here_2_help

I see from the WIFCON front page that DoD has issued its Class Deviation, to be effective immediately.

Agree to disagree. The basis of our disagreement seems to be a misunderstanding of the difference between negotiated profit and realized gross margin.

Vern, Yes, the core of my disagreement is your theoretical position that the amount profit does not provide a contractor with incentive. I believe that it does. I do believe that establishing higher contract prices or fixed-fees during contract negotiation will motivate contractors to do better during contract performance. You ask for evidence, and all I can offer is anecdotal data. One such anecdote is the (true) story of a prime contractor who entered into a FFP subcontract where the margins were so tight, the only way the subcontractor could make any money was to assign only its most junior technical folks to the project. Unsurprisingly, the junior folks made a lot of junior-folks-type errors along the way, resulting in a Level III CAR from DCMA--assessed against the prime, of course. That's all I've got.

Vern, I'm going to disagree with you. Reference FAR 15.404-4 (Profit). (Emphasis added.) It's true that the word "incentive" does not appear in the above quote. However, I see the words "stimulate" and "motivate" in the regulations. Other possible words that could have been used are: "prompt," and "encourage" -- according to an online list of synonyms. Also note the reference to "optimum contract performance." How is it defined? How can it be achieved if not through incentivizing the contractor through profit on its performance? I assert that the use of weighted guidelines does very little, if anything at all, towards achieving innovation and performance speed -- both things that DoD Leadership claims are important to national security. Misuse of the guidelines is even worse; misuse is actually detrimental to the Department's stated goals. Further, you note that they are only "guidelines." However, in practice, they establish policy limits on the amount of profit that a contracting officer is willing to negotiate with a contractor. And they establish exactly how that amount of profit is to be calculated, at least on a prenegotiation basis. Factors that are not listed in the weighted guidelines are not considered. (To be fair, I should say "I've never seen the other factors considered and, when brought up during negotiations, contracting officers consistently have declined to consider them.") Sure, alternate approaches exist; but they are (in my experience) rarely, if ever, used.

It's been pointed out to me before that the Weighted Guidelines don't incentivize early delivery. A contractor that can deliver a satisfactory product six months early is not entitled to receive any more profit than a contractor that promises to deliver on time. So much for "speed of relevance"

Federal Publications Seminars and Public Contracting Institute are two that come to mind. There are also individual trainers/consultants who will customize a course to meet a particular contractor's needs. (Hi.)

Increasing PALT is a symptom, not the disease

Fascinating discussion (to me) because I'm always interested in whether or not a contractor can escape liability under the False Claims Act by claiming it was making a reasonable interpretation of an ambiguous regulation or other requirement when it prepared and submitted its invoices. This discussion seems to support the notion that the rule is, if not patently ambiguous, at least so dense as to require an expert (probably a top-notch government contracts attorney) to help the contractor chart a compliant course.

1. What is the purpose of acquiring property if the property will arrive after the PoP date ... which I assume is the date that the parties mutually agreed performance would have been completed and all deliveries made. I mean, if that's right then the property just seems like a big waste of money. 2. If the property is a deliverable under the contract, and the contract is a completion-type, then you don't need an extension BUT your contracting officer may think you haven't performed your duties as promised by the date you promised to perform them.

Echoing what others have said ... Back in the day, a large trash bin went missing from a military base. You know, the big kind that the trucks pick up and empty? Anyway, it was government property in the possession of a contractor. Properly marked as such. The missing bin was quickly located on the other side of the fenceline, in a farmer's field. Filled with [I don't recall, if I ever knew. Let's say "hay".] Our property manager reported it to the base security office as theft of government property. The farmer received a visit from a couple of uniformed security folks. The bin was back on the right side of the fence, emptied and washed clean, within 24 hours.

Nope

DD Form 1921 in my hypothetical

Fair point. What do you suppose the value of the CDRL item(s) is? Let's assume that they were NSP (not separately priced). Shrug. I'm agreeing with you, basically. I just don't see how the fact pattern I came in with supports a T4D or even a breach damages kind of discussion. I fully agree the CPARS rating would suffer -- and should suffer. Anyway, fun [totally hypothetical] discussion.

Retread, Well, I think the term "physically complete" may be ambiguous. On one hand, everything that was supposed to be delivered was, in fact, delivered, inspected, accepted, and paid for. On the other hand, Vern points out that completion means, essentially, that all obligations have been discharged. Can a contract be physically complete without being complete? Only in government contracting ... Can a contract be terminated for default after all deliveries have been made? It's not like the contractor didn't make progress. I think a court might find such a drastic sanction a bit untenable, but maybe that's my bias showing. Finally, to Vern's latest point -- breach damages -- I think, in my [totally hypothetical] case at least, the government would be hard pressed to prove damages from a few reports that, at best, end up in a Fourth Estate file cabinet somewhere in a Pentagon annex. Thanks for all the input.

Vern, Thank you. This has been very helpful. And while I knew some of your information, I didn't not know it all. As Matthew F. noted, many people (including contracting officers) place an undue emphasis on Period of Performance with respect to what can or cannot be invoiced to a government customer as an allowable contract cost. Your response helped me clarify my position on the matter and gave me solid talking points to take back to [contracting officer]. Finally, for those wondering, my issue was with respect to a supply contract where the item supplied has been inspected/accepted and the associated invoices have been paid. There are a few straggling deliverables (status reports, not tech data), and it has been "suggested" that [contractor] not invoice such costs because they are properly contract close-out costs and should be charged to overhead. I thought I'd throw the issue out and see what came back. As usual, I'm gratified at the responses. Thank you all.

Thank you, Vern. I'm seeking some follow-up information, if you would. What is the purpose of a PoP, if not to signal contract completion to the parties? Why is it important?

Let's say I have a DOD cost-type contract that requires a CDRL (Contract Data Requirements List) deliverable to be submitted 60 days after the end of the contract's Period of Performance (PoP). As the contractor, I have agreed to submit it. But I have failed to do so. Doesn't matter why. I'm not going to submit the required CDRL. From my point of view the contract is over. The PoP is over and my invoice has been submitted (and paid). I'm not going to submit any future invoices, unless my rates change through DCAA audit. Even if the rates do change, I don't expect them to change significantly--so I'm willing to waive any increased costs that I could bill. (Obviously, if the rates go down I'll pass on a credit.) Technically, I suppose, I'm in breach because I failed to comply with the requirements in the CDRL. So what? What remedies does the government have in this situation?

I would expect you to insist on recovering your full costs of performance. Nothing less.

@Vern Edwards

Pretty sure that if the supplier shipped the wrong thing, the government would then (rightfully) be entitled to the right thing or a full and immediate refund. My assumption, right or wrong, was that the supplier shipped the right thing.

Funny. I was going to ask what contractual mechanism allowed the government to contract with a supplier, order an item, receive it, determine it was in all respects exactly what was ordered, then return it because it was unsuitable for purpose (even though it was perfectly functional), and then expect the supplier to refund the payment? Me? I thought the supplier was being incredibly generous. Seems to me that the supplier values its relationship with the ordering agency and is making an effort to retain that relationship.

Never seen it used; never heard of it. But I believe that the software is the least important part of a contractor's accounting system

Vern, I don't disagree with you -- in principle. However, in reality, I've never seen anybody do that level of analysis (at least from the contractor's perspective). How would that risk be evaluated? By whom? Where are the human resource compensation professionals who are qualified to perform that analysis located? Certainly not at DCAA...

Just to be clear about what I'm reading in the previous posts, everybody (most people?) would accept that the offeror's proposed rates, which are based on its actual current payroll costs, have been correctly found to be realistic. However, basing proposed rates on actual current payroll costs in an insufficient basis to determine that the proposed rates are fair and reasonable. Do I have that right? Because, if so, then I agree.

In the past I have seen a Level 3 CAR issued against the prime's Accounting System for failure to comply with 52.216-7. A drastic step, to be sure. But guaranteed to get the contractor's attention, I promise.