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Eager2Learn

Travel Costs-M&IE Per Diem vs Actuals

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11 hours ago, here_2_help said:

Others have suggested you consult the CO and that is absolutely a viable plan. On the other hand ... perhaps you should consider implementing a policy telling your employees to expect reduced reimbursements when/if they receive a free meal. (Note skipping a meal is not grounds for a reduced M&IE reimbursement.) Have your employees identify any free meals on their expense reports. The FTR tells you how much to reduce the M&IE reimbursement for each meal (breakfast, lunch, or dinner). Use that value. It's not particularly hard to implement.

H2H - Come on really?   Go to the CO is more than viable it is the only course!  And again you are close on interpretation but I think you are missing what the contract says.   Why?

"FAR 31.001, Definitions as used in this part - Actual costs means (except for Subpart 31.6) amounts determined on the basis of costs incurred, as distinguished from forecasted costs. Actual costs include standard costs properly adjusted for applicable variances."  (Emphasis added)

 FAR 31.205-46, is referenced in the contract is  from this part and as such the full language of the contract at FAR Clause 52.202-1 applies -  

“Definitions (Nov 2013)

When a solicitation provision or contract clause uses a word or term that is defined in the Federal Acquisition Regulation (FAR), the word or term has the same meaning as the definition in FAR 2.101 in effect at the time the solicitation was issued, unless--

(a) The solicitation, or amended solicitation, provides a different definition;

(b) The contracting parties agree to a different definition;

(c) The part, subpart, or section of the FAR where the provision or clause is prescribed provides a different meaning; or

(d) The word or term is defined in FAR Part 31, for use in the cost principles and procedures.”

To suggest that a contractor to not ask the CO for interpretation because “It's not a good idea when you might not like the answer you receive.” or to change their internal policy and procedures when the contractor has an approved accounting system is ludicrous.

The only advice is go as the CO, but by the way you might want to be armed with the following points..................

 

Eager - The matter of what the contract means is really quite simple.   You first ask the CO for a interpretation of the contract.   

You then have  choices after the CO provides the interpretation - 1) Agree with the interpretation; 2) Disagree with the interpretation and still bill per the interpretation; 3) Disagree with the interpretation, bill as you interpret (possibly based on the advice provided in this thread) and file a claim (FAR clause 52.233-1).   If the 3 choice is made you are then is afforded the ability to appeal the CO's final decision if you disagree with the interpretation. 

In the end as it is the intent of the FAR to have decisions made at the level of the CO again I say " In the end I will say it will actually be left to you and the CO" to decide what is the appropriate way to bill.”

 

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19 minutes ago, C Culham said:

To suggest that a contractor to not ask the CO for interpretation because “It's not a good idea when you might not like the answer you receive.” or to change their internal policy and procedures when the contractor has an approved accounting system is ludicrous.

The only advice is go as the CO, but by the way you might want to be armed with the following points.................

PepeTheFrog respectfully disagrees. here_to_help's advice was not ludicrous, it was real-world and shrewd. Establishing a prior course of dealing can be preferable to getting an immediate "no" from the contracting officer, which might extinguish that option. Your advice is reasonable, but it seems to be coming from a pro-Government or pro-contracting officer viewpoint. That's fine, but contractors do not pay their indirect contracting staff or direct-billing program managers to unquestionably follow the interpretation or opinion of the client. An important part of the job is to "push back" and represent the interests of the contractor.

23 minutes ago, C Culham said:

The matter of what the contract means is really quite simple.   You first ask the CO for a interpretation of the contract.

Respectfully, this is not good advice from a pro-contractor perspective. Contractors pay attorneys, contract managers, consultants, and experts to first create an interpretation of the contract in the contractor's best interest. Then, the contractor can try to persuade the Government client to agree to the interpretation, or take action to implement that interpretation. This idea that contractors should always first defer to the contracting officer's interpretation seems heavily pro-Government and does not reflect reality in the business world.

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C Culham,

We could have a very interesting discussion regarding the definition of "cost" and the distinction between "incurred" and "recorded" ... one that I am sure would bore many WIFCON lurkers to death. At the end of the day, it is the common dictionary language that defines these terms of art, because the Court of Appeals, Federal Circuit, said so.

I thank PepetheFrog for coming to my defense. S/He represents me well! To add to his/her points, in my experience many (most?) DCMA contracting officers are afraid to make a decision regarding contract interpretation without extensive consultations with legal. Legal's inclination is to take a very conservative stance in order to protect the government's interests if the matter comes to litigation. Thus, if somebody were to ask the CO, it would take some time to get an answer, and the answer would tend to favor the government's interests as opposed to the contractor's interests.

Let's agree the contract terms are ambiguous. Your position is that there is a right answer and the CO will provide it. That does not necessarily jibe with my experience in such matters. The CO will tend to interpret the language to support the government's interests. All things being equal, I would prefer to construe the ambiguity against the drafter (government) because that's the legal doctrine.

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My posts never implied that the "right" answer would come from the CO.  My posts stated that one should ask (communicate) with the CO on the conflict to find out how the Government interprets what the Government has written so that the OP could figure out what they should do.   My view is neither pro-government, pro-contracting officer it is pro communication as I do not hold to "ask for forgiveness" I hold to communicating about a conflict and doing the best one can to mediate it and if it can not be then there are adversarial ways to handle the matter.

I will do better in the future to state what my exact position is and again to clarify for this thread...................Go ask the CO and if the answer is not the one you want then follow the Disputes clause to figure out the "right" answer.  I do not have the "right" answer and dare say no one posting to this thread has it but communication with the CO is a prudent, responsible and well held contract administration procedure to arrive at answer to a conflict in a contract about what a contract says and in this case how the bills can be submitted to the Government so the Government will pay them.

Thanks  

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1 hour ago, C Culham said:

Go ask the CO and if the answer is not the one you want then follow the Disputes clause to figure out the "right" answer. 

Well, I don't like that approach.

I would not go to the CO first. Instead, I would thoroughly research the issue (not ask at Wifcon) and, perhaps, seek the advice of bona fide experts, then document my interpretation and proceed accordingly. I would not ask the CO and then proceed under the Disputes clause if I did not like the answer. I would be transparent about what I'm doing and let the CO object if he or she doesn't like it. Then we could talk.

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9 hours ago, here_2_help said:

We could have a very interesting discussion regarding the definition of "cost" and the distinction between "incurred" and "recorded" ... one that I am sure would bore many WIFCON lurkers to death. At the end of the day, it is the common dictionary language that defines these terms of art, because the Court of Appeals, Federal Circuit, said so.

Terms of art are not usually defined in common dictionaries. If a term of art has a formal definition you'll find it in a specialty dictionary.

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Carl, I am going to have to side generally with H2H on this.  We don't know who is administering the contract or who wrote it.  Thus, the ACO may be from a different agency than the PCO.  Which contracting officer would you ask for clarification after the contract has been issued, the PCO or the ACO?  Many PCOs don't know what is in the cost principles (or FAR clauses) and would have no idea what you are talking about if you asked them technical questions concerning what they mean and whether contract terms are consistent with the cost principles and/or the CAS.  If the contract is administered by DCMA, we have another issue and that is DCAA.  Although FAR 52.216-7 says that the contractor will be reimbursed for costs that are determined allowable by the contracting officer, too many DCMA ACOs feel that they are bound by recommendations of allowability made by DCAA auditors.  Thus, asking the ACO may not lead to an answer, but a deferral to DCAA.   Bottom line, in my experience, rarely will a contractor get an answer from a contracting officer on a cost allowability question that is favorable to the contractor.  

As H2H said, contractors have their own resources that are supposed to help them with contract interpretation issues.  This issue should have been raised in the negotiation process.  If the language regarding travel costs is determined to be a patent ambiguity, the contractor generally has a duty to raise that with the contracting    office before contract award, otherwise the contractor will be held to the government's interpretation of the ambiguous language.  Therefore, before moving forward on this question, Eager should consult with his/her contract negotiators to determine what transpired during negotiations and then consult with company counsel.

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5 minutes ago, Vern Edwards said:

Terms of art are not usually defined in common dictionaries. If a term or art has a formal definition you'll find it in a specialty dictionary.

Go tell it to Judge Dyk. Rumsfeld v. UTC, Jan. 2003

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12 minutes ago, Vern Edwards said:

Well, I don't like that approach.

I would not go to the CO first. Instead, I would thoroughly research the issue (not ask at Wifcon) and, perhaps, seek the advice of bona fide experts, then document my interpretation and proceed accordingly. I would ask the CO and then proceed under the Disputes clause if I did not like the answer. I would be transparent about what I'm doing and let the CO object if he or she doesn't like it. Then we could talk.

I am surprised this was not your very first post to this thread!

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5 hours ago, C Culham said:

Actual costs means (except for Subpart 31.6) amounts determined on the basis of costs incurred, as distinguished from forecasted costs.

Carl, this is not in conflict with what H2H said earlier.  When we are talking about costs that are to be reimbursed under FAR 52.216-7, we are generally talking about costs incurred by the contractor as those are the only costs for which the contractor can be reimbursed.  What is an incurred cost can get somewhat tricky, and does not necessarily mean a cost that the contractor has paid.

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3 hours ago, here_2_help said:
3 hours ago, here_2_help said:

C Culham,

We could have a very interesting discussion regarding the definition of "cost" and the distinction between "incurred" and "recorded" ... one that I am sure would bore many WIFCON lurkers to death. At the end of the day, it is the common dictionary language that defines these terms of art, because the Court of Appeals, Federal Circuit, said so.

 

H2H - I would hold that the contract could provide the definition or would provide the basis for the definition that a court says it is.

 

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24 minutes ago, here_2_help said:

Go tell it to Judge Dyk. Rumsfeld v. UTC, Jan. 2003

H2H:

The full citation is Rumsfeld v. United Technologies Corp., 315 F.3d 1361, 1370 ( Fed. Cir. 2003). You misread the decision. Here is what it says:

Quote

Thus, CAS mandated the use of “costs,” here “material costs” in particular, in the base used to allocate indirect expenses. In order to determine whether Pratt incurred a “cost” or “material cost” for the collaboration parts, it is first necessary to determine the meaning of the terms “cost” and “material cost.” Despite the ubiquitous use of the word “cost” throughout CAS, CAS does not provide a definition for the terms “cost” or “material *1370 cost.” See CAS 301; John Cibinic, Jr. & Ralph C. Nash, Jr., Cost–Reimbursement Contracting 638 (2d ed.1993). We initially turn, therefore, to standard dictionary definitions and other pertinent regulations. See, e.g., Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 477, 112 S.Ct. 2589, 120 L.Ed.2d 379 (1992); Wis. Dep't of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214, 223, 112 S.Ct. 2447, 120 L.Ed.2d 174 (1992). Given that “material cost” is involved, the pertinent definition of “cost” is “an item of outlay incurred in the operation of a business enterprise (as for the purchase of raw materials, labor, services, supplies ) including depreciation and amortization of capital assets.” Webster's Third New International Dictionary 515 (1968) (“Webster's ”) (emphasis added). There is no suggestion that the accounting source references use a materially different definition. Indeed, the parties before the Board agreed on a definition of “cost” as “the sacrifice incurred in economic activities that which is given up or forgone to consume, to save, to exchange, to produce.” United Techs., 01–2 BCA ¶ 31,592, at 7, 51 (quoting FASB Concepts Statement No. 6, n. 19). We have indeed approved the use of a similar definition of “cost” under earlier procurement regulations, stating that “ ‘cost’ is equated with the amount a contractor forgoes or gives up, i.e., its economic sacrifice, to obtain goods or services.” Riverside Research Inst. v. United States, 860 F.2d 420, 422 (Fed.Cir.1988) (citing FASB Concept Statement No. 3, which provides “[c]ost is the sacrifice incurred in economic activities—that which is given up or foregone to consume, to save, to exchange, to produce, etc.”).

Footnotes omitted. The decision does not say that you look to common ("standard") dictionaries for definitions of terms of art. In fact, the phrase "terms or art" does not appear anywhere in the decision. I see no indication that either party asserted that the terms at issue were terms of art. What the decision says is that since the CAS regulations did not define the terms at issue the court looked in Webster's Third, a common (standard) dictionary. That is consistent with FAR 1.108(a):

Quote

(a) Words and terms. Definitions in Part 2 apply to the entire regulation unless specifically defined in another part, subpart, section, provision, or clause. Words or terms defined in a specific part, subpart, section, provision, or clause have that meaning when used in that part, subpart, section, provision, or clause. Undefined words retain their common dictionary meaning.

I say again and with complete confidence: terms of art usually are not defined in common (standard) dictionaries. That's because they are standard dictionaries.

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20 minutes ago, Retreadfed said:

Carl, this is not in conflict with what H2H said earlier.  When we are talking about costs that are to be reimbursed under FAR 52.216-7, we are generally talking about costs incurred by the contractor as those are the only costs for which the contractor can be reimbursed.  What is an incurred cost can get somewhat tricky, and does not necessarily mean a cost that the contractor has paid.

Retread - The quote you have parsed out in your post is a quote of what the contract says.  Did I say it was in conflict with what H2H said?  If you believe so please tell me where and I will address my comment if I made it.   The only thing I have ever said about conflict is that the dang wording of the contract is in conflict.  I would add as supported by this thread that the conflict has left a void of interpreting what the OP can bill for.

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"33.204 -- Policy.

The Government’s policy is to try to resolve all contractual issues in controversy by mutual agreement at the contracting officer’s level. Reasonable efforts should be made to resolve controversies prior to the submission of a claim. Agencies are encouraged to use ADR procedures to the maximum extent practicable. Certain factors, however, may make the use of ADR inappropriate (see 5 U.S.C. 572(b)). Except for arbitration conducted pursuant to the Administrative Dispute Resolution Act (ADRA), (5 U.S.C. 571, et seq.), agencies have authority which is separate from that provided by the ADRA to use ADR procedures to resolve issues in controversy. Agencies may also elect to proceed under the authority and requirements of the ADRA."

Hmm, I see nothing in the above statement that the contractor is held to the Governments interpretation of a contract controversy?  My read is that by this regulation (above) it is to be by mutual agreement at the CO level, what am I missing?

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57 minutes ago, C Culham said:

I am surprised this was not your very first post to this thread!

Carl, you were reacting to this quote from me:

Quote

I would not go to the CO first. Instead, I would thoroughly research the issue (not ask at Wifcon) and, perhaps, seek the advice of bona fide experts, then document my interpretation and proceed accordingly. I would ask the CO and then proceed under the Disputes clause if I did not like the answer. I would be transparent about what I'm doing and let the CO object if he or she doesn't like it. Then we could talk.

The second sentence should have said "I would not ask the CO...." Sorry. I have corrected my post.

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