here_2_help

The DoD has several tools/aides available to contracting officers. I don't know how much access a contractor has to them. Start with the Defense Acquisition University (DAU) site and go from there. Ultimately -- and this is why some parties are reluctant to use PBPs -- it is a matter of negotiation. Here are my thoughts but please do your own research. 1. Develop a spend plan (time-phased budget). Layer proposed profit on top of the spend plan. Note that you need to reach 90% of the estimated contract price but not more. 2. Identify key programmatic milestones. Ideally, at least one per month but you can have more than that. Some events may be stand-alone; others may be dependent on others (i.e., cumulative events). 3. Value the milestones/events based on your spend plan. 4. Present to contracting officer. Show your work. Show how you are not front-loading cash to the extent you are actually asking the government for advance payments yourself. 5. Negotiate. 6. Incorporate the final, negotiated, events into the contract.

First, PBPs are the "preferred" form of contract financing payments. Seems to me that your PCO just doesn't want to put in the work to establish event values. PBPs are superior in all respects to Progress Payments based on (adjusted) costs incurred. You should fight for them, especially if you don't have a DCAA-audited and DCMA-approved accounting system. To your other question, if you are paying suppliers at the time of PO placement, as opposed to the time of receipt of materials or finished goods, then those are "advance payments" and are not eligible for inclusion in progress payment requests. I would advise -- if possible -- avoiding advance payments to your suppliers. Those are my thoughts.

Yeah, that's a good catch. Now look at the dollar threshold at 49.108-4 and compare it to the threshold in FAC 2005-098 (May, 2018), implementing FAR Case 2015-039.

Nobody could criticize you for waiting to see if DPC withdraws the guidance memo. But if it is not withdrawn, I will be recommending that subcontractors and prime contractors go for it.

I think the DPC memo would make an excellent exhibit if, in some wild circumstance, a CO should decide in a Final Decision that a prime contractor may not designate a supplier as being a NDC when the supplier meets the statutory criteria, and the contractor decides to appeal.

I beg to disagree. The contractor could have hired a night watchman or security guard to watch over the sod. If the contractor had considered the risks (and most rarely do), it would have concluded that the cost of security while the fence was down was a trivial expense to mitigate its risks. The probability of occurrence may have been low, but the consequences were high. Thus, the risk should have been identified and mitigated. It was not. That is negligence in my book.

1. TINA is a disclosure requirement, not a use requirement. 2. When a proposal will be subject to cost analysis, then the contractor should expect the government negotiators to challenge any costs deemed to be unallowable. In my experience, when a contractor has developed proprietary technology at its own expense, it is often in a strong bargaining position vis-a-vis the Government with respect to profit/fee negotiations. As has been noted, the WGL is used to develop pre-negotiation profit objectives, which may or may not be realized at the negotiating table.

Profit is not cost. Your cost estimate, whether for direct or indirect costs, should include your best guess as to the costs you will incur during contract performance. Nothing more; nothing less. Why did you bid a "best case" proposal instead of a "most probable case" proposal? Go back and review your estimated costs, both direct and indirect. Use a "best case" and a "worst case" scenario to develop a "most probable case" estimate. Be prepared to explain to the contracting officer how you arrived at your cost estimate. Once you have a solid cost estimate, add to it the profit you believe is reasonable. As others have noted, it is difficult to get a profit percentage greater than 15% of estimated costs, but it can be done with the right arguments.

There is not enough info here. What costs are you planning to incur? How does the LLC currently charge those costs? What is going to change -- if anything -- because you receive a new project? And, really, you have no W-2 employees? None? Not even the CEO or CFO?

There are a few cases (e.g., Martin Marietta) that discuss this issue. Fundamentally, when calculating an indirect cost rate, unallowable costs are subtracted from the cost pool but remain in the cost allocation base, so that unallowable costs receive their fair share of indirect costs. Overhead costs are part of all G&A allocation bases except for single element bases; thus Overhead is part of the G&A base for both TCI and Value-Added bases. If there are unallowable costs in the overhead pool, they stay in that pool when calculating the correct G&A allocation base; however when calculating the allowable Overhead indirect cost rate, the unallowable Overhead costs are removed from the Overhead pool. Emphasis added.

I saw that ... insanity

Follow-up question for my own edification. If neither entity had an existing Schedule contract and wanted to propose one, could the parent entity create LCAT rates that were based on an expected division of work between the parent and subsidiary entity, or must the parent entity propose LCAT rates that are based solely on its own fully burdened labor rates?

I am not particularly knowledgeable about GSA Schedule contracting. There are others on this site with more experience/knowledge than I have. I've been waiting for somebody else to weigh in.... I have read FAR 8.4 and visited the GSA website and reviewed the GSA Acquisition Supplement. It is not clear to me that GSA Schedule orders are subject to FAR Part 31 cost principles, or to CAS. Maybe they are, but I couldn't find it. Instead, everything I read pointed to GSA orders being for commercial products or services, to be ordered on a fixed-price or T&M basis. If I'm correct -- and I'm sure SOMEBODY will jump in if I'm wrong -- then 31.205-26 is not applicable and the affiliated parties are free to "subcontract" with each other on any reasonable basis. My answers: 1. The parent company and the subsidiary could map their rates together into an average that combines both. Or they could have separate LCATs, especially if the subsidiary has a particular expertise. 2. If 31.205-26 is not applicable, then yes, the subsidiary could map its fully burdened, with fee added, labor rates. Even if 31.205-26 did apply, the subsidiary could do so if it met the conditions of 31.205-26(e) and (f). If desired, the two entities could "split" a single earned profit in accordance with an internal budgetary agreement. 3. That's an interesting question to which I do not know the answer. Hope this helps.

Yep. Plus the prime always had the ability to request a DCAA assist audit but the prime's buyer was asleep at the switch.

I treat subcontracts to government prime contractors as being government contracts, not commercial contracts. Yes, such contracts are generally subject to the UCC if there is a dispute between the parties; however, the government generally has audit rights as conferred by subcontract terms and conditions (particularly if the subcontract is other than FFP). Chances are your prime contractor has listed your subcontract in its own Schedule J so that the auditors can initiate assist audits if they elect to do so. Because the government generally has audit rights that it may exercise, I treat the subcontract as being governmental.

No, you cannot perform work -- or have subcontractors perform work -- in support of a FFP TO and charge that work to overhead. That is cost shifting and is frowned upon. If the work benefits a single TO then it needs to be charged to the TO.

If I have a subcontractor who is able to charge multiple cost objectives -- i.e., different projects with different Ts&Cs -- I would want to have a separate agreement for each project. That is to make sure the various prime contract clauses flow down correctly. This is also to make sure costs get to the correct project. However, if the subcontractor can charge multiple projects, then maybe the agreement needs to be 100% indirect. (See the FAR discussion of "indirect costs"). If the agreement is charged solely to indirect cost objectives -- i.e., overhead or G&A -- then I agree that no prime contract terms will flow down. I disagree that "no FAR provisions will apply" because some of those FAR Ts & Cs apply to indirect costs not just direct costs. Hope this helps.

The only thing the prime should need is assurance that the subK's accounting system is approved. Typically a copy of the determination of adequacy is all that is necessary. If the prime wants more then the prime either knows something about the subK's timekeeping system that the government does not know ... or the prime is clueless.

Most primes with USG prime contracts develop their "own" clauses by using FAR/DFARS clauses and replacing "contracting officer" with "buyer" and "Government" with "buyer" or "company". Most primes are not motivated to tailor clauses or to develop their own set of local clauses. Most primes do not train their buyers in the nuances of clause application. Note the considered use of the word "most" in the above generalization.

This was a rhetorical question, correct?

I would review the proposed subcontract language de novo, without regard to whether the clause is in the prime or if it is a mandatory flowdown. Identify the clauses that drive risk or other concerns. Then look those clauses up in the FAR Smart Matrix to see when they would be required to be in a prime contract. Review the clause language to see if a flowdown is required. Then negotiate.

(Emphasis added; internal citations omitted.) Based on the above, I'm hard-pressed to imagine how one might evaluate offerors. I guess based on general AI expertise? It seems to me that CBP is looking to hire a guide or two to lead it down the path of implementing AI. Track 1 will augment existing agency resources to manage the contractor(s) who execute Track 2, I guess. But the nature of the awards means that work will be handled on an individual order basis. The Track 1 contractors will have difficulty establishing long-term partnerships with the CBP staff because of the nature of how the work is managed. The Track 2 contractors will have difficulty seeing the bigger picture because of the nature of how the work is awarded. Conclusion: The agency would have been better off awarding one long term Track 1 contract on a CPFF basis and one or more Track 2 contracts to selected AI experts with a proven track record of deploying AI. The Track 2 contracts should have specific requirements in mind. You could even go CPIF with the incentive fee tied to quantitative or qualitative performance enhancement in Track 2. BPAs with pools of contractors and individual orders was not the way to go, in my view.

Wow. A lot of words to say, "Sure, the government made some mistakes in evaluation. But the mistakes weren't prejudicial. Denied."

I also own an S-Corp. I don't need any Form 1099's. They are not required for an S-Corp. If you do your bookkeeping, it is not hard to figure out your corporate income. For me, it is basically all funds I deposit into my business checking account. I have a spreadsheet that I update about every 60 days that helps me to track income and expenses. I don't even use accounting software. In summary, your clients aren't required to provide you with a 1099, nor should you need one to accurately report income and file tax returns.

My first question is: have the parties reached price agreement? If so, how was the R&R cost treated in the agreed-upon price? If no agreement then I would then ask what the contractor's normal practices are for the cost. I assume the contractor will follow its policies consistently. If this is the first time occurrence and precedent is being established, then my opinion is that leave costs are leave costs and should be treated as the contractor's other leave costs are treated, which I assume would be indirect. (But not always.) You could argue that the R&R costs are distinguishable from other "normal" leave costs because of the circumstances. In normal TDY travel, the employee returns home, but not in this case. So, it depends. There is no bright line answer here that I can think of.