Jump to content
The Wifcon Forums and Blogs
TenaciousC

Proposal Preparation Costs

Recommended Posts

 Cost-Reimbursable Contract.  Back in 2011, we issued Engineering Changes and the Contractor responded with Proposals.  The ECPs (along with Proposal preparation costs) were negotiated and contract modifications were subsequently issued.  The technical effort was added to a CLIN.  And, the proposal preparation costs were added to a separate  CLIN — a CLIN created specifically for the purpose of proposal preparation (3020 funds).

Just recently, the Contractor comes back and sends us a proposal for “overrun” costs attributable to proposal preparation only (relative to the ECPs in 2011).  They updated the amount of actuals incurred — 6 years later!  A weak justification was provided (i.e., cost overrun due to proposal preparation and negotiations).

I believe their request is unreasonable because it is untimely.  I want to deny their request but I seem to be in the minority with my  teammates.  Any thoughts?  Do I need a reality check?

Share this post


Link to post
Share on other sites
6 hours ago, TenaciousC said:

Just recently, the Contractor comes back and sends us a proposal for “overrun” costs attributable to proposal preparation only (relative to the ECPs in 2011).  

What do you mean by "recently"? Within the last 30 days? When did you get it?

What do you mean by "proposal"? Do you mean an invoice? Do you mean a claim as defined in the Disputes clause? Do you mean something else?

What do you mean by "overrun"? Do you mean that the amount, when added to costs previously incurred, exceeds the amount covered in the Limitation of Cost or the Limitation of Funds clause? Do you mean just that the amount is higher than what they had previously invoiced? Do you mean something else?

6 hours ago, TenaciousC said:

I believe their request is unreasonable because it is untimely.

What do you mean by "request"? Do you mean an invoice or a claim? Something else?

What do you mean by "untimely"? What was the deadline? Was it set by contract or by regulation? Do you mean the deadline in FAR 33.206 for the initiation of claims? Some other deadline?

If you're going to think and ask about this, think and express yourself in official/contractual language. That will make your thinking and your description of the problem clearer to us. Otherwise, you're just going to get more requests for information and, perhaps, unreliable answers, if any.

We can't tell whether you need a "reality check" until we know what you think the reality is.

Share this post


Link to post
Share on other sites

TC, was the proposal prep CLIN cost reimbursement also or was it FFP?  I presume your did a mod for the ECP and new CLIN.  If you did, did you get a release from the contractor in the mod?

Share this post


Link to post
Share on other sites
20 hours ago, TenaciousC said:

 Just recently, the Contractor comes back and sends us a proposal for “overrun” costs attributable to proposal preparation only (relative to the ECPs in 2011).  They updated the amount of actuals incurred — 6 years later! 

Gosh, have you checked how far behind DCAA and DCMA are with respect to finalizing billing rates? I'm not saying that's the problem, but it would not surprise me at all if the root cause was that rates were finalized 6 years later and the final, negotiated, rates caused an overrun.

Share this post


Link to post
Share on other sites

@Vern EdwardsThe Contractor calls it a "Price Redetermination Proposal" citing the Limitation  of Cost clause and are updating their actuals.

@RetreadfedThe proposal prep goes to a CPFF CLIN and all the mods do contain a paragraph citing release of claims language.  I have a hard time  accepting proposal prep costs incurred after the contract mod was signed.  Especially since the Contractor is  saying that the reason for the additional costs is due to costs incurred (i.e., cost overrun due to proposal preparation and negotiations).  

@here_2_help  I'm new to this program and I still need to find out how far behind DCAA and DCMA are with respect  to finalized billing rates.  I suspect that their approved rates are far behind.  If updating rates and factors was the only update the contractor provided in their "Price ReDetermination" then I wouldn't be so bothered.  It's the updating for more hours (and subcontractor) costs that disturbs me.

Share this post


Link to post
Share on other sites

Tenacious, what does the release language specifically say?

Does the contract place boundaries on what type of  proposal preparation and negotiation costs are reimbursable and/or when they can be incurred ?  

This is the language described in  FAR 43.204 (c) (2):

“CONTRACTOR'S STATEMENT OF RELEASE

In consideration of the modification(s) agreed to herein as complete equitable adjustments for the Contractor's ________ (describe) _________ “proposal(s) for adjustment,” the Contractor hereby releases the Government from any and all liability under this contract for further equitable adjustments attributable to such facts or circumstances giving rise to the “proposal(s) for adjustment” (except for __________ ).”

Since you didn’t state that the proposal prep and negotiation costs are settled at FFP,  I assume that it is a cost reimbursement CLIN. You are also not clear whether the request for price redetermination would exceed the applicable limitation of costs .  

Share this post


Link to post
Share on other sites

You also indicated that you intend to investigate how far behind DCAA is. That should be relatively easy to determine by contacting them for info and also for info concerning the additional requested  costs involved. 

I am assuming that this is an ongoing contract. Is that correct? 

Share this post


Link to post
Share on other sites
12 hours ago, TenaciousC said:

If updating rates and factors was the only update the contractor provided in their "Price ReDetermination" then I wouldn't be so bothered.  It's the updating for more hours (and subcontractor) costs that disturbs me.

I understand your point about additional hours. One might reasonably think that the hours were captured at the time, if the contractor had an adequate timekeeping system. It calls into question the system's adequacy.

Further, your comment about "subcontractor costs" interests me. Apparently, the subcontractor incurred hours in preparing the ECPs and direct-charged them to its subcontract. Your predecessor funded the subcontractor's ECP prep costs in a separate prime contract CLIN. I can see why one might do so (in some cases) but, before I did so I would want to be sure that the subcontractor had a practice of direct-charging certain proposal prep costs. After all, it's not a mandatory practice. It would be bad if the subcontractor were charging the contract both for direct-charged proposal prep costs and indirect-charged proposal prep costs in violation of FAR 31.202(a) and CAS 402. If the subcontractor is a large, well-established, defense contractor then it's probably not a big deal; but if the subcontractor is a smaller or more commercial type of contractor, then I might be a bit more worried.

If the additional subcontractor costs are indirect costs getting finalized, then oh well. But if the additional costs are also labor hours, then I smell something fishy myself and you are right to be concerned. Somebody is messing about with labor hours.

Share this post


Link to post
Share on other sites

@joel hoffman  The release of claims is much like the one in your post -- except for the "(except for __________ ”  language.   The "(except for __________ ).” is not part of the contract mod.  

This price re-determination proposal for the Proposal Prep CLIN seems to be a mixed bag of things.  The spreadsheet provided included each ECP.   Some ECPs update hours, rates & factors to an ECP's Proposal Prep.  Other ECPs update hours, subcontractor's costs, rates & factors.  And other ECPs update of rates and factors only.  Nowhere does the contractor ask to closeout the CLIN.  There is no indication of DCAA approved rates.  Or quick closeout rates.  This contract is ongoing and will be for  at least a couple of more years.  

My issue is with the ECPs that add more hours because of Proposal Prep.

I'm hoping to get a conversation  with the contracts manager tomorrow.  

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×