here_2_help

A recent COFC opinion offered what I thought to be a rather unique definition of a contractor's standard recordkeeping system for purposes of determining the amount of money owed during a Term for Convenience of a commercial item/service contract. I had always believed that the above bolded phrase was intended to distinguish the systems of commercial entities from the systems of traditional government contractors, who invest in developing government-unique systems (including accounting systems) to meet the myriad of requirements for contracts awarded outside of Part 12 procedures. Silly me. In fact, as the Judge noted, the plaintiff had an accounting system (Quickbooks). Apparently, the plaintiff failed to show the Judge how its system was used to track costs. Anyway, I thought this opinion was ... interesting. I would have thought that Quickbooks would have been sufficient for a commercial item/service contractor.

Thought I would close the loop on this. Upon further discussion, it turns out that "Legal" didn't say. It was a policy position from the Chief. The Chief prefers cost-type contracts because ... why? I don't know. We were willing to go FFP and take the cost risk. Anyway, Legal didn't say. The Chief did.

Yes, I have published many articles in the past. I think I published four on Cost, Price & Accounting Report over the years. I write fewer now, to be honest. Vern is right, I need to do more.

We're not that far apart, Vern. There is a (small) audience for in-depth discussions and analyses, sure. They want what you write but they can't afford to subscribe. (And thank you for often making your articles available to the public.) But it's hard to publish in-depth articles when NCMA's membership covers a wide spectrum of folks, from state/local government buyers to prime contract buyers to commercial buyers. For example, I was just speaking with somebody who's planning to join NCMA in a few weeks or months; she's a buyer for the local school district. She's not looking for--nor is she ready for--a deep dive into, say, FAR Subpart 15.4. In my view, Contract Management aims for a low common denominator that will be of general interest to the majority of its readers. I quote from current Editorial Guidelines below regarding what the Editors are looking for.

True but, in fairness, the audience is not there for in-depth analysis.

First of all, yes. The prime can ask you to bill less than you actually incur. (This assumes that you actually incur $102.31/hour for your employee's labor. See ji20874's post.) You don't have to agree, but the prime can ask. Second, if you were CAS-covered I would say that you have to be consistent in your cost accounting practices. Labor over there must be treated as labor everywhere. But you're not CAS-covered. Are there burdening differences between labor & ODC? I don't know your accounting system so I couldn't say. But if the transformation from labor to ODC changes the burdening, and your are required by 52.216-7 to submit a final billing rate proposal at the end of the year, then you may have an argument as to why that's a bad idea. I would suggest you get a consultant in to assist you with these types of questions ...

If you are a small business then no, you are not subject to CAS. So your prime is asking you to (a) request less reimbursement than actual costs incurred, and (b) to treat the additional labor as an ODC? (And burden the labor as an ODC instead of as labor, I assume.) Is that correct? Back to Vern's question then. What do you want to know?

Contractor500, is your company subject to CAS? Is the subcontract subject to CAS?

I have attended several NCMA conferences in the past, including a few World Congresses, where I was a presenter. I have attended NCMA National Education Symposia--and even instructed at one of them. I don't recall with absolute certainty if I've specifically attended a GCMS -- but I think I have (once). NCMA is a good organization--especially for people new to the field. That being said, I let my membership lapse several years ago (after being a member for ~ 20 years). Consequently, I no longer attend NCMA events. I can't speak for other WIFCONites, but the event may be worthwhile for YOU if you are new(er) to the field. No. I think interaction with decision-makers is limited, especially for attendees. The speakers are there to represent their agencies and the Federal government; they don't really have a lot of space to "let their hair down" and interact, assuming they wanted to. In my experience, the best way to get good one-on-one interaction is to be a speaker yourself and hang out in the green room.

When this issue comes up for companies have have supported, we typically turn to 31.205-6(h). (Emphasis added.) So, no. Contractors do not automatically get to claim reimbursement of underpaid wages via submission of an REA, because the compensation costs are unallowable in most circumstances. I guess we can split hairs about what "negotiated settlement means" in this context but, in my experience, the phrase refers to a negotiated legal settlement--an interpretation that is supported by the other two circumstances in that same sentence.

Vern is correct. If the company treats the situation as a contract between affiliated entities, then that's what it is. It is a buy. If the company treats the situation as an interorganizational transfer then no contract is necessary as it's a make. See FAR 15.401 Definitions, as well as FAR 15.407-2(b) Definition.

I agree that TINA does not require you to provide certified cost and pricing data. However, that's not the same thing as providing non-certified cost information necessary for the prime to assure price reasonableness of your rates. If you're going to use foreign workers then your fringe benefit model for them will be entirely different--if you applied the same fringe rate to their labor, you'd (potentially) be making a windfall profit. The prime has a responsibility to assure itself (and its customer) that's not happening. To your questions: 1. Yes, you can try. But what if the prime declines? What then? 2. Maybe but what if the PO prices include inter-company profit? Now you are pyramiding profit. How to you show your prime that's not happening? Good luck.

DCMA Legal

That's not what I was looking for, Vern. I was hoping Joel could point me to the source of his assertion that the Chinese government "loosed" the virus on the world--implying intention.

Citation needed, please.

I can help the United States in designing a cost accounting system that considers such concepts as "allocability" and helps to allocate costs in reasonable proportion to the benefits received by the parties. United States, if you're interested, call me.

As companies I have supported in the past have found out, to their di$may.

In my experience, contractors are expected to comply with prevailing wage requirements, whether or not the CO modifies the contract.

Okay. I have not asked but I suppose we can.

Legal won’t allow an FMS FFP contract. Background: The DFARS was revised 11/27/2019 (84 CFR 65304) to implement Sections 829 and 830 of the 2017 NDAA, which required use of FFP contract types for FMS (unless and exception or waiver applies). The DFARS was revised 08/30/2021 (86 CFR 48339) to eliminate the requirement to use FFP contract types for FMS. DFARS Section 225.7301-1 was removed and reserved. My understanding is that, currently, there is no direction regarding appropriate contract type to use for FMS. DFARS 225.7301 (b) states: Issue: To me, that DFARS guidance tells contracting officers to use the appropriate contract type, following the guidance of FAR Part 16 and DFARS Part 216. However, instead I'm being told (by DCMA contracting officers) that: Question: As I know there are many DCMA contracting officers here, I'm asking whether this is a local thing or something that's found in guidance outside the FAR or DFARS? To be clear, I am dealing with experienced COs who frequently deal with FMS cases. I would expect them to be aware of the latest guidance on the topic. However, this one seems to be an instance of the pendulum swinging a bit further than I would have expected. I'd like to push back but, you know, "Legal says" is kind of final these days. Should I push back, or should I simply accept what I'm being told?

I am grit personified, but unfortunately not a contracts person, so I probably skewed your poll results.

I don't know what else to tell you. Maybe somebody else does. If the contractor can't point to any real harm done, then it's a non-issue I guess. (Let me be clear I'm not a gov't. employee.) If they can point to some harm done, I suppose they can file an REA for compensation.

It strikes me that -- yes -- the employees are currently employees of the incumbent contractor and any information regarding its employees should have come from the contractor. So, yeah. Bad on you, I guess. But was there really any harm done? I'm struggling to see what harm might have been done.

I hope he doesn't try to fly to Morocco via Royal Air Maroc, as I once tried to do. Never again.

I'm going to have to disagree with you a little bit. The OP asked two questions. I (and others) answered one of the two. Obviously, the contract and the parties' intent will tend to control what costs are reimbursable; not just G&A but any/all costs.