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AndiiM

Credit to future invoices for non compliance of training

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Looking for some assistance on a situation that we have come across whereby the Contracting Officer is requesting a credit on future invoices for an employee who has been employed on the contract for a number of months, but failed to take the initial security training as required per our Prime contract.  There are many variables involved as to why the employee did not take the training, and we are aware that no excuses are sufficient.  However, I can find no precedence that shows the Government is entitled to reimbursement for all of her hours going back 9 months where she did not have the training, and certainly not by way of a credit to future invoices.  The Government has accepted and paid these invoices, and the employee in question was on the program roster the entire time, so they were aware she was billing to the contract.   Has anyone had any experience with this type of request, or may be able to offer guidance on how to respond to the Contracting Officer?  The employee has since been removed from the program, and has not been billing anytime as of the date we were made aware the training was not complete, but we are a little taken aback by the request to refund all monies previously paid for work the employee performed.  

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How is the contract priced, e.g., cost reimbursement, T&M, fixed price?  Also, what does the contract say about using employees who have not completed the training?

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Contract is priced T&M.   Contract language is as follows:  "

Failure to complete the mandatory annual training and electronically sign the Rules of Behavior annually, within the timeframe required, is grounds for suspension or termination of all physical or electronic access privileges and removal from work on the contract until such time as the training and documents are complete.

 

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AndiiM,

For a T&M contract, you are entitled to hourly rate payments only for persons who are qualified -- you are entitled to ZERO hourly rate payments for an employee who does not meet the qualification requirements.  By submitting your invoice for that unqualified person, you may have made a false statement, which could have criminal penalties.  So if you don't settle this amicably with the contracting officer, you may find yourself facing bigger problems. 

See para. (i)(1)(B) of the clause at FAR 52.212-4 with its Alternate I, or para. (a)(3) of the clause at FAR 52.232-7, whichever is included in your contract.

You probably need to correct and re-submit all of your invoices that requested hourly rate payments for this unqualified person. 

But don't just take my word for it -- hopefully you have an attorney who can advise you.  You probably want to make the corrections without admitting any fault.

 

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1 hour ago, AndiiM said:

The Government has accepted and paid these invoices, and the employee in question was on the program roster the entire time, so they were aware she was billing to the contract. 

Interesting you bring up acceptance as a defense. In the January 2016 edition of Government Contract Costs, Pricing & Accounting Report (Volume 11, Issue 1), authors Jerome Gabig and Michael Steen argue that whether or not the government can "revoke its acceptance of the services" is governed by FAR 46.501 and the contract's acceptance clause (which may be 52.246-6, Inspection-Time-and-Material and Labor-Hour). The authors point to paragraphs (e) and (j) of that clause. The authors assert that "after acceptance, the Government has relinquished its right to question whether the services were performed by unqualified personnel unless otherwise 'specified in the contract'."

The authors note that, if the government has not relinquished all post-acceptance rights, the parties would look to 52.246-20, Warranty of Services, if it is in the contract. The assert that if the clause, or one similar to it, is not found in the contract (it's not mandatory), then "there is no exception to the acceptance [of services] being conclusive without any right of the Government to challenge the qualifications of the employee performing the work." If the clause, or one similar to it, is found in the contract, then "rather than disallow the entire cost incurred by the Government for the services performed by the unqualified employee, the Government is entitled only to the difference between the labor category charged and the correct labor classification of the employee who actually performed the work." In this case, it seems the government would be entitled to nothing as there would presumably be no price difference between a properly trained employee and the one who performed the work.

Hope this helps.

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Yeah, AndiiM, you should talk to your attorney.  Even if h2h is right about the Government having forfeited to you the payments for the unqualified person, there is still a false claim or statement matter which might or might not stick, depending on the facts.  And you might reasonably get a CPARS hit if your contract is reportable in CPARS.

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