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Posts posted by here_2_help

  1. 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.

  2. CAS clauses flow-down by the express direction of the language. In 52.230-6(l), the clause states:



    l) For all subcontracts subject to the clauses at FAR 52.230-2, 52.230-3, 52.230-4, or 52.230-5-

    (1) So state in the body of the subcontract, in the letter of award, or in both (do not use self-deleting clauses);

    (2) Include the substance of this clause in all negotiated subcontracts; and

    (3) Within 30 days after award of the subcontract, submit the following information to the Contractor’s CFAO:

    (i) Subcontractor’s name and subcontract number.

    (ii) Dollar amount and date of award.

    (iii) Name of Contractor making the award.


    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.

  3. 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.

  4. 1 hour ago, Ribkah said:

    What is sufficient justification for a CO to approve a contractor to exceed the GSA hotel rates? 


    Context is that the contract was issued 2 weeks before the meeting was to take place so there were no hotels within a 50 miles radius available within those rates. We explained this and they stated that ' a meeting should not have been scheduled before a contract was issued" This is a high level federal meeting that is set by appointees.

    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.

  5. 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.

  6. 1 hour ago, LucyQ said:

    Perhaps a better questions would be, how do you guys manage your suppliers in CPSR compliant procurement systems? 

    All I can say is that my companies have had their buyers check the excluded parties website (manually), print out the results showing the date checked, and stick the printout in the purchase file. Okay, nowadays they do this electronically by attaching the screenshot to the electronic PO. But still, I have not worked with a company that outsourced this process. That's not to say that it couldn't be outsourced; however, my companies thought that making the excluded parties check was an essential function of being a buyer and they expected their buyers to do it.

    Apologies for not being more helpful.

  7. I'm a bit confused. 

    How is the contractor currently complying with requirements related to responsibility determinations and excluded parties? Are the searches being done by hand, or are they not being done at all?

    Also, I'm not sure how an Approved Supplier designation plays into CPSR compliance. I don't know all the (many) adequacy criteria off the top of my head, but I don't recall one associated with having an Approved Supplier list. Hopefully, you can enlighten me on that one.  If the issue is that being designated as an Approved Supplier means that future responsibility determinations and/or excluded party searches don't have to be performed, I don't think that's the case.


  8. Quote

    9903.201-1 CAS applicability.

    (a) This subsection describes the rules for determining whether a proposed contract or subcontract is exempt from CAS. (See 9904 or 9905, as applicable.) Negotiated contracts not exempt in accordance with 9903.201-1(b) shall be subject to CAS. A CAS-covered contract may be subject to full, modified or other types of CAS coverage. The rules for determining the applicable type of CAS coverage are in 9903.201-2.

    (b) The following categories of contracts and subcontracts are exempt from all CAS requirements:

    (1) Sealed bid contracts.

    (2) Negotiated contracts and subcontracts not in excess of the Truth in Negotiations Act (TINA) threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)). For purposes of this paragraph (b)(2), an order issued by one segment to another segment shall be treated as a subcontract.

    (3) Contracts and subcontracts with small businesses.

    (4) Contracts and subcontracts with foreign governments or their agents or instrumentalities or, insofar as the requirements of CAS other than 9904.401 and 9904.402 are concerned, any contract or subcontract awarded to a foreign concern.

    (5) Contracts and subcontracts in which the price is set by law or regulation.

    (6) Contracts and subcontracts authorized in 48 CFR 12.207 for the acquisition of commercial items.

    (7) Contracts or subcontracts of less than $7.5 million, provided that, at the time of award, the business unit of the contractor or subcontractor is not currently performing any CAS-covered contracts or subcontracts valued at $7.5 million or greater.

    (8)-(12) [Reserved]

    (13) Subcontractors under the NATO PHM Ship program to be performed outside the United States by a foreign concern.

    (14) [Reserved]

    (15) Firm-fixed-price contracts or subcontracts awarded on the basis of adequate price competition without submission of certified cost or pricing data.


  9. On 7/13/2023 at 5:29 AM, _KB_ said:

    We are fearful of a situation where our final rates come back as higher than what we were billing at with our provisionals, and if the Total Estimated Cost has been deobligated down to current funded values, we would not be able to recover the extra actual costs since the Total Estimated Cost had been reduced, leaving no room to recover the costs. 

    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.

  10. On 7/12/2023 at 1:35 PM, Fara Fasat said:

    Thanks. I think we have covered my question. You can't invoice the government for more than the costs you incur, and there are various ways of handling that when there is uncompensated overtime.

    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.

  11. 52 minutes ago, REA'n Maker said:

    AKA total IDIQ value/contract maximum.  It was intended to address stuff like the $7.5M CAS thresholds.  

    I think it's a totally fair statement to say that CAS is applied at the task order level, but I also think that the determination to do so is in the IDIQ.  It's sort of like how you make a SB set-aside determination at the IDIQ level even though you are actually setting aside the TOs.

    Assuming the maximum order value on a $100M IDIQ is over $7.5M, that would practically dictate CAS coverage. It's definitely not an exact science, or a science at all for that matter, but I've never heard of CAS coverage being a big deal to any vendor proposing on a $100M federal contract.  Aren't CAS basically GAAP anyway?*  That's not rhetorical; I honestly don't know for sure.


    (* I believe this construction is bizarre yet grammatically correct however I am also a product of the American public school system)

    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.

  12. 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.

  13. 2 hours ago, REA'n Maker said:

    I second that opinion.

    Isn't CAS coverage sort of like being pregnant, i.e., "partial" coverage makes no sense (per Don's comment above)?  Considering CAS coverage is based on an entity (corporation, business unit, office, branch, etc.) and the total estimated value of all orders I don't know why it wouldn't be included in the overarching legal agreement with that entity which states the total estimated value of all orders.

    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.

  14. 13 minutes ago, Retreadfed said:

    Why can't you ignore 12.207 which addresses contract types that can be used for prime contracts.  Is it your position that 12.207 applies to subcontracts as well?


    While your question is spot-on, the reality is that CPSR teams apply FAR rules to contractors all the time.

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