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Everything posted by here_2_help

  1. Thank you for the link. I believe I knew the rule intuitively, but it was very nice to see it explained authoritatively. How did I know it intuitively? Genetics. My mother was an English teacher for 40 years. Thanks, Mom. 😄
  2. Speaking from the contractor's viewpoint, many contracting officers are ill-prepared to engage in such discussions. Many (not all!) don't have the critical analysis skills to understand things like carrying cost, imputed interest, inventory valuations, and the like. Frequently, when a contractor attempts to raise those points, the response is not a reasoned analysis; the response is: "No. Because I said so." It can be disheartening to spend the time & effort to prepare an in-depth analysis in support of proposed pricing, only to be told "no" in such a way that one can be sure the other party didn't bother to think about what had been presented.
  3. I'm sorry. I see these stories--or ones like them--nearly every single day. Along with plea agreements, deferred prosecution agreements, and the like. I don't think there is anything to be done about the situation. At least, I am unable to come up with anything else that can be done.
  4. Breaking Defense (2/23, Gill) reports that when it “comes to landing defense contracts, non-traditional defense firms, including startups, have so little chance against the towering traditional primes that there is ‘no fair competition,’ according to blunt remarks from” Anduril Industries Chief Revenue Officer Matthew Steckman. During a panel discussion at the WEST 2022 conference last week, Steckman said, “I would love someone to do a study to figure out how many open competitions are wired for a winner ahead of time before that solicitation ever hits the light of day. … It’s got to be 85%, right? … There is no fair competition.” Steckman described how he would “do things if he were the Pentagon, including forcing competitions to include the fielding of technology and the ‘actual demonstration of something real in the world,’ as opposed to theoretical tech or designs.” Steckman also said, “I would pour a tremendous amount of money into the winner. … I wouldn’t sort of skirt around and do innovation theater and write million dollar checks here or there.”
  5. It was one of the GovtCon accounting firms that do consulting. I don't believe the briefing was recorded. As to why -- high attrition in general, including retirements.
  6. Most of the rhetoric after the acquisition reform efforts of the 90's focused on taking discretion away from contracting officers and ensuring "consistency." See, e.g., Schooner's Fear of Oversight: The Fundamental Failure of Business-Like Government. Portions of the abstract are quoted below.
  7. I attended an industry briefing a couple of weeks ago, where it was reported that labor bases are down across the industry. Accordingly, indirect rates are on the rise. To answer your question: No. There are no limits on the indirect rates that may be bid or billed.
  8. Lovely. Another required report to Congress. This is what passes for acquisition reform these days, I guess.
  9. TNT1 wants to enter into a long-term agreement (LTA) with a supplier. The supplier will receive orders and the cost of those orders will be charged to a USG prime contract(s). We don't know whether the USG prime contracts will be FFP or Cost-Type, or what. DCAA has audit guidance on this topic, for what it may be worth. Bottom-line: I think the government will be more concerned about price reasonableness than it will about TINA compliance. The contractor should be prepared to show how two-year-old pricing will result in a reasonable price.
  10. Well, yeah. I interpreted this question as: If I charge costs to a FFP contract--and they are legitimate direct costs of the contract--then, afterwards, if I repurpose residual items to which I have retained title, do the costs associated with that material have to stay on the original contract to which they were originally charged, or do I have to transfer the costs to the contract or other cost objective where I am repurposing the material. Answer to my interpretation of the question: It depends. You run the risk of having the customer pay twice for the same material items. (Example: Items were priced in the original FFP value, and now you are transferring them to a cost-type contract.) You also run the risk of being accused of defective pricing. (Example: Price negotiated for the second contract included costs of the materials, and if you don't transfer the costs along with the materials, you are getting a windfall profit, especially if you knew you had the residual materials when you negotiated the contract.) So: It depends. It depends on the contract terms & conditions associated with the contract or other cost objective(s) where the company intends to reuse the residual items to which the company has retained title. It's not automatic, but it's certainly within the realm of acceptable practices. If you transfer costs off the completed FFP contract, then you will record a higher profit/margin than you originally thought. That's not a terrible thing.
  11. I'm neither an attorney nor a tax expert. That said, I have helped a half-dozen companies enter the Federal marketplace. In each case, I have counseled the owner(s) to treat themselves as employees of the company. Several of my clients have listened to their tax advisors and, as a result, decided not to pay themselves a salary. (That's when we part ways.) That's fine, especially if you are getting a FFP contract award and/or your customer will be determining that your price is fair & reasonable based on something other than cost analysis. But when you have a customer who is performing cost analysis, you will then have no costs to show. Everything will look like profit. If you're okay with that result, then feel free to ignore my anonymous advice. Re: your second question, no. You will be too small for DCAA to care about. But your billing rates have to be based on something. Since you may not have costs, a cost plus markup approach will not work. In that case, your customer will likely look to the market to set the reasonableness standard for your billing rate. You should think about how to help your customer make the determination that's in your favor.
  12. Yeah, but you're such a helper! I was hoping people would be motivated to read the decision on their own, to see what was being referenced. You're the helper, not me.
  13. I read the CoFC bid protest from the link on the front page. Nicely done, Mr. Edwards!
  14. Unless you are providing a commercial service, I believe the answers to your questions are: 1. Yes. As with most small start-ups I work with, you are not seeing the difference between you as owner and you as employee to your business. Two different concepts. The business has its own expenses, of which your salary is but one. The business makes a profit or loss, which is taxable income to you (depending on how you structure your business). 2. Yes, your business does, if it wants to do business in the government marketspace. Yes, paid time off does exist--as a business expense of the business. Forget taxation (or don't forget it, but don't focus on it either). You need to set up the business, even if it is a sole proprietorship. The business will need its own financials statements. 3. If you are going to subcontract with a prime, you will still need to have the accoutrements of a business. Even if you are just a consultant.
  15. Good article! It does explain how Boeing used (or tried to use) military sales to offset demand problems on the commercial side. Today, though, I believe it serves more as a valuable historical retrospective than a critique of current events. Unfortunately, the article is focused on the failed leasing deal and not on the current aircraft procurement contract award. Its market analysis is similarly aged, in my view. In the past couple of years, Boeing has had problems on both sides of the house. Big problems. Which is why it slashed the corporate dividend and saw its stock price fall precipitously. Between 2012 and 2020, though the company's stock price soared.
  16. No. Disagree with you. Just look at how USAF converted the FPIF contract that was WAY beyond PTA into what seems to be a cost-type contract. Boeing has fallen behind schedule, experienced egregious cost growth, and had quality control issues. USAF doesn't care (or doesn't seem to). They're locked into Boeing now. You'd think they'd be sending cure notices, right? But no. They need that new tanker, whether it meets specs or not. Just my opinion, of course. I have no inside knowledge whatsoever.
  17. Nope. And you know a lot. Somehow we've gotten away from my original assertion, which was that Boeing's LPTA "investment" strategy was brilliant and resulted in a number of key program wins--not only KC-46 but also MQ-25. I have no opinion on their engineering acumen, or lack thereof.
  18. I'm pretty sure, having spoken with company employees, that the commercial division is supposed to generate robust cash flows through commercial margins to be used by the government division to invest in R&D and new program awards. I like this USNI article from a couple of years ago. It doesn't address my assertion (above) but it does speak to Boeing's strategy, which was working just great before the 737-MAX debacle.
  19. You're making an assumption based on ... something. Look, I don't want to argue with you. I'll assert that you don't understand Boeing, especially the interplay between its commercial division and its government division. Let's just leave it at that.
  20. Stop your timelines just before the 737-MAX tragedy/debacle/fiasco and rerun your numbers. I think you'll reach a different conclusion.
  21. It's not buying-in when there is no intention of getting well through change orders. Instead, the company (obviously) plans to recoup its initial losses through follow-on work. It's a great strategy and it destroys most competitors, because only the very biggest contractors can absorb the initial losses.
  22. This story shows me that Boeing's people were the smartest people in the room, despite what DoD and USAF leadership said at the time about their team(s). Boeing's strategy of "investing" in new programs by intentionally submitting a price that it knows is less than the expected cost of performance, and then riding out the initial losses--expecting to make its investment back plus a return on that investment in the long-term, continues to work for the company. The company apparently has outstanding financial strategists. Kudos to them.
  23. Okay. I'll let others more well-versed in fiscal law answer your question.
  24. For those of us who might remember the long and arduous road the Air Force took to get the contract awarded, and the promises made by Air Force and DoD leadership at the time. USAF Releases Boeing From Future Cost-Growth Liability On KC-46A Tanker. Inside Defense (1/28, Sherman) reports behind a paywall that the US Air Force has “released Boeing from future cost-growth liability on the KC-46A tanker, altering the fundamental terms of a 2011 contract that capped government costs at $4.9 billion and forced the defense contractor to pay out-of-hide for remedial work that so far totals $5.5 billion – a move that comes as Boeing saddles the Air Force with a new major milestone delay.” According to Inside Defense, “federal auditors revealed these and other new developments in a report on the $43.8 billion KC-46A program.”
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