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here_2_help

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Posts posted by here_2_help

  1. 1 hour ago, bob7947 said:

    Maybe experience is a detriment.  What do you think?

    Relations between the F-35 Joint Program Office and the prime contractor, Lockheed Martin, have been (in the past) problematic. Maybe she was tainted by that troubled relationship? Maybe Lockheed Martin folks whispered in the ears of Administration officials? Maybe in her dealings with the multiple military services that are customers of the F-35 program, she upset somebody in another service, or even within her own service? 

    To answer your question, though: yes. It can be.

    "Experience is what you get when you didn't get what you wanted." -- Randy Pausch

     

  2. From today's main page, a protest decision at the Court of Federal Claims, decided for the protestor.

    Quote

    While the agency appears to have conducted a rational price reasonableness analysis, as is explained below, its price realism analysis was not conducted in a rational manner.

    The agency’s price realism analysis, at least as documented in the administrative record, essentially consisted of a set of conclusory and repetitive statements with very little explanation or documentation of what, if anything, was actually done to complete this requirement. For instance, the price evaluation section of the source selection decision, which intermixes both the reasonableness and realism components, states that “[i]n conducting the price evaluation, the government assessed the price quotation to ensure the proposed pricing is realistic for the work to be performed, reflects a clear understanding of the requirements, and is consistent with the various elements of the other parts of the quotation.” AR 489. Fair enough, but this statement simply restates the requirements of the price realism analysis the agency committed itself to conduct and then, in conclusory fashion, states the agency did in fact conduct such an analysis. The analysis then reiterates this same conclusion, that “[t]he Government took no exceptions or issues to the Offerors’ proposed pricing and found all three to be realistic for the work to be performed. Additionally, all three Offerors reflect a clear understanding of the requirements.” Id. The Court is left to wonder where the actual analysis is.

    Although the government was not required to perform a cost realism analysis for this fixed-price award, it committed to do so. 

    Request for injunction granted.

  3. Smallbusiness, look at the situation this way.

    The costs in question were properly charged as direct contract costs at the time. Because you didn't comply with your LoC/LoF clause(s), the customer is not obligated to pay for them. Right? In essence, the costs have become unallowable via your noncompliance with the contract clause(s).

    Now you ask whether you can move the unallowable direct costs to indirect and recover them as allowable indirect costs.

    What do you think your auditor(s) are going to say about that? Do you think they'll be okay with that?

    Now, there is a slight chance of keeping the costs as direct costs and recovering them, if the costs are (as you describe them) COVID PTO costs. There is a lot of DOD guidance on reimbursement of such costs. Have you read the guidance? In essence--at the CO's discretion--the costs may be reimbursed. May be being the operative phrase.

  4. 49 minutes ago, Needforspeed said:

    These are great questions.

    Can you clarify what you mean on question 2? For question 3, are you referring to something above and beyond the accounting system - does Sharepoint qualify as a database? Or something like an Access database? If you could expand on what a relational database is to you that would help.

    Question 2 -- Each prime contract (or subcontract) you are awarded has a "contract number". You should include it. Each of your project numbers should have a link to the contract (or subcontract) that was awarded to your company.

    Question 3 -- Sharepoint, from what I understand, is a web-based document management and storage system. Basically, it's a 21st Century filing cabinet. Is that what you want? Or do you want something like OnBase, which is "a single enterprise information platform for managing content, processes, and cases, combining ECM, case management, business process management (BPM), records management and capture functionality". (Not a recommendation, just an example.) My thought is that contract management (and subcontract management) is a dynamic process. You are managing mods, funding changes, and other fun things. Where are you managing all that stuff and the workflow(s) associated with them?

  5. You're with a contractor, right?

    My thoughts:

    1.  Why do you have an internal project number that differs from the "official" project number in the accounting system? What's the value in that?

    2.  Where is the link to contract identifier?

    3. You need a relational database, with all data field active (contract identifier, accounting project number, customer, customer POC, internal POC(s), period of performance, contract value, funding (if incrementally funded), etc. You need another database for subcontractors, purchase orders, and consultants, which ties back to the accounting project number and prime contract identifier.

  6. 3 hours ago, Vern Edwards said:

    What has me wondering is the next sentence:

    "Additionally, any projected costs for terminated work are not recoverable because, when the contracts were terminated, the Government had no further legal obligation under the contracts because the guaranteed minimums had already been met.""

    What does that mean?

    I found the decision to be hard to comprehend. I thought it was just me. Your comment makes me think it may be the judge who drafted the decision.

  7. Today's main page includes a decision from the CBCA that seemed to turn on the differences between a single award ID/IQ contract and a requirements contract. Because the Board found that the contracts awarded were unambiguously ID/IQ contracts, it concluded that the appellant (Sage) was not entitled to any termination settlement expenses once the guaranteed minimum value had been satisfied.

    A sentence from the decision struck me as a good lesson to keep in mind for contractors receiving such contracts: "The risk of any losses incurred by the contractor as a result of start-up costs that exceeded this minimum lies squarely with the contractor."

     

  8. 53 minutes ago, WifWaf said:

    Either way, my point is that this it is management role, not a practitioner’s role to decide where to cut.

    When the DFARS 252.242-7005 clause (and implementing regulations) were out for public comment more than 10 years ago, I personally submitted a comment to the DAR Council that the auditors (and administrators) lacked sufficient resources to execute the rule. I forget the exact response but, essentially, the DAR Council said that resource availability had no weight as they drafted their requirements. (You can probably Google their exact language, if you're so inclined.) I was ... shocked ... at such a callous point of view.

    Shrug. More than a decade later, it doesn't matter.

  9. Some hopefully helpful stuff:

    48 CFR 9904.410-30:

    Quote

    (6) General and administrative (G&A) expense means any management, financial, and other expense which is incurred by or allocated to a business unit and which is for the general management and administration of the business unit as a whole. G&A expense does not include those management expenses whose beneficial or causal relationship to cost objectives can be more directly measured by a base other than a cost input base representing the total activity of a business unit during a cost accounting period.

    48 CFR 9904.410.40:

    Quote

    (d) Any costs which do not satisfy the definition of G&A expense but which have been classified by a business unit as G&A expenses, can remain in the G&A expense pool unless they can be allocated to business unit cost objectives on a beneficial or causal relationship which is best measured by a base other than a cost input base.

    48 CFR 99404.410-60(c):

    Quote

    (2) Business Unit C has included selling costs as part of its G&A expense pool. Unit C wishes to continue to include selling costs in its G&A pool. Under the provisions of this Standard, Unit C may continue to include selling costs in its G&A pool....

    Quote

    (5) Business Unit C has included selling costs as part of its G&A expense pool. Unit C has used a cost of sales base to allocate the G&A expense pool. Unit C desires to continue to allocate selling costs using the costs of sales base [which is not permitted by CAS 410]. Under the provisions of this Standard, Unit C would [then] account for selling costs as a cost pool separate and apart from the G&A expense pool, and continue to allocate these costs over a cost of sales base. If Unit C uses a total cost input base to allocate the G&A expense pool, the selling costs will become part of the total cost input base [used to allocate G&A expenses].

    In summary, CAS permits the treatment of selling costs as either a component of G&A expenses or a component of another indirect cost pool (i.e., "overhead" pool). As has been posted above, it is the contractor's decision, which then must be followed consistently thereafter.

  10. On 3/22/2023 at 12:19 PM, general_correspondence said:

    Is there a rule of thumb, or an accounting standard that the prime should use to negotiate the costs being claimed by the subcontractor?

    Yes, there is such a rule of thumb and it's very straight-forward.

    Make the subcontractor provide detailed support for each of the costs being claimed. Make the subcontractor show you how those costs were incurred solely because of the delay, and not for any other reason. Make the subcontractor show you how the costs could not have been avoided with respect to your subcontract.

    There. That's it. Everything else in this thread is, in my opinion, not responsive to your question.

  11. 18 hours ago, general_correspondence said:

    We are the prime contractor on a CPFF with our DoD customer.  We have a FFP subcontract for construction work. Permit delays, neither party liable for damages, considered an excusable delay.  The subcontractor gave us Notice of these delay impacts when required and in conformance of the contract.  However the most recent Notice is a claim for carrying costs.  Is there a rule of thumb, or an accounting standard that the prime should use to negotiate the costs being claimed by the subcontractor?

    The delay has been well beyond 6 months, The subcontractor has told me they have "diverted" most of the field labor during this delay so the costs are FE, likely OH and G&A type mostly, including Fee.  (Fee may be prohibited?) Is there a process to use to baseline negotiations,  

    I'm excited to learn what "carrying costs" means in this context. I Googled the phrase, and it seems to have something to do with the cost of maintaining inventory. If you can, please let me know how the subcontractor calculated its additional incremental costs related to an inability to start work as anticipated. I'm also interested to learn what "FE" stands for -- Field Engineers?

  12. JDE,

    As Joel noted in his response, there is no way to answer your question without more facts. 

    For example,

    - Was the contractor required to provide cost or pricing data? Was the data required to be certified?

    - What are the contract types?

    - How were offerors evaluated?

    So ... your question needs to be refined & enhanced. Even then, nobody here will be able to address "legal/compliant under federal contract law" because legal advice is something you get from your own attorneys. At the very most, somebody might give you insight into what the applicable regulations say about the issue.

  13. On 3/17/2023 at 4:48 PM, novice said:

    Does anyone know if the requirement for MMAS is being used by agencies other than DoD such as Space Command or NASA , and how were the percentages determined? 

    1. Did you check for appropriate clauses?

    2. What do you mean by the term "percentages"?

     

    On 3/17/2023 at 4:48 PM, novice said:

    A bigger question is can MRP be accepted as a substitute - appears not.  But with the impetus to consider commercial contracting practices especially use of voluntary consensus standards and leading commercial practices why not?

    1. In the DFARS, an acceptable MMAS meets 10 adequacy criteria. Does your MRP system meet those 10 criteria? If not, then it's probably not acceptable.

    2. "Why not?" Suggest you write your Congressperson or Senator. Perhaps you can get the regulations changed!

    It's fairly well known that the MMAS clause is inserted into contracts for which it should be N/A, but it's a mandatory clause so there it is; you are expected to comply with the clause's requirements. If you want the work, I suggest your company invest in a compliant system of policies, procedures, and practices.

  14. On 3/13/2023 at 12:52 PM, realquiet said:

    Hello,

    When completing a Cost Analysis of a supplier's proposal (as the Prime), and the supplier maintains their rates and factors as proprietary and they have a current/active FPRA; would you recommend still requesting field pricing assistance from DCMA? FFP. This is non-commercial. Over TINA. Per FAR, needs a Cost Analysis, there are no existing exceptions. Can the Cost Analyst proceed under the assumption that the rates and factors are reasonable? Or, is it still best practice to request field pricing assistance, despite the long lead time?

    How about having the supplier certify that the rates/factors used in its proposal are fully compliant with the FPRA they have executed with the government? Would that certification address your concern(s)?

  15. On 2/15/2023 at 3:42 PM, Retreadfed said:

    You did not quote the entire definition of "segment."  Although the FAR has the definition formatted differently, the CAS state "Segment means one of two or more divisions, product departments, plants, or other subdivisions of an organization reporting directly to a home office, usually identified with responsibility for profit and/or producing a product or service. The terms include Government-owned contractor-operated (GOCO) facilities, and joint ventures and subsidiaries (domestic and foreign) in which the organization has a majority ownership. The term also includes those joint ventures and subsidiaries (domestic and foreign) in which the organization has less than a majority of ownership, but over which it exercises control."  Thus, separate companies can be "segments" of an organization.  In this regard, the CAS do not say that inter corporate orders are subcontracts.  Instead, such orders are to be "treated as subcontracts."

    Perfectly quoted.

    22 hours ago, Neil Roberts said:

    @Retreadfed, the clause bothers me and seems ambiguous. And, it may also be more complex than it looks at first glance. I would not issue an inter-organizational  order between subsidiaries or joint venture entities because my understanding is there are tax consequences to doing so instead of issuing a subcontract (inter-organizational "order" makes it seem like the parties are one entity). On the other hand, an inter-organizational "transfer" (which poster mentions, and also calls it an inter-organizational "order"), can be issued according to FAR 31.205-26 for commercial work transfer at cost. Commercial work may be "exempt" from CAS. But, poster facts excluded any CAS "exceptions."

    Except for the business case(s) cited by 31.205-26(e), inter-organizational transfers are simply transfers between one organization. See 15.407-2(b):

    Quote

    "Make item," as used in this subsection, means an item or work effort to be produced or performed by the prime contractor or its affiliates, subsidiaries, or divisions.

    Except as noted above, inter-organizational transfers are "make" not "buy" -- but (as Retreadfed correctly pointed out) the CAS requires them to be treated "as subcontracts" for purposes of CAS coverage.

  16. 1 hour ago, Retreadfed said:

    Does the LOC or LOF clause require the contractor to complete the contract if the contractor exceeds the estimated cost or amount allotted to the contract but does not give the government prior notice of the overrun?

    Hmm. I would say yes but I can't point to a case at the moment. How about let's just say the contractor is in material breach?

     

    EDITED: I'm willing to concede that the failure to notify simply means that the government is not required to fund any overruns. A failure to notify does not carry with it an obligation to keep performing. Sorry about that.

  17. 37 minutes ago, joel hoffman said:

    H2H, can you clarify this statement and this statement: 

    Both clauses state that the contractor is not obligated to continue performance beyond the LOF or LOC.

    Joel, I'm sorry I wasn't clear. My statement: "…but the contractor is still expected to perform the contracted work" was in the context of a FAILURE to comply with the requirements of the clause(s).

     

     

  18. 1 hour ago, Retreadfed said:

    H2H, I generally agree with what you have written.  However, I do not understand this sentence.  Can you explain what you meant by it?

    If the contractor fails to comply with the LoC or LoF clause (as applicable) then the government is not obligated to provide additional funds but the contractor is still expected to perform the contracted work. In the event performance costs more than available contract funds, then the contractor will incur a loss on performance of the work. I'm talking about project gross margin erosion into negative territory.

    Okay?

  19. 21 hours ago, OuterSpace said:

    We have a 5 year CPFF contract for approx $10m. As I understand it, the Fee is fixed, so if our rates increase during the life of the contract, this would eat in to our Fee. Or do we get a chance to bill at the new higher rates, and increase the fee as well (or would this only apply to a cost plus percentage of cost)?

    At this point, you have a contract with both (1) an estimated cost and (2) a fixed fee amount. During performance, if your costs increase (because, say, your indirect rates were higher than you expected) you may still bill those costs (assuming they are allowable, reasonable, etc., as ji20874 wrote) up to either (a) the amount funded if incrementally funded or else (b) the full amount of your estimated costs.

    HOWEVER, if your contract includes 52.232-20 or 52.232-22, then you must comply with those clauses. Normally (with a few exceptions for unforeseen situations) you must notify your customer before spending all the money. If you adhere to the notification requirements, the customer may choose to fund an overrun (regardless of cause); but it need not and then you stop work when you have no more funds or have reached the total estimated cost of the contract. In that manner, your fixed fee is preserved. Note that if your contract includes either or both of those clauses (and it should), then your failure to comply essentially converts your CPFF contract into a FFP contract and you must deliver and the customer has no obligation to fund any overrun/cost growth whatsoever.

    Increasing indirect rates just burns the available contract funds faster than planned. Whether that situation impacts your expected profit largely depends on your ability to comply with those contract clauses I cited above.

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