Jump to content
The Wifcon Forums and Blogs

Recommended Posts

 

On 3/4/2022 at 11:14 AM, joel hoffman said:

Isn’t Assad saying “Proposal preparation and negotiation support costs…or [not] required by a contract are by definition to be indirectly charged to contracts through the Bid and Proposal (B&P) indirect cost pool.

 

On 3/4/2022 at 11:49 AM, here_2_help said:

Yes…

 

Link to comment
Share on other sites

The question is whether the cost of proposals and negotiations required by contract that are allocated indirectly are to be treated "as being B&P costs."

The reason why that is important is that there are distinct management issues and concerns that pertain specifically to each kind of proposal costs. See, for instance, DFARS 242.771. See also 10 USC § 3763 (formerly § 2372a).

While contractually required costs may be allocated indirectly under appropriate circumstances, such costs do not become B&P when so allocated and should not be treated "as being B&P."

Link to comment
Share on other sites

34 minutes ago, Vern Edwards said:

The question is whether the cost of proposals and negotiations required by contract that are allocated indirectly are to be treated "as being B&P costs."

The reason why that is important is that there are distinct management issues and concerns that pertain specifically to each kind of proposal costs. See, for instance, DFARS 242.771. See also 10 USC § 3763 (formerly § 2372a).

While contractually required costs may be allocated indirectly under appropriate circumstances, such costs do not become B&P when so allocated and should not be treated "as being B&P."

Correct. That’s what Assad said and H2H agreed with me when I asked isn’t that what Assad was saying. 

Link to comment
Share on other sites

@joel hoffmanWhy are you inserting yourself at this point?

This morning, H2H said:

5 hours ago, here_2_help said:

Shay Assad's directive, link provided earlier in the thread, provides that DoD will accept contract negotiation costs as being B&P costs, so long as the contractor treats them that way consistently.

My emphasis. I've asked him for clarification. He's a big boy. He doesn't need your help. Why don't you just wait for him to respond to my query?

Stand by, for Pete's sake.

 

 

Link to comment
Share on other sites

6 hours ago, Vern Edwards said:

Emphasis added.

@here_2_helpI consider you an expert in these matters and so am hesitant to disagree with you. But I'm not certain about what you are meant by the quoted sentence. When you say "contract negotiation costs" do you mean the cost of proposals and negotiations required by contract? If so, then I must disagree with you. I wonder if I have misinterpreted you.

48 CFR 31.205-18 defines "bid and proposal costs" as follows:

48 CFR 9904.420-30(a)(2) (CAS 420) defines "bid and proposal cost" as follows:

Those regulations appear in the current Code of Federal Regulations (CFR) and have the force and effect of law.

I am holding Shay Assad's November 10, 2011 memorandum, the one you cited last Friday at 9:00 a.m. and this morning. It is entitled, "Memorandum." The word "directive" does not appear therein, neither does the word "shall."  The word that I see is "guidance." It contains six paragraphs. Nowhere therein do I see any sentence that says  DOD will accept the costs of proposals and negotiations required by a contract "as being B&P costs."

My point is that while the costs of preparing and negotiating a proposal that is required by contract may be charged as indirect costs under certain circumstances, as provided by FAR 31.202, charging them as such does not make them "bid and proposal costs" as defined by FAR and CAS.

That is my only point. It's a narrow point, but I think it is an important one. COs should understand the different purposes and roles of the two kinds of proposal costs.

Do you take issue with my point? Do you think that Assad said that proposal and negotiation costs required by contract can be treated "as being B&P costs" as defined by FAR and CAS? If so, would you point out the paragraph and sentence in which Assad said that? If I missed it and he did say it, do you think it was sound guidance.

I apologize if I'm just being a blockhead in the way I read and am reacting to your last post. 

 

Okay. First, I used the incorrect term. I said "directive" instead of "memorandum." I was too loose with my language.

Second, I have already agreed with you regarding the distinction between directly charged proposal preparation costs and "B&P" costs. I have already agreed that there is a third category - proposal preparation costs that are required by contract but not directly charged to a contract because the contractor elects not to do so. I have pointed out that, in practice, that third category does not exist. I used the Assad MEMORANDUM to show that not even DoD makes that distinction, even though you are absolutely correct to do so.

My final point was that negotiation costs may or may not be part of B&P expenses (or, for completeness. directly charged proposal preparation expenses). A contractor's policies and procedures will control the treatment (which must be consistently applied). Some contractors will treat negotiation costs as being part of proposal preparation expenses; others will not. I pointed once again to the Assad MEMORANDUM as support for the notion that DoD will accept such support expenses as being part of B&P (or, directly charged proposal preparation expenses).

To be very clear: such costs as negotiation need not be charged direct, even if "required" because it is the contractor's consistent practice that will control. If the contractor does not charge negotiation expenses as part of B&P costs, then it will not charge them as part of directly charged proposal preparation expenses. Conversely, if it does then it will.

That's it. Those are all my points. Everything else is loose language for which I apologize if there was any confusion caused.

Link to comment
Share on other sites

Thanks, H2H, but I cannot find anything in the Assad memo that supports the following assertion:

1 hour ago, here_2_help said:

I pointed once again to the Assad MEMORANDUM as support for the notion that DoD will accept such support expenses as being part of B&P (or, directly charged proposal preparation expenses).

My emphasis.

That memo consists of exactly 20 sentences. I have read each and every one. And, unless I am losing it, or have been blinded by prejudice, not one of those 20 sentences supports that assertion. (Could we be talking about different memos?)

Maybe I just don't understand what you mean by "such support expenses." It's either that or I disagree with what you seem to be saying.

But I'll let it go. I know what I think, and that's enough for me. Costs incurred for the preparation of proposals that are required by contract are not, and by official definition cannot be, considered or treated as bid and proposal (B&P) costs. There are requirements that apply to B&P that do not apply to the other costs, no matter how they are allocated. Whether they are charged as direct or indirect depends on circumstances and the contractor's established accounting practices. See FAR 31.202. If they are charged as indirect, they are not B&P costs just for that reason.

Best,

Vern

P.S. I remember disputes such as this among the senior contract specialists when I was a newbie. They were often just matters of confusion over communications transmitted and received.

 

Link to comment
Share on other sites

19 minutes ago, Vern Edwards said:

Thanks, H2H, but I cannot find anything in the Assad memo that supports the following assertion:

My emphasis.

That memo consists of exactly 20 sentences. I have read each and every one. And, unless I am losing it, or have been blinded by prejudice, not one of those 20 sentences supports that assertion. (Could we be talking about different memos?)

Maybe I just don't understand what you mean by "such support expenses." It's either that or I disagree with what you seem to be saying.

But I'll let it go. I know what I think, and that's enough for me. Costs incurred for the preparation of proposals that are required by contract are not, and by official definition cannot be, considered or treated as bid and proposal (B&P) costs. There are requirements that apply to B&P that do not apply to the other costs, no matter how they are allocated. Whether they are charged as direct or indirect depends on circumstances and the contractor's established accounting practices. See FAR 31.202. If they are charged as indirect, they are not B&P costs just for that reason.

Best,

Vern

P.S. I remember disputes such as this among the senior contract specialists when I was a newbie. They were often just matters of confusion over communications transmitted and received.

 

Vern, please read the first sentence of the Assad Memo one more time. The very first sentence. The one I quoted earlier in the thread.

To your point, I don't think we really have a disagreement. We are, in the vernacular, "talking past each other."

Best to you!

Link to comment
Share on other sites

@here_2_help

11 hours ago, here_2_help said:

Vern, please read the first sentence of the Assad Memo one more time. The very first sentence. The one I quoted earlier in the thread.

The first sentence in the Assad memo says:

Quote

Proposal preparation and negotiation support costs not funded by a grant or required by a contract are by definition to be indirectly charged to contracts through the Bid and Proposal (B&P) indirect cost pool.

The definition of B&P in FAR 31.205-18:

Quote

Bid and proposal (B&P) costs means the costs incurred in preparing, submitting, and supporting bids and proposals (whether or not solicited) on potential Government or non-Government contracts. The term does not include the costs of effort sponsored by a grant or cooperative agreement, or required in the performance of a contract.

So Assad's first sentence makes sense to me.

But we have been talking about proposal preparation and negotiation costs that are required by contract. Those are ordinarily allocated as direct costs of the contract which required the proposal and negotiation support. However, FAR 31.202 says:

Quote

(b) For reasons of practicality, the contractor may treat any direct cost of a minor dollar amount as an indirect cost if the accounting treatment-

           (1) Is consistently applied to all final cost objectives; and

           (2) Produces substantially the same results as treating the cost as a direct cost .

Much earlier in this thread you agreed with me that charging proposal and negotiation costs required by contract does not turn them into B&P costs.

On 3/4/2022 at 8:27 AM, Vern Edwards said:

@here_2_helpI don't think indirectly charged contractually-required proposal costs are B&P either. They are just contractually-required proposal costs that are allocated to an indirect cost pool. Charging such costs indirectly does not turn them into "bid and proposal costs" as defined by FAR.

Am I wrong about that?

On 3/4/2022 at 9:00 AM, here_2_help said:

No, you're not wrong, though in practice nobody really ever makes that distinction. It's simply a choice between direct contract costs and B&P. 

(I should have challenged you on that business about "in practice nobody really ever makes that distinction," because it is demonstrably false. But I let it go, because I know that people in our business can be careless about terminology.)

But then you said:

18 hours ago, Vern Edwards said:

Shay Assad's directive, link provided earlier in the thread, provides that DoD will accept contract negotiation costs as being B&P costs, so long as the contractor treats them that way consistently.

The phrase "as being B&P costs" in that comment threw me for two reasons. First, because it seems to erase the important distinction between (1) proposal and negotiation costs that ARE required by contract and (2) B&P costs, which are such costs that are NOT required by contract.  Second, it threw me because Assad's memo says no such thing! Not even close!

Yesterday, you said:

12 hours ago, here_2_help said:

My final point was that negotiation costs may or may not be part of B&P expenses (or, for completeness. directly charged proposal preparation expenses).

My emphasis. Again, your words seem to erase the distinction between proposal and negotiation costs required by contract and B&P costs by saying that costs required by contract may or may not be "part of B&P expenses"!

I think we agree, but you have not been precise in the way you have expressed yourself in some of your posts in this thread. You know me. Imprecision can hurt businesses. That's why they have to resort to lawyers.

Words and sentences matter in the contracting world. That's why I try to "mimic" lawyers, because the best of them know that, and they have taught me. Unschooled and inexperienced people are easily confused and misled by careless language about complicated, even esoteric, business matters. We must not mislead unschooled and inexperienced readers who come to this site "to learn," as they like to say.

I shall now say what I think you mean:

Proposal and negotiation costs that are required by a contract are to be allocated as direct costs of that contract, but may in some cases—for sake of "practicality,"—be allocated as indirect costs in the same way as B&P costs. However, the two categories of cost remain distinct, even when both are allocated as indirect costs. Thus, requirements that expressly apply to B&P costs, such as 10 USC 3763, DFARS 242.771-1, and many others, do not apply to proposal and negotiation costs that are required by contract, not even when they are allocated as indirect costs.

Does that work for you? If it does, then we can close the book on this topic.

And while we're at it, "selling costs," which are mentioned in the title of this thread, are not the same as B&P costs.

I have the highest respect for you as a professional and a practitioner. Website chat sites are not the best place to discuss legally complex matters.

Best,

Vern

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...