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CPRsue

Calculating proper hours/salary labor for IDIQ CPFF contract

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I am the owner of a small woman-owned HubZone company... and new to the forum ... We currently have an IDIQ base contract w/reqirements placed via task orders for (2) CPFF tasks and (1) CPFF completion type task. All the tasks are based upon proposed rates by labor category and represented in an hourly dollar amount. My question is what is the proper way to calculate the hours and appropriate cost for a salaried exempt employee who may work more than 40 hours in a week? For example a proposed labor category of Sr Computer Engineer at $40 per hour based upon 40 hrs a week ...if that employee works 60 hrs in a week the gross wages are $1600. Should the task be billed for 60 hour or 40 hours? should the task be charged at the $40 rate or is it the gross wages divided by the # of hours in essence reducing that $40 rate? Also, what if the employees actual is only $1520 ... is the billed amount at the proposed rate of $40 or is it once again the actual grosss wges divided by the number of hours actually worked? Someone please help clarify ... I apologize in advance for what seems like a very simple Contracting 101 type question, but a recent COR change has us now second guessing ourselves and past procedures...

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Guest Vern Edwards

All the tasks are based upon proposed rates by labor category and represented in an hourly dollar amount.

I don't know what that means. What do you mean when you say the tasks are "based upon" proposed rates? And what do you mean when you say that the tasks are "represented in" an hourly dollar amount?

What does the contract say? Does the contract stipulate hourly rates for labor? Does the contract require that you invoice at the hourly rates for the hours performed?

You won't receive a good answer from anyone until you make yourself clear.

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...For example a proposed labor category of Sr Computer Engineer at $40 per hour based upon 40 hrs a week ...if that employee works 60 hrs in a week the gross wages are $1600. ...Also, what if the employees actual is only $1520 ... is the billed amount at the proposed rate of $40 or is it once again the actual grosss wges divided by the number of hours actually worked? ...

$40/HR X 40 HRs = $1600. Since $26.67/HR X 60 HRs ~ $1600, please clarify what you mean by "gross wages" in the statement "if that employee works 60 hrs in a week the gross wages are $1600."

Since this is a cost contract, why wouldn't you bill for labor at the actual cost?.

Does the task order state that employees are to work 40 hours?

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Guest Vern Edwards

Joel, your arithmetic is great. But why not give the person a chance to answer the questions that I asked, then follow up? Or do you just want to cause confusion? Hmm? What you are doing is the kind of thing that I hate about Wifcon Forum. Democratic chaos.

Never mind. Forget about it. You just go ahead. I'll step aside.

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Notwithstanding Vern's disapproving glare (which I can feel from afar), let me offer the thought that the Original Poster is asking about Uncompensated Overtime. This has been a contentious issue for decades. I would suggest that the Original Poster visit the DCAA website, and check out the DCAA Contract Audit Manual, at Section 6-410 ... and then come back and ask the question again if there is still a problem.

Hope this helps.

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Guest Vern Edwards

The best way to know what CPRSue is asking is to wait for her to clear that up. But don't let me get in your way.

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Joel, your arithmetic is great. But why not give the person a chance to answer the questions that I asked, then follow up? Or do you just want to cause confusion? Hmm? What you are doing is the kind of thing that I hate about Wifcon Forum. Democratic chaos.

Never mind. Forget about it. You just go ahead. I'll step aside.

Vern, How could I give the person a chance to answer your questions? There were no replies when I read the initial post. You posted during the time I was developing my request for clarification. I didnt see your post until after I posted. Sorry about that...

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Sorry for setting off such a firestorm ...really expected this to be any easy question and answer, and just looking for clarification. The contract was PROPOSED using labor categories AT hourly rates for computation of total costs. The Contract does not stipulate hourly rates/labor categories for billing only outlines total costs in a whole dollar amount and fixed fee in a whole dollar amount. However, rates/labor categories/hours are required in a monthly financial report prepared for the customer. Again, I will try to make it clearer what I am trying to ask ... an employee is salary exempt at $1600 per week ... during a standard work week he will record 40 hours to the contract and the contract is charged the $1600 (basically $40 per hour) .... what if he works 60 hours in the week? is that contract charged the same $1600 and he records the 60 hours (basically $26.67 per hour)? or based upon our proposal which outlined a cost of $45 per hour for his labor category, is it the 60 hours at the $45 rate? We have a new DCAA auditor, and now a new COR, of which neither give guidance that is the same. Historically, we would charge the contract $1600 for 40 hours based upon the actual costs due to the Cost plus nature of the contract.

Hope I was clearer ...

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CPRSue -- please see my post. Have you reviewed the applicable DCAA guidance? Does it address your question, or am I completely off base?

H2H

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Sorry for setting off such a firestorm ...really expected this to be any easy question and answer, and just looking for clarification. The contract was PROPOSED using labor categories AT hourly rates for computation of total costs. The Contract does not stipulate hourly rates/labor categories for billing only outlines total costs in a whole dollar amount and fixed fee in a whole dollar amount. However, rates/labor categories/hours are required in a monthly financial report prepared for the customer. Again, I will try to make it clearer what I am trying to ask ... an employee is salary exempt at $1600 per week ... during a standard work week he will record 40 hours to the contract and the contract is charged the $1600 (basically $40 per hour) .... what if he works 60 hours in the week? is that contract charged the same $1600 and he records the 60 hours (basically $26.67 per hour)? or based upon our proposal which outlined a cost of $45 per hour for his labor category, is it the 60 hours at the $45 rate? We have a new DCAA auditor, and now a new COR, of which neither give guidance that is the same. Historically, we would charge the contract $1600 for 40 hours based upon the actual costs due to the Cost plus nature of the contract.

Hope I was clearer ...

Well, throwing in the $45/hr proposed rate didn't help clear things up, but it seems clear to me that if you have a cost-reimbursement contract, you may bill for your actual cost, and only that. Thus, if your employee actually worked 60 hours and was actually paid $1,600, then you should bill for 60 hours and $1,600. If the employee's actual salary is $1,520, then you should bill for 60 hours and $1,520. This only really becomes an issue when the employee works on two jobs during the same week. For example, suppose the employee gets $1,600/week and worked first on Job A for 40 hours and then on Job B for 20 hours. Do you bill Job A for 40 hours and $1,600? No, you bill Job A for 40 hours and $1,066.67 and you bill Job B for 20 hours and $533.33. Of course, even then there isn't a big problem if both Jobs are cost-reimbursement, but what if Job A is cost-reimbursement and Job B is fixed price? Does that change things?

I hope I don't need to say "No."

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Guest Vern Edwards

I think here_2_help was right -- this is an uncompensated overtime issue. There will be an issue with DCAA if the employee works on the contract for 40 hours and the contractor charges the employee's entire salary to the contract, but then the employee works 20 hours during the same week on another contract to which no cost is charged. CPRSue should look at the DCAA Contract Audit Manual and at DCAA Pamphlet 7641.90, Information for Contractors. Both are available online.

Under a CPFF contract the contractor bills its incurred ("actual") costs, not what it proposed, unless the parties agreed to some kind of cap.

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The beauty of it is that the DCAA CAM acknowledges that there are multiple methods of handling UCOT. This is one of the few areas in which DCAA tells its auditors that there is no one-size-fits-all, black-and-white, correct answer. Contemplating auditor-approved flexibility is a too-rare experience: we should cherish the moment.

Note to CPRSue: if you are still confused about what to do in your situation, in the face of multiple right answers, then you need to hire a government contract cost accounting SME consultant to assist you. There are several good ones out there; try a search on LinkedIn.

H2H

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While the CAM discussion of uncompensated overtime (CAM 6-410) is a good source for determining DCAA's view on the subject, don't assume that it is correct. There are many errors in that discussion. For example DCAA states that FAR 52.237-10 is a contract clause and that it applies to all contracts for services. This is clearly erroneous. Further, the guidance is based on the assumption that contracts will be subject to FAR 31.201-4 and/or CAS 418. Many contracts are subject to neither, and some contractors have no contracts that are subject to either. Bottom line, do not assume that the CAM is an accurate reflection of what contractors are required or permitted to do.

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Retreadfed,

You are correct (as usual). But for a small business, DCAA's views are often tantamount to biblical pronouncements, especially if they are uttered in the midst of a pre-award accounting system survey. Thus, knowing what DCAA would permit is of paramount importance for the interlocutor, even if you and I might take issue with the agency's position(s).

H2H

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H2H, while you might generally be right in regard to a pre-award accounting system review (which DCAA also does not know how to do), what we have here is a contract that has already been issued.

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Retreadfed,

I'm not going to argue with you about something that we agree on. We would be arguing nuance, which I don't feel is valuable to the interlocutor.

Best to you!

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