here_2_help

I'm interested in the bolded words, above. What is a "defect in the services"? (I think Vern may have been thinking a similar question.) How is a "defect" defined or measured? In my consulting relationships, the quality of service to be provided is defined in the agreements. Often, a reference is made to the AICPA consulting standards. Even more often, I agree to provide services "with due care and in conformity with a reasonable level of care generally associated with professionals in our business." (Vague, I know. But that's what my attorney recommended and it seems to be working so far.) Unless "a defect in the Services" is defined, I don't see how a reasonable person would accept the agreement as drafted. EDITED TO ADD: I always limit damages to fees paid or, less frequently, to a multiple of fees paid. Accepting the possibility of damages without limit seems ... reckless.

Are you CAS-covered? Do you have a Disclosure Statement? If you make the change, what is the impact to existing contracts where you didn't bid the efforts as direct labor and, therefore, do not have budgets established?

Are you sure your dates are correct because Feb 2024 is well within the Period of Performance you specified (29 Sept 2023 to 29 Sept 2024). Second, it's nearly impossible for anyone here to assist you without access to the contract and all the facts. In my opinion, you should hire an experienced government contracts attorney.

I wouldn't want to bill the government for hours not worked. I suggest you sit down with the contracting officer and walk through the situation. Suggest there is now an opportunity to deobligate some contract funds and put them to use elsewhere.

I don't have any of the facts but I wonder whether there is a subcontractor who is difficult for the prime to deal with. Perhaps a subcontractor who is being asked to submit certified cost or pricing data but is not well-versed in TINA requirements and compliance? Shrug. Just a wild guess. Most every contractor I work with takes great pride in submitting solid proposals on time without needing to ask for extensions. But then again, those contractors have robust and adequate estimating systems.

Two. With some thought, you can follow what's going on. But you need to look at what's there and THINK about what the CO is trying to do. For most small businesses, they won't have the time and/or will be overwhelmed. Either they'll submit an offer without being certain what they are bidding on, or else they will pass.

To your question: I think a reasonably knowledgeable person could and would figure out that "1202SA22R9201 - HSS - Type 1.pdf" is the solicitation. There are a number of amendments (aren't there always?) that a reasonable person should be able to navigate. The pricing workbooks? Not so much. I hope the Solicitation instructions provide clarity whether one, or all, of the pricing workbooks must be completed and submitted for evaluation. The distinction (if any) between "T1" and "T1Modern" is not apparent. I would guess that, as questions were answered, the pricing workbooks evolved to address offerors' concerns. Maybe. If so, then I guess only the most recent workbook (one for "T1" and one for "T1Modern"?) would need to be submitted. But who knows unless the instructions provide the answer.

I'm wondering whether there is a prohibition on quick-close by CLIN. Suppose one or more CLINs have been successfully performed, delivered, and accepted. May the contracting parties agree to close out those CLINs while leaving others open until completion?

Love it

Hmm. Fascinating. Gonna put a stop to a lot of FCA cases if this decision is upheld.

Well. 1. Yes, it would have been a CAS 401 noncompliance as the costs were proposed as labor then billed as non-labor (ODC). Inconsistent cost accounting practices. 2. The Allowable Cost and Payment clause (52.216-7) requires a contractor to submit an annual proposal to establish final billing rates (final indirect cost rates). The proposal must be submitted in the specified format. See 52.216-7(d)(2). In particular, note the descriptions of Schedules H and I. If a contractor incurs labor costs, presumably they will be burdened with labor overhead. Presumably those same costs, in billed as an ODC, would not be similarly burdened. This would set up a disconnect within the schedules, one that might well render the submission inadequate for audit. 3. You don't want advice on your issue. Got it. Hope this helps.

TINA does not apply. Okay. There is no mischarging if the contractor personnel are charging the correct CLINs based on the work actually being performed. Thus, I keep going back to the contractor proposal. What did the contractor say that led to the FFP CLIN price being established? Why did the government believe that price was fair and reasonable? If the determination was made at the contract level, not the CLIN level, then what was the basis for the determination? In other words, did the contractor make a misstatement or otherwise mislead the government into setting a price that was reasonable only if personnel charged the CLIN on a full time basis? If not--or if there is no way to know--then I don't think there is much that can be done. Holding up payment is not the way to go, in my view, as that may be a different breach.

All right. We get to the same place either way.

The defective data would be the labor plan that posited full-time charging when the contractor knew that would not be the case. I realize that cost data in support of a proposal is not necessarily cost & pricing data, but facts upon which an estimate is based would be. The fact is the labor plan that supports the proposed price. (Assuming there is one, of course.)

We don't know whether TINA applies, but if it does and the contractor bid the FFP CLIN assuming full-time key personnel charging while also knowing that they would not charge full-time, then you might have defective pricing. If I was the CO that's where I would focus the auditors. Full-time = 40 labor hours per week where I come from, though the amount might be reduced to "productive labor hours" for holidays and other paid time off.

One of the few books I inherited from my father is Cybernetics: Or Control and Communication in the Animal and the Machine It was his college textbook when he took Professor Wiener's class at MIT. Published in 1948.

For those following this thread, the key point is that, when the lease is with an affiliated entity under common control, it does not matter whether the monthly rent is at market rates, below market rates, or above market rates. The market research to show that comparison is irrelevant to the allowable rent expense that may be claimed by the contractor. The contractor must perform the calculations required by the cost principle to adjust the actual rent expense to the allowable value. Failure to do so likely creates unallowable cost that, if claimed in a certified final billing rate proposal, might lead to assertions that the amounts are expressly unallowable, which invites penalties and interest.

Thanks for the update, Vern. Thinking of you, Bob

Vern's advice is spot on. The answer is that the facility rental cost, if adjusted in accordance with the cost principle Vern cited, will be allowable. But the adjustment must be made.

If I were the Ktr I would be very reluctant to provide a cost breakdown for a lump-sum/FFP invoice. We have an agreement as to price; the costs incurred are irrelevant. To Vern's question, if the program office wants cost information to help shape future bids, this is not the right way to obtain such information, in my opinion. More importantly, the Ktr may not have an accounting system that is adequate to track/report its costs by cost element. The Ktr doesn't need an "adequate" accounting system in order to perform an FFP contract. You want a cost breakdown generated from an adequate accounting system? Then issue a cost-type contract and have DCAA (or equivalent) perform a pre-award accounting system survey. Make sure the Ktr can actually report what the program office wants to see.

I cannot help you but I did find a Wikipedia article that traces the quoted philosophy back to 1862 Germany. It provides a decent starting point for further research. https://en.wikipedia.org/wiki/Night-watchman_state

These are contract costs in the year they are received and recognized by your accounting system, unless you accrued for them earlier. (Doubtful but possible.) Apply the current year rates to the subcontractor invoiced costs you have received. I hope you have sufficient funding to cover the additional subcontractor costs. If not, you would need to argue that the costs were not reasonably foreseeable in order to show why you didn't submit the required Limitation of Cost notification ahead of time. Finally, there is a lesson here about proper subcontractor oversight and management. If you were unaware of the incoming rate adjustment costs, ask yourself why. (If you knew you should have accrued for them.) Why are you not communicating with your subcontractors, such that you would understand their current final billing rate status and probable rate impacts to your contract? In my experience, far too many primes simply don't manage the financial aspects of their subcontractors, even in a full EVM situation. I wish that was not the case, but it is.

All, the requirement is found in 52.216-7(d)(2)(v). To my knowledge, there is nothing in the FAR that tells a contracting officer what to do if the contractor is late. I imagine that a CPARS rating might be affected. I imagine that the adequacy of a contractor's accounting system might be affected, as the issue might warrant a Level 2 Corrective Action Request during an accounting system adequacy audit. That's about all I can come up with.

Have you read the contract--especially Sections H and I? Do you understand what each clause means? If not, I urge you to obtain advice from a competent government contracts attorney or consultant. Why? Because all those clauses are part of the deal you agreed to when you signed the contract. I don't know all the clauses in your contract, but I'm willing to bet that, if you are receiving performance-based payments, you will find the clause 52.232-32 in Section I. If it's there (and I bet it is), then visit www.acquisition.gov and type the clause number into the the "Regulations Search" function (found under "Tools"). Look at paragraphs (h) and (i) of that clause. Okay? Now ... for your own protection, please get someone to advise you because coming here isn't going to be enough to ensure you are meeting the terms of the deal.

I believe you are misinterpreting the requirements of the clause. (Emphasis added.) Essentially, the clause states that when a prime contractor, or a contractor at a lower tier, awards a subcontract (or multiple subcontracts) that exceed 70% of the total cost of work to be performed, then it must justify why the awarding entity adds value -- NOT the awardee(s). In other words, the awarding entity must justify why it received its contract instead of the contract going directly to the awardee. Typically this is not a huge challenge. However, if the awarding entity cannot convince the KO that it is adding value (as defined above), then "indirect costs or profit/fee on work performed by a subcontractor (other than charges for the costs of managing subcontracts and any applicable indirect costs and associated profit/fee based on such costs)" are unallowable. (Note I'm cutting and pasting directly from acquisition.gov. The italicized words are in the original.)