here_2_help

ji20874, I believe Mr. Frog is asking about contractor payment of incentive compensation -- bonuses -- to its employees that are not otherwise expressly required by contract terms. He called it a "performance bonus" which strongly implies the employee received the bonus not because the contractor or employer-employee agreement required that it be paid, but because the employee's performance merited it. Had the employee's performance not be of sufficient quality, the bonus presumably would not have been paid.

TNT1, The subcontract has already been awarded (via letter) based on the initial proposal. Now you are definitizing. You say that the supplier has submitted a definitization proposal that is 40% lower than the initial award value, which I assume was found to be F&R at that time. That certainly does not sound like a CPPC contract to me. You don't tell us what the dollar value is but, since certified CoP data is not being provided, I assume it's less than $2 million. I assume you are performing some type of cost analysis, given the lack of competition. I further assume you need a profit breakout in order to evaluate that component of the price. Make the supplier provide the cost information separately from the profit factor. And, as with all cost analyses, you need to evaluate each component of cost separately for reasonableness. The supplier is going to tell you that they don't need to disclose profit information in a FFP contract. And to some extent, that's true! If the original price was determined to be F&R based on competition, they have a valid point. But the counter-point is that since the definitization proposal is being evaluated without the benefit of competition, a full cost analysis must be performed, including an evaluation of profit. Without disclosure of profit, you can reasonably tell the supplier that the definitization proposal is inadequate and send it back for a do-over.

Thanks. That makes sense.

That makes some sense because the primes would want to be confident that their subK settlements would be reimbursed by the customer. Having said that, I hadn't believed that privity of contract worked that way. I had assumed that the prime's decision to settle a subK REA or claim was separate from the government's decision to settle the prime's REA or claim. (Obviously, that's not the case in terminations, where the government's rights with respect to subcontractor termination settlements are expressly established. But that's not what this thread is about.) It's interesting to me that your situation didn't work that way. Do you think the prime getting a governmental green-light to settle with its subKs was unique to your particular contractual situation, or was that the consistent approach you experienced throughout your career?

Your statement confuses me. If a Suspension of Work notice was issued to the prime contractor, wouldn't you expect the prime to flow that notice down to its subcontractors? What's the alternative -- to let the subKs keep working (and charging) while the prime sits on its hands? I don't think that's how it is intended to work. I believe what Vern was getting at is that the prime is responsible for assessing any requests for equitable adjustment from its subcontractors. Those subcontract price increases become part of the prime's cost impact to the government. At least, that's what I think should happen. Vern is welcome to correct me if I've misinterpreted his thoughts.

I thought competition was binary. Either you have achieved it or your have not. I'm not a member of the school that says more competitors is better than sufficient competitors. Just my opinion.

Here's a link to a form used by MIT. It took me less than 3 seconds to find this form via Google.

Let's start with closing out a prime contract awarded to your company by the government. You need to help your contracting officer with the close out. To see what the contracting officer needs, read FAR 4.804-5. Also read your contract to confirm that the clauses that require those certifications are in your contract. Submit the required certifications plus a final invoice. The final invoice may a credit (returning money) or a request for a new payment, perhaps based on having negotiated final billing rates for the period(s) of performance. If you are still awaiting final rates, you can still close out the contract if you and the contracting officer agree on the indirect rates to use for the final invoice. To close out your subcontract with a prime contractor, review your subcontract to see what certifications are required. Provide them plus a final invoice. If you don't have final rates, you can still close out the subcontract if you and the prime contractor agree on the indirect rates to use on the final invoice.

Adding to the previous two replies. When you have the need for a purchasing system that is able to survive a DCMA review, you need to understand what DCMA will look for in a CPSR. In that regard, there is a CPSR Guidebook that is helpful. I'll also add that if a company knows nothing about establishing a CPSR-compliant purchasing system and supporting a CPSR, that company really ought to invest in hiring a consultant or two to advise it. Googling "CPSR consultant" returns several possible candidates for that role.

Government procurement thresholds don't apply to contractor agreements with suppliers, unless expressly called out by a contract clause. As you develop your company's purchasing system, you will want to define your own thresholds and purchasing methodologies. So long as they are compliant with the guidance that Vern identified, you should be fine. But please let me re-emphasize that basing your company's purchasing system solely on the government model will not guarantee that you pass a CPSR, nor will it lead to particularly efficient practices.

I'm way out of my league here and y'all are probably going to laugh at my question. Nonetheless, Why isn't there a (standard) contract clause that says something like: By accepting this offer and executing this contract, the parties agree that the negotiated price that has been agreed upon includes all tasks and activities described in the contractor's technical proposal, regardless of whether those tasks and/or activities were included in the contractor's cost proposal. If not found in the contractor's cost proposal as specific tasks and/or activities, the parties agree that they have been included in the contract price as "Not Separately Priced" items.

I'm nodding my head. You might well be correct! (Always look on the bright side of life.)

I hope the same bidder that "wasn't aware they were supposed to register in SAM" will not be as equally ignorant regarding other aspects of Federal contract compliance.

I was in LA in the mid-90's when an earthquake destroyed a vital freeway overpass. (Yes, all freeway overpasses in LA are vital, but this one was very vital.) It was rebuilt in 65 days. Here's an article on the subject from some group called the Economic Policy Institute. Another quote from the LA Times (April 1994): As I recall, the company received its multi-million dollar bonus and the workers got a pizza party. The taxpayers got their freeways back ahead of schedule. It was a win-win-win! But I hope you'll notice that it was not solely the incentives and/or disincentives that led to the extraordinary result. It was the partnership between the multiple government agencies and the contractor. Everybody from the top down was focused on getting the project done. Red tape was waived. Months were cut off from the project's schedule because of the waivers. If the Federal government wants similar extraordinary results, I assert it needs to start with the notion of partnership, with the notion of a mutuality of interest in the contractual outcome. The notion that the parties must be separated by an arms-length is fatal.

A couple of thoughts from somebody who does training from time to time. 1. You're not going to learn much from a one-hour session of pretty much anything in this business. At most, you'll receive a high-level overview. 2. $200 for one hour does not seem especially expensive to me -- $159 - $189 is the common rate I see for "webinars" of this sort 3. Your employer should be sending you to training sessions. From ACI to PCI to Fed Pubs, there are a number of seminars that might help you get where you want to go.

I'm struggling to understand why any contractor would waste its time with "non-binding" ADR that USACE could ignore and still force litigation.

Well, I'm not advocating bringing back Wunderlich, if that's what you're saying. I'm looking at 41 USC 7105(g)(1) and comparing it to reality. Emphasis added, of course.

After some reflection I am now of the opinion that no significant acquisition reform can or will come about unless there is first significant statutory reform and significant judicial reform. Too many bureaucratic rules are driven by statutes. (Vern already noted two statutes that he believes should go. To his list I would add the ADA.) Further, recent decisions at the ASBCA and Court of Federal Claims have led me to think that those forums are no longer serving their intended purposes. I would replace them with a Court of Chancery equivalent that is empowered to hear disputes without regard to the protections provided by sovereign immunity, which I believe to be a concept that has no place in American democracy.

All the individual business system clauses have prescriptions that define when they apply. As you noted, the -7005 clause prescription states it is only to be include in "covered contracts." Since the contract is a small-business set-aside and small businesses are exempt from CAS, the clause should not have been included. Tell the CO now.

I'm reminded of a story from the early '00's, when a COTR and contractor conspired to avoid DOL-mandated wage increases by strategically reclassifying employees and even demoting them, in order to avoid funding constraints and to make the base "competitive" for receiving repair work. Funny thing, though, that wasn't the behavior that brought them to the attention of the Army CID and IG auditors and GAO auditors and DoJ attorneys, but that behavior surfaced during electronic discovery and interviews. Among other behaviors that were, shall we say, inappropriate. Where was the CO in all this? Hah! More than 1,000 miles away, kept dumb and happy by the COTR's (and contractor's) reporting. I'd give you a link to the GAO report where (some) of this came out, but GAO got the facts way wrong. How do I know they got the facts way wrong? I was the team lead who spent several months at the base, doing the forensic accounting analysis--hired by the contractor to see just how bad the situation was. I had the pleasure of briefing CID folks and DoJ attorneys, and answering their questions. The contractor ended-up paying a pretty penny, including back wages to the impacted employees. (But as I noted above, that was only the tip of the iceberg.) The COTR was charged with some felonies and I think he pleaded, but I also believe he lost his pension (18 months from retirement). As for the CO, I have no idea. The CO was simply not a factor because all they did was follow the COTR's directions, which including modding the contract and MIPR'ing the money as directed.

Okay. With CyndiG having left the building, can we create any value in this thread? Two contract clauses have been referenced here (52.246-2 and 52.246-4). I'd like to explore the concept of "reasonable facilities and assistance." What does that mean in this context? For example, CyndiG the government would like a long-term presence in the contractor's facility where, "a couple of days a week," they will attempt to "'get insight' on how we execute the effort." Does that effort, as described, constitute a reasonable inspection or something else? Is is (perhaps) an attempt to illicitly obtain the contractor's proprietary production process information or other trade secrets? What distinguishes a reasonable inspection from something else? Let's move on, and suppose that DCMA wants to put a Contract Management Office (CMO) in the contractor's plant. The CMO would house not only quality inspectors but contracting officers and functional specialists. What contract clause requires the contractor to provide the government with free facilities potentially worth many thousands of dollars? Ditto for DCAA resident offices in contractor facilities. What contract clause requires the contractor to provide the space? Doesn't the DoD have appropriations to be used to provide its personnel with appropriate facilities? Anyway, just some thoughts that ran through my mind as I pondered what CyndiG was really asking about.

If you are a defense contractor, and not one of the Top 20, then it is possible that program budgets are tight. There are a few major programs that are sucking a lot of money from the trough (hello, F-35). The government's priorities are shifting (hello, hypersonics). These circumstances obviously impact other contractors. On the other hand, if you are a cybersecurity contractor or a high-tech innovator, then you should be doing just fine. I would say that the current environment strikes me as being very much business as usual -- contractors jostling each other for precious program funds. I've not really known it to ever have been any different. And yes, I experienced the Reagan years first-hand. But I admit your clients may have a different view, depending on what they sell and to whom they sell.

With respect to labor billed at the contract's hourly billing rates, the contract is effectively a fixed-price contract. Bid the same profit rate you would bid on a FFP.

It depends on the terms of the subcontract. The terms of the subcontract will determine whether the subcontractor can or cannot bill the prime.

On what basis would you charge the government for a seat? What contractual provision permits you to do that? How would you calculate the amount to be billed? Would it include a share of your indirect costs? Profit? Yeah, I'm not seeing it.