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For an IDIQ JOC where the UPB contains a list of roles and their rates (e.g. field superintendent, design engineer, etc), when calculating the overhead cost for the project, how do you distinguish between which staff personnel can be charged to the client and which can't?  Asked the question, but client's response was not clear.   

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CA2012--

As a contractor, it is your responsibility (not the client's) to determine your direct vs. indirect charging practices, keeping in mind the definitions of direct cost and indirect cost found in both FAR and the Cost Accounting Standards.

It sounds as if you may be calculating a contract-specific overhead rate to be allocated to active Task Orders. That can be done, of course, but it's tricky in exactly the area (direct vs. indirect) you are asking about. It's tricky because you will have people charging directly to the active Task Orders and other people charging "directly" to a PMO or similar charge code for subsequent allocation to those Task Orders. (CAS 418 calls these "pooled" or "blanket" costs.) All this is going one while you still have your "normal" overhead for indirect expenses such as training, etc. As I said, tricky.

Apologies if I've read into your question more than you intended. In any case, you--the contractor--must have adequate policies and other command media to ensure you consistently charge your labor and other costs as either direct or indirect. It one of the basic requirements for an "adequate" accounting system.

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15 hours ago, here_2_help said:

CA2012--

As a contractor, it is your responsibility (not the client's) to determine your direct vs. indirect charging practices, keeping in mind the definitions of direct cost and indirect cost found in both FAR and the Cost Accounting Standards.

It sounds as if you may be calculating a contract-specific overhead rate to be allocated to active Task Orders. That can be done, of course, but it's tricky in exactly the area (direct vs. indirect) you are asking about. It's tricky because you will have people charging directly to the active Task Orders and other people charging "directly" to a PMO or similar charge code for subsequent allocation to those Task Orders. (CAS 418 calls these "pooled" or "blanket" costs.) All this is going one while you still have your "normal" overhead for indirect expenses such as training, etc. As I said, tricky.

Apologies if I've read into your question more than you intended. In any case, you--the contractor--must have adequate policies and other command media to ensure you consistently charge your labor and other costs as either direct or indirect. It one of the basic requirements for an "adequate" accounting system.

Thank you for taking the time to respond.  I appreciate it. 

This is less of a question of how I treat these costs internally (for my own accounting purposes) and more of a question of what will the client's contracting officer allow us to charge them.  It's important to know that because if I can charge them the monthly rate of a superintendent, for which there is a unit rate in the UPB, then it means when I'm estimating my bid price, I don't have to account for the cost of that person as overhead.  As you could imagine, the larger your estimated overhead, the higher your bid price would be, and the lower your odds of winning the bid.  

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8 hours ago, California2012 said:

This is less of a question of how I treat these costs internally (for my own accounting purposes) and more of a question of what will the client's contracting officer allow us to charge them.  It's important to know that because if I can charge them the monthly rate of a superintendent, for which there is a unit rate in the UPB, then it means when I'm estimating my bid price, I don't have to account for the cost of that person as overhead.  As you could imagine, the larger your estimated overhead, the higher your bid price would be, and the lower your odds of winning the bid.  

If you are a CAS-covered contractor, consistency between direct and indirect costing is mandated. So is consistency between cost accounting practices used in estimates, cost accounting, and reporting. If you are not a CAS-covered contractor, FAR Part 31 has similar (but not identical) guidance that applies to you. So I'm not fully on board with your position that what an individual  contract allows (or doesn't allow) for billing purposes has a significant impact on cost accounting practices for the entire company.

I'm also not in alignment with your statement that higher overhead leads to a higher bid price. From my point of view, the relationship is not as straightforward as your statement would have it be. For example, more overhead dollars could be allocated to more contracts (depending on the allocation base used), meaning that the other contracts would absorb some of the overhead that would have been charged to the instant contract, meaning the bid price for the instant contract would be lower than it otherwise would have been.

Direct vs. indirect costing decisions and establishment of cost allocation structures are jobs for experts in the art of government contract cost accounting. I don't know whether or not you are one. But if not, then I would recommend your company find one.

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8 hours ago, California2012 said:

It's important to know that because if I can charge them the monthly rate of a superintendent, for which there is a unit rate in the UPB, then it means when I'm estimating my bid price, I don't have to account for the cost of that person as overhead.

You have not said what the solicitation says about staffing.  I have seen some solicitations that specifically say superintendent costs may not be charged as a direct cost.  Others specifically require a superintendent which is to be charged as a direct cost of the contract.  In any event, if you are not CAS covered you need to look at FAR 31.203 and 204 and comply with the requirements of those sections.  If you are CAS covered comply with CAS 401 and 402.

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15 minutes ago, Retreadfed said:

You have not said what the solicitation says about staffing.  I have seen some solicitations that specifically say superintendent costs may not be charged as a direct cost.  Others specifically require a superintendent which is to be charged as a direct cost of the contract.  In any event, if you are not CAS covered you need to look at FAR 31.203 and 204 and comply with the requirements of those sections.  If you are CAS covered comply with CAS 401 and 402.

Thank you.  So it looks like we are CAS covered.  So let me lay out an example and I'd appreciate it if you could opine please:

The project is an IDIQ job order contract.  We plan to staff 1 Planning Engineer for the whole contract, who will be there from Day 1 (even if no task orders have been issued yet).  They shall do the planning work for all task orders that get issued during the contract.  Now the Unit Price Book does have a rate for a Planning Engineer.  The question therefore is, can I charge a Planning Engineer at the (UPB Rate x Coefficient) to the client in one of the task orders, or is it that because the engineer is working on simultaneous task orders (and not dedicated to a specific task order), then I am not allowed to charge for them?

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What says an employees time cannot be split between multiple cost objectives?  It is not uncommon for employees to be working on multiple contracts at the same time.  The key is proper timekeeping to identify how much time was spent on each contract.  The same principle applies to task orders.

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Edit: Cal did clarify somewhat while I was composing the following post. I didn’t see Cals post till after I posted the following:
 

Cal, I’m curious.

1. Is this is a FFP, unit priced JOC contract for those activities in included in a referenced UPB?

2. JOC contr acts for Army used to use a coefficient to applied to each individual UPB activity and the activity used to identify or reference a “crew”, which listed trade, direct supervision (e.g., foreman or % of foreman’s time, etc.) , estimated equipment, etc. I Don’t remember how one would handle sub contracted versus direct work on a an individual activity. There were global adjustments for applicable DB labor rates.  Is this close to what the UPB and contract works for this contract or solicitation?

3. If the unit price book did not cover an activity that would be in a task or job order, the parties would have to negotiate a unit rate. Is that what your situation covers or are you asking a general question?

4.  It used to be that the coefficient would be applied to any identified activities in the book. The contractor would have to use considerable judgment in determining whether the work would be subcontracted or directly performed, which of course, can be tricky for general construction The contractor would also have to take into account all indirect costs and other support type activities that are not covered in a line item activity, including supervision and general administrative costs and an Allowance for profit or fee. I don’t remember how the bonding would be applied -  if it was applied within the coefficient or separately.Am I close concerning this contract?

5. Is this situation for an upcoming future contract or something within an existing contract, such as a claim or a new line item? 

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1 hour ago, California2012 said:

Thank you.  So it looks like we are CAS covered.  So let me lay out an example and I'd appreciate it if you could opine please:

The project is an IDIQ job order contract.  We plan to staff 1 Planning Engineer for the whole contract, who will be there from Day 1 (even if no task orders have been issued yet).  They shall do the planning work for all task orders that get issued during the contract.  Now the Unit Price Book does have a rate for a Planning Engineer.  The question therefore is, can I charge a Planning Engineer at the (UPB Rate x Coefficient) to the client in one of the task orders, or is it that because the engineer is working on simultaneous task orders (and not dedicated to a specific task order), then I am not allowed to charge for them?

Is this an existing or proposed contract? JOC contractors used to complain that it was high risk on how to staff and price full or part-time personnel dedicated to the JOC contract or part of their time dedicated to the JOC contract. I don’t know if or how that’s addressed these days in JOC contracts.

It would seem like the government would want to know how you intended to charge the planning engineers time since they will be full-time. This should be something that the government would want to know prior to contract award. To me it would seem like it should be included in the coefficient Because, although it is a direct cost of the contract to the contractor, it is not a direct cost to individual activities. The planner could be working on no tasks, one task, or multiple tasks. It would not seem appropriate to charge a job planner to individual task orders, if they are a full-time employee of the contract.

EDIT: Another consideration would be how active this ID/IQ JOC contract is contemplated to be. For instance, does it require or warrant a full-time assigned planner,  can the planner perform other work, full-time presence on-site or not, etc. 

Interesting.  

Edited by joel hoffman

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13 hours ago, joel hoffman said:

Edit: Cal did clarify somewhat while I was composing the following post. I didn’t see Cals post till after I posted the following:
 

Cal, I’m curious.

1. Is this is a FFP, unit priced JOC contract for those activities in included in a referenced UPB?

2. JOC contr acts for Army used to use a coefficient to applied to each individual UPB activity and the activity used to identify or reference a “crew”, which listed trade, direct supervision (e.g., foreman or % of foreman’s time, etc.) , estimated equipment, etc. I Don’t remember how one would handle sub contracted versus direct work on a an individual activity. There were global adjustments for applicable DB labor rates.  Is this close to what the UPB and contract works for this contract or solicitation?

3. If the unit price book did not cover an activity that would be in a task or job order, the parties would have to negotiate a unit rate. Is that what your situation covers or are you asking a general question?

4.  It used to be that the coefficient would be applied to any identified activities in the book. The contractor would have to use considerable judgment in determining whether the work would be subcontracted or directly performed, which of course, can be tricky for general construction The contractor would also have to take into account all indirect costs and other support type activities that are not covered in a line item activity, including supervision and general administrative costs and an Allowance for profit or fee. I don’t remember how the bonding would be applied -  if it was applied within the coefficient or separately.Am I close concerning this contract?

5. Is this situation for an upcoming future contract or something within an existing contract, such as a claim or a new line item? 

Great questions, Joel.  

1) It is an FFP, unit priced JOC for activities in the UPB.  

2) I believe those. 

3) No, we are still in the bidding phase.

4) Bonding is supposed to be included in the coefficient you submit in your bid. 

5) This is for a future upcoming contract. 

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13 hours ago, joel hoffman said:

Is this an existing or proposed contract? JOC contractors used to complain that it was high risk on how to staff and price full or part-time personnel dedicated to the JOC contract or part of their time dedicated to the JOC contract. I don’t know if or how that’s addressed these days in JOC contracts.

It would seem like the government would want to know how you intended to charge the planning engineers time since they will be full-time. This should be something that the government would want to know prior to contract award. To me it would seem like it should be included in the coefficient Because, although it is a direct cost of the contract to the contractor, it is not a direct cost to individual activities. The planner could be working on no tasks, one task, or multiple tasks. It would not seem appropriate to charge a job planner to individual task orders, if they are a full-time employee of the contract.

EDIT: Another consideration would be how active this ID/IQ JOC contract is contemplated to be. For instance, does it require or warrant a full-time assigned planner,  can the planner perform other work, full-time presence on-site or not, etc. 

Interesting.  

This is for an upcoming contract that is still in the bidding stage.  We need to arrive at an estimate for the coefficient, and that needs to include the items under the "Adjustment Factors" heading in the file attached.  You will notice that it says the Adjustment Factor (ie coefficient) needs to include "project management and project supervision."  However, a few pages later in that same UPB document, the very first section contains monthly wage rates for a long list of roles.  So for instance, it says the monthly wage rate for a "Contract Administrator" is $2,834.  Now I know that we'd want to have a Contract Admin on the project team from day 1 all the way to the end of the contract.  The question then becomes which of the following would we be allowed to do:

(1) If there is more than one task order outstanding during any given month, can we direct charge this person's wage x coefficient to the task orders (on a pro rata basis), and therefore get paid for that person?

OR

(2) Are we allowed to direct charge their wage x coefficient to a task order only if the person is 100% dedicated to that particular task order? (ie not splitting their time with other task orders within the same contract)

OR

(3) Will the client not allow us to direct charge this person at all since they're really part of the "project management" staff?

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Cal, I will try to look at this tonight. However, I really think that you need to talk to the contracting officer or their point of contact to get clarification on this.

also, I forgot to ask you earlier what type of technical proposal if any is included in this RFP. Do you need to identify your organization chart for instance?

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On 1/24/2020 at 12:07 AM, joel hoffman said:

Cal, I will try to look at this tonight. However, I really think that you need to talk to the contracting officer or their point of contact to get clarification on this.

also, I forgot to ask you earlier what type of technical proposal if any is included in this RFP. Do you need to identify your organization chart for instance?

Hi Joel - thank you. The Contracting Officer would not answer that question.

Yes, there is an org chart required to be submitted with the RFP as part of the technical proposal. 

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Assuming that how to price the planner the planner was the question that the USACE (Winchester?) wouldn’t answer.

I can’t answer your questions with confidence. It looks ambiguous to me but one interpretation could be to include your project management and supervision staff in the org chart and in the coefficient factor, which also says to include business risk for lower than expect volume and numbers of task orders. Then explain in the Contract proposal which positions are included in the factor.

I am assuming that this will not be a multiple award job order ID/IQ.

Not being totally familiar with the RFP and scope, location, etc. would result in speculation on my part.

Here is the deal though. To avoid the arguments after award and risk of them not allowing a cost that you did include for in the coefficient, I would identify and seek official clarification of anything that is patently ambiguous (could be read more than one way).

If they won’t clarify, explain your interpretation in the proposal for how you would intend to price those positions in task orders.

i don’t know how much competition there will be for the ID/IQ contract(s) or if the USACE would conduct discussions if price proposals are inconsistent with each other or their interpretation or if you would be in the competitive range, if  discussions are conducted.

All you can do is ask how they want or will allow you to price the indirect staffing, then tell them how you did it - especially if they won’t clarify...

 

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4 hours ago, joel hoffman said:

All you can do is ask how they want or will allow you to price the indirect staffing, then tell them how you did it - especially if they won’t clarify...

Posted with caveats. 

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16 hours ago, Ibn Battuta said:

What follows reflects some musings and is not intended as criticism.

My answer to California2012's question and to the ones that followed in his later post would have been: I don't know. What did you and your client agree to in that regard?

I understand that California2012  needs and wants answers to his/her questions, but it seems to me that questions of that kind, about a particular contract, cannot be answered responsively or responsibly in this forum.

While some Forum participants are expert in the content and application of government contract cost principles, cost accounting standards, and JOC contracts, I don't know how any Wifcon Forum participant can answer California2012's questions about his/her particular contract without a thorough analysis of that contract, cover to cover, and review and analysis of any contending interpretations by the two parties.

It seems to me that general knowledge of rules and practices can provide only general answers about what is or has been generally thought and done. Such answers will surely be of only limited usefulness in cases like this one. In the end, California2012 will have to read the contract in the context of the issue and the facts, develop his or her own interpretation(s), consider the CO's conflicting interpretations, if any, and then decide what to do.

It seems to me that time would be better spent in seeking the assistance of a lawyer with access to all pertinent documents and people.

The desire among Wifcon Forum participants to help, even when they can't, is very strong.

Actually I very much appreciate their feedback.  This is why these forums exist - so we can leverage our collective experiences and knowledge and help one another.  It's not like lawyers have all the right answers either.

It's up to me as the OP to decide whether and how to take the feedback.  

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