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I am currently managing a FAR part 15 subcontract with several SLINs that have FFP travel.  It appears now that this travel will not be needed and will not be taken. We asked to de-scope the subK but were unsuccessful in negotiating this with the sub - they bid in 8 trips for two people for a full week, so the travel was fairly costly.  My true concern here is not so much that we are paying for something that we did not get, but I am more worried about staying in compliance with the FAR.  This travel was bid based on estimates from the year prior to award and when conducting my cost analysis for this effort I was told by the subcontractor that they always bill actuals per FAR part 31.205-46 (I questioned their costs, as I thought it was high at the time).  So the billing for the travel at this time is based on estimates from almost two years ago, as it was the FFP that was accepted and put on contract at time of award.   If we were to be audited on this contract and subcontract, could we be in violation of the FAR for billing of these travel costs even though they were bid and accepted as a FFP cost?

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You did not say what type of prime contract you have (cost reimbursement, fixed price, T&M, etc.).  Also, why can't you issue a termination notice for the travel?

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Who is billing who for travel at this time, the contractor or the subcontractor? If travel is not needed and will not be taken, how is it that there is any billing by any party?

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On ‎5‎/‎10‎/‎2019 at 2:39 PM, Retreadfed said:

You did not say what type of prime contract you have (cost reimbursement, fixed price, T&M, etc.).  Also, why can't you issue a termination notice for the travel?

The prime is also a multi-type of award, has elements of both FFP and T&M - it is also a EV managed contract.  They are claiming that this travel was quoted as FFP and as such is not cancelable as long as the deliverable is complete - which it is - just that the travel was not needed to complete the deliverable (it was for software design and itegration).

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Neil - The subcontractor is billing for the travel - that was kind of my problem with this whole thing too - how can the sub bill actuals, if there was no actual travel taken....I'm afraid that we are in conflict with the FAR  in this instance.

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mcmack5, I'm not clear on the structure of the subcontract.  Was travel listed as a separate SLIN in the subcontract or was it part of a larger SLIN, e.g., software design where the price included the anticipated travel?

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it was part of a larger SLIN included engineering labor and 8 trips of travel - total SLIN cost over 100K - one lump sum - this did trip the TINA threshold, but we were not allowed to see the cost breakdown at time of proposal (Cost data was only provided to the government for this contract, upon request).  There again...how much exactly are they charging us for travel and how can they substantiate that as actuals according to the FAR (or do they have to do that under a FFP priced contract?)

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From what you have described, they are not charging you anything for travel.  You hade an FFP SLIN that called for the sub to do something.  It did what the SLIN called for, but did not incur as much cost as anticipated in doing so.  This appear to be nothing more than an application of the concept of an FFP contract that works to the sub's benefit but the prime's detriment.  Unless there is something more to the subcontract that you have not told us, I suggest that you chalk this up to lessons learned on how not to structure a subcontract and move on.

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Well, the SLIN actually states 8 trips of Travel in the description (I mentioned that in my original post), so I would say that there is a charge for travel in the SLIN.  If the description of the SLIN did not include travel, I would completely agree with you.  I was really not worried so much about the cost and us being on the losing side of the table here, but more on the side of being caught on the bad side of an audit with unsupportable costs and charges for travel.

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mcmack5, the SLIN description may have included a statement that 8 trips were included in the price.  However, you indicated that travel was not separately priced, but the cost of the travel was included in the overall SLIN FFP.  In this case, from what you have written, the object of the SLIN was the engineering services, which were provided, but at less cost than anticipated.  What in the subcontract permits you not to pay the sub the full price of the SLIN?

As for an audit, because you are dealing with an FFP SLIN, that SLIN would not be subject to audit under the standard FAR audit clause, 52.215-2, regardless of the prime contract type.

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34 minutes ago, Retreadfed said:

As for an audit, because you are dealing with an FFP SLIN, that SLIN would not be subject to audit under the standard FAR audit clause, 52.215-2, regardless of the prime contract type. 

mcmacck5, I am not entirely clear about who you work for. If you work for the prime contractor and FAR 52.215-2 is included in the prime contract and certified cost or pricing data was submitted by prime contractor to the government, I believe your subcontract is subject to audit per paragraph (c).  .You may wish to read the clause and decide for yourself. Also, the subcontract may be reviewable in a Contractor Purchasing System Review (CPSR). I am troubled by whether your firm paid the subcontractor the entire fixed price line item amount plus travel costs.

Edited by Neil Roberts
sentence structure

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mcmack5, this GSA blog may be of help to you in seeking an acceptable way to handle travel in service contracts for your agency https://interact.gsa.gov/blog/how-do-i-add-travel-costs-services-task-order. 

Your situation seems to involve mutual contract confusion. Based on how I understand your posts, I would say travel has been questionably handled and understood. Also relying on estimates over a year old for a price, without more, seems weak. if I audited, it would require more information than in this post to survive an audit finding. 

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16 hours ago, Retreadfed said:

mcmack5, the SLIN description may have included a statement that 8 trips were included in the price.  However, you indicated that travel was not separately priced, but the cost of the travel was included in the overall SLIN FFP.  In this case, from what you have written, the object of the SLIN was the engineering services, which were provided, but at less cost than anticipated.  What in the subcontract permits you not to pay the sub the full price of the SLIN?

As for an audit, because you are dealing with an FFP SLIN, that SLIN would not be subject to audit under the standard FAR audit clause, 52.215-2, regardless of the prime contract type.

Retredfed & Neil - As for an audit, because you are dealing with an FFP SLIN, that SLIN would not be subject to audit under the standard FAR audit clause, 52.215-2, regardless of the prime contract type.  - does this mean that even if the subcontractor submitted their proposal to us as a certified cost  or pricing proposal it is still not subject to an audit (under letter c of that same clause since it was FFP?  I think that Neil alluded to this fact)   That was not my complete understanding of that clause, but if that is true, then my worry over this situation is for nothing.  By the way, we are not the Prime for this contract, we are a second tier - but this clause 52.215-2 was flowed to us in our contract.  I was worried about how this was priced during the proposal phase which is was why I questioned how the supplier first proposed the travel costs and was told at the time that they only charged actuals but had to propose estimated travel costs.  Assuming that all travel would be taken, this is fine and per the FAR requirements.  But, if the travel is not taken, the actuals can not be priced and charged, so the travel costs are not accurate per the FAR on the final invoice, so we are not in compliance, in my view.

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2 hours ago, mcmack5 said:

does this mean that even if the subcontractor submitted their proposal to us as a certified cost  or pricing proposal it is still not subject to an audit (under letter c of that same clause since it was FFP?

You have two different issues here.  One is whether the cost of an FFP SLIN can be audited for allowability.  The answer is no.  The second is whether the subcontract can be audited to determine if the data submitted was defective.  The answer to that is yes.  However, if the data submitted is not defective, i.e., was  current, complete and accurate as of the date of agreement on price of the prime contract, the government is not entitled to a price adjustment to an FFP SLIN even if all costs proposed were not incurred.

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Ok, good.  I think then that answers my question, because they did certify their cost at time of proposal and we did our due diligence under the FAR in documenting the subcontract as was required.  Thank you all for the assistance, much appreciated.

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3 hours ago, mcmack5 said:

I questioned how the supplier first proposed the travel costs and was told at the time that they only charged actuals but had to propose estimated travel costs.  Assuming that all travel would be taken, this is fine and per the FAR requirements.  But, if the travel is not taken, the actuals can not be priced and charged, so the travel costs are not accurate per the FAR on the final invoice, so we are not in compliance, in my view.

I don't understand this.  You have stated that the SLIN is an FFP SLIN.  If that is the case, actual costs are irrelevant to what the supplier is entitled to bill and be paid.  Of course, the supplier can, but is not required to, bill you less than the contract price for an SLIN.  If it does not bill less than the FFP, you have no basis for complaint.  Also, the government has no basis to question what is paid to the supplier based on actual costs incurred.

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