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Deobligation of cost reimbursable travel costs-not contract closeout


Milcon

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On 3/17/2021 at 8:17 PM, joel hoffman said:

Yes, the travel CLIN is adjusted to reflect the actual travel costs and the total contract amount is adjusted, accordingly. There is no change in scope. 

Milcon is now seeking written policy or some kind of instructions stating that total task order value is adjusted when excess funding on a CR CLIN is deobligated:

On 3/18/2021 at 8:07 AM, Milcon said:

Joel,

Is it stated anywhere that this is what we do.  Or this this "just what we do"?

 

On 3/18/2021 at 9:45 AM, Milcon said:

My policy team is telling me not to reduce the total task order value.  If I go back to them stating that what we are doing (reducing the total task order value) is correct and we will continue, I would like to have something to show them stating what I am doing is correct- hence asking "Is it stated anywhere that this is what we do.  Or this this "just what we do"?"   

On 3/19/2021 at 9:56 AM, Vern Edwards said:

 

 

On 3/19/2021 at 9:56 AM, Vern Edwards said:

This was the opening post:

The very first response to that should have been:

If the "total task order value" is the sum of the values of the individual order line items, then a change that reduces the value of any of the order line items should result in a commensurate reduction to the "total task order value.”

 

Vern said that he doesn’t understand my last post.

I was answering Milcon’s question to me: “Joel, Is it stated anywhere that this is what we do.  Or this this ‘just what we do’?”:

On 3/18/2021 at 8:07 PM, joel hoffman said:

EDIT: If the answers to these two questions[**] are “yes” and one of those forms or a similar form was used, the total amount of the task order will change when you change the total amount of any CLIN.

And yes, “this is just what we do” (to be consistent with the fact that the total amount of the task order equals the total of all the CLINs).

[** The “two questions” I referred to are:

1. Vern asked: “5. Is the "total task order value" the sum of (1) the firm-fixed price (for performance) and (2) the estimated cost of travel?”

2. Joel asked: “Secondly, when the excess funding for the CR travel CLIN was de-obligated, was the amount of the travel CLIN reduced accordingly?”]

I asked the second question above seeking clarification and verification as to whether the Travel CLIN was reduced to reflect the de-obligation of excess funds. MILCON hasn’t responded yet.

I’m  trying not to be “snarky” to MILCON, who posted this thread under the “For Beginners Only” topic area.

I noticed that MILCON has been a member since June 29, 2010 though. That is almost 11 years ago.

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I think Milcon has left the building.

When I read the opening question I wondered why there had to be a "total task order value." I assumed it was required by some form, such as DD 1155 or OF 347, otherwise it serves no obvious purpose. If the total task order value is needed to fill a space on one of those forms, then the answer to the opening question should be obvious. If the "total task order value" is the sum of the individual CLIN values, then if you change any CLIN "value" (i.e., amount) you change the total task order value, as well. In my opinion, that should have been the first and last response to Milcon.

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On 3/20/2021 at 9:17 AM, Vern Edwards said:

If the "total task order value" is the sum of the individual CLIN values, then if you change any CLIN "value" (i.e., amount) you change the total task order value, as well. In my opinion, that should have been the first and last response to Milcon.

It essentially was.  But Milcon, not  thinking inferentially, subsequently wanted to see specific instructions or policy to support the obvious that:

WHEN X + Y = Z;  and when you reduce Y,  therefore Z is reduced. 

You are probably right. We should have stopped there. Trying to take it easy on someone posting as a “beginner”.

The answer to the initial question was simple and straightforward. That wasn’t good enough for Milcon to support his argument with the “policy group”, who apparently don’t know how to write a simple mod to adjust a CR line item.

The answer to the subsequent second question was also straightforward but isn’t contained in a written instruction. It simply requires an understanding of contract admin procedures and how contracts and task orders are priced. 

I’ll stop there. 

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On 3/20/2021 at 11:01 AM, Vern Edwards said:

He did no worse than most beginners. Better than many.

It would have been nice to know specifically whether or not the “total task order value” refers to the “total amount” of the task order, as shown in typical forms used to award task orders.   There has been no rebuttal to stated assumptions that they are the same*. Thus the “total value of the task order equals the total amount ( the sum) of the CLINs.

There has been no rebuttal to assumptions that the estimated amount of the CR CLIN was decreased by the amount of the deobligation to reflect actual amount,  in that mod. So they correctly reduced the value, amount or price of the CR travel line item and the total task order value, amount, price.

It is then clear that “policy’s” position is wrong.

Therefore:

On 3/20/2021 at 9:17 AM, Vern Edwards said:

the answer to the opening question should be obvious. If the "total task order value" is the sum of the individual CLIN values, then if you change any CLIN "value" (i.e., amount) you change the total task order value, as well.

The only proof necessary to rebut “policy” (subsequently asked of me by Milcon) is to tell policy that Total $ amount of FP CLIN(s) + $ amount of the CR CLIN equals task order amount (equals the “total task order value”,).  This is defined in the task order award form.

When the amount of any CLIN changes or if there are any new CLINs added - by definition in the task order - the “total amount” (or “total value”)  of the order changes.

Show policy the task order award form. Boom. Debate is over.

Therefore, Milcon’s contract action is confirmed to be correct.

* Note that “amount”, “cost” and “price” are some synonyms of “value” (non-FAR terms) in common language usage.

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1 hour ago, joel hoffman said:

It is then clear that “policy’s” position is wrong.

I agree but you keep hammering the "math", a "form: etc. and that is off-base to the "policy" contention.   If I were Milcon I would be frustrated with your continued dialog on math and form too.  By further clarification by Milcon "policy" never said the value by math or form was wrong.   What  "policy" was telling Milcon was that the original value of the TO, no matter the math, the form, etc., must stay the original value of TO when CLIN values are deobligated because the original value denotes scope of the work under the TO.     

Milcon probably thinks it would be nice if the thread just stopped!

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On 3/21/2021 at 8:18 AM, C Culham said:

I agree but you keep hammering the "math", a "form: etc. and that is off-base to the "policy" contention.   If I were Milcon I would be frustrated with your continued dialog on math and form too.  By further clarification by Milcon "policy" never said the value by math or form was wrong.   What  "policy" was telling Milcon was that the original value of the TO, no matter the math, the form, etc., must stay the original value of TO when CLIN values are deobligated because the original value denotes scope of the work under the TO.     

Milcon probably thinks it would be nice if the thread just stopped!

Vern has answered the initial post’s question, as at least four others of us also did. And Vern had the benefit of several various clarifications. But I don’t want to argue over that.

Carl, If the amount of the task order after deobligating excess funds was not being questioned, then it wasn’t a contract question. Policy regarding “value” for overall program fiscal purposes isn’t relevant here. This is a simple contract mod question concerning revising the task order amount or price.

Milcon has said that he/she also wanted a policy or other proof to be able to refute the “policy” person(s).  He/she asked me: “Where is it written...?”

He/she didn’t say what “value” means and did not verify or deny that it is synonymous with the “amount” of the task order, as shown in an award format. I assume here that it means the amount or price of the task order.

I provided an answer to the second, later question that Milcon specifically asked of me.

Milcon probably won’t find written instructions in the FAR that say if a contract line item changes, recalculate and revise the total task order amount (price, value, etc.). Instead, one simply uses the format provided in the award document to adjust the total amount or price to match the sum of line item prices. It’s not rocket science.

Only an idiot wouldn’t be able to see that when something included in calculation of the contract amount changes, then the contract amount changes, too!!!

Simply show “policy” how the contract amount, value, price or whatever is calculated. Show them the MATH. I began negotiating mods in 1972 with the Air Force and negotiating and writing mods for the Army Corps of Engineers in 1980. The concept is still the same.

If  Milcon uses either answer or not, so be it.  

Agreed that the Scope of the task order did not change.  But the total price, cost, amount or value of the order contractually changed when the amount of the travel CLIN was adjusted to match actual reimbursed travel costs. It was a mod for a CR line item reconciliation and de-obligation of excess funds.

By the way, my agency’s various District contract administration SOP manuals (dating back as far as 1975) do address formatting of price revisions in modifications.  They say that, in addition to showing revisions to affected line items, state any applicable revisions to and the revised (contract or task order) price and time in the modification.  If there are no overall price and/or time revisions, then state that.

The agency now has an Enterprise contract admin software system that does the math and addresses it on the mod forms and line item schedules.

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4 hours ago, joel hoffman said:

It would have been nice to know specifically whether or not the “total task order value” refers to the “total amount” of the task order, as shown in typical forms used to award task orders.   There has been no rebuttal to stated assumptions that they are the same*. Thus the “total value of the task order equals the total amount ( the sum) of the CLINs.

There has been no rebuttal to assumptions that the estimated amount of the CR CLIN was decreased by the amount of the deobligation to reflect actual amount,  in that mod. It is then clear that “policy’s” position is wrong.

Yes, it would have been nice. Maybe the responders should have asked some clear questions before responding. And maybe they should have ignored the inquiry if the OP did not provide timely and informative responses, instead of launching into the typical Wifcon Forum free-for-all.

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5 hours ago, joel hoffman said:

It is then clear that “policy’s” position is wrong.

 

3 hours ago, C Culham said:

I agree...

@C Culham On what basis, if not "math" and "form"? Why is policy wrong?

What rule says that a task order must state a "total task order value," however measured? And if there is such a rule, what is the point? What information other than math is it supposed to communicate? Could it not have been intended to communicate "scope"?

And why total task order "value" instead of amount? Is there some significance to the use of the word "value"?

And yes, I read your post of Friday at 07.24.

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3 hours ago, Vern Edwards said:

On what basis, if not "math" and "form"?

Scope is not determine on math for form.

 

3 hours ago, Vern Edwards said:

Why is policy wrong?

Because "scope" has to do with more than math or form.   It has to do with  the type of work, the performance period, and costs between the contract as awarded and the order as issued.  The "and" is not an "or".

Remember Milcon provided this  "I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value)." 

3 hours ago, Vern Edwards said:

What rule says that a task order must state a "total task order value," however measured?

Well FPDS-NG rules for one and if I wanted to do research further I suspect there are accounting rules that require it as well or at least strongly imply it along with FAR 4.10.   

 

3 hours ago, Vern Edwards said:

And if there is such a rule, what is the point?

To properly account for obligations from the inception of creating one via a contract action to the end.   Or in other words it has nothing to do with scope.

 

3 hours ago, Vern Edwards said:

What information other than math is it supposed to communicate?

Well for starters aCLIN is to communicate the appropriation the money is coming from.  Again FAR 4.10 and then go from there.

 

3 hours ago, Vern Edwards said:

Could it not have been intended to communicate "scope"?

You bet but not as the singular matter of scope.  Plus you want to get involved in some extended dialog and throw in the ? when in fact in this instant discussion thread "policy" was pinpointing one particular matter, that decreasing travel to what was spent was decreasing scope.   

 

3 hours ago, Vern Edwards said:

And why total task order "value" instead of amount? Is there some significance to the use of the word "value"?

Yes to some that want to nitpick Milcon about value and amount and those that side with him that the comments were inappropriate.  In context of the question I do not think value is important because it was never about value, as clarified by Milcon,  It was about some "policy" dude saying you can't change the total value with the deobligation because you (Milcon) would be changing scope. 

That is it for me on this one as I am sure everyone gets the "math" so carry on with it as you and Joel will.   What I am sure is that not everyone, most especially ,"policy", does not get scope.

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On 3/18/2021 at 8:02 AM, Milcon said:

Formerfed,

The contracting office is deobligating the unused travel funds. This has nothing to do with the FP CLINS, only the CR travel CLIN.  I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value). 

The thing is is the original dollar amount on the CLIN is an estimate- we often add another CLIN for more travel when needed-(it is all based on new hiring training).  If we don't use it, it is deobligated.  But do I reduce the total task order value when the money is deobligated? Or does the total task order value stay the same.  

My apologies to Milcon. I overlooked the instance where he/she referred to the term “total task order amount” in the same context as “task order value”.

Whether originally stated that way or later edited in response to responders’ questions asking what is meant by “task order value”, it appears now that the term “total task order value” means the “total task order amount” (price). 

 

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3 hours ago, C Culham said:

Scope is not determine[d] on math for form.

Because "scope" has to do with more than math or form.   It has to do with  the type of work, the performance period, and costs between the contract as awarded and the order as issued.  The "and" is not an "or".

Remember Milcon provided this  "I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value)." 

From Government Contract Changes, by Nash and Feldman, 4:5: "A dramatic increase (or decrease) in the contract price also should be an indicator of a cardinal change. Indeed, this issue is frequently a key component for whether the change is out of scope, although it is not a conclusive consideration."

Thus, while scope may involve more than price or total price, a change in price may well be a factor in determining whether there has been a change in scope. And thus, your assertions that "Scope is not determine[d] on math for form." and "Or in other words it has nothing to do with scope." are not correct.

3 hours ago, C Culham said:

Well FPDS-NG rules for one and if I wanted to do research further I suspect there are accounting rules that require it as well or at least strongly imply it along with FAR 4.10. 

FPDS is not a "rule." A CO can determine a total contract or order "value" for purposes of FPDS reporting without stating such a value in a contract or order. And as far as I know nothing in the FPDS-NG User Manual requires that a contracting officer state a "total value" in a contract or an order. If you know of such a requirement, please cite it specifically. And where in FAR Subpart 4.10 does it state that a contract or order must state a total "value"? While every CLIN has a total, I've never heard of establishing a CLIN for something called "total value" or "amount." Did I miss it in FAR Subpart 4.10?

3 hours ago, C Culham said:

To properly account for obligations from the inception of creating one via a contract action to the end.

COs account for obligations at the level of CLINs, not "total value."

3 hours ago, C Culham said:

You bet but not as the singular matter of scope. 

Well, it seems to me that if the purpose of stating "total task order value" is to account for even just some component of scope, it makes the policy shop's stance a reasonable one. Note again the Nash and Feldman reference, above. 

Look, Carl, I also think the policy shop is wrong. But I think it's wrong because "total value" is obviously the sum of the individual values that go into the total, which I presume are CLIN values. And, therefore, I think that when you change any CLIN amount common sense dictates that you should change the total amount. I think my belief is  easily validated by looking at the forms used for orders, which I think are primarily DD Form 1155 and Optional Form 347.

I don't think the policy shop's argument relating a stated "total task order value" to scope makes much sense, not because total value has no bearing on scope, as you so vehemently assert, but because if a scope-of-the-order issue arises the value of the order will be determined on more evidence than any stated value or amount on a form or elsewhere on an order document.

Now, Carl, I can tell that you're upset about this thread (typos). So I don't want to provoke you further. I'll leave that to Joel.

😌

Easy does it, buckaroo. None of this matters. I've learned that.

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3 hours ago, Vern Edwards said:

Now, Carl, I can tell that you're upset about this thread (typos). So I don't want to provoke you further. I'll leave that to Joel.

😌

Easy does it, buckaroo.

Provoking and provocative but not correct.  Like your inference that FPDS-NG isn't a rule.   Reference FAR 4.6.  

Carry on...

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Milcon, Here is my reason for reducing the task order amount,  in response to the stated policy team’s reason for not reducing the task order value, price, total amount here.

The policy team is wrong. The fact that there is no change in scope has no relevance to the instant case here.

The task order contains a CR CLIN for estimated travel. The task order CLIN provides for payment of actual travel costs, not necessarily the estimated travel cost. 

There is no obligation to pay the Contractor the estimated travel CLIN amount that exceeds actual travel costs.

There is no “value” to the task order for funding which exceeds the government’s total obligation to pay the contractor.

The Government can and should deobligate excess travel CLIN funding and reconcile the final CLIN amount with actual,  payable amount of travel cost during the time period for travel covered by the CLIN. The modification does not affect the substantive rights of the parties.

Therefore, reducing the amount of the CLIN, reduces the total task order amount, which is the sum of the CLINs. When a CLIN is revised by the deobligation Mod, the total task order amount is revised, accordingly.

Show policy team how your contracting office calculated the revised total task order price, consistent with the above stated reasons.

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Thank you to everyone that has responded to this thread.  I didn't realize at the time of posting that it would garner so many responses.  I believe that I have the information to go forward and speak to my policy office intelligently and in the future if I decided to ask another question I will make sure there is enough detail so it leads to less confusion.  

Just to clear up any confusion there are two dollar amounts that are tracked- the obligated amount and the total task order value/amount. This team always notes these two numbers on modifications and the obligated amount and total task order value/amount are always different $ amounts due to unfunded options.  This is a FP task order with a CR line for travel that is fully funded at the time of option exercise.  When the travel money is not fully used we deobligate and we would reduce the CLIN by the amount we deobligate which reduces the total task order value/amount. What my policy person in my office is saying is the we should not reduce the CLIN amount but still deobligate the funds- ie we are deobligating 5k from an funded 10K CLIN- the CLIN would still be for 10K but now only funded for 5K.   

From everything that everyone has posted it looks like my team has been doing it correctly and reducing the CLIN to match the amount actually spent.  Again I appreciate all the help!  

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Milcon, thanks for the clarification to the policy person’s position. 

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33 minutes ago, Milcon said:

Just to clear up any confusion there are two dollar amounts that are tracked- the obligated amount and the total task order value/amount. This team always notes these two numbers on modifications and the obligated amount and total task order value/amount are always different $ amounts due to unfunded options. 

Gee whiz, Milcon, you just confused me again. 🤠

Unfunded options are generally not awardable until funded. They should not be included in either the obligated amount or total task order amount/value.

I don’t know why the fiscal amount of unfunded options would be noted in a contract modification. Those are internal government project or program numbers, not part of the contract between the parties.

I’ve never seen contracts or mods track unawarded options. If they are potentially awardable, they are managed outside the contract, aren’t they?

 

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How about this?  Either way is okay.

If a contractor underruns a cost-reimbursement CLIN, it is not necessary to establish a new estimated cost.  For example, it is okay if the estimated (and initially obligated) amount is $10,000 but the actually expended (and amount after de-obligation of excess/unused funds) is $7,000 -- in such a case, it is not necessary after performance is complete to re-establish the estimated cost as a figure that matches the actual cost.  Many contracting persons might do it, and some simple-minded automated systems may require it, but it is not necessary from the perspective of correct principles.

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1 hour ago, ji20874 said:

How about this?  Either way is okay.

If a contractor underruns a cost-reimbursement CLIN, it is not necessary to establish a new estimated cost.  For example, it is okay if the estimated (and initially obligated) amount is $10,000 but the actually expended (and amount after de-obligation of excess/unused funds) is $7,000 -- in such a case, it is not necessary after performance is complete to re-establish the estimated cost as a figure that matches the actual cost.  Many contracting persons might do it, and some simple-minded automated systems may require it, but it is not necessary from the perspective of correct principles.

I don’t disagree concerning the technical necessity to de-obligate excess funding, unless agency policy or agency contracting automated systems require reconciliation.

However, for fiscal management, it ties up underrun obligations that could and probably should be made available to cover other agency needs. Even appropriations that are expired for new obligations remain available for a period of time to cover antecedent  liabilities, such as in-scope modifications. See, for example this thread: 

Maybe a  project/Program management team would want to keep the underrun funding tied up so that it can be made available for other possible in-scope needs on the instant contract. So a program manager may be “bogarting” the funds (not in this thread).

 

Edited by joel hoffman
This policy office isn’t bogarting funds. They have been deobligated
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3 minutes ago, joel hoffman said:

However, for fiscal management, it ties up underrun obligations that could and probably should be made available to cover other agency needs.

No one in this thread has suggested leaving unused funds sitting on the CLIN -- everyone on this thread has supported deobligation of unused/excess funds.

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33 minutes ago, ji20874 said:

No one in this thread has suggested leaving unused funds sitting on the CLIN -- everyone on this thread has supported deobligation of unused/excess funds.

Correct. A requirement or desire not to de-obligate excess funding would be a “policy” matter by a project or program management team, not contracting.

The actual question in this thread may well stem from policy outside the contracting office.  I’ve suspected that the “policy team” is not in the contracting office. But they don’t object to the de-obligation, only the adjustment to the CLIN.

However, when the excess funding is de-obligated, the CLIN amount and task order amount must decrease, accordingly. 

Edited by joel hoffman
Clarify that the policy people in this thread are not bogarting the funds - they have been de-obligated.
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Help me out, Vern.  While it is true that a new estimated cost must be established before a contractor is entitled to reimbursement for an overrun (FAR 52.232-20 or -22), I am not aware of any requirement to establish a new estimated cost for an underrun.  FAR 52.232-20(b)(2) requires a notice from the contractor when the contractor has reason to believe that its costs will be substantially less than the estimate, but it does not require that the agency establish a new estimated cost for that projected underrun.

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