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Symera

Invoicing Prior to CLIN Start Date

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HAPPY NEW YEAR EVERYONE! This is my FIRST POST HERE :-) and this topic might also be appropriate under CONTRACT CLOSE-OUT

I have a contract that has costs which were invoiced prior to the CLIN start date.  Normally this might raise a flag, but it's merely a data point at this juncture. I don't know if there are any pre-contractual agreements in place that mitigate the potential for a setback.

What I'm really looking for are the CAS, FAR and DFAR clauses that specifically state that absent other contractual agreements, costs prior to start date cannot be billed to the customer.

Any assistance or insight would be greatly appreciated.

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Guest Vern Edwards

Have you looked at FAR 31.205-32, "Precontract Costs"?

What was the contract pricing arrangement? Fixed-price? Cost-reimbursement? Time-and-materials? Other?

How, exactly, was the term "start date" used in the contract? Please provide a verbatim quotation from the contract.

You said the costs were "invoiced" before the contract start date. Was the invoice submitted before the "start date" or was the invoice submitted after the "start date" for costs incurred before the "start date"?

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Vern, you're the best!! 

Haven't looked at 205-32 - that will be today's bathroom read.

Contract type is CPFF, don't know the Ts&Cs yet - we're trying to locate anything that might shed some  light on why costs were even eligible to be collected prior to CLIN start. For this contract, "start date" is used to describe that date upon which the CLIN would be effective for charging.

Invoice was submitted after the CLIN start date for costs that were incurred prior to the CLIN start date.

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Guest Vern Edwards

It's going to be a very short bathroom read. Here is FAR 31.205-32 in full:

Quote

Precontract costs means costs incurred before the effective date of the contract directly pursuant to the negotiation and in anticipation of the contract award when such incurrence is necessary to comply with the proposed contract delivery schedule. These costs are allowable to the extent that they would have been allowable if incurred after the date of the contract (see 31.109).

I can't answer your question without a better understanding of the contractual meaning of the term "start date." I'm not even sure whether that term appears in the contract you're working on or is just one that you're using. The term "start date" does not appear in the FAR. It appears in the FAR System in only six agency supplements, most not in the sense in which you appear to use it.

Since the answer to your question might turn on the contractual meaning of "start date," I need to know what it means, contractually. I need a quote from the contract.

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5 hours ago, Symera said:

What I'm really looking for are the CAS, FAR and DFAR clauses that specifically state that absent other contractual agreements, costs prior to start date cannot be billed to the customer.

Vern is right with respect to the contract.

To answer your question (which does not ask about the contract) the answer is "you won't find what you're looking for" because they don't exist. Quite to the contrary, as Vern gave you the rules on pre-contract costs already.

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OMG - you guys are awesome! I'm going to try to shed some light

FROM VERN:
What was the contract pricing arrangement? Fixed-price? Cost-reimbursement? Time-and-materials? Other?
    >> Cost Plus Fixed Fee

How, exactly, was the term "start date" used in the contract? Please provide a verbatim quotation from the contract.
Since the answer to your question might turn on the contractual meaning of "start date," I need to know what it means, contractually. I need a quote from the contract. 
     >> The one that's wrapping me around an axle. The only thing I can say is that we're using "start date" as the date agreed to by my company and the buyer upon which costs for labor, material and ODC can start being collected in support of the work agreed to in the contract.  I know that probably sounds vague, but I don't have the contract or the SOW to provide anything more specific or clear.

You said the costs were "invoiced" before the contract start date. Was the invoice submitted before the "start date" or was the invoice submitted after the "start date" for costs incurred before the "start date"?
     >> Correction: Costs were collected prior to CLIN start date; the invoice was submitted after the "start date" for those costs.  The invoice was submitted within the period of performance.

FROM Here_2_Help:
"...the answer is "you won't find what you're looking for" because they don't exist."
     >> And that's fine too.  If the only thing I can go on is 205-32, then so be it.  If I can provide support that demonstrates these costs as being necessary to comply with the proposed contract delivery schedule, then I don't have to worry about any setbacks.  If I can't find any support, then - well, I'll have to fall on my sword.

But you have my sincere thanks for responding so quickly and so accurately.  If any other thoughts come to mind, don't hesitate to toss them into the mix.

For now, stay warm & drink hot chocolate!

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Guest Vern Edwards
50 minutes ago, Symera said:

The only thing I can say is that we're using "start date" as the date agreed to by my company and the buyer upon which costs for labor, material and ODC can start being collected in support of the work agreed to in the contract.  I know that probably sounds vague, but I don't have the contract or the SOW to provide anything more specific or clear.

My advice is to rely on FAR 31.205-32.

And now a comment: How is it that you're working on the contract but don't have a copy of it? You surely must know how bad that sounds. How can you make an argument on behalf of your company without documentation of its agreement with the government?

Lesson learned, I hope.

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As I recall without doing research, there are court cases where where the decision turned on the difference between a contract's execution date and its effective date. If there is a significant amount of money at stake I suggest you find a good attorney who can advise you how those terms were interpreted by the courts.

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Vern - you don't miss a thing, but I'm indirect and part of billings working the close out.  This contract came across my desk last week from what I can tell so far, this is the tip of the iceberg.

H2H - good advice. I think it would behoove me to check in with our compliance folks and see what their take is on it.  I'm hoping it's all just an interesting data point that leads nowhere because the program folks have it all buttoned up and can send me the appropriate support docs.

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If you're a contractor and you don't have anything that prohibits you from billing the pre-contract costs in the final voucher then why are you hesitating? Believe me, if the government has an issue they will let you know quickly.

Alternatively, check with your company's government accounting group. Ask how the costs were treated in the appropriate year's final billing rate proposal (also known as "incurred cost submission"). If the costs were claimed as being allowable on Schedule H, there you go. Presumably the costs were already audited by DCAA as part of finalizing that year's indirect rates.

They say cash is king...

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Guest Vern Edwards

And rely on FAR 31.205-32.

The key date is the effective date or date of the contract, which should appear at the top of the contract cover form. Don't confuse the effective date of the contract with the date(s) on which the parties signed the contract document. Don't get caught up with "start date" unless the contract uses the term in a way that is relevant to the issue at hand or you have written correspondence between the parties about the term that is relevant to the issue in terms of FAR 31.205-32.

Key information you will need includes the dates: (1) of the RFP, (2) of the proposal submission, (3) of the contract negotiations, and (4) the dates on which the precontract work were performed. If you can show that the work was done: (a) for the contract, (b) in anticipation of contract execution and (c) in an effort to complete the contract work within the period of performance, you have no trouble establishing that the costs were not unallowable on the basis of the date(s) on which the work was performed.

Precontract costs are discussed at length in Manos, Government Contract Costs & Pricing, Part II, Ch. 39, which is available through Westlaw.

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