here_2_help

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.

It's sad to me that we are using phrases such as "rig the criteria" and "illusion of competition" and nobody is voicing outrage. Has it always been this way? Was Druyun just an extreme example of what happens all the time? Have we all become so cynical? I can't find a sad emoticon, so here's a frowny face.

Perhaps I misread, but I was under the impression that the Russians would be submitting a separate bid, making three offerors in total. What makes the whole situation ironic is that, while the A330 is heavier than the 767 and thus more expensive, the Il-98 would be roughly half the price of a 767, according to Wikipedia. If the Air Force wants the cheapest solution to its mission needs, they may be getting it from an unexpected source...

nitram_PM if you have a CPFF contract then you can only bill actual, allowable costs. You have a contract clause 52.216-7 and you should read it carefully. If rates go up, you bill up to funding. If rates go down, you submit an adjustment voucher or give the government a refund. (The fixed fee stays the same either way.) Hope this helps

I don't really have anything to add to Vern's comments, but I am interested in the original post: "So, of course, my program was shut down by our finance department." I am hoping that the work was done and all reports submitted and that all required close-out activities had been completed before the program was "shut down". If not, where are the costs of those efforts going to be charged? Let's assume a quick hypothetical -- 1. Program did not inform customer that it was going to need additional funds as required by the clause(s) found in the contract. 2. Program had some work or required close-out activities left to perform. 3. Costs of those remaining activities would have been charged as direct costs of the CPFF contract, absent the "shut down" by Finance. 4. Somebody will still perform those activities but the costs of performing them won't be charged to the contract. If those four statements in the hypothetical scenario are true, then (hypothetically) your company has a problem--particularly if there is a pattern of Finance "shutting down" incomplete contracts when they reach funding ceilings, where the company didn't comply with the contract clause(s) Vern noted above. I hope my hypothetical scenario does not apply to your company. I also hope this helps.

Vern, Unless I'm misreading the original post, Cajuncharlie is a prime contractor and is looking to issue a subcontract without obtaining cost or pricing data by using the exemption for commercial items. Apparently, his Government contracting officer refuses to provide consent because he has taken the position that construction services cannot be commercial items. (I know that's speculation, but that's what it sounds like to me.) My point is that if I've correctly understood the situation, then the contracting officer won't be inconvenienced by boxloads of data, it will be Cajuncharlie's purchasing/negotiating team. Moreoever, the proposed subcontractor may be getting advice that it should not (or cannot) sign a CCCPD because it is not capable of providing accurate, current, or complete cost or pricing data. (I know I'm speculating again about that last part. But there must be a reason that Cajuncharlie wants to avoid requiring the subK to provide the data, and that seems like a good possibility.) If I'm right in my speculations, then requiring Cajuncharlie to obtain cost or pricing data from the proposed subK might be tantamount to directing that another source be used. Certainly it will delay the subcontracting process and may impact the schedule. There may be additional costs incurred by Cajuncharlie's company. I don't know all the circumstances, and I've created a chain of speculation that could certainly be all wrong--but if it were me, I would attempt to comply, including going to another source if my original subK balked at providing the data. Then I might consider submitting a claim for disruption and/or delay, based on the contracting officer's arbitrary and unreasonable withholding of consent and/or direction to obtain cost or pricing data when the contracting action was exempt from the requirement to do so. Hope this helps.

br549, I haven't devoted tremendous time or research to your question, so I guess I'm risking the Wrath of Vern (WoV)TM in answering from TDY. But my reading of the clause supports the position that the two certifications you mention are NOT in conflict. The certification at I©(3) says that the contractor is not required to submit its Disclosure Statement concurrently with the proposal because it did not receive $50 million in CAS-covered awards in the preceding cost accounting period (fiscal year). The certification at II, the contractor is electing Modified CAS coverage and certifies it is eligible to do so because it received less than $50 million in CAS-covered awards in the preceding cost accounting period. I don't see those two statements as being in conflict with one another. Hope this helps.

https://www.dss.mil/GW/ShowBinary/DSS/isp/f...c_sec_prox.html

Vern is as usual absolutely correct in his answer. But your initial question raised two or three potential issues that I would have DCAA explore if I were the KO. 1. You wrote, "their were rumors of the company restructuring, but no changes prior to finalizing negotiations" That doesn't really provide much information, but company structure "changes" don't have to take place before negotiations are finalized in order to constitute cost or pricing data that should have been disclosed. In fact, knowing about a potential restructuring that might, in the future (during time of post-award contract performance) reduce contract costs, and not disclosing it would be the classic defective pricing scenario. Also, if company executives knew about the upcoming restructure then the contractor knew about it, even if the individual negotiators did not. I would have DCAA follow-up on this in a post-award (i.e., "defective pricing" audit). 2. Corporate restructurings come in different flavors. There is the ongoing management reorganization, the internal restructuring, and the external restructuring. Each of these is a term of art and has its own section the DCAA Contract Audit Manual. In either of the two restructuring scenarios, the contractor is supposed to forecast the cost savings into its forward pricing rates. Another area for potential DCAA follow-up, in my view. 3. Did the contractor change any cost accounting practices along with the restructure, and was the CPFF contract CAS-covered, and does the contractor owe the ACO a cost impact proposal pursuant to the CAS administration clause? If indirect rates go down on this contract, where are they going up? Hope this helps.

Hi Marc, After reviewing the CAS requirements you believe your award will be subject to CAS coverage, right? There is no applicable exemption to be found based on your reading of the regulatory requirements. Your only question is what flavor of CAS will you be subject to? Will your contract be subject to Full or Modified CAS coverage? As part of your proposal submission, I expect your prime will require you to submit representations and certifications. Among those reps and certs will be one or more CAS certifications, with wording identical or very similar to the FAR solicitation provision 52.230-1. Go look at that provision now. You will see that your contract will be subject to Full CAS coverage unless you qualify for, and elect to be subject to, Modified CAS coverage Your company must make an affirmative election and certify that it qualifies for Modified coverage; otherwise, the default is Full coverage. To qualify for Modified CAS coverage, your company must have received less than $50 million dollars in CAS-covered awards during its most recently completed fiscal year. NOTE that contract award value is not the same thing as revenue recognized. A more interesting question might be whether your company needs to submit a Form CASB DS-1 Disclosure Statement concurrently with its proposal. If you look at that provision, you will see that a company might be subject to Full CAS Coverage, yet still qualify for an "interim exemption" from the requirements to concurrently submit a DS-1. If your company does not qualify for an interim exemption, my advice is to get to work on writing the Disclosure Statement now--and remember that cost accounting practices used to estimate costs in your proposal must be consistent with those practices used to accumulate costs after award. CAS 401 applies whether you contract is subject to Full or Modified CAS coverage. CAS administration--fun times! Hope this helps -- and good luck!

Looks like the Court of Federal Claims agrees with you, Don. And Mission Critical Systems wins again. "The court has examined the statutory language of the Small Business Act and concluded that the mandatory language of the HUBZone statute requires that a contracting officer first determine whether the specified criteria are met before awarding a contract under another small business program or on a sole-source basis."

Casius, DCAA obtains a listing of all pricing actions subject to defective pricing (i.e., subject to TINA) which is the "universe of activity". The entity is given a PASS rating which is the overall risk assessment of the likelihood of defective pricing based on DCAA's experience. PASS = Post-Award Something Something (I forget.) The PASS is essentially a co-efficient that drives sample selection; the higher the PASS rating the larger the sample size selected from the universe of activity. Hope this helps.

I completely agree with Vern's post in every respect. I would add that, as missgamecock noted in passing, contractors' travel costs are subject to a number of allowability limitations. (See 31.205-46.) For many if not most contractors, travel is the number one source of unallowable costs. For example, many times it is impossible for a contractor on travel to find lodging within the FTR locality limits, which causes unallowable costs to be incurred. Those unallowable costs come out of contractor profit. If a CO says "no profit on travel" then the government is essentially asking the contractor to take a loss on its travel costs. Moreover, complying with the FAR cost principle related to travel is hard to do, and expensive as well. The recent change in air fare allowability rules, for example, has significantly impacted companies' ability to determine allowable air fares. Policies and procedures are being rewritten, employee training is being rolled out, and travel agency reporting is being revised. My point being that to treat travel costs as some kind of unworthy "pass through" cost, for which the contractor adds no real value, betrays ignorance of the true situation (as Vern correctly pointed out). But it also does the contractor, and its administrative/compliance staff, a real disservice.

Whynot, Consider the FAR policy at 32.10, the solicitation clause at 52.232-32, and DoD's User's Guide to Performance-Based Payments. You may be able to get the contracting officer to move from cost-based progess payments to PBPs, which are the Government's "preferred" method of contract financing. Hope this helps.