Neurotic

Assume the provision you mentioned was included in the solicitation, which the offeror was responding to. This provision clearly states that adjustments to G&A, overhead, or profit are not permitted, and this was known to the offerors. However, the provision does not seem to prevent an offeror from proposing the G&A, overhead, and profit they believe are necessary to cover their costs, especially in the case of a fixed-price contract. It's important to note that higher G&A, overhead, or profit do not qualify as contingencies under the SCA definition. A contingency would involve proposing wages and benefits that are not valid at the time of the proposal, based on possible future changes. Based on these considerations and the Service Contract Labor Standards (SCLS), it appears the contractor might be eligible for adjustments to wages, fringe benefits, and associated taxes as outlined in the provision. Also, refer to section 4(c) of the Service Contract Labor Standards for requirements related to successorship and timeliness. Specific conditions apply for these adjustments to be applicable. See https://www.ecfr.gov/current/title-29/subtitle-A/part-4 The offeror should bring the contracting officer the basis (agency guidance, contract clause, law or statute) to the offeror's entitlement to an adjustment to any expense. Basically what you are calling "rationale". Show it to them to make your case.

Is your question about a request for equitable adjustment, for example, as a result of a changes clause, or are you talking about an adjustment as a result of a labor law clause, for example Service Contract Labor Standards? Price adjustments for SCLS are not REAs and SCLS adjustments do not allow adjustments on overhead, G&A or profit.

Yes it is. I am not a COR, and actually always disagreed with the CO and COR's position but presented the issue here from their perspective. I know what a full time employee is, and I don't think the individual is working full time. Still, that again is not relevant to the issue because is not defined in the contract so is not a requirement. What I know or think is separate from what the contract says but that should be clear to everyone. Thanks, always appreciate everyone's input.

We can and will verify the hours on the CPFF. I just don't think the person is putting a full time effort in the FFP...but that's irrelevant. Thanks

It does. This is a nothinburger.

Indeed, we advised the CO to ask the contractor and were waiting to hear back. The contractor stated: 1/the scope of the work performed under the FP and CPFF CLINs is different. 2/labor hours billed on the CPFF CLIN for individual identified as Key Personnel are for effort under the CPFF CLIN in connection with the scope of the work under such CLIN. Therefore, correctly billed. 3/The government is receiving the services it contracted and pays for under the FFP CLIN. The gov did not procure Key personnel as a deliverable. The contractor's proposal (Basis of Estimate) identified the Key Personnel by name under the FFP CLIN working 1,746 productive hours annually (each FTE). However, the proposal is not part of the contract and the contract does not specify a level of effort. The contract identifies Key Personnel by name but does not specify a CLIN either. So, they promised (proposed) something but the government did not make it a requirement. No way this individual is able to work full time under the FFP CLIN and also charge the hours billed under the CPFF. But I don't see how this is enforceable now if it's not a contract requirement.

If the contract was indeed CAS covered, would it be a 401 issue then?

TINA does not apply.

Found this case while researching the topic. See HPM Corporation v. Department of Energy, CBCA 7559. The CBCA held that because the cost reimbursement portion of the contract required a year-end incurred cost audit (to establish indirect rates and verify claimed costs), the government may reasonably audit the FFP contract portion as well to ensure the contractor is not improperly claiming reimbursement for costs covered by FFP line items or trying to recoup FFP losses through indirect costs. However, I don't think the data needs to be certified to include 52.215-2 in the contract. See also the attached.20231114-nash--cibinic-report--can-government-auditors-do-that1749955851.pdf

The contract does not define "full time". Not only that, just found out there is no actual requirement in the contract for Key Personnel to be full-time. The contractor may have "promised" full time in their proposal but if it's not in the contract I would say is meaningless now. So what I see is a contractor performing on an FFP, which includes a Key Person, whose effort is not clearly defined, and that is also working and charging a CPFF CLIN. We would have to have the time records audited or reviewed to see whether there's actually a double charge. If they are double charging it would be an allocability issue and like you say , if deliberate, mischarging.

My agency has a contract with a combination of types. One of the CLINs is for Program Management and is FFP. The agency requested, and the vendor proposed named Key Personnel for various labor categories within this CLIN, to include a full time "Test Manager" (for Quality Assurance). The Key Person's names were incorporated into the contract. The contract also includes a CPFF CLIN for work that has some labor categories for quality assurance but not for the scope of work of a Test Manager. However, the contractor billed for some labor hours under the CPFF CLIN that and the CO and COR believe were performed by the same person (Key Personnel in FFP CLIN). Payment is being withheld for those hours under the CPFF CLIN. The agency's leadership is asking whether the gov essentially paying for a full time Key Person under an FFP but then having the contractor bill for labor hours for the same person under a CPFF.... would be a Cost Principles, GAAP, or a potentially a Cost Accounting Standards issue (the contract is not CAS covered anyway)? Also, if confirmed, would it be considered a "Mischarging'' ?

Thanks for the responses. My agency does not have an issue with reimbursing the contractor. The government created the requirement/conditions for the cost to happen. My original question goes to the treatment of the cost since the cost principles make this cost unallowable. The contractor (and at this point we don't see any other way) wants to include the tax differential cost in the profit of the T&M CLIN. I was asking if anyone had dealt with this type of cost and how they accounted/paid the contractor for it.

Apologized for the delayed response. The government created the conditions (Pandemic) for extended TDY during performance. Extended TDY was never considered prior to award (2019). We are negotiating a follow on contract and the extended TDY conditions remain.

Appreciate the responses. In a nutshell, the inclusion of these expenses in profit seem to be reasonable given the circumstances. I did not mention in the original post that my agency is not bound by any limitation in profit so it will just be a matter of getting to a reasonable/supported agreed upon profit rate/dollars. Thanks again.

Good insight, will give some thought to the rotating option although additional personnel is unlikely. This is a highly specialized field. Thanks