Jump to content
The Wifcon Forums and Blogs
jcb2k

Contractor Manpower Reporting

Recommended Posts

Hi All,

I've just received a mod to an existing contract that adds a requirement for Contractor Manpower Reporting to a DOD contract that is being administered by a non-DOD agency. The language in the mod states that the reporting will be done at no additional cost to the Government. However, my recollection of doing this type of reporting is that it can be fairly burdensome. I also recall that it was a direct charge to the contract. My questions are:

1. As this is a CPFF contract, should the costs incurred for doing the reporting be captured as direct labor or indirect labor?

2. If the costs should be captured as indirect labor, would the language prohibiting the reporting from being charged to the Government make it an unallowable cost?

Thanks!

 

Share this post


Link to post
Share on other sites

1. Depends on the contractor's standard practices and who performs the work. If the work is performed by direct-charging personnel and the contractor consistently charges same or similar reporting labor as direct costs, then yes - direct labor.

2. No. The prohibition would only apply to direct labor. On the other hand, if the indirect labor amount was large enough to impact the contractor's indirect cost rates, then maybe somebody could make an argument the labor was unallowable. I would not make that argument (unless the personnel performing the reporting were 100% dedicated to the reporting), but somebody else might. That being said, if the contractor would normally charge the labor as direct labor and only charges it now as indirect labor to avoid the contract prohibition, then that would be a big no-no.

Share this post


Link to post
Share on other sites

Was the modification done unilaterally or bilaterally?  If unilaterally, with what authority?

If unilaterally, the contractor might be entitled to consideration (an increase in the contract price?) if the contractor asks for it.  Or, a unilateral modification without consideration might be null and void.

If bilaterally, well, the contractor may have already given away its rights, and may have to eat the costs of compliance with the new contract term.

Share this post


Link to post
Share on other sites
20 minutes ago, ji20874 said:

If bilaterally, well, the contractor may have already given away its rights, and may have to eat the costs of compliance with the new contract term.

A bilateral modification without consideration could be null and void, too.

Share this post


Link to post
Share on other sites

 

14 hours ago, Don Mansfield said:

A bilateral modification without consideration could be null and void, too.

That's true, but here the contractor's position is stronger if the modification is unilateral and weaker if it is bilateral.

Share this post


Link to post
Share on other sites

In my opinion, it's foolish to think that addition of the contractor manpower reporting requirement could be incorporated into the contract with no additional cost.  Likewise, it makes no sense to add a requirement to a cost-reimbursement contract and then make the costs of doing that added work unallowable.  Could the mod be saying that the requirement is being added at no increase to the estimated cost of the contract?

Share this post


Link to post
Share on other sites
Guest Vern Edwards
1 hour ago, Navy_Contracting_4 said:

Likewise, it makes no sense to add a requirement to a cost-reimbursement contract and then make the costs of doing that added work unallowable.

Sometimes it makes perfect sense. Government contracts have long included advance agreements that make some otherwise allowable costs of performance unallowable under the contract. Such is the case when the parties agree to caps on indirect cost rates, which is not uncommon. Another reason to agree that some costs will be unallowable is to restrict the use of certain practices.

It could be that the clause (presumably, one of the ones prescribed at FAR 4.1705 or an older DOD clause) was improperly omitted from the contract and that the mod was made in reliance on the Christian Doctrine. If so, and assuming that the reliance on Christian was justifiable, no consideration is necessary, but the cost of compliance will be allowable.

Share this post


Link to post
Share on other sites
1 hour ago, Vern Edwards said:

Sometimes it makes perfect sense. Government contracts have long included advance agreements that make some otherwise allowable costs of performance unallowable under the contract. Such is the case when the parties agree to caps on indirect cost rates, which is not uncommon. Another reason to agree that some costs will be unallowable is to restrict the use of certain practices.

It could be that the clause (presumably, one of the ones prescribed at FAR 4.1705 or an older DOD clause) was improperly omitted from the contract and that the mod was made in reliance on the Christian Doctrine. If so, and assuming that the reliance on Christian was justifiable, no consideration is necessary, but the cost of compliance will be allowable.

An advance agreement capping indirect rates is not an example of adding a requirement to a contract and then making the cost of doing the work unallowable.

Share this post


Link to post
Share on other sites
Guest Vern Edwards

Come on, Navy! Of course it could be an example of adding a requirement and then making some part of the cost of doing the work unallowable, if the parties negotiate a deal to that effect, either simultaneously or subsequently. There could be any number of reasons to do it. The only real issue is contractual authority.

Give us a break, or explain why I don't understand what you're saying.

Share this post


Link to post
Share on other sites

Vern,

Of course, compared to yours, everyone's experience is limited, but, in my limited experience, negotiating an advance agreement capping indirect rates does not add any work to a contract.  Further, in my experience, limited as it may be, caps on indirect rates do not necessarily make expected costs unallowable.  They have been used as protective devices to motivate the contractor to pay close attention to his indirect expenses, and to prevent the government from getting stuck with a huge bill for indirect rates that unexpectedly grow.  In the instant case, we're talking about adding some direct work to a contract and then specifically saying the direct costs of doing that work are unallowable.  Now, you may disagree, but that makes no sense to me, and I question whether that was the intention in the OP's case.

Share this post


Link to post
Share on other sites
Guest Vern Edwards
5 hours ago, Navy_Contracting_4 said:

In my opinion, it's foolish to think that addition of the contractor manpower reporting requirement could be incorporated into the contract with no additional cost

Navy:

There might be any number of reasons why the addition of a reporting requirement at no additional cost might make sense. We cannot know from the information provided by the OP. We don't even know what "no additional cost" means in the context of a CPFF contract. Additional to what other cost?

What's foolish was for you to say that such a thing is foolish without more information about the case. I have seen many things in contracts that, at first look, seemed peculiar, but that, upon explanation, made perfectly good sense. The parties to a contract might reach a post-award or post-modification agreement to make what would otherwise be allowable costs unallowable for programmatic reasons, to keep a contract alive.

As for rate caps, a cap might not add any work, but you might add a cap because you've added work. Think about it.

Withhold judgment, Grasshopper, indeed, withhold comment, until you know what went on.

Share this post


Link to post
Share on other sites

Vern,

If you want to take issue with my use of the word "foolish," fine. Point taken.  Nevertheless, I think it unlikely that the government would add a manpower reporting requirement and simultaneously make the costs of doing the reporting unallowable.  My point, which I obviously didn't communicate well, was that "at no additional cost" probably didn't mean that the costs would be unallowable, and I suggested an alternative possible meaning that made more sense to me.

Share this post


Link to post
Share on other sites
1 hour ago, Vern Edwards said:

 

Withhold judgment, Grasshopper, indeed, withhold comment, until you know what went on.

If people withheld comment in this forum until they knew what went on, there would be hardly any comments posted.

Share this post


Link to post
Share on other sites
Guest Vern Edwards
1 hour ago, Navy_Contracting_4 said:

If people withheld comment in this forum until they knew what went on, there would be hardly any comments posted.

Are we being paid by the comment? If so, one comment you can post is: Give us more facts. We need to know [fill in the blank].

1 hour ago, Navy_Contracting_4 said:

I think it unlikely that the government would add a manpower reporting requirement and simultaneously make the costs of doing the reporting unallowable.

That's not the situation that the OP described. He did not say that the mod said that the costs of doing the reporting would be unallowable. He seems unsure, and he's asking us. According to him, the mod said: 

On July 19, 2016 at 1:47 PM, jcb2k said:

[T]he reporting will be done at no additional cost to the Government.

I don't know what "additional" cost means, especially in the context of a CPFF contract. Does it mean that some cost will be borne by the government? Perhaps there is something more, a memo to file or a cover letter or something, that explains the mod. The key is to get facts before reacting.

His questions were (1) whether the cost of reporting should be accounted for as direct or indirect and (2) if accounted for as indirect, would the cost be unallowable. He doesn't seem to be concerned about direct cost.

I have no idea what the mod means or what his problem is. The best response to that kind of post is silence or, if you're a patient person, questions seeking clarification.

Share this post


Link to post
Share on other sites

Thanks for all of the replies! Sorry for the lack of some details - I'm sort of feeling my way through the dark when it comes to accounting issues. Hopefully this will help clarify:

1. The exact language from the mod is "...hereby releases the Government from any and all liability under this contract for further adjustments attributable to such facts or circumstances giving rise to this modification." I tried to paraphrase that by saying "at no additional cost to the Government", but perhaps that wasn't the best wording. Also, the only purpose of the mod is to add a requirement for CMR.

2. I am concerned about not whether we can charge as indirect or direct labor because I've recently seen Army solicitations that have a requirement to price the costs of CMR separately as a direct charge, or not price it at all. My most recent experience with CMR is over 10 years old, and I recall that it was a cumbersome requirement, especially if the contract was non-DoD and did not use the standard DoD contract numbering format. We are a very small company with little administrative support, so this could be a significant burden, especially if this requirement starts showing up in all of our contracts.

3. Regarding a question from an earlier respondent, this is a bilateral mod, and we have not signed it yet.

4. Re: Vern's point about what the problem is: I'm trying to decide if I should push back on the CO and advise that we cannot accept the mod without providing a revised proposal reflecting an increase in price due to the additional work, or request that the language (see #1 above) should be removed or modified in some way. Or am I making a mountain out of a molehill? In any case, I don't want to accept a requirement and find out that we have to eat the costs out of our pocket.

Thanks again to all of you for your advice and comments.

Share this post


Link to post
Share on other sites
Guest Vern Edwards

If the Government wants to modify the contract in a way that will require you to do something that you do not now have to do, and if that work will cost money, and if they do not want to reimburse you for the costs of doing it under your CPFF contract, then my advice to you is to refuse to sign the mod. I mean, really, why would you? It strikes me as really very simple. So simple I cannot understand why you are asking us about this. There must be more to the story.

If you are unsure of what the mod means, ask for an explanation in writing.

Share this post


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

×
×
  • Create New...