here_2_help

Hmmm. If I interpreted the allegations correctly, the Hon. Senators are saying that DOD is conspiring with Transdigm to make only small (less than $2 Million) orders for spare parts, rather than buy in quantities that would require submission of certified cost or pricing data. Seems to me that decision would be within the discretion of the KO. And as for Boeing, they seem to allege that the company is using subsidiaries in some fashion to avoid providing cost or pricing data. I'm not sure how -- maybe by claiming commercial item status? In any case, the letter then says Boeing IS providing the data upon request, so I'm not really sure what the issue is. Looking forward to receiving enlightenment.

1. Evaluate each account for risk of incurring unallowable costs. The scrub approach depends on (a) likelihood of incurrence, (b) how much risk the company is willing to take and (c) effort to review. 2. Document your risk analysis. Determine which accounts will be scrubbed -- and how. 3. If you are doing less than 100% transaction reviews and projecting the results, ensure your approach is statistically valid (see FAR 31.201-6(c)). EZ-Quant is the "go to" stat sample program but there are others. In all other circumstances, assume that if DCAA finds anything, they will question the cost they find. 4. After-the-fact scrubs are not a good substitute for 100% allowability reviews at the point of entry into the accounting system. Good luck!

Agreed this approach is not in accordance with FAR/DFARS/PGI. It's a poor substitute for actual Program Management. Questions: 1. Do you expect DCAA to audit the contractor's invoices? If so, how? Are they going to audit against the contract as formally bilaterally modified, or against MOCAS-reported funding, or perhaps against some PM's notion of what the funding should be? 2. Do you expect MOCAS to track all the funding movements? If so, how quickly do you expect that to happen? How quickly do you expect to issue/receive bilateral contract mods? Not a fan of this approach.

I work with contractors all the time. Most are simply unaware of their contractual obligations. (I ask them if they've read their contract, and they tell me they've read the SOW. Nobody ever reads the clauses incorporated by reference.) The larger contractors are aware, but struggle to have solid processes that support proper notification. Some PMs are reluctant to acknowledge an incipient overrun. Others have trouble pulling actual costs from their accounting systems in a comprehensible manner. The ones who are both larger and have adequate EV systems are the ones who can both project overruns and report IAW clause requirements. Unfortunately, the number of those contractors is rather small in comparison to all the rest. So, yes. It can be done and IS being done by a few of the larger, knowledgeable, experienced primes with good systems. As for the rest, not so much. As contracting officers, you can help the rest of them learn by adhering to the clause requirements and refusing to fund cost growth that is not reported timely as required by the clause.

I think you are right to be concerned. The subcontract is to support your ID/IQ contract, right? So why would there be a PoP that extended beyond the need? I don't see it.

Ask the prime to flow down to you their exemption certificate.

If I understand the situation correctly, the company is moving to a pay-as-you go model. There is no liability on the balance sheet. Is that correct? If so, what does CAS 408 say? It occurs to me that the company can estimate its liability, based on historical usage trends. A liability for the estimated annual usage can be booked. Let DCAA audit that value.

There are no real metrics because -- as you've posted -- each company is different. You don't need KPIs when the situation is clearly evident for those who have eyes to see. Does your company conduct exit interviews? If so, what do they tell the company's executives? The metrics that matter are all about attrition and retention. Those numbers speak loudly.

I wonder if ReadtheContract believes the original question has been satisfactorily addressed?

Contractor employees stay in service-issued tents, eat at the DFAC (or eat MREs) and, in general, are treated like service members all the time. This situation is hardly unusual, though it should have been covered in the solicitation. However, such employees are usually compensated for those inconveniences. They typically receive an "uplift" that covers deployments to difficult locations, such as FOBs. If the government intended that contractor employees were to be deployed to military bases, that definitely should have been covered in the solicitation. This is a real gap. Was it patent or latent? I don't know. What does the government want to accomplish here? When did it determine its objectives? If I'm the contractor, I'm going to tell the contracting officer that my contract has been changed, and I want an equitable adjustment. Not for the cheap facilities, but for compensating my employees for the inconvenience.

Thank you!

Assume progress payments based on costs incurred to be liquidated as units of production are delivered and accepted.

Normally, when I think FPIF, I think "contractor overrun" -- but here's a new one (for me): the contractor is actually significantly underrunning because of unexpected production efficiencies realized during the multi-year procurement (for production, not services). The contractor is worried because it believes that the CLINs are now over-priced. As it delivers, it's billing more than will be the case when the Incentive Fee formula is used to determine the final price. That's a great situation from a cash flow perspective, but not so much from a revenue recognition perspective. The contractor is convinced that, at the final Incentive Fee reckoning, it will have to send its government customer a Very Large check, which it would very much rather not do, even though it means that the government is basically giving it a nice, interest-free, loan at the moment. Instead, the contractor would like to reprice CLINs to recognize the underrun. However, the contracting officer is reluctant. Is there something I should know to understand why repricing CLINs on an FPIF contract -- to recognize an underrun and to prevent what could be perceived as an over-billing -- is not favored? Thank you.

Nobody has land lines anymore. If you work in an office that has land lines, move on. It's a sign of regression

Text first to see if the person is available. Then call. That is proper etiquette.

The heart of the question seems to be the type of subcontract(s) that the prime will award. Will they also be FFP with a separate cost-reimbursable travel CLIN? It is not necessary that the subcontract type must match the prime contract type. For example, a subcontractor can receive a FFP subcontract and then it won't matter what its own travel costs are because there will be an invoice that says "subcontractor costs" with no further breakdown. We don't know if that will be the case, but it could be. Thus, the correct answer depends on the type of subcontract awarded. From a purely competitive standpoint, having the subKs each bid their own travel costs increases the proposed price, even if those costs show up as "subcontractor costs" not travel. Why would you do that in a competitive acquisition?

Key discussion points being: - If the contractor delivers the customer may not be available to perform inspection and acceptance - If the contractor delivers and obtains acceptance, there may be no staff in the payment office to process the invoice

The topic title asks "how to T4D a micropurchase." Not T4C. Terminate for Default. That was the premise. In what way did the vendor fail to perform -- especially if 20% of the acquired services have been delivered? We're talking about $10,000 here, right? Let it go, man -- unless you feel the Government has been defrauded in some way. In which case, refer it to the appropriate authorities for action.

I would hazard a guess that, at the micro-purchase threshold, it's simply cheaper not to terminate the contract. I might be wrong (because that would be a common sense position) but that's my guess.

I will add that, in a CPFF contract, the fixed fee is, literally, fixed. It does not change when you add a new subcontractor, unless there is something else going on, such as a change in the required work. The profit rate you negotiate with your subcontractor is strictly between you and the subK. Whatever the subK bills you becomes "cost" to your prime contract.

Seems to me that the "customer" is equating spending money (as reported on progress payment financing requests) with making technical progress. Have we forgotten the lessons learned from the A-12 debacle already? (Yikes!) There are other means to determine the contractor's technical performance. Monthly reports (CDRLs) are one means of doing so. Second, if this "big" contractor doesn't want progress payments, there must be some other reason. Why? Because "cash is king." Every contractor in the world wants--or should want--enhanced cash flow. They will frequently trade profit for enhanced cash flow. My thought is that there must be some other (unstated) reason for not wanting progress payments. For example, FFP without progress payments avoids most if not all auditor scrutiny. If the contractor is trading cash for a lack of auditor scrutiny, that would signal to me that the contractor has something to hide. At a guess, they have an accounting system issue. (I.e., use of progress payments requires an "adequate" accounting system as determined by DCAA auditors.) FFP means that the accounting system issues remain unobserved and unknown. After all, if the price was fair & reasonable, nobody really cares what the contractor is spending. Though another possible reason for denying progress payments is that the contractor is making a huge windfall profit and it doesn't want USG to know, as a huge underrun against planned/negotiated costs would smell like defective pricing and--again--the auditors would be brought in to see what was really going on. (You can always bring in the auditors afterwards, for a post-completion "truthful cost or pricing data" audit.) Those are my thoughts, for what they may be worth.

CAS clauses flow-down by the express direction of the language. In 52.230-6(l), the clause states: Thus, the prime flows-down to 1st tier negotiated subcontracts that are CAS-covered. The clause is now in the 1st tier subcontract. Should that subcontractor award a negotiated CAS-covered subcontract to the next tier, the clause--by its express language--must flow. Now the 2nd tier subcontract has that clause and the 2nd tier subcontractor must comply.

I'm wondering what services the subK will be providing to the prime, and whether the staffing levels can be assured by means other than contract type. For example, can you create a clause that mandates a certain LOE with appropriate damages (liquidated?) for failing to maintain. Or maybe a CPIF type where the incentive fee is tied to the prime's award fee %. Just some thoughts.

The Federal Travel Regulations probably do not apply in full to a contractor's travel. The FTR does, however, provide a good guideline as to what contractor travel costs may be reasonable for a CO to approve. The FTR discusses when "actual" expenses may be used in lieu of locality per diem rates for lodging.

Today's main page has a link to an interesting ASBCA decision where the contractor not only received a contract extension for COVID-related delays, but was also awarded compensation for the additional costs it had to incur. A key part of the decision was to note that the contractor was not prevented from delivery of CLIN-required rental items; the pandemic required the government to use those rental items for longer than originally planned. Even though the CLIN was FFP, the contractor was entitled to be compensated for its additional costs.