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0 NeutralAbout Don Mansfield
- Birthday 11/04/1972
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This thread suggests that there would be a market for "Sovereign Acts" insurance, which would cover losses on Government contracts caused by sovereign acts of the Government.
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Yes. What would prohibit the contractor from proposing that, assuming the price was not higher than prices for comparable unrated orders?
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The DPAS regulations do not prohibit the contractor from doing this. Exactly. So you can't rely on DPAS regulations to say which costs a contractor can or cannot consider. The OP's question was asked and answered a long time ago. I'm reacting to your assertion that the DPAS regulations prohibit a contractor from considering anticipated cost increases on other contracts when pricing a rated order. When I asked why a contractor could not do this, you wrote: The cited regulation says nothing about what anticipated costs a contractor can or cannot consider when deciding what price to charge the Government for a rated order. It just says that the contractor can't charge a higher price than it does for comparable unrated orders. Period. If the contractor considers anticipated cost increases on other contracts when determining what prices to charge for comparable unrated orders, how would it violate DPAS if they did the same for rated orders? As long as they didn't charge higher prices, it wouldn't.
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For any scenario you come up with, I will only need to know two things: 1. The price charged for the rated order; and 2. The prices charged for comparable unrated orders. Nothing else is relevant in determining whether the contractor is compliant with 15 CFR 700.13(a)(2).
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That is not what I'm saying. Using your example, let's say the widget is priced at $2,500 for delivery in 90 days. A customer issues an unrated order requiring delivery in 30 days. Contractor says it will be an additional $700 to expedite. Parties agree to price $3,200. Contractor receives DX-rated order for widget requiring 30 day delivery. Contractor charges $3,200. Where's the DPAS violation in this scenario?
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Answer my question, then I'll answer your question.
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If the contractor prices the DX-rated order consistent with comparable unrated orders, how does that violate the DPAS regulation?
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If the overall price for the DX-rated order was consistent with prices charged for comparable unrated orders, I don't think the contracting officer should be questioning any particular estimated cost. I don't understand where you and FASA are coming from. You seem to be worried about cost accounting. If a contractor wants to be profitable, they need to ensure that revenue exceeds expenses. If a customer wants their order expedited, they should expect to pay a premium. This should cover the increased costs to the contractor for expediting the order. Why should the Government get special treatment? I don't think the DPAS regulations provide this. I think the DPAS regulations just ensure that the contractor doesn't take unfair advantage of the Government. As long as their prices are consistent with comparable unrated orders, the contractor is not violating the DPAS regulations. By the way, I think that the subcontractor in the original scenario is out of luck. They already accepted the order.
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There wouldn't be any costs incurred at the time of pricing the DX-rated order. Do you mean estimated costs? In any case, the contracting officer should be concerned about the overall price. As long as it was consistent prices charged for comparable unrated orders, they shouldn't find it unreasonable solely because the contractor included collateral costs in its estimate.
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I'm saying that when pricing the subcontract, the subcontractor would not be in violation of DPAS regulations if it considered the cost impact to the company for accepting a DX-rated order. A "comparable unrated order" would be one where the buyer wants expedited delivery. Expediting fees are standard commercial practice. ********************* AI explanation-- An expediting fee is a charge paid to prioritize and fast-track a process, allowing for quicker completion of a task or service, often by allocating additional resources to handle the request faster, with the understanding that the customer is willing to pay extra for the expedited timeframe; essentially, it's a fee to "jump the line" or receive faster service. ************** If you are interpreting 700.13(a)(2) to mean that a contractor is prohibited from considering the cost impact to the company of expediting, including the cost impact on other orders, when pricing a DX-rated order then I disagree. If the company considers these costs when pricing comparable unrated orders, there's no violation.
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I meant increased costs in total--the same way they would price an expedited order. You seem to be suggesting that the contractor must eat any losses on its DO-rated orders if it receives a DX-rated order. I think that's wrong. The contractor would not violate the DPAS regulations if it priced a DX-rated order the same as an expedited unrated order. In that situation, a competent contractor is going to make sure they price the order to cover its costs. Think of an expediting fee. If you are not suggesting that the contractor must eat any losses on its DO-rated orders if it receives a DX-rated order, then I don't know what you're trying to say.
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