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Everything posted by here_2_help
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CFO, have you read your contract to see if there is a contract clause that answers your question?
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From what I gather, there are two processes in play here: (1) annual "true-up" between budgeted (or "target") and actual G&A rate to clear any over/under variance (which may be carried on the balance sheet); and (2) whether the impact of the true-up (either debit or credit) can or should be passed on to a customer. With respect to (1), if the contractor has any contract that includes 52.216-7 or any CAS-covered contract, then this process must be executed at least annually. With respect to (2), contract terms and conditions will govern whether any resulting impacts from the true-up process may (or must be) passed on to the customer.
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Thought I would post to let people know that the original author of the LinkedIn post has now resigned from the NCMA Board of Advisors. As I posted earlier, I know the guy. I think it's a shame that NCMA lost a resource because some people didn't like either the message or the delivery.
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POSTSCRIPT II: Our Competitive System by Vernon J. Edwards
here_2_help replied to bob7947's topic in Recommended Reading
I have personal relationships with several people who served on the Section 809 Panel. The Panel did some good work and some changes were made as the result of the Panel's reports. That said, there were not enough changes. No substantive changes resulted. A lot of work by some very smart people for ... not very much, in my view. The truth is that when you touch the budget process you are also touching the political process. You are in essence asking the same people who use the current process to their advantage to also spearhead reforms that might tend to reduce the influence they currently have. Not something many individuals will be eager to champion. Again, all my opinion. -
VAO on Fixed Unit Price Contracts
here_2_help replied to Freyr's topic in Contract Pricing Including CAS & Allowable Costs
Sorry for being late to this party: I just wanted to address the above question. The answer is provided (in detail) in CAS, not the FAR. See CAS 418. However, there is also a higher-level answer in FAR Part 31, at 31.203-3 ("Indirect Costs"). So, yes. The contractors' indirect cost pool allocation bases should--and must--contain all contracts being performed, if those contracts receive benefit from the activities in the pool. Being provided three hours to learn FAR Part 31 is like me being provided three hours to learn FAR Part 15. -
POSTSCRIPT II: Our Competitive System by Vernon J. Edwards
here_2_help replied to bob7947's topic in Recommended Reading
An incisive article. Opinion backed by research and fact, as I've come to expect from Vern. I would add my opinion that revising the acquisition process without revising the budgetary process at the same time seems doomed to failure. Unlike Vern, I don't have any research and facts to support my opinion. Yet it remains my opinion, based on working in this government contracting world for 40 years now. -
I read Mark's LinkedIn OP. He's a smart guy. But he's also very opinionated and not at all shy about sharing his opinions. (I routinely receive similar feedback but, then again, I didn't post what he did on LinkedIn.) My take on his assertion was "meh." I don't think it really matters all that much, nor does knowing the "acquisition chronological order" of the FAR Parts aid in finding what one might need to find. In that vein, I agree with dacaan regarding the "so what". I teach the FAR (using Vern's amazing hands-on method) and we have never, ever, needed to map the various FAR Parts to the acquisition lifecycle. If that's important info for somebody, then good for them. The entire assertion strikes me as "interesting, if correct, but I have better things to think about."
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Dang, but that was a helpful thread! I miss Vern's input so much ... and trust that he's doing well (physically) these days.
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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.
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Scrubbing Discussion
here_2_help replied to Justine's topic in Contract Pricing Including CAS & Allowable Costs
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.
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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.
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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.
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Industry KPIs to justify hiring/growing company
here_2_help replied to newtocontracting12's topic in Contracting Workforce
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. -
How Applicable is the JTR
here_2_help replied to ReadTheContract848's topic in About The Regulations
I wonder if ReadtheContract believes the original question has been satisfactorily addressed? -
How Applicable is the JTR
here_2_help replied to ReadTheContract848's topic in About The Regulations
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!
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Assume progress payments based on costs incurred to be liquidated as units of production are delivered and accepted.
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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.