonable, and thus unallowable, and if the contractor still disagrees, it would have to appeal the contracting officer's decision to a board of contract appeals or to the Court of Federal Claims. If the board or the court denies the contractor's appeal, the contractor could then appeal the board or court decision to the U.S. Court of Appeals for the Federal Circuit. If it loses there it could appeal to the Supreme Court.

The crux of the matter would be this: Is $50 an amount "which would be incurred by a prudent person in the conduct of competitive business." By law, the burden would be on the contractor to persuade the board or court that $50 is reasonable. The contractor would likely have to meet that burden with market data.

I don't know whether and how you could find the board decisions you asked about. Do you have access to case books or to a research service like Westlaw or Lexis? Is there a law library nearby that would let you use its resources?

But I'm not sure that reading the cases would help you. Have you been trained in case law analysis? Do you know how to apply it? Are you a lawyer or an educated layperson? Well, we know you're not a lawyer or an educated layperson, because if you were either you would know how to find the cases.

Rather than mucking about in case law, I suggest that you gather market data that support the proposition that $50 is reasonable. Then you should craft an argument in support of the proposition that a prudent person in the conduct of a competitive business would pay $50 and that $50 is, therefore, reasonable and allowable. Check the references that I provided above for additional guidance in determining reasonableness.

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Vern and Help. Thank you both. Very enlightening. 

1 hour ago, Vern Edwards said:

If the contracting officer will not yield, the contractor can yield or will have to submit a claim to the contracting officer and demand a final decision.

Vern - let's go back to my example for a second. Let's assume as a contractor, you said to heck with checking with the CO to put the $50 engineer on the job, you just did it. Except, that engineer is only one of 25 other employees direct charging the project each month. You did not think twice because you had been working day and night for months to find someone that could do the job at a rate the budget could bear. At that point you are certain any challenges of reasonableness would be in your favor. That thought may have not even crossed your mind; you knew you had been a good steward of the contract's money. And until this point, you have done nothing wrong, because the contract has no such requirement to notify a CO of the price increase, there are no stated pay caps, etc. You know it is reasonable because it is using the market forces of supply and demand to determine the "should cost" salary. Only we (I) now know that the risk is, the government CO may point to a locality pay, CPI chart, or some other data point that lacks relevance to question the cost reasonableness (which, besides reviewing the direct labor rates on an invoice, how else would the CO surveil this cost to form their argument?). And if the CO cannot be convinced, the contractor can choose to absorb the added cost or lawyer up. Seems a little unfair. The takeaway for the contractor being if you are going to charge the government for something, as a prudent person in the conduct of competitive business, have a great paper trail to demonstrate its allowability, and be ready to go the distance to justify it. Do we agree that, until questioned, the contractor did nothing wrong in charging the government $50 per hour for this engineer's time?

 

1 hour ago, Vern Edwards said:

I don't know whether and how you could find the board decisions you asked about. Do you have access to case books or to a research service like Westlaw or Lexis? Is there a law library nearby that would let you use its resources?

But I'm not sure that reading the cases would help you. Have you been trained in case law analysis? Do you know how to apply it? Are you a lawyer or an educated layperson? Well, we know you're not a lawyer or an educated layperson, because if you were either you would know how to find the cases.

Correct. Although I have found that occasionally after reading things over and over that don't make sense, you eventually learn something that can be applicable. 

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2 hours ago, Needforspeed said:

Let's assume as a contractor, you said to heck with checking with the CO to put the $50 engineer on the job, you just did it. Except, that engineer is only one of 25 other employees direct charging the project each month. You did not think twice because you had been working day and night for months to find someone that could do the job at a rate the budget could bear. At that point you are certain any challenges of reasonableness would be in your favor. That thought may have not even crossed your mind; you knew you had been a good steward of the contract's money. And until this point, you have done nothing wrong, because the contract has no such requirement to notify a CO of the price increase, there are no stated pay caps, etc. You know it is reasonable because it is using the market forces of supply and demand to determine the "should cost" salary. Only we (I) now know that the risk is, the government CO may point to a locality pay, CPI chart, or some other data point that lacks relevance to question the cost reasonableness (which, besides reviewing the direct labor rates on an invoice, how else would the CO surveil this cost to form their argument?). And if the CO cannot be convinced, the contractor can choose to absorb the added cost or lawyer up... Do we agree that, until questioned, the contractor did nothing wrong in charging the government $50 per hour for this engineer's time?

Emphasis added.

No, we don't agree. There are two kinds of questions—conditional and non-conditional. The answer to a conditional question depends on certain facts. It is often the case that the person asking the question does not know on what facts the answer depends.

You have been talking about a cost-reimbursement contract. A cost reimbursement contract contains either the clause at FAR 52.232-20, Limitation of Cost, or FAR 52.232-22, Limitation of Funds.

You said, "Let's assume as a contractor, you said to heck with checking with the CO to put the $50 engineer on the job, you just did it." Well, will the effect of just doing it be to increase estimated cost of performance? Emphasis added. I ask because FAR 52.232-20(b) says: 

Quote

(b) The Contractor shall notify the Contracting Officer in writing whenever it has reason to believe that-

           (1) The costs the Contractor expects to incur under this contract in the next 60 days, when added to all costs previously incurred, will exceed 75 percent of the estimated cost specified in the Schedule; or

           (2) The total cost for the performance of this contract, exclusive of any fee, will be either greater or substantially less than had been previously estimated.

Emphasis added. And FAR 52.232-22(c) says:

Quote

 

(c) The Contractor shall notify the Contracting Officer in writing whenever it has reason to believe that the costs it expects to incur under this contract in the next 60 days, when added to all costs previously incurred, will exceed 75 percent of (1) the total amount so far allotted to the contract by the Government or, (2)if this is a cost-sharing contract, the amount then allotted to the contract by the Government plus the Contractor’s corresponding share. The notice shall state the estimated amount of additional funds required to continue performance for the period specified in the Schedule.

 

Emphasis added. So I cannot give you an unqualified answer to your question. You didn't provide all of the necessary facts. 

The contractor certainly had reason to believe that just doing it would increase the estimated cost of performance, so the contractor may have breached the contract by deciding to incur significantly greater hourly labor costs without notifying the contracting officer. Under FAR 52.232-20, the amount of the increase is irrelevant. Under FAR 52.232-22, the notice is required in a specific circumstance. Not notifying the contracting officer and just doing it may have been a serious mistake.

I can tell you this—If I were the contracting officer there would be a price to pay for just doing it without first giving me a heads up, whether required to do so or not. From $30 to $50/hour is a 66.6 percent rate increase. And your contractor thought "to heck with checking with the contracting officer." Well what else has this contractor been up to with our money without telling us? Let's audit them into the Stone Age.

You failed to provide other pertinent facts, as well.

I told you that you were delving into a complex matter and that you needed to do more study. I'm busy trying to meet a publication deadline and don't have time to discuss this with you further. I have tried to advise you and have referred you to study material. That's all I can do for you. 

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Vern, thank you for your time and thoughts on this. 

1 hour ago, Vern Edwards said:

The contractor certainly had reason to believe that just doing it would increase the estimated cost of performance

I had not thought to consider FAR 52.232-20 or FAR 52.232-22. Although I am not sure that charging someone's time at an hourly rate higher than was bid is guaranteed to "increase the estimated cost of performance". Maybe it will, maybe it won't. Maybe no one charged labor costs at this engineer category for the several months we were busy trying to hire someone. Or other employees were recruited and retained at hourly rates lower than initially bid, generating cost savings. If staffing this engineer at $50 per hour does not increase the cost of the contract (it may not) we are back to reasonableness as our guiding allowable cost compass. (For now.) We have not identified a contract requirement that would prohibit charging $50 per hour without CO notification or consent. Just the threat of an unhappy CO that feels we tried to pull a fast one. Or the threat that the cost will be disallowed, leading to what sounds like a miserable time trying to justify it in court. 

You have said now in three separate occasions that I am not educated enough to be asking these questions. You, of course, are correct. Just trying to learn. Thanks for the reminder to open C&N Cost Reimbursement Contracting it is a very pleasant read and has not been opened in more than a decade. Thanks for the other study materials, as well. Good luck on the publication. 

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38 minutes ago, Needforspeed said:

You have said now in three separate occasions that I am not educated enough to be asking these questions. You, of course, are correct. Just trying to learn. Thanks for the reminder to open C&N Cost Reimbursement Contracting it is a very pleasant read and has not been opened in more than a decade. Thanks for the other study materials, as well.

As for the Cibinic & Nash text, the second edition is from the last century. Try to find a fifth edition. Even better, see if you can get access to the periodical Government Contract Costs, Pricing & Accounting Report. I found 315 articles that addressed reasonableness.

Also, take a look at FAR 31.205-6, paragraph (b).

In the reading stack on my table is a 1978 article entitled, "To Ask a Question, One Must Know Enough to Know What is Not Known," by Miyake and Norman. It opens with this:

Quote

To ask a question of someone implies more than a need for information. It also implies a proper structure of knowledge with which to formulate the question and to interpret the response. Thus, the ability of a person to think of an appropriate question on a topic matter is a complex function of the knowledge of that topic.

Don't feel bad about not knowing enough. There is nothing better than study and learning. Enjoy the trip.

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47 minutes ago, Vern Edwards said:

Don't feel bad about not knowing enough.

Thanks, Vern, for your response. I think what I have learned today, in jest, is that in government contracting there are two habits of highly successful people: 1) Be reasonable at all times, and 2) Always do as a prudent businessperson would do. If you do those things, you are likely not to stray off into a land of mismanagement or fraud. It is bound to keep you out of trouble. And if you are really reasonable, any time that a suspecting, conscientious, CO asks for your proof - like being audited into the stone age - there is no need to fret because you are really reasonable, prudent and you can prove it. 

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12 hours ago, Needforspeed said:

Thanks, Vern, for your response. I think what I have learned today, in jest, is that in government contracting there are two habits of highly successful people: 1) Be reasonable at all times, and 2) Always do as a prudent businessperson would do. If you do those things, you are likely not to stray off into a land of mismanagement or fraud. It is bound to keep you out of trouble. And if you are really reasonable, any time that a suspecting, conscientious, CO asks for your proof - like being audited into the stone age - there is no need to fret because you are really reasonable, prudent and you can prove it. 

Well, after almost 48 years in the business I'm not so confident that there is no need to fret, but reasonableness is good advice in any case.

What I have learned is that the two key habits of highly successful people are (1) be curious about everything and (2) pursue your curiosity. Those are old ideas. Here, from 10th Century Ireland, by an anonymous monk in a Benedictine Monastery, a scholar and his cat:

Pangur Bán (pronounced Bawn)

(from the Irish by Robin Flower)

I and Pangur Bán my cat,
'Tis a like task we are at:
Hunting mice is his delight,
Hunting words I sit all night.

Better far than praise of men
'Tis to sit with book and pen;
Pangur bears me no ill-will,
He too plies his simple skill.

'Tis a merry task to see
At our tasks how glad are we,
When at home we sit and find
Entertainment to our mind.

Oftentimes a mouse will stray
In the hero Pangur's way;
Oftentimes my keen thought set
Takes a meaning in its net.

'Gainst the wall he sets his eye
Full and fierce and sharp and sly;
'Gainst the wall of knowledge I
All my little wisdom try.

When a mouse darts from its den,
O how glad is Pangur then!
O what gladness do I prove
When I solve the doubts I love!

So in peace our task we ply,
Pangur Ban, my cat, and I;
In our arts we find our bliss,
I have mine and he has his.

Practice every day has made
Pangur perfect in his trade;
I get wisdom day and night
Turning darkness into light.

 

PANGUR BÁN means white panther.

Vern

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Needforspeed, since you are either a government employee administering or a contractor performing a cost reimbursement contract, your organization should have some expertise and knowledgeable resources to practice this type of contracting. 

Do you have a legal office? If so, they may have a law library and/or or your lawyers have on-line access to Westlaw or other services to find relevant case law…

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2 minutes ago, Needforspeed said:

Unfortunately no, Joel. I am the resource, albeit not at the expert level. Much to Vern’s chagrin.

I deduce from your posts that you work at a small(er) contractor. I'll guess you're the contracts person, and are being asked to do things not found in the NCMA CMBOK.

Good luck. Even if I'm wrong about you and your role, good luck.

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Unfortunately, I don’t have daily access to my old legal offices anymore. But I do have a friend who is a lawyer. He said I could come into his office and use Westlaw or any other research resources. I haven’t had to do that. If you have any lawyer friends, maybe you could try that route…

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10 hours ago, joel hoffman said:

Unfortunately, I don’t have daily access to my old legal offices anymore. But I do have a friend who is a lawyer. He said I could come into his office and use Westlaw or any other research resources. I haven’t had to do that. If you have any lawyer friends, maybe you could try that route…

@joel hoffmanSo Needforspeed is still trying to learn the basics of incurred cost reasonableness and has said that he is not familiar with case citations and how to search for them, and you are suggesting that he find a way to use Westlaw? Really?

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Luckily, I have a GOOD friend who has and would have his paralegal help me. There are some offices that still have hardcopy libraries of the older case law, too. After all, they bought all those books. I’ve also seen libraries that had books donated by law offices. 

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If anyone wants to appreciate the cost reasonableness complexities that I warned Needforspeed about, I urge them to read Schubbe, "PAYING THE PIPER? HOW THE FEDERAL CIRCUIT SHIFTED PERFORMANCE RISK TO THE CONTRACTOR BY REDEFINING COST REASONABLENESS," Public Contract Law Journal, Fall 2015, 45 Pub. Cont. L.J. 47.

When the article was published, Major Schubbe was an Air Force staff judge advocate attorney. You can access her article in the Spring 2015 issue of the BCA Bar Journal:

http://bcaba.sparkfiles.com/wp-content/uploads/2016/04/BCA-Bar-Journal-Spring-2016.pdf

See page 74. The article begins:

Quote

In two significant cases involving the same defense contractor, Kellogg Brown & Root Services, Inc. (KBR), the U.S. Court of Federal Claims (COFC) and the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) fundamentally altered the cost-reimbursement contract arena.

There are 318 footnotes.

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