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eklene

Cost Reimbursement Contract - Rebudgeting between direct cost line items

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We (non-profit organization) have a cost reimbursement contract from DOE and need to rebudget between direct cost line items to allow for more spending on labor and less on travel. We will not exceed the total contract value.

For DOE grants, the EDGAR regulation is ?The Secretary may restrict the transfer of funds among direct cost categories or programs, functions and activities for awards in which the Federal share of the project exceeds $100,000 and the cumulative amount of the transfers exceeds or is expected to exceed 10 percent of the total budget as last approved by the Secretary.?

Since this is a contract, the federal contracts officer is asking me to supply the FAR regulation which states that a contractor may rebudget between line items and the percent limits before approval is required by the contracts officer.

I can't find such a regulation in the FAR, but I am sure you all will know.

Vern: This is my first time posting, so please be gentle.

Ellen

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Does anyone else find it somewhat telling that the KO is asking the KTR to provide the FAR regulation and not informing the KTR of the FAR regulation?

eklene, personally I would supply the KO with the EDGAR regulation and highlight the word MAY. I would then tell them that you could not find a FAR regulation that deals with that subject. At that point it fall upon the KO to decide if he or she wants to restrict or seek a restriction of the transfer as per the EDGAR regulation. Regarding the FAR, the KO should know that body of regulations and find it his or her self. Be sure you have your reasons for making the transfer at hand and be able to explain how the transfer would benefit the contract performance or improve efficiency without imposing a penalty on the Government.

Personally, as a Contract Specialist or a Contracting Officer I would be ashamed to ask a KTR for a FAR regulation that I was too lazy, too stupid, or so unable to read that I could not find it on my own!

By the way, in a quick search of the FAR I did not find anything in the FAR dealing with your specific situation.

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Thank you for your response. I actually already quoted the EDGAR regulation to the KO, but was told that this regulation is not applicable, since EDGAR only applies to grants and agreements, but not to contracts.

Ellen

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Most likely the Contracting Officer must approve the reallocation via a contract modification. The contract probably has one or more line items for travel and a line item for travel. Normally the contractor cannot exceed a line item for labor and use excees for travel to cover the increase in labor without the CO's concurrence.

In addition travel money uses a different budget code/accounting classification than does labor. So the contract likely needs to reflect that change as well.

Finally the agency and/or this specific contract may manage the work at the line item rather than overall contract level. So they may be looking for work to be performed and/or deliverables at or less than the specififed dollar value. In other words each line item is viewed as a "mini" contract in and of itself and the contractor is not free to make unilateral adjustments.

If I were the CO, I would ask the contractor to explain the need to rellocate the funds in a letter. If it was acceptable to me, I would just prepare a contract modification.

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Guest carl r culham

eklene - So have you read the entire contract to determine if your answer is in it?

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Guest Vern Edwards

I am not sure that I understand "rebudget between direct cost line items." What does that mean?

Do you mean that you want to change the estimated costs of certain contract line items, moving one part of the estimate for one line item to a different line item?

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eklene - So have you read the entire contract to determine if your answer is in it?

Yes, none of the cost related FAR clauses that are included in our contract address this issue.

52.216-7 Allowable Cost and Payment

52.232-22 Limitation of Funds

52.232-20 Limitation of Cost

52.243-2 Changes - Cost Reimbursement

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I am not sure that I understand "rebudget between direct cost line items." What does that mean?

Do you mean that you want to change the estimated costs of certain contract line items, moving one part of the estimate for one line item to a different line item?

Yes. We will be needing more funds for personnel costs than originally estimated and less funds for travel costs.

We have not come across this before, since most of our funding is grants (where there is a certain amount of leeway in regard to changes in spending by line item) and fixed-price contracts (where this is not an issue).

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I am not sure that I understand "rebudget between direct cost line items." What does that mean?

Do you mean that you want to change the estimated costs of certain contract line items, moving one part of the estimate for one line item to a different line item?

Vern-

You hit the nail on the head. That is exactly what they are wanting to do.

Sorry, but I posted this response in the other forum.

I feel your pain with this. I was a grant officer, and people sometimes do not realize that there is a major difference between a contract and an assistance award. This is might be a hard one since you are more familiar with Federal Assistance awards (grants & cooperative agreements), not contracts. The contracting officer probably knows nothing about, or has little experience with, assistance awards. You two are probably talking apples and oranges to each other.

The bad part is that you already told the contracting officer that - 'the EDGAR regulation is ?The Secretary may restrict the transfer of funds among direct cost categories or programs, functions and activities for awards in which the Federal share of the project exceeds $100,000 and the cumulative amount of the transfers exceeds or is expected to exceed 10 percent of the total budget as last approved by the Secretary.? ' Generally nothing in the EDGAR will apply to contracts. This is what you have to remember next time you speak with them about contracts. Now they are looking for something in the FAR or EDAR (Education Acquisition Regulation) that says about the same thing that the EDGAR. The short answer is, you will not find a regulation that specifically says that you can or cannot do that in the FAR/EDAR.

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Vern-

You hit the nail on the head. That is exactly what they are wanting to do.

Sorry, but I posted this response in the other forum.

I feel your pain with this. I was a grant officer, and people sometimes do not realize that there is a major difference between a contract and an assistance award. This is might be a hard one since you are more familiar with Federal Assistance awards (grants & cooperative agreements), not contracts. The contracting officer probably knows nothing about, or has little experience with, assistance awards. You two are probably talking apples and oranges to each other.

The bad part is that you already told the contracting officer that - 'the EDGAR regulation is ?The Secretary may restrict the transfer of funds among direct cost categories or programs, functions and activities for awards in which the Federal share of the project exceeds $100,000 and the cumulative amount of the transfers exceeds or is expected to exceed 10 percent of the total budget as last approved by the Secretary.? ' Generally nothing in the EDGAR will apply to contracts. This is what you have to remember next time you speak with them about contracts. Now they are looking for something in the FAR or EDAR (Education Acquisition Regulation) that says about the same thing that the EDGAR. The short answer is, you will not find a regulation that specifically says that you can or cannot do that in the FAR/EDAR.

To close the loop on this one:

I never did receive any concrete guidance from the contracts officer. In the meantime, our most recent invoice which had total labor costs exceeding the originally estimated cost for labor was approved and paid.

Ellen

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