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Finalized Indirect Cost Claim is 8 years behind, now money is expiring before we can invoice


sprice11

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Hello all,

The problem I am running into right now is that I am trying to bill an interim completion invoice based on our submitted Indirect Cost Claims (since DCAA is running about 6 years behind). I have performed a calculation, and this interim completion invoice will requires that the PCO add money to our contract since it was not fully funded. The kicker is this is old money that has since expired, so they will have to go ask for old money.

What, if anything, can we do to mitigate this from happening again? One of the issues is that are Delivery Orders dont have a specific Period of Performance, rather the wording is this "...until all effort is completed.".

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sprice11,

I'm not a Fiscal law expert, but I've been told that the "old money" is gone from contracts once the funds have expired. Instead, "new money" (current year funding) needs to be added.

May I ask why you waited for 6 years (or 8 years) to submit the interim voucher and request additional funds? Why didn't you submit the request immediately after submitting the proposal to establish final billing rates?

Second question: Are you confident that you complied with the Limitation of Cost clause in your Delivery Order or ID/IQ?

Hope this helps.

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Guest Vern Edwards

sprice11:

Your post is confusing because of the terminology you used. The title says you have an "indirect cost claim" and that it is "8 years behind." In the body you write of an "interim completion invoice" that is based on your indirect cost claim and that DCAA is six years behind.

Is the contract a cost-reimbursement contract? Did your company literally submit a claim--an official term defined in FAR 2.101--six or eight years ago, or did your company submit a final indirect cost rate proposal? When you say that your company submitted an "interim completion invoice," do you mean that it submitted a completion voucher six or eight years ago? Have you been waiting for DCAA to make a final indirect cost rate determination or to approve the completion voucher?

What, exactly, do you want advice about how to "mitigate"?

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Vern,

FYI, contractors typically refer to the annual proposal to establish final billing rates as "the claim" which I know is bad form, but it's also prevalent. Also, DCAA calls it an "incurred cost submission" which is kind of funny because the intent is to use it to establish final billing rates not (necessarily) to verify incurred direct costs.

Hope this helps.

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Guest Vern Edwards

Thanks, help.

People call all kinds of things "claims" that aren't claims. That's why people like me have to ask them what the hell they're talking about. It's one of the reasons why government contracting is such a mess. The practitioners don't practice professionally.

As you can tell, it irritates the heck out of me.

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I see sprice11 is another drive-by interlocutor, posting questions and then not providing follow-up clarifying information.

How can we train posters that if they want an answer they have to participate in the clarification process?

H2H

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here_2_help, I am not another "drive-by interlocutor" as you say above, I just did not have time to sign back in due to being busy at work/home.

Now to answer some of the questions from above:

1) May I ask why you waited for 6 years (or 8 years) to submit the interim voucher and request additional funds? I waited this long because when I first submitted my reconciliation voucher (immediately after completing each years Interim Cost submission), each voucher was rejected due to the fact that rates have not been finalized by DCAA. I submitted the interim voucher in order make the PCO, ACO, and DCAA aware of the fact that this has been needed for a long time, but kept getting rejected.

2) Why didn't you submit the request immediately after submitting the proposal to establish final billing rates? See answer above.

3) Are you confident that you complied with the Limitation of Cost clause in your Delivery Order or ID/IQ? Yes I am.

4) Is the contract a cost-reimbursement contract? Yes it is

5) Did your company literally submit a claim--an official term defined in FAR 2.101--six or eight years ago, or did your company submit a final indirect cost rate proposal? We submitted all of our annual indirect rate proposals. I apologize if I used the word "claim", as this is the exact wording that DCAA has given me (Indirect Cost Claim). I am aware that it is a rate proposal, but I also understand that people do call it an indirect cost claim as well.

6) Have you been waiting for DCAA to make a final indirect cost rate determination or to approve the completion voucher? Both. DCAA has only made final indirect cost rate determinations through year 2007.

7)

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I missed this one:

What, exactly, do you want advice about how to "mitigate"? I trying to find to make it so we dont run into this issue again (ie. having to ask for money). We report our funds status every month, the issue with this CPIF contract is that the fee typically puts us over what is funded. The government doesnt take this into consideration, even though I explain to them all the time. Now, since DCAA wont approve any of our reconciliation vouchers (I submit every year after completing our Indirect Cost Submission/Proposal), can I ask the PCO/ACO to apply quick close-out procedures to our contract? I have never been involved in a contract with quick close-out, so what do I need to get that approved?

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Sprice11, a couple of more clarifications. You said the contract was not fully funded. By that did you mean that it was an incrementally funded (i.e., subject to the Limitation of Funds clause) contract and that the government did not obligate sufficient funds to cover the estimated cost of the contract or did you mean that the contract was not incrementally funded (i.e., subject to the Limitation of Cost clause), and you experienced an overrun but the government has not funded the overrun? In either case , did you continue to perform although you were in an overrun situation? If so, why in light of the language in the Limitation of Cost clause or the Limitation of Funds clause?

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Retreadfed, by saying that the contract is not fully funded I mean they did not fund the contract to the estimated cost. We did not perform in an overrun situation. All work was provided within the amount funded. The need for additional funds comes from our incentive fee, and estimated reconciliation of indirect costs.

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Sprice11, going back to your answer 3 in post # . From what you have just written, it is not clear that you have complied with the LOC clause. You are now saying that more funds need to be added because of "estimated reconciliation of indirect costs." I'm not quite sure what you meant by that, but I interpret that to mean that when you submitted your proposal to establish final indirect costs that your final rates were higher than your billing rates. If that is the case, I doubt that you are in compliance with the LOC clause. The estimated cost of the contract includes properly allocable and allowable indirect costs. Under the LOC clause, you are expected to monitor your indirect cost rates and if they are going to be higher than your billing rates causing a need for more funding, you are required to give the government notice of this prior to experiencing an overrun. The government is not obligated to provide additional funding if you did not give the proper notice. Further, you are permitted to stop work once your allowable incurred costs, including allowable indirect costs allocable to the contract, equal the estimated cost of the contract. Any costs you incur in an overrun status are at your own risk.

As for fee, it is not governed by the LOC clause. However, I do not understand why funds that were obligated to cover your costs, if you did have a cost underrun, would not be available to cover an incentive fee that resulted from that cost underrun. Also, if you need more funding to cover increased costs caused by higher indirect cost rates, I do not understand how you can be entitled to an incentive fee for an underrun.

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  • 3 weeks later...

Retreadfed, as a small company we monitor our indirect cost rates every 6 months to a year. We do give the government notice, but we are not experiencing an overrun based on the estimated total cost of the contract. We were never funded fully to the estimated total cost of contract. Also, the fee is based on a share percentage, "The fee payable under this contract shall be the target fee increased by 60 cents for every dollar that the total allowable cost is less than the target cost...". We are not experiencing an overrun, we are experiencing a contract that wasnt funded to the estimated cost.

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Sprice11, you still have not identified if the contract is subject to the Limitation of Funds clause or the Limitation of Cost clause. From what you have written, it appears that the contract should have been subject to the LOF clause. If that is the case, FAR 52.232-22(f)(2) states "The Contractor is not obligated to continue performance under this contract (including actions under the Termination clause of this contract) or otherwise incur costs in excess of -- (i) The amount then allotted to the contract by the Government." It also states that any costs incurred in excess of the amount allotted (obligated) to the contract are at the contractor's risk. Based on this, it seems you are in an overrun situation and the government probably is not obligated to pay you for your incurred costs over the amount allotted to the contract.

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  • 2 weeks later...

Retreadfed, The contract does include both teh LOC and LOF clause. However, all work under this contract was performed within the funded amounts. The reason the extra funds need to be added is due to the fee (CPIF, sharing at 60/40), and reconciliation of billed amount vs finalized DCAA rates (not finalized yet, as they are behind).

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