here_2_help

Hi ktr1999, Consider this point of view: cost or pricing data includes all facts that would reasonably be expected to significantly affect price negotiations. "All facts" includes factual information such as vendor quotes, but is not limited to only vendor quotes. Cost or pricing data is certified and penalties exist for defective certifications. "Information other than cost or pricing data" includes "any type of information" that the Contracting Officer believes is necessary to determine price reasonableness or cost realism. "Any type of information" includes factual information such as vendor quotes, but is not limited to only vendor quotes. So there is obviously going to be some overlap. The critical distinction is that "information other than cost or pricing data" is not certified and therefore you cannot be penalized for a defective certification. (But note that the False Statements Act may apply ....) Basically, the C.O. is prohibited from requiring submission of cost or pricing data where there is adequate competition, but is encouraged to obtain sufficient information in order to determine price reasonableness. Just because there is competition does not automatically mean that the C.O. can conclude an offeror's price is reasonable. Note that FAR 15.305(a)(1) says "Normally, competition establishes price reasonableness [but] in limited situations, a cost analysis ... may be appropriate to establish reasonableness of the otherwise successful offeror?s price." From my point of view, you need to give the Contracting Officer whatever he/she says is necessary. So long as you're not certifying, your downside risk is limited. Moreover, you want the contract award, don't you? Hope this helps.

I sighed when I read this post. I bet others did as well. Let's break it down -- 1. Yes, most times DCAA uses the DRI/Global Insight values to establish its position(s) on the reasonableness of estimates of future costs. Generally, contracting officers use that position to establish pre-negotiation objectives. 2. If your company has a history of providing employees with raises larger than that used by Global Insight and -- more importantly -- if it has budgetary projections showing it intends to award those larger raises in the future, then those facts need to be given to the contracting officer during negotiations. At that point, it's simply a matter of negotiation. Let me reemphasize that: it is NOT a matter of index vs. index; it is a matter of negotiating skill. Period. 3. You say, "The Govt should have no say in what kinds of increases [my company] pays its employees." True, and so what? The Government has a say in the price it wants to pay its contractors. If you keep giving out raises in excess of the industry average, eventually you will price yourself out of the market. The bottom-line here (excuse the pun) is that you are negotiating a price, of which labor escalation is but one element. I'm willing to bet that your indirect rates affect the contract price as much as -- if not more -- than direct labor escalation. Moreover, if you don't like the Government's escalation value, then jack-up proposed fee/profit to cover the difference. Finally, if this is a cost-reimbursement contract, then you're not even negotiating a price; you're just negotiating an estimated cost value. The Government is going to pay actual, allowable, costs in any case. I feel your frustration, but you should understand how the process works, and be well-prepared to negotiate when you're at the table. Because that's where the rubber meets the road, not at the issuance of an audit report. Hope this helps.

I recall the FAR Councils had some tough words for contracting officers who put CAS clauses into contracts when they were not applicable, using the excuse that they were self-deleting. Somebody might want to look at the promulgating comments from the revisions to 30.6 from a few years ago. My recollection is that the Councils said such an approach was expressly prohibited with respect to CAS clauses. I'm thinking the logic would apply to other clauses as well. That said, the Councils were talking about Government contracting officers not prime contractor subcontract managers/administrators. I guess primes can do pretty much what they want (as ji20874 said). It would be nice to think somebody aspired to a higher standard, but I can't think of any express requirement that says primes cannot use self-deleting clauses.

(From Karen Manos' Government Contract Costs & Pricing 2d. Ed.)The point being, that (exceptions aside) tax payments are in fact costs and must be accounted for in order to calculate total contract costs. Disputes have arisen regarding allocabilty of such costs, but there have been very few disputes regarding the allowability of tax payments when properly allocated. Hope this helps.

Yes, that was the original question. To which I replied "No. No it is not." Because it isn't a bad debt. Hope this helps.

No. Not at all. FYI, any expense the contractor records (or has recorded) is unallowable because the employee "voluntarily" terminated within 12 months. See the cost principle on relocation. On a somewhat related note, this contractor sounds like a "sharp operator" to me, and I mean that in a pejorative sense. I have never in my career seen a voluntary termination conflated with a termination for cause. And I have never seen a relocation agreement packaged as a loan. It seems to me that the main reason for doing so would be to avoid recording an expense (which would be a charge against income) and instead record an asset on the balance sheet (employee receivable). Somebody ought to get DCAA to perform a financial capability audit on this company, stat. Hope this helps.

Another resource to consider would be Karen Manos' article, "Caveat Contractor: DCAA?s New Audit Guidance on the Sarbanes-Oxley Act and Contractor Internal Controls,? 80 FCR 19, Nov. 25, 2003. In that article, Ms. Manos discussed US v. Newport News, 837 F.2d. 162 (4th Cir. 1988), U.S. v. Westinghouse, 788 F.2d. 164 (3rd Cir. 1986), and US v. MIT , 129 F.3d. 681 (1st Cir. 1997). A more recent (May 2010) article in West's Government Contract Costs, Accounting & Pricing Report discussing DCAA audits of contractor ethics and business conduct programs cited the same cases, and noted: "... courts generally have held that DCAA?s power to compel production of documents is limited to financial and cost records, and 'other objective factual information concerning contract costs, such as invoices, vouchers, and time logs, rather than ? subjective assessments.' The power of the DOD IG to compel document production has been accorded more deference, however. The DOD IG?s 'broad powers to seek out fraud and waste in agency operations and programs' was deemed sufficient to compel production of a contractor?s internal audit reports." Hope this helps.

Hi govtacct02, The situation as you describe it is simply a matter of (a) your company making a business decision on how hard it wants to push back, and ( your ability to negotiate a better outcome with the Contracting Officer(s) who are taking this unsupported position. I'm sure most everybody here agrees that when a CO directs the contractor to book only nonrefundable air fares, then s/he should also expect to pay for unused air fares when circumstances lead to a trip being changed or not taken at all. That's not unreasonable; it's simply common sense. We could delve further into whether the CO has authority to direct such a thing as you describe, or whether such micromanagement is actually interference and disruption--but why bother? Either your company will push back or not. Either the CO will back-off the position, or not. If you push back and the CO doesn't start allowing otherwise allowable air fares, then will you be filing a claim for the disallowed costs? If your company is not willing to push back to the point of threatening to file a claim -- and is actually willing to file the claim -- then I'm thinking "move on to another problem". Hope this helps.

Don, This is one of your better blog posts. The FAR Councils need to clear up confusion, in terms of both TINA and CAS administration. In particular, what is the contract award value of an ID/IQ with respect to CAS administration? The DCAA says it's the ID/IQ ceiling value but that's a puerile position, particularly when there are multiple ID/IQ awards being made. Will you be submitting a request to open a FAR Case?

Cajuncharlie, Perhaps others are better researchers than I am, but I don't think you can find what you're looking for in the FTR, JTR or DSSR. I am only aware of two types of travel -- Temporary Duty (TDY) assignments and Permanent Changes of Station (PCS). Many contractors have developed a third type of travel, e.g., Long-Term Temporary Assignment (or some similar name) for assignments of between 60 days and one year. But so far as I know, the official Government travel regulations don't recognize it. I look forward to somebody else providing more info.

The situation you describe is not right. First of all, there is no such thing as "DCAA actuals". The contractor submits its proposed final indirect cost rates -- and certifies to them -- and DCAA audits the submitted rates. Some work may be done on direct costs, or not, depending on how DCAA approaches its audit. The ACO then uses the DCAA audit report to establish a negotiating position. (Granted, sometimes rates are established unilaterally.) Second, in today's environment a contractor might be waiting for--literally--years before getting to the negotiating table with its ACO to finalize indirect cost rates for any given year. And even then, it's 50/50 or worse regarding how many Boards of Review the ACO will have to go through to obtain management approval of the rates s/he negotiated. Third, does this contract contain the Limitation of Cost clause and, if so, how does the contractor intend to comply with it if the additional billable cost pushes it over the contract's estimated cost? Fourth, this is just plain stupid from a contractor's cash flow point of view. Bill the costs now and process the credit later. I now see where you're coming from. This contractor needs help.

Hi woops85, CAS compliant has nothing to do with it. Accounting system adequacy has nothing to do with it. The only correct answer is that you should expect to pay for costs incurred through the end of the POP whenever they are recorded to a contract that has not yet been closed-out. Reasons for "late" charges might include: correction of inadvertent mischarges, late vendor invoices, etc. The government expects its contractors to process credits related to the contract even after close-out. See, for example, 31.201-5, Credits. Why should the contractor not expect to get reimbursement for allowable and allocable contract costs incurred up to the end of the POP, even if they are recorded "late"? Hope this helps.

The correct answer is to use the lodging and M&IE rates for the locality where the person has been assigned, regardless of where the lodging is located. Where there are multiple locations in a single day (e.g., when there is a stopover point en route) then use the location where the individual is at midnight. ?301-11.7 What determines my maximum per diem reimbursement rate? Your TDY location determines your maximum per diem reimbursement rate. If you arrive at your lodging location after 12 midnight, you claim lodging cost for the preceding calendar day. If no lodging is required, the applicable M&IE reimbursement rate is the rate for the TDY location. ?301-11.102 What is the applicable M&IE rate? For days of travel which require lodging Your applicable M&IE rate is the M&IE rate applicable for the TDY location or stopover point. Do not require lodging, and travel is more than 12 hours but less than 24 hours. Your applicable M&IE rate is the M&IE rate applicable to the TDY site or the highest M&IE rate applicable when multiple locations are involved). Travel is 24 hours or more, and you are traveling to a new TDY site or stopover point at midnight. Your applicable M&IE rate is the M&IE rate applicable to the new TDY site or stopover point. Travel is 24 hours or more, and you are returning to your official station. Your applicable M&IE rate is the M&IE rate applicable to the previous day of travel. Hope this helps.

No I don't have a good answer for you. But I have a couple of questions/thoughts. Some of the questions may be stupid, because I'm not an SBIR expert. So sorry if I'm about to expose my ignorance. 1. If the vendor will not give you information related to its current USAF contract, what else is it not telling you? How do you expect the relationship to be with the vendor going forward? 2. Even if you asked DCAA to "verify" the rates, the most likely scenario is that the agency will not be able to do so--at least for a number of months. Most small businesses aren't set up the way DCAA wants them to be, and they will have a difficult time meeting SF 1408 requirements. Most small businesses fail their first DCAA audit, as well as the second and sometimes the third one as well. 3. What contract type to you intend to award? Do you really need all the cost information you are asking for? Hope this is helpful (in some way).

govtacct02, yes I suppose one could have a FP type contract for financial reporting but a CP type for government contract cost accounting. That said, I don't see the advantages in doing so. To comply with FAR, you still need to calculate "total cost" as that term is defined in FAR Part 31. That value must include allocable credits as well as direct and indirect costs, and that value must be adjusted to identify and segregate unallowable costs. Moreover, that value must also be adjusted for changes to actual allocated indirect costs at the affiliate. My point is, you're going to do all the work anyway. Plus, the inter-company profit will be eliminated in consolidation for GAAP purposes. So I don't see any advantage in pretending it's an FP contract for one set of books, while treating it as a CP type contract (which you must do) for FAR compliance purposes) on the set of books you show DCAA. Hope this helps.

So you are saying that some of the prime's own employees committed wrongful acts and, as a result, the prime suffered a financial loss? How is that loss a cost to the government? A cost-plus-award-fee contract is one in which the government will reimburse actual, allowable costs. You need to incur a cost, not record a loss, in order to get reimbursed. And even if the "loss" was somehow a cost (debit to an expense account) it would be unallowable per 31.205-15(. So you wouldn't get reimbursed in any possible case. However, the company may have legal recourse against the employees. Hope this helps.

Govtacct02, I'm confused. If the affiliate does not qualify under 31.205-26(e) for transfers at price, then the transfers must be made on the basis of allowable cost. Right? So if that's true, then what kind of contractual arrangement can the two affiliated entities have, other than a cost-type one?

Not saying you're wrong, Vern. And meaning no disrespect to anybody anywhere. But how many of them types you seen 'round the campfire lately? 'Specially down two/three tiers in the supply chain? H2H

Hi elf949, I was thinking along the same lines. If the hourly labor rates aren't fixed, then they must be reimbursable. In essence, the contracting parties want to convert a fixed-price concept into a cost-reimbursement one. So to calculate the appropriate billing rate, one would need to calculate a cost build-up from direct labor dollars. As an aside, that value may or may not be what the employee is actually paid (because the contractor could use average labor rates.) To that DL $ value, one would add-in applicable indirect cost burdens (e.g., fringe benefits, overheads, G&A) as per established/disclosed practices. From there one would add in an agreed-upon profit factor, I would think. That's how I would build-up an "actual" hourly rate were I the performing entity. Interesting subpoint -- what indirect rates would the performing entity use? The higher-tier would need to create a clause very much like 52.216-7 in order to specify how the indirect rates would be calculated. You would want the rates to adjust to avoid windfalls from overly pessimistic forecasts, I suppose. Also the performer would want the rates to adjust to avoid losses from overly optimistic forecasts. But you wouldn't want the rates adjusting every month, so you would want to specify timing, such as quarterly or every six months. Complicated. Another interesting question would be whether the applied rates could be questioned by an auditor, based (say) on alleged unallowable costs being included? Would the rates need to be adjusted after audit? In other words, would creating a "lower of actual cost or ceiling" hourly billing rate in a T&M contract create more problems than it solves? Hope this helps.

Jimmie, There is a difference between disclosure and use. In this case, it sounds like the customer is asking for your subKs to disclose information, even though it has no direct link to already negotiated labor prices. If you and your subKs incur additional costs related to complying with the customer's request, or if compliance disrupts planned program execution, then you may be entitled to an equitable adjustment. Otherwise, I don't think you or your subKs have any basis to "refuse" the request. Hope this helps.

Casius, I'm not sure what you're looking for, but you might try looking at this blog site for a start. http://www.apogeeconsulting.biz/index.php?...s&Itemid=55 Hope it helps.

Thanks Vern. So the contractor performs up to funding and then stops. I don't have a problem with that. H2H

From the Aviation Week Ares blog -- I'm not exactly sure how to interpret MDA's action. It sounds like the agency may have stopped incrementally funding the contractor. But if there is authorized work in process, doesn't the work eventually have to be funded, unless there is a Term for Convenience (or Default)? Also, "cutting them off from the MDA purse" sounds a bit like a de facto suspension with regard to that particular agency. Is that even kosher? I'm wondering if an agency can simply "cut-off" funding without doing anything else? Doesn't that sound a bit, well, strange? Or am I straining at nothing? Thanks for the help.

Yep. Hopefully the person or persons who executed the subcontract have "moved on" ... to another company. H2H

pmh, This question seems to merit either a lengthy reply going into legal stuff, or a pithy one. I choose pithy. If you want a deeper reply, you'll either have to wait for somebody else or hire an attorney. My reply: You are correct. But so what? It's not a matter of FAR vs. A-122 or privity of contract or tailoring terms. It's a matter of negotiation. Either accept the terms or push back and seek different ones. How hard are you willing to push back? If you accept the terms, how much more work will it be for you? Seek increased profit to cover the delta. Hope this helps.