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Team, here are the facts:

Firm-Fixed Price

Prime is sole-source (only one with technology).

DoD technology (non-commercial)

We have negotiated a Teaming Agreement to be on the bid. (there were three subs that could have teamed with the Prime)

Our agreement with Prime is Fixed Price. (since we are on the Teaming Agreement, I guess we would be sole-source)

5-year contract

$100.0M Contract

Will I be subject to CAS or Modified CAS?

Thanks!

Marc

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Guest Vern Edwards
Team, here are the facts:

Firm-Fixed Price

Prime is sole-source (only one with technology).

DoD technology (non-commercial)

We have negotiated a Teaming Agreement to be on the bid. (there were three subs that could have teamed with the Prime)

Our agreement with Prime is Fixed Price. (since we are on the Teaming Agreement, I guess we would be sole-source)

5-year contract

$100.0M Contract

Will I be subject to CAS or Modified CAS?

Thanks!

Marc

See 48 CFR 9903.201-1, "CAS Applicability" and 48 CFR 9903.201-2, "Types of CAS Coverage."

http://ecfr.gpoaccess.gov/cgi/t/text/text-...idno=48;cc=ecfr

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See 48 CFR 9903.201-1, "CAS Applicability" and 48 CFR 9903.201-2, "Types of CAS Coverage."

http://ecfr.gpoaccess.gov/cgi/t/text/text-...idno=48;cc=ecfr

Thanks Vern! Yes, I had already been through 9903.201-1. I know the question looked like I didn't take time to look it up and I just came to you for the answer! I just didn't want to get into too much dialogue. Sometimes too much info, I guess I just went straight to the facts. Next time, I will go through my thought process.

Saying that, my specific question is, since we have a FFP agreement with the Prime, and since they have FFP and Sole Source, are we going to be Full or Modified. My contract with the Prime states specifically FFP and nowhere does it state that we are sole-source (except by virtue of the Teaming Agreement).

We competed to get on the team and since paragraph 15 of 9903.201-1 states "Firm-fixed-prive contracts or subcontracs awarded on the basis of adequate price competition without submission of cost or pricing data" I am on the fence as to whether or not I am Full or Modified. In either case, having everything in place, except a Disclosure Statement (accounting system, timekeeping, etc) I was thinking Modified. But I could be wrong based on the other factors.

Thanks, Marc

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Guest Vern Edwards
[M]y specific question is, since we have a FFP agreement with the Prime, and since they have FFP and Sole Source, are we going to be Full or Modified.

Whether coverage is full or modified does not turn on contract type or the extent of competition. The rule is stated at 48 CFR 9903.201-2:

(a) Full coverage. *** Full coverage applies to contractor business units that—

(1) Receive a single CAS-covered contract award of $50 million or more; or

(2) Received $50 million or more in net CAS-covered awards during its preceding cost accounting period.

(B) Modified coverage. (1) *** Modified, rather, than full, CAS coverage may be applied to a covered contract of less than $50 million awarded to a business unit that received less than $50 million in net CAS-covered awards in the immediately preceding cost accounting period.

If you read the rules, then the analysis is should be straightforward:

1. Is your contract CAS-covered under 48 CFR 9903.201-1? Do any of the exceptions in 48 CFR 9903.201-1(B) apply? If not, then it's CAS-covered.

2. If the answer to 1 yes, then (a) did your business unit receive a single CAS-covered contract worth $50 million or more or (B) did it receive $50 million or more in net CAS-covered awards during its preceding cost accounting period?

If the answer to 1 is that your contract is CAS-covered, and if the the answer to 2(a) or 2(B) is also yes, then you get full coverage. Otherwise you get modified coverage.

You said your contract is worth $100 million. Is it CAS-covered? Your have not provided enough information for me to be able to determine that, but you should be able to. It's simple: Do any of the exceptions in 48 CFR 9903.201-1(B) apply? If not, then your contract it's CAS-covered, and since it's worth more than $50 million, you get full coverage.

In response to your first post:

  • The fact that the prime is sole source is irrelevant.
  • The fact that your contract is not for commercial items is relevant, but not ultimately determinative.
  • The fact that your contract is fixed-price is relevant, but not ultimately determinative.
  • The fact that your contract is for five years is irrelevant.
  • The fact that your contract is worth $100 million is relevant, but not ultimately determinative.

Determine if your contract is CAS-covered. If it is, then since it's worth more than $50 million you get full coverage.

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Saying that, my specific question is, since we have a FFP agreement with the Prime, and since they have FFP and Sole Source, are we going to be Full or Modified. My contract with the Prime states specifically FFP and nowhere does it state that we are sole-source (except by virtue of the Teaming Agreement).

We competed to get on the team and since paragraph 15 of 9903.201-1 states "Firm-fixed-prive contracts or subcontracs awarded on the basis of adequate price competition without submission of cost or pricing data" I am on the fence as to whether or not I am Full or Modified. In either case, having everything in place, except a Disclosure Statement (accounting system, timekeeping, etc) I was thinking Modified. But I could be wrong based on the other factors.

Thanks, Marc

Hi Marc,

After reviewing the CAS requirements you believe your award will be subject to CAS coverage, right? There is no applicable exemption to be found based on your reading of the regulatory requirements. Your only question is what flavor of CAS will you be subject to? Will your contract be subject to Full or Modified CAS coverage?

As part of your proposal submission, I expect your prime will require you to submit representations and certifications. Among those reps and certs will be one or more CAS certifications, with wording identical or very similar to the FAR solicitation provision 52.230-1. Go look at that provision now.

You will see that your contract will be subject to Full CAS coverage unless you qualify for, and elect to be subject to, Modified CAS coverage Your company must make an affirmative election and certify that it qualifies for Modified coverage; otherwise, the default is Full coverage. To qualify for Modified CAS coverage, your company must have received less than $50 million dollars in CAS-covered awards during its most recently completed fiscal year. NOTE that contract award value is not the same thing as revenue recognized.

A more interesting question might be whether your company needs to submit a Form CASB DS-1 Disclosure Statement concurrently with its proposal. If you look at that provision, you will see that a company might be subject to Full CAS Coverage, yet still qualify for an "interim exemption" from the requirements to concurrently submit a DS-1.

If your company does not qualify for an interim exemption, my advice is to get to work on writing the Disclosure Statement now--and remember that cost accounting practices used to estimate costs in your proposal must be consistent with those practices used to accumulate costs after award. CAS 401 applies whether you contract is subject to Full or Modified CAS coverage.

CAS administration--fun times!

Hope this helps -- and good luck!

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Hi Marc,

After reviewing the CAS requirements you believe your award will be subject to CAS coverage, right? There is no applicable exemption to be found based on your reading of the regulatory requirements. Your only question is what flavor of CAS will you be subject to? Will your contract be subject to Full or Modified CAS coverage?

As part of your proposal submission, I expect your prime will require you to submit representations and certifications. Among those reps and certs will be one or more CAS certifications, with wording identical or very similar to the FAR solicitation provision 52.230-1. Go look at that provision now.

You will see that your contract will be subject to Full CAS coverage unless you qualify for, and elect to be subject to, Modified CAS coverage Your company must make an affirmative election and certify that it qualifies for Modified coverage; otherwise, the default is Full coverage. To qualify for Modified CAS coverage, your company must have received less than $50 million dollars in CAS-covered awards during its most recently completed fiscal year. NOTE that contract award value is not the same thing as revenue recognized.

A more interesting question might be whether your company needs to submit a Form CASB DS-1 Disclosure Statement concurrently with its proposal. If you look at that provision, you will see that a company might be subject to Full CAS Coverage, yet still qualify for an "interim exemption" from the requirements to concurrently submit a DS-1.

If your company does not qualify for an interim exemption, my advice is to get to work on writing the Disclosure Statement now--and remember that cost accounting practices used to estimate costs in your proposal must be consistent with those practices used to accumulate costs after award. CAS 401 applies whether you contract is subject to Full or Modified CAS coverage.

CAS administration--fun times!

Hope this helps -- and good luck!

Oh MAN, ALL, YOU ARE THE BEST yes, (all of you)! I know it should be straight forward, but sometimes I get "wrapped around the axle". Yes, I was looking for direction on what "flavor" CAS, and I think that I am going to get the FULL Monty! You also hit on my research topic for tomorrow, Disclosure Statement NOW or interim exemption. We are getting the contract novated from another company that we are a minority owner. So I am preparing for the immediate burden of requirements! I am going to start the preparation now. I have the accounting system, timekeeping and expense reporting, but we are essentially starting from scratch. Just set up an SSA (now that was fun and exciting!). Yes, we set up an SSA without purchasing a company! So now I have the SSA shell and am ready to populate with contracts!

In the future, I will use the tems below "relevant, but not ultimately determinative, irrelevant", etc. to explain my position!

I have been on this forum for a while and no joke, I truly appreciate the insight and guidance from everyone! Thanks for taking the time to respond. I really use your advice. This is the BEST site. Thanks! Marc

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While we?re on the subject, I?ll take this opportunity to ask about filling out the Cost Accounting Standards Notices and Certification, FAR 52.230-1. When an offeror is eligible for Modified CAS, is it wrong to check block I( c )(3) ?Certificate of Monetary Exemption? AND the ?Eligibility for Modified CAS Coverage? block in part II ? We received such a cert. Some here think it is invalid and a new cert should be obtained. Others believe that I( c )(3) does not contradict II and a new cert is not necessary. What say y?all?

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A CAS Coverage Decision Tree appears in on page 809 in Chapter 8 of the DCAA Contract Audit manual, found at www.dcaa.mil as another reference.

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While we?re on the subject, I?ll take this opportunity to ask about filling out the Cost Accounting Standards Notices and Certification, FAR 52.230-1. When an offeror is eligible for Modified CAS, is it wrong to check block I( c )(3) ?Certificate of Monetary Exemption? AND the ?Eligibility for Modified CAS Coverage? block in part II ? We received such a cert. Some here think it is invalid and a new cert should be obtained. Others believe that I( c )(3) does not contradict II and a new cert is not necessary. What say y?all?

br549,

I haven't devoted tremendous time or research to your question, so I guess I'm risking the Wrath of Vern (WoV)TM in answering from TDY. But my reading of the clause supports the position that the two certifications you mention are NOT in conflict.

The certification at I©(3) says that the contractor is not required to submit its Disclosure Statement concurrently with the proposal because it did not receive $50 million in CAS-covered awards in the preceding cost accounting period (fiscal year).

The certification at II, the contractor is electing Modified CAS coverage and certifies it is eligible to do so because it received less than $50 million in CAS-covered awards in the preceding cost accounting period.

I don't see those two statements as being in conflict with one another.

Hope this helps.

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