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Everything posted by joel hoffman
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HA HA HA HA HA HA! LOL, , etc... I liked that!!! Unfortunately, that person is spending the US Taxpayers' money, plus money that the government does NOT have and that my kids and grandkids might be expected to pay back someday. That is sobering, isn't it?
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Sigh... I should have known better. "And now... The Rest of the Story!" ... Or most of it... Err, refer to another thread for more details...
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Whoop, I think that scenario is a form of cost plus percentage of cost, which could motivate a firm to expend the most money possible within the cost ceiling. I do agree with you that a decrease in actual cost with a fixed fee would result in a higher return on costs, but there is nothing inherently wrong with that. Zoom, Zoom, Zoomie71.
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I agree with Vern. If there was no formal or constructive government change to the scope of work or other contract requirements, there would be no basis for a change in the fee. Here, I am assuming that only the firm's G&A rate has been adjusted due to an internal or external audit or general business conditions.
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I had developed a lenghty explanation of how the National Council of Engineering Examiners tested for Engineer in Training certification and for Professional Engineer Registration. but I pushed the wron button on the BB and it erased it. Will try again tomorrow at office on the computer. Short version - relying only on multiple choice questions seems to be for the convenience of the testing organization and is not the best way to test knowledge and qualifications.
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I cant find the requirement in Title 10 of the US Code but I'm not a great researcher. It might be in Title 41. I'm TDY this week. I know that the old Corps of Engineers' Engineer Contract Instructions and DAR that pre-dated the FAR influenced the development of Part 36. But I dont have access to them today or to the 1984 wording of the FAR.
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I don't know the current intent. The way that the sentence seems to grammatically read appears to require an IGE for each contract and an IGE for each mod anticipated to exceed the SAT. If the SAT limit applied to contracts, shouldn't it read as follows: "An independent Government estimate of construction costs shall be prepared and furnished to the contracting officer at the earliest practicable time for each proposed contract and for each contract modification, anticipated to exceed the simplified acquisition threshold." However, jm neglected to include the next sentence in the post: "The contracting officer may require an estimate when the cost of required work is not anticipated to exceed the simplified acquisition threshold." Reading both sentences together appears to me to say that an estimate is only required for contracts anticipated to exceed the SAT, although the grammer might not be correct. The KO can require an estimate for contracts or mods, which are less than the SAT.
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I tend to agree. When I was developing Army BCM's, there was a canned format. I answered the questions which were applicable and answered those inapplicable ones with "N/A" or similar response. That was a long time ago.
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Good questions, plus we dont know how the cost is actually proposed. One month direct cost was identified. However, it appears that the Contractor direct billed one person's cost for more than a normal monthly number of hours and additionally for the position of CEO. Does this appear to be reasonable? I'd surmise that one person cant physically perform two full time positions. At some point they have to go home, eat and sleep. Right now, they are proposing charges based upon both direct and indirect, full-time efforts for one person. If a person can perform CEO duties on a part-time basis, then the salary "appears" to be unreasonable to me for the possible involvement necessary to be the CEO. But the KO needs to use some business judgement and not simply take the lawyer's "ruling" literally. The overall question isnt the lawyer's call or purview from what was described. I feel that my point that the lawyer doesnt make a determination as to allowability of a proposed cost, based only upon a cost principle in FAR, is "reasonable" (no pun intended). There are business judgements involved in determining "allowability" and "reasonableness", in addition to the accounting principles. In addition to performing 2 full-time positions (seemingly) simultaneously and simultaneously billed in two different ways, is the total proposed compensation reasonable for the situation? The KO must determine whether all this is reasonable.
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Why would you use the same ranges as construction? Labor is only a share of a construction contract price. Examine why you feel that it would be beneficial to provide such a range and why you are doing it, first.
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Hold on a dad-gummed minute here! This is forward pricing not a claim, correct? Where the Heck does a lawyer decide that you "have to allow" or "cannot disallow" dual compensation if it doesn't appear to be reasonable???? That isn't the lawyer's call or authority to determine. While it might not be illegal or legally improper, it still has to pass the stink test of reasonableness and common sense. It is up to the KO to determine what is "reasonable", not the lawyer. If the proposed prices are not reasonable, then you don't have to accept the proposal. It is up to the proposer to show that charging the taxpayers for the same person, paid full time for his position as CEO and then charging him as a direct hire is fair and reasonable. I'm with Vern on this all the way! As a fellow taxpayer, please advise the PCO to drink some gumption and not to be overly dependent upon some legal opinion. In fact, if the lawyer actually said that you "cannot disallow" the proposed pricing approach, he or she is legally off-base. See, for instance: 31.201-2 -- Determining Allowability. "(a) A cost is allowable only when the cost complies with all of the following requirements: (1) Reasonableness. (2) Allocability. (3) Standards promulgated by the CAS Board, if applicable; otherwise, generally accepted accounting principles and practices appropriate to the circumstances. (4) Terms of the contract. (5) Any limitations set forth in this subpart." See also, for instance: 31.201-3 -- Determining Reasonableness. "(a) A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business. Reasonableness of specific costs must be examined with particular care in connection with firms or their separate divisions that may not be subject to effective competitive restraints. No presumption of reasonableness shall be attached to the incurrence of costs by a contractor. If an initial review of the facts results in a challenge of a specific cost by the contracting officer or the contracting officer?s representative, the burden of proof shall be upon the contractor to establish that such cost is reasonable. (b ) What is reasonable depends upon a variety of considerations and circumstances, including -- (1) Whether it is the type of cost generally recognized as ordinary and necessary for the conduct of the contractor?s business or the contract performance; (2) Generally accepted sound business practices, arm?s-length bargaining, and Federal and State laws and regulations; (3) The contractor?s responsibilities to the Government, other customers, the owners of the business, employees, and the public at large; and (4) Any significant deviations from the contractor?s established practices." Edit- this a definitization action on a letter contract. Ok. But my opinion is the same. It isn't reasonable.
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Cost and Pricing Data
joel hoffman replied to DebbieLester's topic in Contract Pricing Including CAS & Allowable Costs
Don, I'd like to clarify that in A-E contracting, price is not competed. So price is not a "factor", except as described below. The Brooks Act procedures are a form of qualifications based selection (QBS). The exemption from submission of cost or pricing data due to adequate price competition is not applicable to A-E contracts. However, the price must still be fair and reasonable. If the parties cannot agree on what the government considers to be a fair and reasonable price, then we go to the next most highly qualified firm to negotiate a fair and reasonable price. -
Let's not necessarily beat up the DCAA here. This appears to be the KO's problem. After checking for more information - I wont go into more detail on that - my premise was pretty close to what happened. The parties have previously contracted for training and the material was bought the same way at least twice before. The government didn't seem to have any problem with the method or the pricing. The training was fixed price in previous contracts. But there seemed to be too much variation in the student load, so the government - for some reason - went CPFF this time, with the intent or impression that it would get a better deal on the training cost, when the student load fluctuates. The contractor proposed a similar method for selling the training materials for this contract and the parties agreed. I don't know the details. The government failed to include a separate CLIN for the training materials when the contract was written up. The proposal was made part of the contract. The DCAA correctly pointed out that a separate CLIN was necessary in order to pay for the training materials, thus rejected the invoice. I don't know if they said anything else, as I didn't read what the DCAA said. They didn't have to say anything else. It doesn't appear to be a reasonableness assessment. There is simply no way in the contract as currently written to pay for the contractor produced materials at a fixed price. The government needs to fix the contract if that is what was agreed upon. The KO doesn't seem know that he/she can simply fix the contract to effect what was agreed upon by adding the separate CLIN. It is acceptable to mix CPFF and fixed price (unit price) as long as the material costs can be segregated from the training costs. It might only require a mod to adjust the current CLIN an add the training material CLIN. - but I dont know the details. The KO now says the contractor needs to work it out with DCAA!!!! Is this fear of DCAA reporting the KO to DoD or something if he/she mods the contract to reflect the original agreement? Amazing to me...
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I apologize for not being clearer and for my clumsy typing. I may also withdraw my comments concerning the possibility of government underhandedness. I apologize if that offended anyone (discussing superior knowledge or unilateral mistake). The contractor apparently doesn't feel that the government negotiated the price down to reflect a low fee while rejecting the proposed materials pricing arrangement. The contractor thinks that it was agreed as proposed to pay for materials using the catalog pricing. I honestly think, after mulling it over, that the government side didn't realize that they had to set up a separate CLIN to pay for training materials based upon the catalog price or some discounted percentage of catalog prices. Obviously, neither did the contractor - although why should it have to know more than the government contract writers about mechanisms of CLIN structures? I hope that the parties can work it out. By the way, I'm wearing hand splints for the next 30 days to determine if I only have tendinitus in my hands or if I have the awful cousin Arthur - or Carpal Tunnel Syndrone. Too much thumbing on the BB and one digit typing on the keyboards. The dad-gummed things keep getting tangled in the keyboards.
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One cannot provide a definitive answer to the situation which was only outlined by Retreadfed. One can offer areas to explore or possibilities. I suggested discussing the situation with the KO, who APPEARS to have been told by DCAA that a separate CLIN is required to effect the terms of payment in the ("incorporated") proposal that conflict with the CR payment provisions in the contract. I also suggested consulting with an attorney. Explain the facts to him or her more clearly than here and provide the details and "evidence") The KO (might be or might not be the PCO) had to have seen the payment request. According to Retreadfed, it was the DCAA who identified the problem, not the KO. Vern stated in post #9 that: "Absent express agreement to the contrary, under a cost-reimbursement contract the contractor is entitled to be reimbursed for its allowable incurred costs. Absent express agreement to the contrary, the contractor is not entitled to be reimbursed at what it would have charged if it had sold the books at retail or wholesale prices." I believed and still believe that Retreadfed said, that there is evidence to prove that the proposal reflected and the parties agreed on excluding the training materials from the fixed fee basis and agreed that using established catalog rates would be acceptable. Then, SUPPOSEDLY, the PCO incorporated the proposal into the contract. Retreadfred did not say how. He or she did not indicate that the proposal was modified to delete or modify the information that stated how materials would be priced. The contractor MAY have assumed that this is all that is necessary to implement the terms of the proposal. We don't know. The PCO may have also assumed this. We don't know. However, in my opinion, it would be incorrect (not professional?, bad judgment? Wrong? Ignorant? Poor practice? a MISTAKE?) to incorporate a proposal into a contract that patently conflicts with the rest of the terms of the contract, if the government had rejected the contractor's proposed pricing approach. In my opinion, the KO should have first gotten the proposer to correct the proposal to reflect any negotiations that questioned or rejected the price basis of the proposal, if the government didn't intend to accept the proposed pricing basis of training materials. Had the government objected to this proposed pricing, it should have never incorporated the conflicting proposal into the contract as written. This MIGHT indicate that the KO didn't know any better that it would be necessary to add a CLIN to handle payment of the training materials or provide some other means to do so. As far as I know, a CPFF contract can contain some fixed price or fixed unit price contract line items. Several of the multibillion dollar Chemical-Demilitarization Systems contracts I helped administer within the past 10 years (the PCO was with a subordinate command of AMC) contained hundreds of millions of dollars of fixed-price and unit-priced line items with CR umbrella contracts for disposal of stockpiled chemical weapons. This could be a possible means to fix the contract to pay for the training materials, if the contracting parties both thought that is what they agreed upon and what they intended to contract for. There may be better ways to cover a CLIN to pay for training materials.
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??? Not sure why you are asking here instead of asking your legal department. For the record, each of the Corps of Engineers' legal offices that I worked with (not worked "for") had subscriptions to the N&C Report as well as to other periodicals.
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Assuming that Retreadfed knows what he is talking about, he said that "the contractor proposed the commercial items at their catalog price, it excluded the commercial items from its fee calculation. All evidence indicates the govenrment did the same. Thus, what you have suggested is the way the contract was actually priced. Moreover, by the government now saying the contractor cannot bill for the items the way the contract was negotiated, the contractor will receive an effective fee substatially less than what the parties negotiated." He also said that the KO incorporated the proposal into the contract. It APPEARS that the DCAA has told everyone that to pay for the training materials at catalog price there must be a separate CLIN (fixed unit price, I am ASSUMING). It APPEARS that the KO may have found that out from the DCAA, after award. Otherwise,why did the KO accept the proposal and incorporate it into the contract (from Retreadfed's post)? To induce the Contractor into signing the contract, knowing that the clause would override the proposal? THAT would be unprofessional or worse. Now, I will give the KO more credit than that.
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I failed to mention that it appeared from the first post in the thread that the DCAA alerted both parties that a separate CLIN for training materials was necessary to be able to pay for them at the catalog price. To me, it appears that the KO who accepted the proposal and incorporated it into the contract didn't know any more than the proposer/contractor that the proposed approach either wasn't possible or that it required that a separate CLIN be established. Looks like the guy needs to contact a good attorney. Again, I see no intent by the contractor to deceive anyone from the information provided. A false claim or fraud requires intent to deceive. If anything, it appears to be a case of mutual ignorance.
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No, you didn't abuse me, too much. I thought that the contractor had made it clear how it intended to price the training materials and how it had not based its fee on the cost of materials. Yes, we've only heard one side of the story but that is what some of us are responding to. The government officials then(EDIT: appeared not to) know any better than the contractor or (EDIT: It appears that they) decided to get a great deal for itself. Then it (EDIT: supposedly) incorporated the proposal into the contract without any communications concerning the proposer's announced approach (EDIT: from the information provided). How is that fraud or a false claim? The guy isn't intentionally trying to lie, steal or cheat.
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I am not a lawyer, so the parties probably ought to seek such advice. I'm only commenting on the fairness aspect of the contract formation. The contractor obviously thought that its proposal was based upon exclusion of fixed fee on training materials and that it would be paid for its training materials at the commercial price. The government apparently incorporated the proposal, without deleting that condition, into the contract. The contractor feels that there is evidence that the KO or authorized negotiator knew about this aspect of the proposal. Apparently, the materials are a substantial portion of the cost of contract performance. Mutual mistake may be grounds. If both the Contracting Officer or their authorized representative negotiated the fee terms, knowing that fee on materials would be excluded from the fixed fee and would be priced as a commercial item in accordance with the clear terms of the proposal, then the KO should have included some mechanism in contract when integrating the proposal into the contract. The Contractor was obviously under the impression that payment would be made at the commercial rate per its proposal. There is also discussion about unilateral mistakes in Nash & Cibinic's, Administration of Government Contracts (in both the 3d Ed. and 4th Ed.), at page 330. Discussed is where the Government should have known of the Contractor's mistake at the time of contract formation. There is a similar doctrine called "Superior Knowledge". I didn't notice it specifically addressed as such in Administration of Government Contracts . Superior Knowledge is a situation where the government has in its possession information unknown to bidders and vital to contract performance, and the contractor, unaware of such information and relying on the disclosures actually made, is induced to agree to perform at a price which does not take account of the matters within the special knowledge of the government. See http://www.cohenseglias.com/government-con...view&id=136 "...the government has breached its duty to disclose matters within its superior knowledge and the contractor is entitled to recover the increased costs resulting therefrom." Several cases are cited, where the superior knowledge relate to costs. I would think that the same principle could apply to the fee basis. It would seem to me that there was either a mutual mistake by both parties when the government didn't revise the contract terms to integrate the terms of the proposal or a unilateral mistake by the proposer (contractor) that the government knew about and didn't fix the contract's payment terms. Or, if the FAR prohibits such payment terms (I don't know), the contractor obviously didn't know and the government officials apparently didn't know. It should be obvious that the proposer didn't know that something special had to be added to accommodate payment for the training materials as it proposed. This is assuming that the proposal is clear enough to be obvious. Whether there is enough contemporaneous evidence necessary to support this position or even if it is necessary, I wouldn't know. I'd recommend discussing with the government officials the possibility of reforming the contract to either accommodate the terms of the accepted proposal or renegotiate the fixed fee. Depending upon the outcome of that conversation, you may need to hire an attorney. My assumption is that the Government officials intended to pay a fair price for the training materials and were aware of the prices. I'm also assuming that DCAA or somebody informed the KO that they either didnt write the contract in a way to do that or can't do it that way. Now the government needs to fix the situation one way or another.