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On 10/25/2021 at 8:15 PM, Corduroy Frog said:

Contracting officers not wanting to pay G&A on travel.

OK, CO's aren't avaricious. They are risk-averse.  

Pro Tip 1: If we are talking about a commercial contract, don't call it "G&A."  As others have noted, very explicitly cite 212-4 Alt 1.

Pro Tip 2:  When conducting price analysis for a competitive commercial contract, which includes travel as part of T&M line item, nobody cares about your "G&A" rate on travel.  Honestly, just make it zero, and mark up some other T or M element (legally and following the rules, of course), so net change is zero.

 

For the record, CO here who dislikes travel as ODC in my commercial contracts.  Because:

1) The line item including travel is now T&M, which

  • triggers some rather onerous procedures per 12.207 (b).  In particular, getting HCA approval if the PoP > 3 years.  
  • makes the contract no longer fixed price.  Executive dashboard KPI needles move, in the wrong direction.

2) If the conditions of 12.207 (b) (1) (i) - basically, it must be competitively awarded - cannot be met, then T&M, and therefore travel, is verboten, or its not commercial.

3) I do not like dealing with, and know very little about, indirect costs.  For example, G&A vs. Material Handling.  What's the difference?  Do I even need to care for competitive commercial contracts?  I'd rather not think about it at all.

4) My customer, the requiring activity hates, just hates, both

  • obligating money upfront for theoretical travel which may never occur AND
  • not obligating money upfront for actual travel which needs to happen but for which there is no longer sufficient remaining money. 

 

 

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Maybe an example can clear the water:

Assume "Starving Tech" - a small contractor has been awarded a T&M contract, with CLIN001 for $600,000 to fund and accommodate T&M billings, and a Cost-plus CLIN002 for Travel for $20,000.  The contract contains the infamous Alt I.

Starving Tech is somehow aware of the perils of Alt I, and negotiates $2000 in indirect add-ons, leaving $18,000 in direct travel.  If this were a G&A rate, it would be 11.11%.  The contracting officer didn't really want to pay this, but it was negotiated.

But after the option is over, the valid direct charges to CLIN002 Travel is only $2500.  But according to the fixed price allowance for indirect, Starving Tech is entitled to $2000 as negotiated.  Had the CO agreed to a G&A rate, $278 would be all the G&A that could be billed.

Total for CLIN002 is $4500, instead of $2778.  Has the Govt shot itself in the foot with this strategy?

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9 hours ago, Corduroy Frog said:

...a Cost-plus CLIN002 for Travel...

If CLIN002 is "Cost-plus," as you say, then use of Alt. I to FAR 52.212-4 is error.  Alt. I is only for T&M contracts (or CLINs), not cost-reimbursement contracts (or CLINs).  They are not the same.  And Alt. I is further only for T&M contracts for commercial items, and your contract cannot be for commercial items since cost-reimbursement is prohibited in commercial item contracts.

Your example fails to make your case.

Since your contract has both T&M and cost-reimbursement CLINs, it should have c ntract clauses appropriate for both.  Sloppy contracts make for sloppy outcomes.  Using the proper clause (such as FAR 52.216-7) for a cost-reimbursement CLIN would allow for the floating G&A rate you desire.  Maybe your client should negotiate for cost-reimbursement clauses for cost-reimbursement CLINs?

BTW, it seems the contractor in your example should be happy.  It came out pretty good, and didn't have to maintain the expensive records system normally required for cost-reimbursement contracts.  And the agency didn't have to go through the indirect costs audits normally required for cost-reimbursement situations. In your example, sloppy as it is, the contractor received exactly what it bargained for -- what is the problem?

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8 hours ago, Corduroy Frog said:

Maybe an example can clear the water:

Assume "Starving Tech" - a small contractor has been awarded a T&M contract, with CLIN001 for $600,000 to fund and accommodate T&M billings, and a Cost-plus CLIN002 for Travel for $20,000.  The contract contains the infamous Alt I.

Starving Tech is somehow aware of the perils of Alt I, and negotiates $2000 in indirect add-ons, leaving $18,000 in direct travel.  If this were a G&A rate, it would be 11.11%.  The contracting officer didn't really want to pay this, but it was negotiated.

But after the option is over, the valid direct charges to CLIN002 Travel is only $2500.  But according to the fixed price allowance for indirect, Starving Tech is entitled to $2000 as negotiated.  Had the CO agreed to a G&A rate, $278 would be all the G&A that could be billed.

Total for CLIN002 is $4500, instead of $2778.  Has the Govt shot itself in the foot with this strategy?

@Corduroy FrogIt's a good thing for your consulting practice that you are not posting under your own name, because you clearly don't know enough about the issue to provide advice to anyone, especially not for money. That "example" is absurd. If it's real, cite the contract number.

If your point is that COs are not negotiating fair deals with contractors, you have made it. Enough from you is enough.

And read the article about contract line items that was posted to Wifcon a few days ago.

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I appreciated the  @General.Zhukov post as I was headed down the same road when it appeared.  Yet I am not in 100% agreement on the risk adverse comment.   Unfortunately I am more inclined to echo a much stated opinion in Forum that is something to the effect about a acquisition workforce that has lost its direction which is to an extent agreement with @Corduroy Frog.

As to the example presented by @Corduroy Frogbeing absurd I am not so sure.   Acknowledging that I discarded a post that was similar to @General.Zhukov I took some time this morning - like an hour - and plowed through some internet searches and SAM.gov.   At this point in this topic I just shake my head, in part even at me. 

Some may and some may not but I do invite you to glance at the following and use a "Find" tool to drill down to the see what caught my eye. 

 https://www.transit.dot.gov/funding/procurement/third-party-procurement/time-materials-contracts    This is a website to give advice to Federal Transit third party entities that would contract for needs with Transit's money.   I understand referenced updates are dated but I believe this is the most current.  No tool use needed, it is just an interesting read.

The following are examples of three different entities TM solicitations -

https://sam.gov/opp/c2278d7a7d834a8db8e67ae2fe6164eb/view   DOD.  Pull up the solicitation Find 52.212-4 (absent Alt 1) and its "addendum".

https://sam.gov/opp/ac1f624c56adff21b270582d0fa65e14/view  Homeland Security.  Pull up the .pdf for the work statement and payment schedule and Find travel.  Also look at the reference to 52.212-4.

https://sam.gov/opp/8bd770ec632db2d54265c6fe720a2bc3/view  Department of Interior.  Find 52.212-4 and its addendum, and indirect.   PS the laser light show on the dam is actually kind of cool.

Confusion and absurdity exists!

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15 minutes ago, C Culham said:

As to the example presented by @Corduroy Frogbeing absurd I am not so sure.   

Not sure? Really?

So a contracting officer writes a T&M contract for commercial items and includes a cost-reimbursement CLIN for travel? Why on earth would a CO do that? To get around the pro-rata fixed amount in 52.212-4, Alt. I? And that would not be a FAR deviation?

And then, in connection with the cost-reimbursement CLIN, the fool of a CO negotiates a fixed lump sum amount to cover indirect costs?

And you are not sure that's absurd?

15 minutes ago, C Culham said:

Confusion and absurdity exists!

Yes. In confused, absurd, and ignorant minds.

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4 minutes ago, Vern Edwards said:

Not sure? Really?

You might have taken my comment wrongly but if not I will be more forthcoming.  Your challenge to Frog as his example as being absurd is not in my opinion and quick research as far fetched a you exclaim it to be.   No doubt you did not take time to explore the references I provided  but in my casual search of SAM.gov this morning I randomly looked at 3 of over 2,000 hits I got.  Point blank not one was in alignment with the essentials of the posts you have made about TM contracts in this thread.  

 

18 minutes ago, ji20874 said:

Right!  So let's use this forum to teach correct principles...

On my part I continue to try but truthfully in using this specific thread as an example the correct principles are just what people make them to be.  By example in specific discussion I have heard nothing, with references, whether a contractor rather the CO is to "fill in" the information in 52.212-4 Alt 1.   It is just what people (me included) make it to be because in truth the FAR is both silent and confusing on the topic leaving it to ones imagination.   Confusing!  Confusion that leads to the absurd.  Absurdity not because of ignorant minds but of closed minds that would rather challenge and then not accept true examples because, well by their own profession they do not have to!

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2 hours ago, C Culham said:

By example in specific discussion I have heard nothing, with references, whether a contractor rather the CO is to "fill in" the information in 52.212-4 Alt 1. 

The parties must AGREE to a pro-rata fixed dollar amount in paragraph (i)(1)(ii)(D)(2) for indirect costs and a schedule of payments, rather than a percentage rate. (The FAR councils thought that inserting a percentage rate would violate the cost-plus-a-percentage-of-cost prohibition. The frog seems to be ignorant of that prohibition.) The amount might be $0. It doesn't matter who proposes the amount—contractor or CO. They ultimately must AGREE to an amount if they want a contract. (That's Contract Law 101 for professionals.)

There is no reason for a professional to be confused. As a CO conducting a procurement for a commercial item T&M contract, I would invite the prospective contractor(s) to propose an amount and a schedule of payments. If I were determined not to pay any amount, I would insert "$0" and tell the prospective contractor(s) that the amount is non-negotiable.

As for accepting "true examples," even if the frog's example is "true," which I question, there is no reason to accept it. Only a fool of a CO would do or agree to do such a thing. And if the CO's agency has a competent review function they would reject any attempt to do it and cancel the CO's warrant after stamping it FOOL.

As for the sources of confusion, much of the confusion in this thread has been caused by people who wrote sentences like this:

Quote

My belief is aligned with the negotiation aspect buffered by the sad fact  a fill-in derived by the Government that fails to recognize travel G&A, or the Government otherwise does not accept that travel is a "material" and therefore can have "material handling costs' attributed to the material price in a TM commercial item contract does not understand the reality of business.

Such writing is not associated with any reality of which I am aware.

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Carl,

You searched for and found some examples that might show a lack of understanding of correct principles by some contracting officers.  I don't want to argue whether there are bad examples out there (there are) or whether the frog's example is bad (it is).  I want to help teach correct principles.

Please over-look all the bad examples our there, and let's focus on correct principles for the benefit of our reading audience.  I think the following is a good list of correct principles regarding indirect costs on Materials for T&M contracts for commercial items--

  • A T&M contract for commercial items will include the clause at FAR 52.212-4 with its Alt. I.
  • The Alt. I allows for a fixed amount fill-in for indirect costs on Materials.
  • If an offeror wants payment for G&A costs (or any other indirect costs) on Travel (or any other Materials), it should include a fixed amount for that purpose in its proposal as a fill-in for Alt. I.
  • If an offeror does not make such a proposal, or if the offerer accepts a contract with $0 as the fill-in, then the offeror has zero post-award entitlement to such payment.

Do you see any error in my list of correct principles?  I am presenting them as "correct" as my professional opinion, with a hope of being helpful to our reading audience.

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  • A T&M contract for commercial items MUST include the clause at FAR 52.212-4, Alt. I.
  • Paragraph (i)(1)(ii)(D)(2) requires (1) a pro-rata fixed amount and (2) a payment schedule as the basis for payment of indirect costs. The parties can agree to $0.
  • COs who insist on $0 are taking a tough, perhaps unreasonable, stance in negotiations. But they are within their rights.
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@ji20874 thank you for a possible fix.  Please consider my professional opinion along the others provided or to be provided.

 

  • A T&M contract for commercial items MUST include the clause at FAR 52.212-4, Alt. I.
  • Paragraph (i)(1)(ii)(D)(2) provides for (1) a fixed amount and (2) a payment schedule to reimburse that amount on a pro-rata basis for Indirect Costs should Indirect Costs not be included in the Hourly rate or Material payment item (CLIN). The parties can agree to $0 if applicable Indirect Costs are otherwise included in the Hourly rate/Material payment items (CLIN).
    • Per FAR 12.302(b) Paragraph (i) of the Alt I cannot be tailored; fill-ins are permissible as noted by Alt I.
  • If an offeror wants payment for G&A costs (or any other indirect costs) not included in the Hourly rate and/or Materials, the offeror should propose a fixed amount for that purpose in its proposal as a fill-in for Alt. I Paragraph (i)(1)(ii)(D)(2).
  • If an offeror does not make such a proposal, or otherwise does not negotiate an amount, for the fill-in and the offeror accepts a contract with $0 as the fill-in, then the offeror has zero post-award entitlement to a pro-rata fixed amount for in-directs.
    • Note that acceptance has different meanings for a quote versus a firm offer and the offeror should be aware of this difference when proposing and negotiating with regard to the fill-in.
  • COs who insist on $0 if in-directs are not otherwise included in Hourly rate and/Materials are taking a tough, perhaps unreasonable, stance in negotiations. But they are within their rights.
    • Unreasonable may be where the offeror’s usual practice is to not have indirect costs in its proposed price for hourly rates and/or materials as supported by the offeror’s usual accounting practices.

 

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Carl,

I have taken your bullets and edited them to show my understanding of correct principles.  We're only talking about indirect costs on Materials, so I deleted everything related to Hourly Rates -- I don't want our readers to conflate these.  I also disagree with a couple of your "if" statements.  Finally, any particular offeror's usual accounting practices are irrelevant in determining a contracting officer's unreasonableness in this matter.  My edits are shown within brackets.  I hope this will be helpful for the original poster and any other readers.

  • A T&M contract for commercial items MUST include the clause at FAR 52.212-4, Alt. I.
  • Paragraph (i)(1)(ii)(D)(2) provides for (1) a fixed amount [for indirect costs on Materials] and (2) a payment schedule to reimburse that amount on a pro-rata basis [for Indirect Costs should Indirect Costs not be included in the Hourly rate or Material payment item (CLIN)]. The parties can agree to $0 [if applicable Indirect Costs are otherwise included in the Hourly rate/Material payment items (CLIN)].
    • Per FAR 12.302(b) Paragraph (i) of the Alt I cannot be tailored; fill-ins are permissible as noted by Alt I.
  • If an offeror wants payment for G&A costs (or any other indirect costs) [not included in the Hourly rate and/or on] Materials, the offeror should propose a fixed amount for that purpose in its proposal as a fill-in for Alt. I Paragraph (i)(1)(ii)(D)(2).
  • If an offeror does not make such a proposal, or otherwise does not negotiate an amount, for the fill-in and the offeror accepts a contract with $0 as the fill-in, then the offeror has zero post-award entitlement to [a pro-rata fixed any] amount for in-directs.
    • Note that acceptance has different meanings for a quote versus a firm offer and the offeror should be aware of this difference when proposing and negotiating with regard to the fill-in.
  • COs who insist on $0 [if in-directs are not otherwise included in Hourly rate and/Materials] are taking a tough, perhaps unreasonable, stance in negotiations. But they are within their rights.
    • [Unreasonable may be where the offeror’s usual practice is to not have indirect costs in its proposed price for hourly rates and/or materials as supported by the offeror’s usual accounting practices.]

 

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Just now, ji20874 said:

my understanding of correct principles.

Your understanding is not consistent with how others, yes including me, have addressed Indirect.   If our attempt is to promote consistency and hopefully a meeting of the minds that is acceptable to all then I offer this. 

 As we have discussed FAR 31 and FAR 15 cost analysis does not apply to a CI TM (only) contract.   Therefore no one knows what the offerors price might or might not include.  So if you are leaving it to the offeror to price the fill-ins good faith and fair dealing seems to come into play.   So in one more whack at the bullets how about this?

  • A  T&M contract for commercial items MUST include the clause at FAR 52.212-4, Alt. I.
    • A hybrid commercial item contract that includes TM and Fixed Price CLINS may include the Alt 1 as well as other clauses as applicable that address indirect costs. 
  • Paragraph (i)(1)(ii)(D)(2) of Alt 1 provides for (1) a fixed amount and (2) a payment schedule to reimburse that amount on a pro-rata basis for Indirect Costs. Should indirect costs NOT BE INCLUDED in the Hourly rate or Material price of a TM CLIN the offeror should propose a fill-in amount. If the offeror has proposed a Hourly rate and/or Material reimbursement TM CLIN price that DOES INCLUDE indirect the offeror should not propose a fill-in amount. 
    • Per FAR 12.302(b) Paragraph (i) of the Alt I cannot be tailored; fill-ins are permissible as noted by Alt I.
  • If an offeror does not make a proposal , or otherwise does not negotiate an amount, for the fill-in and the offeror accepts a contract with $0 as the fill-in, then the offeror has zero post-award entitlement to a pro-rata fixed amount for indirect costs.
    • Note that acceptance has different meanings for a quote versus a firm offer and the offeror should be aware of this difference when proposing and negotiating with regard to the fill-in.
  • COs who insist on $0 for the fill-in with out knowing the contractors pricing approach are taking a tough, perhaps unreasonable, stance in negotiations. But they are within their rights.
    • Unreasonable may be where the offeror’s usual practice is to not have indirect costs in its proposed price for hourly rates and/or materials as supported by the offeror’s usual accounting practices.  In the hierarchy of FAR guiding principles (FAR 15.404-1(b))of price analysis a CO, should not know and does not need to know where indirect amounts might be unless price competition received indicates a closer look of the offeror's pricing is necessary.  At such a point the CO may use, and is not limited to just the price analysis techniques listed in FAR 15.404-1(b) to determine the offeror's approach to indirect. 
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I don't think we will come to agreement regarding indirect costs on Materials for T&M contracts for commercial items.  I take care not to carry baggage from FAR 52.216-7 and 52.232-7 into commercial item contracts -- I see those clauses (and all the baggage associated with them) as wholly irrelevant to T&M contracts for commercial items.  It is an entirely new paradigm.

I am not aware of the clause you are referencing to deal with reimbursing a contractor's indirect costs in fixed-price arrangements.  In my practice, I do not reimburse a contractor's indirect costs on a fixed-price contract -- I simply pay the fixed-price.

I cannot join you in conflating Hourly Rate and Materials, and treating indirects on both of those the same way in the same sentence.  I see them as fundamentally different.

I disagree that an offeror can include indirect costs on Materials as part of its direct costs.  Alt. I says the government will pay actual costs for Materials, plus a separate fixed amount for indirect costs.  The indirect costs must be handled separately from the actual costs, and submitting an invoice that includes indirect costs in the actual costs would seem too me to be illegal or at least improper.

My recommendation for anyone awarding or administering a T&M contract for commercial items is to forget everything you learned from FAR 52.216-7 and 52.232-7, and to rely solely on a careful reading of FAR 52.212-4 with its Alt. I.  

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8 hours ago, ji20874 said:

It is an entirely new paradigm.

Agreed.

 

8 hours ago, ji20874 said:

I am not aware of the clause you are referencing to deal with reimbursing a contractor's indirect costs in fixed-price arrangements.  In my practice, I do not reimburse a contractor's indirect costs on a fixed-price contract -- I simply pay the fixed-price.

I am referencing Alt I.    More specifically Alt I says this (emphasis added) - "Indirect Costs (Material Handling, Subcontract Administration, etc.). The Government will reimburse the Contractor for indirect costs on a pro-rata basis over the period of contract performance at the following fixed price:"  I think you my have confused my wording some how that I was referring to a FP contract.   I was not, the reference was to Alt I for TM using its explicit wording.

8 hours ago, ji20874 said:

I cannot join you in conflating Hourly Rate and Materials, and treating indirects on both of those the same way in the same sentence.  I see them as fundamentally different.

I understand you cannot but contractors do.  My intent is not to try and convince you but rather help improve bulleted advice matrix for the world.

8 hours ago, ji20874 said:

I disagree that an offeror can include indirect costs on Materials as part of its direct costs.  Alt. I says the government will pay actual costs for Materials, plus a separate fixed amount for indirect costs.  The indirect costs must be handled separately from the actual costs, and submitting an invoice that includes indirect costs in the actual costs would seem too me to be illegal or at least improper.

I know but my question is how do you know if an offeror is or is not including indirect on materials when you are depending on price analysis?  And should you care if you have adequate competition?   By me posing the questions Alt I says the contractor will be paid at actual cost, the contractor can use its own materials and that actual cost for those "own" can  not exceed the offeror's catalog or market price.   Think Jakes Lumber Yard that gets a CI TM contract to build a wood fence around a facility and pulls the necessary lumber from their own stock.  

8 hours ago, ji20874 said:

My recommendation for anyone awarding or administering a T&M contract for commercial items is to forget everything you learned from FAR 52.216-7 and 52.232-7, and to rely solely on a careful reading of FAR 52.212-4 with its Alt. I.  

And so.....

  • A  T&M contract for commercial items MUST include the clause at FAR 52.212-4, Alt. I.
    • A hybrid commercial item contract that includes TM and Fixed Price CLINS may include the Alt 1 as well as other clauses as applicable that address indirect costs for the Fixed Price portion of the contract. 
  • Indirect Costs- Paragraph (i)(1)(ii)(D)(2) of Alt 1 provides for (1) a fixed amount and (2) a payment schedule to reimburse (pay) that amount on a pro-rata basis for Indirect Costs. Should indirect costs NOT BE INCLUDED in the Hourly rate, Material price and/or Other Direct Cost of a TM CLIN the offeror should propose a fill-in amount. If the offeror has proposed a Hourly rate, Material reimbursement and/or Other Direct Cost TM CLIN price that DOES INCLUDE indirect the offeror should take that into consideration with regard to proposing a Indirect fixed price for the fill-in. 
    • Material is reimbursed (paid) at actual cost to the contractor noting that materials from the contractors own stock will be reimbursed (paid) at an amount not more than the contractors catalog or market price for such material. 
    • Other Direct Costs - If purchased or otherwise not provided on the contractors own basis the actual cost the contractor secures the needs is what will be reimbursed (paid).  If direct costs are on the contractors own basis (contractor per diem, contractor owned computer usage, contractor's own transport buses)such contractor cost will be reimbursed and shall not exceed the contractors catalog or market price.
    • Per FAR 12.302(b) Paragraph (i) of the Alt I cannot be tailored; fill-ins are permissible as noted by Alt I.
  • If an offeror does not make a proposal , or otherwise does not negotiate an amount, for the fill-in and the offeror accepts a contract with $0 as the fill-in, then the offeror has zero post-award entitlement to a pro-rata fixed amount for indirect costs.
    • Note that acceptance has different meanings for a quote versus a firm offer and the offeror should be aware of this difference when proposing and negotiating with regard to the fill-in.
  • COs who insist on $0 for the fill-in with out knowing the contractors pricing approach are taking a tough, perhaps unreasonable, stance in negotiations. But they are within their rights.
    • Unreasonable may be where the offeror’s usual practice is to not have indirect costs in its proposed price for hourly rates, materials (such as material from the contractors own stock) and other direct (like a computer usage charge based on the contractors catalog or market price) as supported by the offeror’s usual accounting practices.  In the hierarchy of FAR guiding principles (FAR 15.404-1(b))of price analysis a CO, should not know and does not need to know where indirect amounts might be unless price competition received indicates a closer look of the offeror's pricing is necessary.  At such a point the CO may use, and is not limited to just the price analysis techniques listed in FAR 15.404-1(b) to determine the offeror's approach to indirect. 
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12 hours ago, ji20874 said:

I disagree that an offeror can include indirect costs on Materials as part of its direct costs.  Alt. I says the government will pay actual costs for Materials, plus a separate fixed amount for indirect costs.  The indirect costs must be handled separately from the actual costs

ji, under general accounting principles, the actual cost of an item includes all costs, both direct and indirect.  I don't interpret Alt I as prohibiting pricing material in this way.  However, if the contractor did price material in this way, I would have a problem adding an additional kicker to it as a part of the lump sum for material handling.

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2 hours ago, Retreadfed said:

ji, under general accounting principles, the actual cost of an item includes all costs, both direct and indirect. 

Please cite that "general accounting principle," and then explain how it applies to the pricing of a government contract.

Here is what the clause says:

Quote

(D) Other Costs. Unless listed below, other direct and indirect costs will not be reimbursed.

(1) Other Direct Costs. The Government will reimburse the Contractor on the basis of actual cost for the following, provided such costs comply with the requirements in paragraph (i)(1)(ii)(B) of this clause: [Insert each element of other direct costs (e.g., travel, computer usage charges, etc. Insert “None” if no reimbursement for other direct costs will be provided. If this is an indefinite delivery contract, the Contracting Officer may insert “Each order must list separately the elements of other direct charge(s) for that order or, if no reimbursement for other direct costs will be provided, insert ‘None’”.]

(2) Indirect Costs (Material Handling, Subcontract Administration, etc.). The Government will reimburse the Contractor for indirect costs on a pro-rata basis over the period of contract performance at the following fixed price: [Insert a fixed amount for the indirect costs and payment schedule. Insert “$0” if no fixed price reimbursement for indirect costs will be provided. (If this is an indefinite delivery contract, the Contracting Officer may insert “Each order must list separately the fixed amount for the indirect costs and payment schedule or, if no reimbursement for indirect costs, insert ‘None’).”]

Since the clause expressly states how the government will pay for indirect costs, please explain how the contractor can include indirect costs in the other direct costs. By the terms of the clause, travel is an ODC.

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50 minutes ago, Vern Edwards said:

Please cite that "general accounting principle," and then explain how it applies to the pricing of a government contract.

More from Alt I...

"(B) Except as provided for in paragraph (i)(1)(ii)(A) and (D)(2) of this clause, the Government will reimburse the Contractor the actual cost of materials (less any rebates, refunds, or discounts received by the contractor that are identifiable to the contract) provided the Contractor-"

Jakes Lumber Yard  actual cost of acquiring the asset (inventory is an asset) in their stock, the material they will incorporate into the work, includes all costs necessary to acquire the asset, hence the ODCs they expended to acquire the asset that becomes the material of the contractors that is used in the work.

 

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As an addendum to this discussion,

 

True story about the last time I had to deal with travel on a contract.

Travel was a topic of discussions with the contractor and program office.  It was all very confusing to them, and if I am being honest, to me too.  We were going around in circles, not entirely unlike this thread.  Ultimately, the contractor proposed that travel should just be FFP.   We crunched numbers and came to something like $1,500 per "travel event."   If the contractor flew on a private jet, we don't care.  If they eat ramen and stayed in their sister's spare bedroom, we also don't care.  Made program happy, because this makes travel like an optional FFP line item - something they know and understand (unlike ODC).

This was a commercial open-market services & software contract valued at about a $1M.  Did not use FAR 15 procedures.  So far as I could tell, what we did was legal and compliant, and resulted in a fair and reasonable price.  Although I wouldn't bet my paycheck on that.         

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On 10/28/2021 at 7:58 AM, Vern Edwards said:

@Corduroy FrogIt's a good thing for your consulting practice that you are not posting under your own name, because you clearly don't know enough about the issue to provide advice to anyone, especially not for money. That "example" is absurd. If it's real, cite the contract number.

 

Vern, my name is Ron Jordan - I live in Manchester Tennessee at 802 Parks St.  Ask anyone in town and they can tell you where I live.  I work for money as an accountant, not a contracts consultant.

And of course, the example is not real.  Hypothetical.

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