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AF1981

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  1. Hello Retredfed - I'm pretty certain company letterhead is considered a necessary and typical business expense and the associated company name and logo would not be considered advertising as intended in the principle regarding allowability. As for the masks - the intent would be to have them used by our staff whenever appropriate during company business - whether in our facility or the government's. As the intent is for them to be used when appropriate during company business we'd provide them just like we would the notebook or the landscaper would the truck for his teams travelling to customer job sites. The contract(s) the staff support do not require distinctive clothing or uniforms however they do all have to wear badges that do distinguish them as contractors. No marking on these masks *is required* to distinguish one from the other at all. Wrt 31.205 - the "but are not limited to" component of the definition of advertising media along with the all "other than those specified" as allowable are unallowable language always leads us to the conclusion that putting our logo on pretty much anything where it doesn't HAVE to go constitutes something unallowable from a cost perspective. For example, when we chose to put it on optional (and professional) company-provided clothing the cost was always considered unallowable. In this particular case, the company-provided attire was NOT a normal part of our business and not required nor did it in-and-of-itself provide any distinguishable additional value to our operations. All that said - I think the immediate conclusion I'm coming to is that there is NO FAR or other language regarding cost allowability determination (in 31.205-1 or otherwise) that removes the opportunity for subjectivity on the part of an auditor or CO when it comes to the question of whether unallowability of a cost item makes another otherwise allowable cost item unallowable once combined (as in the logo on the truck, notebook, or face mask). The risk-free approach would be to simply not do it as the answer isn't codified but instead open to individual interpretations and constructed defense.
  2. Thanks here_2_help but I'm not sure either example is really apropos. In the case of the masks (or the notebooks) the cost is not only appropriate but allowable because both have very specific value and purpose and are needed in operations. In your examples, neither the (empty) billboard nor the 95% of the beer is needed in operations or has business value or purpose otherwise. The costs for them would simply not be incurred were-it-not-for the purpose of either being an advertisement or "to be alcohol" - both of which would normally be unallowable. The arguable premise here is that the masks DO have real value and purpose in operations whether with or without the logo and ONLY when you incur costs to put on company logos do they ALSO serve the additional purpose that could be perceived as advertising (and if so, likely unallowable). I'd more liken it to a landscape company that purchases a truck to haul their gear. Clearly appropriate, needed, has value and purpose in the business. BUT, does its cost become unallowable if they put their company logo on the side?
  3. Hello Joel - right, that is the crux of my inquiry. It seems unreasonable to automatically convert the costs for a legitimately allowable costs for something like the masks (or notebooks in my example) to unallowable simply because an additional amount of costs were incurred to apply logos. I understand the principle to make the *additional costs* that provide a marketing/advertising value as unallowable but can't see why (or where there is any clear policy/FAR language) the entire costs for the masks (or notebooks) would now be unallowable.
  4. Thanks. I agree and the same would apply to notebooks where we put our company logo. The question however isn't as much about the masks as it is about the principle. Specifically, if the fundamental cost is for something that is allowable, does adding a logo to it make the total cost unallowable, or just the cost to add the logo? Nothing in 31.109 has addressed that principle for me.
  5. In today's COVID-19 environment it is obvious to me that masks are becoming an "office supply" of sorts and would therefore be an allowable business (indirect) cost applied to our cost-reimbursable contracts. If we subsequently choose to have a corporate logo applied to the reusable (or one-time use masks for that matter) is the cost of the mask itself unallowable or is it just the addition of the logo? This might be analogous to buying log books or notebooks that are an integral part of the business operations and then choosing in subsequent orders to have the front cover modified to have the company logo. Clearly the “intent” of the purchase of the log/note books and the face mask are to do routine business activities and the “intent” of putting on the logo is marketing, the latter being defined as unallowable. The question is whether the entire cost of the mask or notebook is now unallowable because the intent of the logo overrides the legitimate allowable cost otherwise?
  6. I believe each year's adjustment is indeed less than that but am not certain. Once we understand what a "demand" looks like and how to do it (tactfully) I'd hope we can get paid much sooner than 60 days... I guess that begs the question of how we recoup the cost-of-money for these costs which could be many years in the "hold cycle" when it isn't currently a part of the contract...?
  7. Thanks Vern - rest assured we're not complaining and just sitting around. We've had extensive conversations with the CO and their financial representation as well as solicited specific help from both DCAA and DCMA on many occassions on the subject but it seems to always fall back to the completely resistent customer financial management team. I can provide many months of dialog between all of the parties to reflect a very aggressive attempt to simply recover actual costs on this CP contract (specifically, the delta between provisional and interim rates determination after the ICE submission). In fact, I have asked our CFO to summarize and excerpt them for potential use later. Bottom line is that as a small business we have to reach out to experts such as yourself to find out what our next recourse is for such critical things because on one hand the government reserves the right to approve (or reject) provisional rates prior to costs being incurred and then (in this case) also rejects our invoices following the much more accurate rates determination following the contract performance and accepted ICE submission. It's unclear what further options we have when we've pleaded with the CO and their finance team, as well as our cognizant DCAA representation and our cognizant DCMA representation (both of whom say that our interpretation is correct but fail to provide any guidance/feedback of that nature to the customer organization to get the bills paid). While surely there must be a better answer that doesn't cause our customer to dislike us for trying to get paid we feel that the government is the prosecutor, judge, and jury here and leaves us no recourse but to try to standby for many years to recover legitimate costs... That's the reason we're asking for cases/examples where contractors had to fight and eventually were paid for these much more accurate costs without having to wait for the contract to close and DCAA to do a final audit...
  8. Vern - thanks for the feedback. For whatever reason the government (in this case) has chosen to read the applicable regulations to limit the exposure to only billings using initial provisional rates during each contract year and to never adjust them again until after contract close out and overall contract final rate determination. As I mentioned in my earlier post to Woops, this could be financially devasting to a small business who ends up forced to carry substantial costs year-over-year for a multi-year CP contract. We believe the regs were specifically written to allow for such cases where the contractor can bill for prior years when their ICE is accepted (interim rates) as this represents actual (pre-audit) rates and the provisional applications were merely budgeted expectations. What would be very useful is reference to specific cases where a contractor fought to get paid their costs based on rates from their annual ICE submissions instead of being forced to carry these costs for the life of the contract and through a DCAA audit period to determine contract overall final rates. Any suggestions? Thanks
  9. Woops - My understanding is that the government (in this specific case) "has never heard of" the idea of billing any costs other than those based on provisional rates that were determined at (or before) the beginning of any given contract year up until final contract close out when costs are reconciled using final rates... Frankly, I'm not sure if this is a lack of experience or intentional desire to cause contractors to bear the burden of any deviations throughout the life of the contract and final audit period... Certainly I'd hope that whatever policy they choose to adopt that they exercise it equally among the various contractors (large or small)... It's worth noting that while it shouldn't be a material fact in determining how to proceed here, withholding the reimbursement of these costs wouldn't likely cause an extreme financial distress to the LB but certainly could to an SB depending on the size of the contract, rate deviations, and proportion of their revenue that the contract represents... I could see it even causing them to close their doors altogether in some circumstances over my career... BTW, I think I would prefer to work to find current year funds to pay the annual discrepancy amounts instead of trying to find 3-5 times (or more) that much all at once at closeout. Right?
  10. Contractor annually submits proposed rates to DCAA under CPAF (for upcoming FY) and DCAA subsequently approves the FY indirect rates as provisional. Contractor then bills provisional rates for the relevant period (FY) and subsequently submits ICE for that same period (following close out of the FY) to DCAA to establish Interim rates (for that same relevant period). Contractor then invoices the difference between provisional and interim for prior year as "catch up" for incurred costs. Government rejects "catch up" invoice stating that contractor may only bill provisional rates until contract close out when it can then invoice at Final rates once determined. For small businesses this amounts to true costs being "carried" for many years (for as much as seven if it is a 5-year contract and then DCAA takes up to two years to complete close-out audit). Contractor believes the FAR specifically allows contractor to invoice interim rates for prior years as the interim rates are determined via their accepted ICE submission and acknowledges that the Final cost determination does not occur until contract completion audit. What specific authority does the government have to either allow payment of the interim costs or to reject them until contract close following DCAA audit and final costs determination? Can we make the contractor wait until contract close out audit and final costs determination on a multi-year contract for what may be many hundreds of thousands of dollars of actual costs not yet reimbursed (over many contract years)? Also, must the government allow a cost-of-money addition where the "carry" costs could amount to tens of thousands in contractor lost cost of money? Finally, are there publically available cases that detail the approach logic?
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