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here_2_help

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  1. Hi Jiggy, Absent a request for extraordinary relief, I don't see how you obtain any such modification.
  2. I'm confused. Have you read the clause at 52.216-7 (Allowable Cost and Payment)? By contract clause, you are supposed to adjust your provisional billing rates so as to match your estimated final billing rates. There is no reason for a large disparity in billing rates to exist. In fact, any such disparity is contrary to the clause's requirements. Where are these "fears" coming from? Do you know that your final rates will be higher than your provisional billing rates? If you know, then you should do something about it now, IAW 52.216-7. If you don't know -- then why don't you know? Isn't somebody in Finance running variance analyses? If not, why aren't they? I don't mean to be a jerk but this is all fairly fundamental cost-reimbursable contract stuff. In many contracts, indirect rates make up 50% of total costs billed. It is the responsibility of the contractor--not the government--to manage those rates.
  3. Yes. Now I would like to add something in case it has not become obvious. 1. You pay salaried employees a salary. The salary is independent of the number of hours worked and recorded. In a perfect world, a salaried employee will record 2,080 hours per year. (52 weeks x 40 hours per week). 2. Salaried employees fill out time cards (or they should, as Raytheon learned at the Federal Circuit in January of this year). Let's assume those are weekly time cards. On each time card, the salaried employee records the hours spent on each assigned cost objective. (To make it easier, let's say those cost objectives are either contracts, overhead, or some paid-time-off account such as vacation or holiday.) In a perfect world, the perfect 40 hours per week will be spread across whatever cost objects were worked. Maybe it's 40 hours to only one contract; but more likely the 40 hours are being charged to multiple things each week. 3. Each cost object "thing" has a code associated with it -- traditionally called "the charge number". So, when the employee turns in the weekly time card, there are hours associated with each charge number. There are many employees, so there are many time cards. The labor system aggregates all the time card data by employee each pay period. 4. Separately, the employee gets paid. Let's assume the employee is paid weekly -- i.e., annual salary divided by 52 equals the weekly paycheck. The paycheck is reduced for taxes and the cost of benefits to generate the net takehome pay for the week. That's what Payroll does. 5. Separately, the gross payroll (before taxes/benefits) is distributed to cost objects in accordance with the time card data. Thus, the time card is the method for distributing the salary costs. To the extent the charge numbers reflect "contracts" the distributed payroll shows up as a contract cost -- i.e., as direct labor dollars. 6. Yes, the world is rarely perfect. Sometimes more than 40 hours are recorded in a work week - UCOT. Sometimes less than 40 hours are recorded (LWOP - Leave Without Pay). There are various accounting methods for dealing with those issues. The bottom line answer to the OP is that the contractor bills for the direct labor dollars that were distributed by the labor accounting system to the cost-reimbursable contract, based on the time cards submitted by salaried (and hourly) employees during the billing period. NOTE: An adequate accounting system provides for reconciliations between the payroll system and the labor distribution system. Hope this helps.
  4. 31.201-2 Determining allowability. (a) A cost is allowable only when the cost complies with all of the following requirements: (1) Reasonableness. (2) Allocability. (3) Standards promulgated by the CAS Board, if applicable, otherwise, generally accepted accounting principles and practices appropriate to the circumstances. (4) Terms of the contract. (5) Any limitations set forth in this subpart.
  5. To all, I just got off the phone with Vern (his eye is improving a little bit each day, by the way). He wanted me to make the following points on his behalf. 1. As I stated in an earlier post, this is a known issue. It's been around since ID/IQ awards started to be made to multiple offerors, especially those for services. Formerly (according to Vern), agencies awarded ID/IQ contracts to individual contractors, and those awards were for goods (not services). That has changed but the FAR Council and CAS Board haven't adapted to the changes. There is simply very little (if any) guidance on the issue. 2. Since FAR and CAS are silent, a contracting officer has the flexibility to craft their own solution (See FAR 1.102(d).) This would be a permissible exercise of authority and not a deviation. 3. Therefore, a contracting officer faced with this situation could craft one or two contract clauses, stating that (a) each order is divisible and separate from the others, and (b) CAS coverage and rules shall be applied at the individual order level. Again, I'm paraphrasing a conversation. Any errors in translation are mine.
  6. Let's say you have an multiple award ID/IQ with a ceiling of $100 Million. Twenty formerly non-CAS-covered contractors receive an award. According to current DCAA thinking, each contractor has a $100 Million contract award, subject to Full CAS coverage and requiring submission (and audit) of a CASB Disclosure Statement. The contracting officer and the contractors all know that the likely value of the awards to each is much less than $100 Million. But how much less? Should the $100 Million simply be divided by 20--so that each contractor expects only $5 million each? (Note that $5 Million is under the $7.5 Million CAS trigger threshold.) Nothing in the regulations or guidance suggests that is the right approach. If each order is a separate contract (and there is much to support that notion) then CAS should be applied at the order level not the parent ID/IQ level. But that's not the current state of things. Instead, CAS coverage is determined based on the total value of the ID/IQ contract awarded.
  7. Retreadfed, While your question is spot-on, the reality is that CPSR teams apply FAR rules to contractors all the time.
  8. Thanks, Jamaal, for your comment. It was thought-provoking and led me to some additional research. Source: Accounting for Government Contracts: The Cost Accounting Standards (LexisNexis) at 3.03[5][a]. Food for thought, huh?
  9. It's unclear to me what you mean by "CAS determination." Do you mean a determination regarding CAS coverage? I.e., are you asking whether CAS coverage is determined at the ID/IQ level or at the individual order level? I'm afraid there is very little in the way of regulatory language or case law to help you with this one. As Don pointed out, the FAR Council says CAS coverage is determined at the contract level but that is a silly position, since both TINA coverage and Limitation of Cost/Limitation of Funds requirements are applied at the order level. It's just silly to have a different approach for CAS coverage; but that's what the FAR Council asserted was the case. I think your statement that an ID/IQ is a "$0 award" is not exactly correct. First of all, there's a guaranteed minimum, right? Second of all, there's a ceiling amount. Finally -- and in my view this is an important data point -- there is the Government estimate regarding how much $ will be awarded to the contractor or contractors. Maybe there's an IGE somewhere. Those might assist you. But there's almost nothing firm you can rely on. This is has been a known issue for almost 30 years yet the CAS Board has declined to address it. So you are on your own, unfortunately.
  10. I've seen it done before. There is little argument that the prime contractor is responsible for its subcontracting, including choosing the appropriate subcontract type and flowing down all applicable prime contract clauses. FAR 44.303 identifies 11 things the government looks for when it assesses a contractor's purchasing system. In addition FAR 44.202-2(a) lists 13 things the contracting officer should evaluate with considering whether or not to give consent to a subcontract. Unless award of a commercial item subcontract violates one of those 24 items, there is no prohibition on awarding it, regardless of prime contract type.
  11. I started my career in what is now called "EVMS" but which was then called "C/SCSC" (aka "Two-and-a-half Chicken Shits"). Using EVM and related tools to predict an at-completion variance is not a bad idea, though the at-completion value is never as precise as advocates want you to believe it is. But all the variance analysis a formal EVM system requires is simply a big waste of time. As somebody once told me, it's like steering a boat by focusing on the wake.
  12. I imagine that the contracting officer would like to establish confidence in the contractor's number. If the contractor is asking for more funds today, how does the contracting officer know the contractor won't be back next week, asking for even more funds to complete the work?
  13. One of my pet peeves in this area is the set of indirect rates to be used for forecasting the At-Completion variance from the estimated cost budget when an FPRA is in place. Many government folks expect the contractor to use its FPRA rates; after all, that's what the parties agreed to for estimates of future costs, right? Not in my opinion. In my view, the contractor should use its current indirect cost estimates--which could be its FPRP rates or something even more current--to project its to-go costs. Often, FPRA rates are decremented as part of negotiations, which renders them (potentially) inaccurate. The At-Completion variance should be as accurately calculated as is feasible. Since we argue about which set of indirect rates to use, you can safely infer that my clients are encouraged to provide their government customers with as detailed an estimate as they can feasibly provide, because they are asking for more money than planned and it is only reasonable to expect an explanation of what happened and why, as well as a justification for the amount of additional funds now required. Just throwing "1 number" at the customer is not a winning success strategy, in my experience.
  14. I apologize. I said I was done with this discussion but here I am again. Shrug. I have seen the scenario quoted above many times in my career. The contractor believes it is smarter than the government and wants to innovate unofficially and without the mess of a contract modification. Adding another person who was not contemplated at the time of contract formation and price agreement must make sense, right? At least from a technical perspective. The perspective ignores the agreement struck between the parties. If the contractor wants to add another FTE (and associated labor hours) then Vern's post of an hour ago is the way to do so. Doing so unofficially is going to lead to all the problems already mentioned in this thread. Again, I bow out unless a comment is specifically directed to me. I will attempt to stay "bowed-out" this time.
  15. Well, if this was a FFP-LOE contract I would 100% agree with you. However, this is a CPFF LOE-Term contract, so there is no way to avoid compliance with the LoF / LoC clauses, to my way of thinking. To be more explicit, in a Cost-Type contract, the labor hours and dollars are integrated. You say the customer is buying hours but there is also an estimated cost (and fixed fee) inextricably associated with those labor hours. As I basically agree with your conclusion (a mod is required or else the contractor stops work or else the contractor continues to perform without remuneration) I will say no more.
  16. 1. Contractor has a CPFF LOE Term contract with an estimated cost agreed-upon based on 10 FTEs for one year (19,200 labor hours). By terms of the contract, the contractor must deliver all LOE hours within the estimated cost, or else notify the customer of a potential overrun IAW 52.232-20 or 52.232-22 (as applicable). 2. Contractor plans to add an additional 0.5 FTE (halfway through the Period of Performance). As a result, the contractor will deliver more labor hours than the parties originally contemplated (20,160 hours vs. 19,200). However, the additional hours come at an additional cost. Because the contractor will incur more labor hours than budgeted, it will burn through its funding faster, likely triggering the 52.232-20 / 52.232-22 notification. 3. Upon receipt of the contractor's notification, the contracting officer must decide whether or not to provide more funds. If more funds are provided, then a modification to the existing contract will need to be made. The customer will be compensating the contractor for the additional 0.5 FTE (presumably because value was received). If no additional funds are provided, then the contract will be completed earlier than the parties anticipated. Work will stop until the next option year is exercised (if it is exercised). That's how I see the situation, anyway.
  17. Restating my position(s): 1. You don't provide the contract award date (or effective date if not the award date) so there is no way to tell whether the contract was awarded before or after the Class Deviation was issued and took effect. If the contract was awarded before the Class Deviation took effect, then the contract language controls. If the contract was awarded after the Class Deviation was issued, the contract language still controls--unless somebody wants to argue the point in court. If you think the clause doesn't belong in the contract, because of the Class Deviation, you should request it to be removed via contract mod. 2. Yes, because the contract contain 52.216-7 and that clause requires submission. Inclusion (or not) of 52.215-2 does not trump the requirements of 52.216-7. In point of fact, though, DCAA rarely audits the ICS submitted by small businesses, because there's typically not much recovery for audit hours expended. DCAA calls this "risk-based" auditing. EDITED: From the link provided by HitTheNutz:
  18. By issuing a UCA for the requested funding. At least, that was my impression as to what the OP was thinking about.
  19. I would add to C Culham's comment that IAW 52.232-20(c), the contractor should have provided the CO with the amount of additional funds necessary to complete the work. The CO can accept that amount or not, but there should be no reason to have the contractor continue to work without providing additional funding. To do so effectively defeats the purpose of the clause's advance notification requirement, which is to provide the customer with sufficient time to find the finds or to decide to tell the contractor no further funds will be forthcoming.
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