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Under what circumstances (if any) would it be appropriate to inlcude FAR Clauses 52.232-20, Limitation of Cost and 52.232-22, Limitation of Funds in a fixed price service contract with a cost-reimbusrable travel CLIN? Travel will make up less than 10% of the total contract price, if that is a consideration.

Please explain why or why not it is appropriate so I can educate myself - this is a new one for me. Thanks in advance for any help.

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  • 8 months later...

I would think that if you have cost reimbursable CLINs then that portion of the contract is considered to be a cost reimburasable contract. Contract clauses appropriate for a cost reimbursable contract are identified in 16.307 and subpart 32.7. DFAR 204.7103-1(a) see (iii)(:) and © specifies that you have a mixed contract.

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Under what circumstances (if any) would it be appropriate to inlcude FAR Clauses 52.232-20, Limitation of Cost and 52.232-22, Limitation of Funds in a fixed price service contract with a cost-reimbusrable travel CLIN? Travel will make up less than 10% of the total contract price, if that is a consideration.

Please explain why or why not it is appropriate so I can educate myself - this is a new one for me. Thanks in advance for any help.

I do not believe that either of the clauses should be used in your circumstance because they are not designed to address a single travel reimbursement line item in a FP contract and because there are more efficient ways to control the travel costs.

Look as the prescriptions for the two clauses:

52.232-20 Limitation of Cost.

As prescribed in 32.705-2(a), insert the following clause in solicitations and contracts if a fully funded cost-reimbursement contract is contemplated, whether or not the contract provides for payment of a fee. The 60-day period may be varied from 30 to 90 days and the 75 percent from 75 to 85 percent. ?Task Order? or other appropriate designation may be substituted for ?Schedule? wherever that word appears in the clause.

52.232-22 Limitation of Funds.

As prescribed in 32.705-2(B), insert the following clause in solicitations and contracts if an incrementally funded cost-reimbursement contract is contemplated. The 60-day period may be varied from 30 to 90 days and the 75 percent from 75 to 85 percent. ?Task Order? or other appropriate designation may be substituted for ?Schedule? wherever that word appears in the clause.

Each clause addresses too many circumstances and rules that do not apply to your case. One of these is the payment of fees. I would not pay fees on travel.

Instead of using either of the Limitation clauses, I suggest you 1) specify in the pricing schedule the maximum amount of dollars available for the travel line item; 2) write a brief SOW or clause for the line item stating that there is a maximum beyond which no travel will be reimbursed; and 3) include, either in the SOW or in a clause, the pertinent restrictions set out in FAR 31.205-46, Travel costs (e.g. compliance with JTR).

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I think you would need 52.216-7 Allowable Cost and Payment.

If you already have a commercial fixed priced contract with the 52-212-4 clause you can not unilaterally add cost reimbursable CLINs. The addition and/or ommsion of clauses would have to be bilaterally agreed for any cost reimbursable work under an exisiting fixed price contract.

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With respect to 52.232-20 Limitation of Cost and 52.232-22 Limitation of Funds, these clauses are listed in the FAR Matrix as REQUIRED when applicable. You will need a funding clause one way or the other when you have a cost reimbursable CLIN/contract. They are not OPTIONAL.

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I think you would need 52.216-7 Allowable Cost and Payment.

If you already have a commercial fixed priced contract with the 52-212-4 clause you can not unilaterally add cost reimbursable CLINs. The addition and/or ommsion of clauses would have to be bilaterally agreed for any cost reimbursable work under an exisiting fixed price contract.

Why do you need the clause 52.216.-7? Do you have a FAR cite?

Of course, contracting officers cannot add new work unilaterally. If travel is being added, then both parties to the contract must sign the contract mod.

I suspect we are at the solicitation stage. The solicitation contains the travel clin - with a maximum amount - and any SOW and relevant clauses. The contractor signs the 1449; the contracting officers countersigns. Voila! The contract is created with a travel line item, a travel $$ max, a travel SOW and a clause covering payment of travel.

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With respect to 52.232-20 Limitation of Cost and 52.232-22 Limitation of Funds, these clauses are listed in the FAR Matrix as REQUIRED when applicable. You will need a funding clause one way or the other when you have a cost reimbursable CLIN/contract. They are not OPTIONAL.

The clauses are not applicable.

The travel line item is funded upon award. Or, if the contract is an ID type, it is funded when the orders are placed.

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I think we agree that the reimbursable travel makes that part of the contract cost reimbursable.

DFAR 204.7103-1(a) supports this conclusion.

Are you saying that if you have a cost reimbursable contract that you don't need a funding or payment clause? Or are you saying that you tailor those clauses?

I think we will agree that you can not tailor the payment clause in 52.212-4, but I guess it would be OK for a new solicitation.

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DFAR 204.7103-1(a) supports this conclusion.

Are you saying that if you have a cost reimbursable contract that you don't need a funding or payment clause? Or are you saying that you tailor those clauses?

I think we will agree that you can not tailor the payment clause in 52.212-4, but I guess it would be OK for a new solicitation.

DFARS subpart 204.7100 prescribes policies and procedures for assigning contract line item numbers. It does not prescribe clauses to be used.

You fully fund the travel line item when you award the contract or place the order. You do not need a funding provision.

You write a clause tying reimbursement of travel to the relevant parts of FAR 31.205-46. How does that conflict with 52.212-4?

There is no need to tailor the payment paragraph of 52.212-4.

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The alt 1 version of 52.212-4 is for T&M/LH and the payment provisions are very different from the base clause- I think tailoring or moving to alt 1 payment version would constitute a cardinal change to the contract. The alt 1 version provides how to reimburse travel. My point is that it can not be done unilaterally if the contract is already controlled by 52.212-4.

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Under a FAR Part 12 fixed priced commerical contract with the 52-212-4 clause: what law, rule, regulation or agency requirement would the government possibly be trying to comply with by mandating that travel be cost reimbursable and/or subject to 31.205-46 and/or not exceed the FTR? Likewise, under what circumstances would a FAR Part 12 contract ever be subject to the Cost Principles at FAR Part 31?

Separately, does Alt 1 of the 52-212-4 clause for T&M/LH contracts invoke the cost principles?

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Does anyone know what clauses the software acquisition systems (SAP, PD2, etc.) - as discussed on another thread - identify for use with a mixed contract type contract? Do these systems, for a mixed FFP and CR contract, identify that CR funding and payment clauses should be included? I think that DFAR 204.7103-1(B) and © is pretty clear that when you have more than one contract type within a contract that the contract will require more than one payment clause. FAR 16.307 prescribes the 52.216-7 payment clause for CR contracts - and you will need a funding clause (52.232-20 - 52.232-22) per 32.705 -2(a) and (B).

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I don't know why the text gets converted to the silly faces. It seems to happen when you put the letter b in parens. And when you put the letter c in parens you get the copyright symbol.

You can stop the faces by unchecking the box under the area where you draft your post that says "Enable emoticons?"

If would be nice if having it unchecked was the "default" setting. However, until that happens you'll just have to manually do it.

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Does anyone know what clauses the software acquisition systems (SAP, PD2, etc.) - as discussed on another thread - identify for use with a mixed contract type contract? Do these systems, for a mixed FFP and CR contract, identify that CR funding and payment clauses should be included?

There are about five major software acquisition systems and probably another dozen systems, either internally developed or lesser used ones, in use. They all have their own logic and processes for how clauses get pulled in. So there isn't a single answer to your question.

In most cases, the person assembling the solicitation/contract would have to go back and add the appropriate additional clauses. Usually that's done by designating a secondary payment clause gets added to certain CLINS, for example.

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DFARS subpart 204.7100 prescribes policies and procedures for assigning contract line item numbers. It does not prescribe clauses to be used.

You fully fund the travel line item when you award the contract or place the order. You do not need a funding provision.

You write a clause tying reimbursement of travel to the relevant parts of FAR 31.205-46. How does that conflict with 52.212-4?

There is no need to tailor the payment paragraph of 52.212-4.

napolik,

What would be the pricing arrangement for the travel CLIN in your proposal? Fixed-price? Cost-reimbursement? Something else?

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napolik,

What would be the pricing arrangement for the travel CLIN in your proposal? Fixed-price? Cost-reimbursement? Something else?

It would be a funded NTE line item in the contract or delivery order. Assuming one could not reasonably estimate the travel sites and the volume of trips, I would do cost reimbursement, no fee, in accordance with FAR 31.205-46.

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It would be a funded NTE line item in the contract or delivery order. Assuming one could not reasonably estimate the travel sites and the volume of trips, I would do cost reimbursement, no fee, in accordance with FAR 31.205-46.

How do you get around the prohibition on using cost-reimbursement contracts to acquire commercial items?

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Guest Vern Edwards

Don:

The prohibition against the use of cost-type contracts for the acquisition of commercial items is to prevent agencies from entering into contracts that would require forward pricing rate agreements, interim billing rates, final billing rates, across-the-board application of contract cost principles, incurred cost audits, application of CAS and the like. The idea is to prevent COs from entering into pricing arrangements that are inconsistent with commercial practice, to prevent the use of cost-type payment arrangements for the principal purpose of the contract. I do not believe that the prohibition was intended to prevent COs from making commonsense agreements to reimburse contractors for incidental expenses at cost, without fee, which is a commercial practice for certain kinds of work.

Now, some will say that what I have just written violates the letter of the procurement regulations, and if you think that, then so be it. Napolik and I are of a generation and professional class who are capable of rational thought, have well-developed powers of common sense, who know our regs and are able to hold our own in a discussion of rules with anyone, and who have the pride of warrant authority. We were not taught to spend our time huddling in cubes before desktop workstations and doing data entry. We are the descendants of Gordon Wade Rule. We were taught to do deals. The acquisition world will never see our like again, unless the new hires rise up in rebellion. But that's unlikely--they'll just move on to better jobs.

This is a silly thread. Anyone with even a passing understanding of the content and purpose of the Limitation of Cost and Limitation of Funds clauses would not apply either to a CLIN for incidental expenses to be reimbursed at cost. Anyone who would spend any amount of time debating the issue is not worth talking to.

Please set aside your Socratic approach to this petty topic and write something interesting for your blog. Write something that will knock our socks off and that will have people standing at the copier and telling others, "You HAVE to read this! I am looking to you and others like you for leadership. Lead, please. Stop wasting your time with this bull----. If you don't, then there is no hope for this so-called "profession."

Come on, professor. Go to the head of the column and tell the others to follow you. Professor Cibinic is gone. Professor Nash is in his 80s. We need new minds and new ideas. This is beneath you.

Now, I'll go refill my wine glass.

Vern

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