Jump to content
The Wifcon Forums and Blogs

Recommended Posts

Cross Charging (Comingling of Contracts) as defined by the DoD IG's Office reads: Dishonest contractors can submit multiple bills on different contracts or work orders for work performed or expense incurred only once.  A contracting official can facilitate the scheme and share in the profits by writing similar work orders under different contracts and accepting the multiple billings.  (Source: International Anti-Corruption Resource Center, 2014)

Fraud indicators related to cross charging (comingling of contracts) include, but are not limited to:

  • Multiple awards for similar work are given to the same contractor.
  • The contractor submits several invoices for the same or similar expense or work under different jobs or contracts.
  • The contractor submits the same or similar documentation to support billings on different contracts.
  • Similar work orders are issued to the same contractor under more than one contract.
  • Contractor receives multiple awards for similar work.
  • Frequent errors/corrections of errors on invoices and other documents.
  • Contractor costs on fixed priced contract are unusually low.
  • Costs on the cost plus contract are considerably higher than those expected or budgeted.
  • Same employee billed to more than one job for the same time period.

Whereas, Industry defines cross charging as companies filling various fixed-price and cost-plus contracts simultaneously. While sometimes, shifting the costs and expenses associated with fixed-price contracts to a cost-plus contract in order to increase their profit.

Based on the DoD IG's definition, one could interpret that that it would not matter what type of contract it is. Thus, could the following be deemed as cross charging? Is the following actually allowable?

Company ABC identified one specific employee on three (3) separate proposals while proposing that said employee would be providing 3/4 of his time (1,410 hours) on the first contract and 1/4 of his time (470 hours per contract) on each of the second and third contracts. The Government awards all three contracts to Company ABC on a firm-fixed-price (FFP) basis for the delivery of services and the company submits fixed monthly invoices per contract. 

Share this post


Link to post
Share on other sites
26 minutes ago, rae.story said:

Based on the DoD IG's definition, one could interpret that that it would not matter what type of contract it is. Thus, could the following be deemed as cross charging? Is the following actually allowable?

Company ABC identified one specific employee on three (3) separate proposals while proposing that said employee would be providing 3/4 of his time (1,410 hours) on the first contract and 1/4 of his time (470 hours per contract) on each of the second and third contracts. The Government awards all three contracts to Company ABC on a firm-fixed-price (FFP) basis for the delivery of services and the company submits fixed monthly invoices per contract. 

You asked "Thus, could the following be deemed as cross charging? Is the following actually allowable?

To deem is to form an opinion, so yes, my opinion is that if ABC charges for 1 1/4 times an actual single employee's time between three contracts, it could be engaging in cross-charging.  Do YOU think it would actually be allowable, if in fact, this is occurring?  Could it be fraudulent or a gross mistake to overcharge ?

Share this post


Link to post
Share on other sites

Is the employee providing the number of hours on each job that it proposed? Did it identify an associated cost for billing purposes?

Share this post


Link to post
Share on other sites
57 minutes ago, rae.story said:

Company ABC identified one specific employee on three (3) separate proposals while proposing that said employee would be providing 3/4 of his time (1,410 hours) on the first contract and 1/4 of his time (470 hours per contract) on each of the second and third contracts. The Government awards all three contracts to Company ABC on a firm-fixed-price (FFP) basis for the delivery of services and the company submits fixed monthly invoices per contract. 

No. That is not cross-charging as you (and the IG) defined it in your post.

However, it may indicate a defectively priced proposal--assuming that the contractor knew that all three contracts would be awarded and that the employee did not intend to work overtime in order to staff each contract as proposed. But those are some big assumptions. All Company ABC would have to say is that the employee works overtime in order to meet the needs of each contract.

Hope this helps

Share this post


Link to post
Share on other sites

Before award the overextended employee could be considered a risk and it should be clarified or discussions opened in negotiating the fixed price.  However, after being awarded fixed price it is not cross Charging.  The contractor must perform all three contracts fully for the fixed price and it don't matter how he does it. 

Some of my clients disliked performance contracts because we would award it fixed price with the thier assumption of 5 workers all the time.  Then the contractor would meet the performance standards with 3 full time and 2 part time low paid students.  They felt that was cheating.  It was good business and what PWS with fixed price is all about. 

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.

×