here_2_help

Here in SoCal -- and I imagine in other places as well -- DoD employees who have been furloughed can obtain (1) loan deferments and (2) $5,000 interest-free loans to help them out. These offers are from local credit unions. If you have been furloughed or are working without pay, please check with your bank to see if they have any special offers available for you.

Without knowing any of the facts, I'm willing to bet that the language was drafted at a high level and passed down; people are using the language they were given. It's not a matter of ethics; it's a matter of following direction. At least, that's what I think (again, acknowledging I have zero facts).

We don't discuss politics here and I trust I'm not violating any Forum rules to add that so much of what transpires these days is performative rather than substantive. The quoted language strikes me as being performative.

46 minutes ago, Witty_Username said:

My understanding is that from the contractor perspective TINA creates enough risk that they are unable to quickly certify cost and pricing data even with significant historical pricing information. Inability to certify may be how they got into a UCA situation in the first place.

edit: in fact looking at some notes I think I heard this explicitly from NAVAIR regarding the difficulties of using "priced offers" based on 20 years of cost history in the F/A-18 program to speed the negotiating process.

That's really interesting. If I were advising the parties I would point out that the risk can be reduced by having the KO agree on what was relied on to reach price agreement. Something something fighter engine litigation.

Thank you all. This is helpful.

I think it was the "retroactive" nature of Mod 4 that caught my eye. It appears that, instead of issuing a new Delivery/Task Order for new parts, the KO chose to add additional line items to the existing undefinitized Order, which (I suppose) means that it will now take longer for the parties to definitize. If only the F/A-18 were a mature program with history that the parties could use to reach quick price agreement ....

49 minutes ago, Don Mansfield said:

In FY22, DLA awarded a requirements contract to Boeing. In FY24, DLA issued an undefinitized delivery order under the contract. This announces the fourth modification to that delivery order.

So the customer has modified for the fourth time an undefinitized delivery order under a definitized requirements contract? Okay. Sure. But why? Why do you even need a UCA when you have accepted terms in the parent contract?

Will somebody smarter & more experienced than I am please explain what's going on in this contract action, as reported in the DoW's daily report? I am trying to envision the sequence of events and now my head is hurting.

The Boeing Co., St. Louis, Missouri has been awarded a maximum $41,801,543 modification (P00004) to an undefinitized delivery order (SPRPA1-24-F-0051) issued against a three-year requirements contract (SPRPA1-22-D-001U) to retroactively increase line items and establish additional funding to extend the existing undefinitized contract action. This was a sole-source acquisition using justification 10 U.S. Code 3204 (a)(1), as stated in Federal Acquisition Regulation 6.302-1. Location of performance is Missouri, with a performance completion date of Sept. 16, 2027. The military services are Air Force, Army, Navy, and Marine Corps. Type of appropriation is fiscal 2025 through 2026 defense working capital funds. The contracting activity is the Defense Logistics Agency Aviation, Philadelphia, Pennsylvania.

2 hours ago, Vern Edwards said:

I’ve been away and am not sure whether this question has been answered.

The answer is: If the contract is written in the Uniform Contract Format, then Part I.

Fee must be stated in Section B, the contract line item(s). See FAR 4.1005-1(a)(5)(ii).

As a general matter , there is no “overall contract amount” in a cost reimbursement contract.

As a general rule, payments of fixed fee should be based on percentage of work completed, not on percentage of estimated cost incurred.

Thank you.

4 hours ago, C Culham said:

Or cancelled or otherwise incorporated into???????????

"DCMA Instruction 2101 Product Acceptance and Proper Payments __________________________________________________________________ Office of Primary Responsibility Product Acceptance and Proper Payments Capability

\Effective: February 14, 2019

Releasability: Cleared for public release

New Issuance Incorporates and Cancels:

DCMA-INST 102, “Progress Payments Based On Cost,” August 20, 2013, as amended

DCMA-INST 106, “Public Vouchers,” July 31, 2013, as amended

Etc, Etc, Etc"

https://www.dcma.mil/Portals/31/Documents/CIG/DCMA-INST-2101V508C_03162023.pdf?ver=yzaXj5tLPt399jogTDy3xQ%3D%3D

Thank you. You know what? That Instruction says nothing of substance. Nothing at all.

You know, I've tried to find DCMA Instruction 106 and wasted a decent amount of time doing so. My conclusion was that the Instruction is not available to the public. I would love to be proven wrong ....

16 hours ago, formerfed said:

The Uniform Contract Format encompasses several parts of the contract under “Schedule”

https://www.acquisition.gov/far/15.204-2

As a matter of practice, I’ve always thought the overall contract amount, including fixed fee on a cost reimbursable type, should be detailed in Section B

Thank you. I was thinking G but I don't think the parties are consistent.

(a) The Government shall pay the Contractor for performing this contract the fixed fee specified in the Schedule.

(b) Payment of the fixed fee shall be made as specified in the Schedule; provided that the Contracting Officer withholds a reserve not to exceed 15 percent of the total fixed fee or $100,000, whichever is less, to protect the Government’s interest. The Contracting Officer shall release 75 percent of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the Contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years’ settlements. The Contracting Officer may release up to 90 percent of the fee withholds under this contract based on the Contractor’s past performance related to the submission and settlement of final indirect cost rate proposals.

So ... where do I find the Schedule? In what part of the contract should I look?

I can see a contractor's history of project data, costs, on-time deliveries, positive customer correspondence, CPARs, etc., being fed into a Large Language Model. If the contractor is large and experienced, that would be a huge amount of information for an AI to mull over. Given a solicitation, it could identify similar projects that had been successfully performed. It could write up the benefits received--formerfed's "evidence" in support of the offeror's assertions. The LLM could look at solicitation requirements and identify gaps that need to be filled, in terms of either personnel to be hired or else subcontractors that need to be brought on board. The LLM could look at prior cost history for similar projects and make accurate estimates of future costs to be incurred. I can see all that happening;

I expect it will happen.

That said, I think people will still be needed, especially if what is being proposed is new and different from the past.

Let's hope history does not repeat.

https://breakingdefense.com/2025/09/exclusive-navy-taps-four-aerospace-primes-to-design-autonomous-drone-wingmen/

WASHINGTON — The US Navy has awarded contracts to four major aerospace prime contractors — Anduril, Northrop Grumman, Boeing and General Atomics — for “conceptual designs” for a carrier-based autonomous combat drone, according to a Navy document obtained by Breaking Defense. 

Additionally, Lockheed Martin is under contract for the drone’s “common control,” according to a slide on Collaborative Combat Aircraft from the Navy’s program executive office for unmanned aviation and strike weapons, dated Aug. 20.

The contract awards, which previously were not publicly known, are the clearest sign that the Navy is moving forward with the concept of a “loyal wingman” aircraft that can operate from the deck of a carrier. Both the Navy and Air Force have pursued the concept of CCAs, but while the Air Force put its program in the spotlight, the sea service’s own efforts have been largely shrouded in secrecy. 

The latest GAO Report on the F-35 Program has several headline-worthy findings. The one that caught my eye was the lengthy quote that follows ... which leads me to ask "Are incentive fees worth the time and effort of administering them?" I'll add that, in my experience, it can take years for the contracting parties to finalize program incentives (often because of the indirect rate finalization process, but also for other reasons). Do the seasoned professionals here think contract incentives are effective and, if so, are they worth the effort involved?

Contract Incentives Are Not Improving Production Outcomes

The F-35 program office uses various contract incentives aimed at improving program outcomes, including on-time deliveries. In the case of the F-35, engine and aircraft contractors can be compensated in multiple ways. First, contractors earn a base profit, which is calculated as a certain percentage of the cost of the engine or aircraft. Second, on top of the base profit, the contract can include the payment of additional fees to incentivize the contractors to identify opportunities to reduce the cost of developing and producing the engine or aircraft. Third, the contract may also include fees or penalties to incentivize the contractors to achieve various performance objectives, such as reducing the overall time it takes to build an engine or aircraft, or deliver them on time.

The F-35 program office compensated Lockheed Martin with hundreds of millions of dollars of performance incentive fees while the percentage of aircraft delivered late and the average days late grew.[33] For aircraft produced in lots 13 and 14, which were delivered between 2021 and 2024, the program included performance incentive fees to drive Lockheed Martin’s performance in certain areas, including delivering aircraft on time.[34] The lot 12-14 contract allows Lockheed Martin to earn a portion of the fees for aircraft delivered up to 60 days late, with the fee decreasing every day the aircraft is late.[35] Lockheed Martin earned a large percentage of the on-time delivery performance incentive fee for lots 13 and 14 although it delivered aircraft late, as shown in figure 6.

Figure 6: Lockheed Martin Earned Millions for On-Time Delivery of U.S. Aircraft, Even Though It Delivered Aircraft Late

Note: Percentage of incentive fee earned reflects the total on-time delivery incentive fee earned out of total on-time delivery incentive fee available for the entire production lot of aircraft delivered on time and late.

While the program originally targeted lot 15 incentives to on-time delivery, once officials knew the contractor would not be able to earn those incentives, the program repurposed the incentive fees. A portion of the lots 15-17 contract incentive fee was designed to incentivize on-time delivery. Defense Contract Management Agency officials projected that under the lots 15-17 contract incentive fee structure, Lockheed Martin would not earn the vast majority of the fee because of the TR-3 delays we described above. Withholding this fee altogether would have saved taxpayers millions of dollars; however, the program modified the contract, which allowed Lockheed Martin to earn some of the incentive fee that it would have otherwise not earned. The program repurposed the unearned on-time delivery incentive fee to target some of the issues that it believed were driving the late deliveries of aircraft in lots 15-17. For example:

·       The program redirected over a hundred million dollars of unearned incentive fees to Lockheed Martin to pay for improved software lab capacity, and

·       The program repurposed over a hundred million dollars of unearned incentive fees to pay Lockheed Martin to address repairs and hardware of TR-3, Next Generation Distributed Aperture System, and to fund TR-3 test stands—special tooling to improve production processes.

Pratt & Whitney also earned tens of millions of dollars in incentive fees even though it was partially penalized for delivering engines increasingly late.[36] The F-35 program negotiated an incentive fee structure for the engine that allowed the contractor to earn more money if engines passed specific quality tests and if it kept total assembly time down. This incentive fee structure is intended to encourage the contractor to improve engine quality while also reducing the hours its takes to build engines, keeping engine costs down and increasing the likelihood that engines are delivered on time. The incentive structure also included penalties that reduced the total amount of fee Pratt & Whitney could earn based on how late it delivered engines. Pratt & Whitney earned between 37 and 78 percent of the total incentive fee available for production lots 14 through 16, equating to tens of millions of dollars, because it performed well on both the quality tests and assembly time metrics. The total amount of incentive fee earned for engines delivered across those production lots was reduced by over $10 million because it delivered nearly all engines late. However, Pratt & Whitney earned tens of millions of dollars in incentive fees because the value of the fees it earned for keeping total assembly time down more than offset the penalties levied on it for delivering engines late. This incentive structure and late delivery penalty was not effective at improving on-time deliveries (see figure 7).

Thought I would throw in this 1999 article which is one of my faves.

One lesson learned is that progress payments don't correlate to program progress; they correlate to the contractor's ability to spend funds. Which is why we now have Performance-Based Payments, which are supposed to tie payments to program progress.

I seem to recall a defense contractor CEO (Kresa?) talking about the "culture of hope" that permeated DoD acquisition. The contractor hoped that everything would work out perfectly. The government hoped that the contractor would perform. Everybody lived in hope but, at the same time, history told those same people that nothing every worked out perfectly, especially in development programs.

I did not read the draft article; I am responding to the three points you raised in your post. They got me thinking ...

Can you separate culture from the people who make it up? Your focus seems to be on people, for obvious reasons. People are what drive culture, after all. But let's say you are a newcomer to the office. Do you accept the culture you get, or do you try to influence it, to change it? In this case, the culture is separate and distinct from the individual. So, maybe culture is an aggregation of individual attitudes, but also separate and distinct from any single individual, such that if you take the individual out of the culture, the culture still exists?

Anyway, thought-provoking. To your points, I would suggest:

1. Be curious. Interrogate the unwritten rules, the way it's always been done. Challenge the norms; respectfully request justification, especially if how it's always been done seems suboptimal. Suggest improvements.

2. Know your customers' mission(s). Understand how your role supports and advances their mission. Understand how your efforts, and the efforts of those around you, create value. If you don't see the connection, maybe there isn't one and you need to move on.

3. Personnel development should be the primary focus of any culture. It is perhaps even more important than supporting the mission. Any culture that doesn't support the development of its people should be avoided. As a corollary, any individual who resists development (e.g., opportunities to learn, grow, advance in skills/knowledge) should be sidelined and, if possible, eased out.

I'm certainly no expert, but wouldn't a letter to the contractor--issued prior to 01 October--informing the contractor that the Government intends to exercise the option on or about 01 October be sufficient, especially if the contractor agrees?

I reviewed the overhauled FAR Part 31. I saw no significant changes. None. Zero. I think there was maybe one or two sentences lined-out and some references were deleted.

A missed opportunity to move the government away from prescriptive rules, in my view.

Anybody see things differently?

1 hour ago, Retreadfed said:

Another issue is how does the contractor account for these types of cost? If they are accounted for as indirect costs, I think the increased amount should also be accounted for as an indirect cost and allocated over all applicable contracts, not just one contract.

That is the crux of the problem for many contractors. How does one quantify the impact for an individual contract if the cost is indirect? What if not all contracts are FFP? What if not all contracts contain the clause?

It's a hairball of an issue.

To me, the key point here is that the subcontractor has completed work and delivered the product to the prime contractor. Accordingly, I would expect the prime to liquidate all progress payments made to the subK to date and make full FFP payment to the subK for the delivered goods. At that point, all costs paid to the subK are now prime contractor costs, and should be included in the prime's progress payment requests in accordance with the terms of the prime contract (i.e., 90% of costs incurred are eligible for reimbursement). That's my take, even though the original poster has moved on.

I believe the contractor has encountered an "after-imposed tax" (as defined in 52.229-6) and, therefore, is entitled to an appropriate price adjustment based on additional costs that were unforeseen at the time of contract formation by both parties.

3 hours ago, WifWaf said:

There was a COFC case involving CAS that led to review boards being instituted. It was rightly needed, given the current state of professional development and the facts I recall of the blatantly poor decision the ACO made. It didn’t involve any forward pricing, though, from what I recall.

The broader problem statement here is in this: Experience tells us almost every government project that gives people power, like a review board, will expand beyond its original basis for establishment. So…

1. Provide what you recommend doing about it.

2. Please rate this problem on 1 - 7 scale.

How did the checks and balances written into the Constitution solve this kind of problem efficiently?

I beg to differ. I assert there was no "smoking gun" COFC CAS case. Review boards were instituted to: (a) ensure "consistency" in KO decisions across the agency; and (b) provide coverage to KOs from adverse IG and GAO reports. Properly trained KOs who perform their job well and document their decisions do not need review boards. In fact, KOs spent far too many hours preparing their review packages for those boards. Pre-negotiation reviews. Post-negotiation reviews. An utter waste of everybody's time.

Problem: The proliferation of "review boards" at DCMA that review many decisions made by warranted contracting officers has created another bureaucracy within the bureaucracy. As a result, decisions take months longer to implement than should be the case.

Scale: 5 of 7

Proposed Solution: Eliminate all review boards at DCMA. Instead, give warranted contracting officers authority inherent in their position to make business decisions on behalf of DoD. Hold them accountable as individuals for the quality of their decisions.

Signed "Still Waiting for My FPRA to Be Approved by a Review Board Six Months After Submittal, Two Months After DCAA Audit, and Six Weeks After Handshake"

On 4/21/2025 at 1:08 PM, Keith Faulconer said:

I know that when the subcontractor is paying their employees, they are required to include holiday hours in the base for computing their OT rate.

How do you know this? What regulation or contract clause requires this? Please be specific.

If what you are saying is that "A contractor must include paid time off hours in its calculations of hours worked in order to determine whether or not OT has been worked" then that seems to be a different thing than what you posted.

Regardless, OT laws vary state by state. In what state is the work being performed? What does that state's labor laws require regarding your question?

Labor laws, including overtime rules, vary by state. The contractor will be expected to comply with applicable laws and regulations.

Regardless of what the government negotiates, the contractor will (or should) incur labor costs in compliance with the rules in the locality in which it is working. Trying to establish rules such as "reimbursable work starts when the contractor sets foot on the site" may be contrary to the legal reality. To be clear, that position may work when the contractor is commuting to the site, but not when the contractor is traveling to the site.