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here_2_help

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  1. Thanks! So if industry responds that weapon system prices are increased by x% because of the burden of Cost Accounting Standards administration, OIRA will recommend that the statute and implementing regulations be revised or eliminated? Because if not, what's the point?
  2. I'm going to take that as a reference to Monty Python.
  3. Vern, thank you but I don't believe you were responsive to my question. I'm not looking for what the statute says should be done with the info ... I'm looking for what is really done with the info. sdvr, my impression is that official information collection notices are not connected with final rules but, instead, exist in and of themselves. Am I mistaken about that?
  4. I see frequent Federal Register notices asking for public input on various regulations. For example: Apparently, such public input is required by statute (Paperwork Reduction Act). My question is: what does the government do with the information it receives? Does anybody ever say, "This is a ridiculous burden for almost no benefit; let's eliminate the requirement!" Does anybody even analyze the responses ... or do "they" just collate the responses and file them away? In other words, do these information collection opportunities even matter? If they don't matter, and don't result in any changes, then why should anybody bother to respond? It would seem to be a big waste of everybody's time. I'm also open to the notion that the public's input is studied thoroughly and a cost/benefit analysis is performed, and is then used to drive regulatory roll-backs. That would be nice .... So what's really going on here?
  5. If that transpires, would you say that the contractor would be justified in stopping work at the point at which authorized funds have been spent?
  6. Okay -- so two more thoughts. 1. You don't pay your people any differently based on the contract maximums. You pay what you pay. The max rate limits the amount of labor costs that will be reimbursed. To be clear, if you are paying over the max rate, then what's in excess is unallowable, by contract terms. 2. You may have a "course of dealing" argument because you and the customer agreed on application of the ceilings with respect to the Base Year and Option Year 1. That is a legal argument. You should really consider consulting with a sharp, experienced, government contracts attorney. I don't know how many dollars are at stake here, but consider the cost of a legal consultation to be an investment in a possible recovery of what's at stake. And, so long as you haven't filed a claim, that consultation is allowable because you're talking about contract administration matters. At least, that's how I would code the legal expense.
  7. Okay. You have not said, but I will assume, that you have max unburdened labor rates that are specified in either the ID/IQ or else in the TTO. The contract limits the amount of labor cost that is reimbursable by your customer. There is one maximum for OY1 and another maximum for OY2. The TTOs awarded in OY1 are subject to OY1 rates for the life of the TTO (i.e., the Period of Performance). That's the interpretation your customer seems to have. And, if the contract specifies the max rate, then I tend to agree with your customer's interpretation. The max rate is the one that the parties agreed to when they priced and executed the TTO, regardless of when the work is performed. Now if the contract is actually silent on the max rates, then I would disagree with your customer. Hope this helps.
  8. You say the TTOs are each CPFF, but have contractual limits on the (unburdened) labor costs (per labor hour, I assume) that may be billed. You say that all (unburdened) labor rates at which you want to bill are below the ceilings (whether OY1 or OY2). I don't see how the customer CO can disallow labor costs if that's the case ... but now is the time to consult a good attorney because it looks like you may have a dispute developing. Best of luck
  9. You are misrepresenting my point. My initial post was diametrically opposite of what you represent that I represented. I literally said it was not a normal occurrence.
  10. Interesting point of view. You should take it up with Judge Dyk of the Federal Circuit, because I'm fairly sure he would disagree with your position, based on language in his decision reversing the ASBCA decision I quoted.
  11. Thought I would add that there is a case that may be on point regarding what is "normal" in this context. See ASBCA Nos. 47416, 50453, 50888, United Technologies Corporation, Pratt & Whitney, July 30, 2001. (Subsequently reversed on appeal.) The following is from a recitation of the facts. Emphasis added. Citations omitted. Redaction in the original.
  12. "Is it normal?" No. But it happens. When it happens, the prime needs to be very careful, because contract clause 52.203-7 is in play. Have you read that clause?
  13. You're not Atlas Telemon. You're not required to fix what's wrong with contracting today. Nobody can. The best most of us can do is to help our colleagues with their individual challenges. Your writings influence judges. That makes you a Titan, but you still can't fix what's wrong with contracting today. That's an unreasonable aspiration. I'm not going to respond anymore. You wanna talk further, we both have each other's email addresses and phone numbers.
  14. No, it's not. That's not the answer. Your input is far too valuable.
  15. I'm going to address the tone of this thread, and not the content. I'm not looking for a response; feel free to move on. People are frequently in over their head. People are frequently clueless in the eyes of more experienced people. That's just reality. My boss asks me hard questions all the time. Quite often I have no clue about the right answer. But because I have 30 years of experience, I know where to look for answers. More importantly, I am comfortable telling my boss "I don't know" and suggesting that Legal be called. (I'm not allowed to call Legal. Long story.) My point is that not everybody has my level of comfort in admitting ignorance. Speaking generally, we are failing at training the next generation on what to do when they are given a question or a task for which they are unqualified to tackle. We don't give them options. The truth is that very few people are comfortable admitting ignorance on a topic that may not be within their subject matter expertise. We can debate why that might be but I'm convinced it's the truth. Clint Eastwood's Dirty Harry character said: "A man's got to know his limitations," but that's a very hard thing to learn. So, given that people (generally) are reluctant to admit ignorance on a topic, what is next for them? People come to WIFCON because it's what's next for them when they need help. Calling them clueless is not helpful. Telling them to read a specific contract clause, or to look of a particular legal decision, is helpful.
  16. As I posted, I've seen this before and it worked for the non-DoD contractor. The company allocates the draw in accordance with the time card. Does the owner record time for G&A activities (i.e., managing the company?) What about holidays, sick time, vacation time? Because if the other time isn't being recorded, then there may be an argument that the "cost" is actually inflated because some amount of the draw should be going to places other than the contracts being charged. Yes, you won't find much guidance because (repeating myself) this situation is by far not the preferred practice. The owner is listening to the tax experts but the owner should be listening to the cost accountants. Shrug. You still have to do the best you can do with a sub-optimal situation.
  17. This is by far not the preferred practice ... but you know that already, right? I have seen small businesses do what you describe -- count the owner's draw and bonus as labor expense. I've seen them get away with it thru an audit. (FYI: not a DoD contractor.) You want to treat the draw as direct labor, but how do you apportion the "labor expense" to individual contracts? Did the owner fill out a time card? Doubtful. You don't say whether the company has any cost-type contracts; if it does, I would absolutely not recommend distributing the draw to contracts with zero support for doing so. Even if the company only has FFP contracts, it's hard to imagine compensation costs going to all contracts like peanut butter; in fact, that is almost the definition of G&A expense, isn't it? I think you will be lucky to count total owner's compensation as an indirect expense in the G&A expense pool. Unless you have support, I don't see how it can be treated as direct labor. To be clear: I think this is risky business. As I've posted before, I prefer that owners get paid a salary and that the salary be distributed via time card to all cost objectives. But since that's not possible here, I think the best you can hope for it to treat total owner's compensation as being an indirect expense. Good luck.
  18. I'm a bit unclear as to why you need this information, but I can tell you that there are many ways to calculate a wage rate. Some companies use 2,180 (52 weeks of 40 hours) and others use the actual pay divided by the actual number of hours worked (which would include both compensated and uncompensated overtime). Other companies use actual pay divided by the standard number of hours in pay period, ignoring any uncompensated overtime. Still others look for the effective hourly wage rate, based on the number of available productive labor hours (i.e., 2,080 hours less expected or actual Paid Time Off hours). There is no absolutely correct way to make the calculation. You need to do what works for you, given your circumstances and business objective.
  19. Thank you Vern, for not only writing a thorough article, but for allowing it to be shared.
  20. Vern, please read the first sentence of the Assad Memo one more time. The very first sentence. The one I quoted earlier in the thread. To your point, I don't think we really have a disagreement. We are, in the vernacular, "talking past each other." Best to you!
  21. Okay. First, I used the incorrect term. I said "directive" instead of "memorandum." I was too loose with my language. Second, I have already agreed with you regarding the distinction between directly charged proposal preparation costs and "B&P" costs. I have already agreed that there is a third category - proposal preparation costs that are required by contract but not directly charged to a contract because the contractor elects not to do so. I have pointed out that, in practice, that third category does not exist. I used the Assad MEMORANDUM to show that not even DoD makes that distinction, even though you are absolutely correct to do so. My final point was that negotiation costs may or may not be part of B&P expenses (or, for completeness. directly charged proposal preparation expenses). A contractor's policies and procedures will control the treatment (which must be consistently applied). Some contractors will treat negotiation costs as being part of proposal preparation expenses; others will not. I pointed once again to the Assad MEMORANDUM as support for the notion that DoD will accept such support expenses as being part of B&P (or, directly charged proposal preparation expenses). To be very clear: such costs as negotiation need not be charged direct, even if "required" because it is the contractor's consistent practice that will control. If the contractor does not charge negotiation expenses as part of B&P costs, then it will not charge them as part of directly charged proposal preparation expenses. Conversely, if it does then it will. That's it. Those are all my points. Everything else is loose language for which I apologize if there was any confusion caused.
  22. Yes. And to the OP's original question The answer is that the contractor's own policies/procedures should define when costs associated with, but not directly a part of, proposal preparation and submission are charged to the B&P project and when they are not to be so treated. Shay Assad's directive, link provided earlier in the thread, provides that DoD will accept contract negotiation costs as being B&P costs, so long as the contractor treats them that way consistently.
  23. Yes, true. Am I understanding your position as being that, since CAS is not applicable to the contractor, then the permissive cost accounting practices described by CAS are not available to the contractor?
  24. Vern, I don't know how my comment morphed in your mind from "mimic[king] the legal profession" to "thinking like a lawyer." I don't think those two phrases are equivalent. In my personal experience, the vast majority of lawyers do not focus on cost or accounting issues. The comparatively few that do, and do it well, become legends in their fields. Mel Rische and Karen Manos and Tom Lemmer spring immediately to mind - though of course there are others. Further, in my personal experience, too many attorneys are risk averse, seeking to eliminate risk rather than to manage it. Again - not all attorneys. But many. Anyway, I, too, am an Associate Member of the ABA, Section of Public Contract Law. I have been for two decades. In that capacity, I've attended meetings and presented a paper at a Quarterly meeting and contributed to a Section publication. Just so that we're clear that my statement was not an indictment of the legal profession.
  25. Yeah, I think it's basically a general ignorance of deep CAS stuff and related accounting issues. The more the KO function mimics the legal profession, the less actual business acumen seems to matter. That's a purely personal opinion, of course. I'm sure there is a myriad of exceptions to my generalization.
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