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SpartanHead

FFP Incurred costs

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We have a change in SOW and need to show what our incurred costs are currently. The problem is my account group screwed up (we are a very small company) and when i pull the report for costs, none of the indirect costs are coming in. So in figuring out the total incurred costs, do I use the direct labor rates we proposed or the actual rates of the performers? (IE joe smith was bid at $100, but joe smith got a raise and makes $102) and do I use the indirect rates we bid with to burden the direct costs or the actual indirect rates? It would be simple if this was a Cost plus contract but with it being FFP im not 100% sure.

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Incurred costs are actual costs, including actual direct labor dollars and actual indirect cost rates (to the extent known) allocated to actual direct costs.

That said, is the "change in SOW" related to a descope or partial termination? What is the the justification for showing current costs incurred to date?

Hope this helps.

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Incurred costs are actual costs, including actual direct labor dollars and actual indirect cost rates (to the extent known) allocated to actual direct costs.

That said, is the "change in SOW" related to a descope or partial termination? What is the the justification for showing current costs incurred to date?

Hope this helps.

Thanks for the reply. The change im SOW is they are terminating the current scope and going in a different direction on the same contract. The net value of the contract is not going to change at all b/c the customer only has X amount of dollars for the project, but i still have to fill out the FAR 15-2 table.

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Spartanhead, are you a prime contractor so that you are dealing with the government or are you a subcontractor so that you are dealing with a contractor or higher-tier subcontractor? I am confused by your statement that "they are terminating the current scope and going in a different direction on the same contract." That needs substantially more explanation, particularly regarding how the SOW can be terminated without the contract being terminated.

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SpartanHead,

Based on your choice of words, you have a problem. Your customer may have a problem. Where is your legal counsel on this?

H2H

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SpartanHead,

Based on your choice of words, you have a problem. Your customer may have a problem. Where is your legal counsel on this?

H2H

let me correct that... they are descoping some of work and not terminating the contract at all.

I was never happy with this contract being a FFP in the first place, it should have been a CPFF contract anyway b/c the scope was not nearly specific enough originally. But being a small company, they wanted the work as a resume builder... so they took the risk. And now they are changing the SOW.

I was just more concerned with the actual incurred cost and if i should use what we bid or what was actual cost.

Thanks!

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Like some of the other respondents, this is a little confusing to me. Could you clarify this: Are incurred costs being requested in order to determine what you're due as a result of the termination? Or are the incurred costs being requested in support of Table 15-2, which is used in proposals?

I'm going to go out on a limb and guess that it's the latter. Since your customer has a fixed bucket of dollars, they're going to be required to substantiate that the value of the work incurred plus the value of the new work is truly worth what you're charging.

If that's the case, you're in the driver's seat on this one. Speaking as simply as possible: Provide actual hours and actual material dollars. They can burden all of that using the bid rates that you provided previously.

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let me correct that... they are descoping some of work and not terminating the contract at all.

Well, somebody might assert that a descope of the awarded work and an addition of new scope "going in a different direction on the same contract" for the same "fixed" funding might be interpreted to be a partial termination for convenience followed by a cardinal change that should have been a new procurement, which is being shoehorned into the existing contract vehicle in order to spend programmed dollars while avoiding a competition, in violation of CICA and perhaps the Anti-Deficiency Act.

But not me. I would never assert such a thing.

Carry on.

H2H

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"Descope" is a word that no professional should use to describe a contract modification.

The proper term for a contract modification that deletes some but not all of the work from a contract is deductive change or partial termination, depending on the authority used to make the change. If the modification is done under the authority of the changes clause, it is called a deductive change. If it is done under the termination for convenience clause, it is called a partial termination. If it is done by mutual assent and not pursuant to a contract clause, it is just a supplemental agreement to delete work.

Deleting work from a contract may or may not affect the contract's scope.

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