here_2_help

Shickson, Obviously this is a risk. A contractor is always looking for constructive changes to throw back at the CO. That's the nature of the FP contract type. One control is to compare OT ordered vs. historical averages, and to include a solicitation provision that any deviations +/- x% will not trigger a contract price adjustment. Showing a relatively stable historical trend should go a long way to assuaging bidders' concerns about their ability to price the OT. But frankly, if this is such a concern then maybe FP contract type isn't the right way to go. H2H

You say that "occasionally" there is some required overtime. Is there some reason that historical overtime hour data can't be provided as part of the RFP? If so, the bidders could price it into their FP bids. Hope this helps.

Carl & Vern, I am happy to learn something new. Thanks. H2H

Carl, not being a female my judgment may be questionable. But I do NOT believe that "sexual harassment" and "sexual discrimination" are the same thing. Discrimination based on gender, sexual preference, or other characteristic protected by law is one thing. Actual harassment (i.e., attempting to obtain sexual favors based on force, position of authority, etc.) or creation of a hostile work environment is something entirely different. H2H

Hi KMY, Why did you decide to go with a CPFF contract type if the situation you describe has been a concern? How did you justify the use of a cost-reimbursement type of contract? What was the thinking? H2H

Hello Benny, You will want to check out the DFARS, not the FAR. At 231.205-18, the DFARS Supplemental Cost Principles discuss cost allowabilty for contractor IR&D costs allocated to DOD contracts. There is a reference to 242.771-3(a). If you click over to 242.771, you'll see contract administration responsibilties related to the determination of cost allowability related to such costs -- including (at 242.771-3(d)-- which includes the following statement: (d) The Director, Defense Research and Engineering (OUSD(AT&L)DDR&E), is responsible for establishing a regular method for communication? (1) From DoD to contractors, of timely and comprehensive information regarding planned or expected DoD future needs; and (2) From contractors to DoD, of brief technical descriptions of contractor IR&D projects Hope this helps.

I would be interested in knowing whether the original poster, August, has found this discussion to be helpful.

And thank you very much for devoting the time and effort to make this site so valuable. H2H

From my point of view, the competence/incompetence argument is a red herring. In point of fact, the FAR confers FPRA and FPRR authority to the DCMA and not to DCAA. (Ref. 42.1701) In fact the FAR says that FPRRs should be used only "when an FPRA has not been established or has been invalidated". The FAR establishes a process for submission and negotiation of FPRAs, and the Memo seems to be a tacit admission that the process, as implemented by both DCAA and DCMA, is not working. Rather than fix the process, DOD leadership has chosen to scuttle it. As far as finger-pointing goes, having DCAA take six months to issue its audit report seems like a good start. That's pretty pathetic, and comes from the multiple management reviews the agency imposes. Let's also add multiple DCMA Review Boards (to approve both PNMs and post-negotiation draft FPRAs) to the list of process kinks. In other words, there's plenty of blame to go around. H2H

I'm a bit surprised that nobody has commented on the following points -- 1. Eliminates the current preference for use of Performance-Based Payments, in favor of a return to use of customary progress payments. 2. Emphasizes use of unilateral Forward Pricing Rate Recommendations instead of bilateral Forward Pricing Rate Agreements. Where DCAA has expressed an opinion on the contractor's future indirect rates, that opinion must be adopted by the DCMA contracting officer without exception. There's plenty of criticism to be aimed at the Memo, but those two points stood out to me as being egregiously bad decisions, that will lead to no good outcome. This doesn't help anybody, except DCAA. They get to audit contract financing payments again, and they get to override the ACOs.

It's misleading to say that ALL claims have been dismissed by the GAO.

Hi Navy, First, no, none of the CAS clauses are self-deleting. See the promulgating comments by the FAR Councils on the revisions to FAR Part 30 (and CAS clauses) from a couple of years ago (2008 I believe). The C.O. has to insert the clauses that are appropriate to the situation, period. Second, doesn't the contractor claim (or not claim) CAS exemptions through execution of the 52.230-1 CAS Notices and Certification provision, which is one of the mandatory Section K Reps & Certs? I would assert that the C.O. can only determine the proper CAS coverage based how the contractor executes that Certification. GIGO. Hope this helps

Seems to me that whether the subcontractor's subcontract is exempt from CAS, or not, is determined based on its own situation, not the prime's. I could see an argument being made that if the prime's contract is exempt from CAS, then all subcontracts under it would also be exempt, because there would be no clause to flow down. But that's not the situation here. No matter what the subcontractor thinks should have happened, in fact the prime has a CAS-covered contract. The prime wants to flow-down the CAS clause in its CAS-covered contract. Indeed, the CAS clause contains mandatory flow-down provisions. In order to claim CAS exemption, the subcontractor must show that it qualifies, on its own, for a valid exemption. That's what I think, anyway. Hope this helps.

jacques, What I am saying is exactly what you said: "No doubt the price is ultimately set by the Committee." Since the Committee is established by statute (JWOD Act) and its role in establishing contract price is implemented by the FAR, I believe that the pricing policy established at 15.403-1©(2) applies. I.e. -- (2) Prices set by law or regulation. Pronouncements in the form of periodic rulings, reviews, or similar actions of a governmental body, or embodied in the laws, are sufficient to set a price. H2H

Thank you formerfed, for responding to jacques' question. You nailed it.

Not that Vern needs any extra support, but I'm confirming his response. Plus I want to pontificate for a minute. As many know, DOD is pushing to use AbilityOne NPAs. There is quite a bit of ignorance and confusion associated with getting a handle on how to work with the NPAs. In particular, I'm seeing use of DCAA to audit AbilityOne program proposals, so as to help determine whether a proposed price is fair and reasonable. DCAA is looking for cost or pricing data in the format of Table 15-2. The only problem is that when the price is being reviewed and approved by the NISH Committee, the price is being set by the operation of a "law or regulation". Lots of wasted effort all around. H2H

According to HIPAA-- Two (or more) legally separate entities may choose to designate themselves as a single ?affiliated covered entity? if they are under common ownership or common control. ? 164.504(d)(2)(i). a. Common ownership exists if an entity or entities possess an ownership or equity interest of 5 percent or more in another entity. ? 164.504(a). b. Common control exists if an entity has the power, directly or indirectly, significantly to influence or direct the actions or policies of another entity. ? 164.504(a). How the SBA determines affiliation for small business size eligibility can be found here: http://ecfr.gpoaccess.gov/cgi/t/text/text-...5.3&idno=13 Also, check out these definitions -- http://www.allbusiness.com/glossaries/affi.../4942600-1.html http://www.teachmefinance.com/Financial_Terms/affiliate.html Hope this helps.

I don't have the contract in front of me (obviously), but I would be interested in knowing the answers to the following questions-- 1. Is the contractor currently overrun, or projecting an overrun, against estimated costs or incremental funding? 2. Did the contractor comply with Limitation of Cost/Funds reporting requirements? 3. Did the contractor comply with the requirement(s) to notify the Contracting Officer regarding changed work, within the timeframe required by the contract clause? I would think the answers to those questions might impact how one treated the situation. Hope this helps.

The situation regarding indirect cost rates is more complex than has been described. And potentially more challenging, as well. See the June 4, 2010 audit guidance (MRD PSP-018) at the DCAA website (www.dcaa.mil). Essentially, DCAA has staked out the position that, if a Forward Pricing Rate Agreement (FPRA) is negotiated between the contractor and DCMA but DCAA did not perform a full audit of the rates prior to DCMA negotiation, then it will question all costs it has not yet audited, even those indirect cost rates that conform to an executed (and otherwise valid) FPRA. If DCAA did audit the submitted rates, but the authorized ACO negotiated FPRA rates that were significantly different than those DCAA recommended, then the auditors will ignore the FPRA rates and substitute their own rates in place of the negotiated FPRA rates. Any difference between the two sets of rates will result in questioned costs. The guidance directs auditors to perform a full-scope audit of indirect cost rates used in cost proposals, where such rates have not been previously audited. In my view, that's going to add to the already overlong period between the time a Contracting Officer requests a DCAA audit and the time that the audit report is received. Obviously I can't summarize every nuance in a single post. You will want to see the audit guidance for yourselves. And perhaps consider adding more time to your acquisition schedules, or consider moving away from DCAA audit results as a factor in determining price and/or cost reasonableness.

Sounds good to me, too -- and glad to help. But a little corrrection, just to keep everybody on the straight and narrow. The limit for PBPs is 90% of total contract (or CLIN) price, not total cost. I don't mean to be overly pedantic, but that extra fee makes a difference. H2H

Basically I think PBP liquidation works just like liquidation of cost-based progress payments. Here's a link to a previous WIFCON discussion on cost-based progress payment liquidations. http://www.wifcon.com/discussion/index.php?showtopic=481 Unless your agency specifies a different approach (and you indicated that yours does not), then I would expect that the liquidation rate would be equal to the total percentage of contract price covered by PBPs. For example, if the aggregate value of PBPs equals 88% of the contract price, then your liquidation rate would be 88%. But to my knowledge, very little about PBP liquidations has been put into writing, just like very little about PBP administration has been put into writing. Between 2002 and 2005 I collected every little thing I could find on PBPs ... I found very little. Hope this helps.

Good reply. My thought was that the Government could accept the late bid when it was in their interest to do so. I see that it must have been in the government's control in order to be entertained. According to the article, the proposal was delivered to the installation on time, but not to the exact building. The protester appears to be arguing that it was late because of governmental action -- i.e., misdirection as to how to find the right building. Thanks H2H

?The proposal was late and by law we are not allowed to consider it,? Morrell said in response to a query from AVIATION WEEK. ?We are considering two proposals and U.S. Aerospace is not one of those being considered.? Apparently the bid was received 5 minutes late. Apparently the US Air Force does not read the FAR at 15.208(, which permits consideration of late proposals. Now they have their first protest -- of this round. Here's a link to the story. http://pogo.ly/8dzziX My question is whether other 1102's would have accepted the late proposal for evaluation, or done what the USAF C.O. did and refuse to consider it?

Vern, You are looking only at the clause. You also need to look at the provision (below) and FAR 15.408(n)(1). 52.215-22 Limitations on Pass-Through Charges?Identification of Subcontract Effort. As prescribed in 15.408(n)(1), use the following provision: Limitations On Pass-Through Charges?Identification Of Subcontract Effort (Oct 2009) (a) Definitions. Added value, excessive pass-through charge, subcontract, and subcontractor, as used in this provision, are defined in the clause of this solicitation entitled ?Limitations on Pass-Through Charges? (FAR 52.215-23). ( General. The offeror?s proposal shall exclude excessive pass-through charges. © Performance of work by the Contractor or a subcontractor. (1) The offeror shall identify in its proposal the total cost of the work to be performed by the offeror, and the total cost of the work to be performed by each subcontractor, under the contract, task order, or delivery order. (2) If the offeror intends to subcontract more than 70 percent of the total cost of work to be performed under the contract, task order, or delivery order, the offeror shall identify in its proposal? (i) The amount of the offeror?s indirect costs and profit/fee applicable to the work to be performed by the subcontractor(s); and (ii) A description of the added value provided by the offeror as related to the work to be performed by the subcontractor(s). (3) If any subcontractor proposed under the contract, task order, or delivery order intends to subcontract to a lower-tier subcontractor more than 70 percent of the total cost of work to be performed under its subcontract, the offeror shall identify in its proposal? (i) The amount of the subcontractor?s indirect costs and profit/fee applicable to the work to be performed by the lower-tier subcontractor(s); and (ii) A description of the added value provided by the subcontractor as related to the work to be performed by the lower-tier subcontractor(s). (End of provision) The excessive pass-thru limitation applies only when the contractor / subcontractor intends to award more than 70% of the program cost in subcontracts. If there is no pre-award intent, but actual awards end up exceeding 70% post-award, then the contractor / subcontractor must report to the C.O. for a determination. That's how it works. H2H

I defer to Joel on construction and A/E type questions. But it seems to me that there is a difference between the formula used to calculate a pre-negotation objective for profit, and "allowing" or "prohibiting" subcontractor profit to be billed/included in contract prices. The original question was whether there was a clause that "prohibits the Government from allowing a prime contractor to earn a profit on its subcontractor's cost?" I stick with my original answer--NO, except for T&M contract types. I also want to add that the subcontractor's price is the prime contractor's allowable cost. The prime normally doesn't share in the subK's profit, and bears the risk of subcontractor non-performance. Thus, the focus on "profit on profit" seems much ado about very little, in my view. Finally, Vern correctly noted a limitation on subcontractor profit. He noted it only applies in very limited circumstances. Just to elaborate, the limitation only applies when (a) the prime subcontracts 70% or more of total program cost, and ( adds little or no value to the subcontracted work (as determined by the C.O.) If the prime doesn't subcontract at least 70% of the total program cost, the limitation is not applicable. H2H