here_2_help

Contracts whose final price is determined based on final billing rates must contain the clause 52.216-7. That clause discusses finalization of rates at (d). The clause states, in pertinent part:

Back in the day I used to work on secret and above programs. Many, many aspects of those contracts were classified. But nobody ever worried about the DPAS rating. Which is to say, it was neither classified nor was it controlled. Short answer: I agree with Mr. Edwards' position on the matter.

Well. As the OFPP Administrator is, by statute, also the head of the CAS Board, I'm wondering just how much the Board is going to accomplish during his tenure. I'm not happy to say I have to agree with Mr. Edwards' comment, above.

I would ask the contractor to provide a policy, procedure, or other support for its practice of treating non-qualified personnel charges as billable direct labor charges on T&M contracts. The personnel are not qualified because they don't have clearances, and the contract specifies that only cleared personnel may charge billable time. (They could charge the time non-billable, but that's not what you asked about.) Asking them such a question is a nice thing to do. It's in the nature of a warning shot across the bow. If you're not feeling merciful, you can get the auditors involved. If you want to cut directly to the chase, you can issue a Notice of Disallowance. If you're feeling angry, you can turn it over to the appropriate investigating authorities to see if they want to charge the contractor under the False Claims Act. But why be mean? Give them a chance to think about the implications/consequences of what they've done. That's my advice.

Maybe FAR 31.205-6(f)(1) applies. You could also have cited to 31.201-3(b)(4). But in the instance where there is no history to look at, it's relatively easy to gin-up a bonus plan. It doesn't have to be especially detailed, and you could fill it with ambiguous weasel words to permit maximum flexibility. It could be a one-page memo and that would pass a lot of scrutiny. Similarly, one could implement a prospective change to a bonus plan. Say, about 5 minutes before bonus award time. That could work as well.

The question is not one of budget or funding availability, the question is whether the contractor, in similar circumstances and for the same purpose, treated the bonuses as being direct or indirect expenses. If the contractor had never, ever, awarded such performance bonuses before, then it has the choice to elect treatment as either a direct or indirect expense. If the contractor had awarded such bonuses before, then in similar circumstances the treatment must be consistent with prior treatment. (As Don originally posted. I was fine with that response.) But if the contractor can identify different circumstances, then it is free to treat the bonuses differently than it did in the past, for the new circumstances. I will add that, if the contractor has elected to treat the bonuses as direct expenses, it would be stupid not to have cleared that decision with the CO prior to implementing it.

Sigh. I know I shouldn't do this. I should just let your post go because you're expressing an opinion. I know I'm going to regret this ... Recognizing that when a cost is disallowed by the contracting officer, the burden is on the contracting officer to provide a basis for that disallowance (see FAR 42.801 and the clause 52.242-1) -- what would your regulatory basis be for asserting that the costs in question were unallowable? What would be your Part 31 citation?

You are asking if the US government needs to pay the US government? If you're a defense contractor, you might want to check out DFARS Part 229.

Oh, yes. Very much so, Joel. Often, direct labor dollars are used as the allocation base for one or more indirect cost pools.

If the question is directed at me, then I think Don answered it along the lines I would have. I would have quoted the same FAR citation and I would have emphasized the same phrase as Don emphasized. The only difference would have been that I would have posted that the contractor must be consistent in direct vs. indirect cost determinations unless the cost is incurred in different circumstances. The answer to your question is "it depends."

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.