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Needforspeed

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  1. To throw out another perspective, the entity’s actual G&A rate for a given fiscal year is calculated for the organization [first], then applied to contracts where it is required. The number of contracts where G&A is ‘charged’ or billed through its invoicing does not impact the G&A calculation itself. Say your G&A expense pool (numerator) is $125K. Your G&A base (denominator) is $1M. Your G&A is 12.5%. Provisional or ‘target’ indirect rates that track closely against the ‘actual’ rates allow for the rate variance to be kept to a minimum. It seems unusual if the government required proof of provisional billing rates during negotiations that there would be rates bid all over the place or without consistency. It may be helpful to visualize a pyramid. At the top of the pyramid are your company’s contracts that contain FAR 52.216-7, as Help already said. Those are the contracts where you are *required* to perform the true up of applicable indirect rates charged at ‘target’ versus ‘actual’. Would focus on those first. The next down on your pyramid could be subcontracts where the federal government is the ultimate customer, or other cost plus or grant agreements with non federal customers. Read the contract terms to see what if any terms dictate the settlement of indirect rates. Read the proposal too if you can. Everything else at the bottom of the pyramid - commercial contracts - should not require much additional analysis. Seems unlikely a ‘requirement’ would exist to perform a rate true up for a commercial non-FAR customer although I suppose it is possible. More likely the company bid G&A as an administrative ‘markup’ or material handling rate without the intent of ever settling the difference between ‘target’ and ‘’actual’
  2. @Neil Roberts thanks for proving that link, interesting. Reading FAR 31.112 it allows the government CO to ‘encourage’ contractor payment for unpaid subks, ‘reduce or suspend’ payments to prime contractor when subks are left unpaid, and shall ‘advise the subcontractor’ whether ‘final payment under the contract has been made…’ So, as a prospective subk where the prime inserts pay-when-paid language, if one cannot strike the language altogether, it seems reasonable to request FAR 31.112-1,2 be added to allow for some escalation to the government when a subk goes unpaid. That is something, I guess. I did see an old 2001 wifcon thread on the web that suggested this FAR only applies if the prime is using progress payments, not sure if that still applies. @here_2_help thank you that is very helpful as well. Not to mention risking noncompliance with prompt payment for small business etc. These are smart factors to consider in a subk where the prime is covered by the FAR. It does not help where the prime may be under a state or local government for example, but the idea of crafting specific language that allows for the unpaid subk to go directly to the ultimate client contracting office is compelling. Essentially a threat to expose a prime contractor for not paying their bills. Will probably get most folks’ attention.
  3. @Neil Roberts Let me try to rephrase what I’m really after. I agree that a subk’s opportunity to nix this payment clause is during the negotiations. And for me a subk should really never agree to it unless there is a specific application that makes sense. Again, it seems unfair and unreasonable to have your payment tied to some means far outside your control. But that is still not what I’m after here. I want to know what happens if a subk delivers exactly as prescribed in their subcontractor. The prime accepts said deliverables. For whatever reason, small hypothetical, the prime is never paid for work purported to include a portion of the said work subk performed. Therefore, prime never pays subk. Is subk left holding the bag, even though they complied with all requirements of the subk? Why would anyone agree to this?
  4. Correct. Thanks, Neil. Sorry for not clarifying that up front. I do not have any language in front me, but this would not be a FAR clause of any sort, rather a commercial payment term negotiated into a subcontract. For example, instead of saying “subcontractor will be reimbursed within 30 days receipt of an acceptable invoice” the agreement says “subcontractor shall be paid 30 days after corresponding payment is made to prime contractor”
  5. I have always despised these payment terms in subcontracts. Subcontractor A/R managers scoff each time they see them knowing their leverage to collect payment is altered from its normal state; drastically reduced. The only fair, practical application I can see them used is where the subcontractor performs the preponderance of the prime contract SOW, and the prime is just a pass through. From a cash flow perspective the prime doesn’t want to go out pocket to pay the subk knowing the invoice could be held up or rejected by the client for various reasons, and payment to the subk could have already occurred. Are there any other practical uses for these clauses? Does anyone feel these clauses are misused and except in special cases, should not be agreed to by subcontractors? Are there any primes out there who have held some false sense of security that the a pay when paid clause protects the prime from ever having to pay the subk if there is an issue at the prime contract? If a subcontractor performed the work as intended, they should be reimbursed. Whether the prime is paid by the ultimate client is the prime’s job to figure out. It is silly to think the two should be linked, in my opinion. Does anyone know of a subk that was stiffed by a prime because of this type of payment clause, took the prime to court, and what happened?
  6. Thanks all for the added dialogue on this one. Neil, I think the reference provided at 4.703 (b) (2,3) answers my question. Which, until I found the file the government was asking about, was what happens if a cost plus contract was not closed out nor settled for indirects, and the contractor has no record of it. Suffice to say, not good. I believe that FAR reference to say the contractor is on the hook- pretty much forever in the case of retaining files that were not properly closed out and in accordance with the allowable cost and payment clause.
  7. Thanks, C Culham, for the reference. Let's assume this is from a contractor's perspective. The government is asking for a final voucher - in furtherance of contract closeout. Let's assume the final payment occurred ten years ago. The contractor may or may not have complied with the allowable cost and payment clause, so let's also assume unreconciled indirect variance could exist. Is there anything that would compel a contractor to unearth a contract that old, more than ten years, and inspect and perform a reconciliation of final costs? In other words, does final payment occur only after all rate variance adjustments have been performed - in which case the six year clock would not start until then? I realize I may be conflating retention requirements with compliance on allowable cost and payment clause.
  8. In the absence of a "closed out" cost plus contract, can anyone point me to guidance re: how long you must keep your files? I perused FAR 4.7 and 4.805 but didn't see the answer specific to my question. For example, would the "6 years after final payment" laid out in 4.805 apply to all contract types?
  9. Thanks Help, correct - with a contractor. These are great questions. Can you clarify what you mean on question 2? For question 3, are you referring to something above and beyond the accounting system - does Sharepoint qualify as a database? Or something like an Access database? If you could expand on what a relational database is to you that would help.
  10. Current filing structure is pretty chaotic/disorganized, so wanted to see if anyone has any good suggestions or best practices in how they maintain their e-files. My thinking is to create a Sharepoint site that is organized by internal project number - which is a number that is also linked to the project number assigned in our accounting system. That sounds better than by client, for example. Then, potentially separating the files by active/inactive. In the contract folder, you would have a contract brief, all awards and mods, a folder for subcontractors or consultants, if any. The proposal folder would be linked or visible in the folder and contain final proposal revisions/budget docs, etc. Outside of using a contract database, any ideas for a good file structure on Sharepoint?
  11. 😂 Thank you for your service WifWaf
  12. Having worked with consultants/subcontractors over the years - some brand new to government contracting - I always felt some folks just compared themselves to their competitors - through GSA schedules or other means - tried to decide if they were more or less valuable than these other companies, then picked labor rates for their services that were comparable and went with it, regardless of their expenses or cost rate structure. Then figured out this whole indirect cost rate stuff later 😀.
  13. Thanks all the for the discussion and making some citations which I will continue to peruse.
  14. Vern the overarching themes between the article Don provided and the CPA article are the same to me. My only hangup is "business development". The explanation that overhead includes the indirect costs of managing contracts makes sense to me and that is an easy visualization. But I generally see that going hand in hand with capture managers growing a business line - finding partners, keeping tabs on agency spending and RFP release, business strategy, whatever. So, I would consider business development overhead rather than G&A. The CPA article says: The G&A cost pool typically includes the salaries and benefits of c-suite personnel as well as business development, finance and accounting... I think what we have agreed is that business development can be either, so long as the contractor is consistent in its treatment of the cost as it goes into the expense pool. From a perspective of explaining it to the staff managing these lines of business, I would rather say "capture manager, VP business development, business strategy, whatever, all of your time is overhead, no matter what." I also do not think business development has to or necessarily will serve the greater benefit of the company, not like an accounting department would anyway. Your capture team selling to client A serves no benefit to client B and except for maybe someday (maybe not) bringing in revenue to your company, does not benefit the company as a whole.
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