here_2_help

As a contractor, my primary concern would be that the contract types and colors of money be the same for the gaining and losing CLINs. From a compliance standpoint, I'm not worried about transfers within the same contract, unless it impacts billings (which it would if I'm moving the material from a cost-type to a FFP CLIN or vice-versa). If a customer has multiple active contracts, I would even accept direction to transfer material between contracts, so long as the direction was in writing by an authorized customer representative. For example we could build widgets on Contract #1 and then transfer residual material to Contract #2, if the customer directed us to do so.

This is especially true on a CPAF contract, where willingness to work with the customer (within reason) might affect the AF determination.

In a related note, on a contract with multiple CLINs -- some of which were added based on acceptance of ECPs -- I wonder how the contractor's personnel figure out which CLIN to charge labor to? Let's say CLIN #003 is for building widget A. During performance it becomes apparent that an Engineering Change needs to happen. The ECP is submitted and approved and the contract is modified by adding CLIN #099 for the changed work--which is changed work for building widget A. How does the contractor know which labor to charge to CLIN #003 and which labor to charge to CLIN #099? It's all labor associated with building widget A. Wouldn't it make more sense (in this example) to modify the contract and add funding to CLIN #003 rather than create a new CLIN? Are there any rules of the road with respect to when a new CLIN is created and when an existing CLIN is modified, with respect to ECPs?

H2H

Have you read the DCAA Contract Audit Manual, Chapter 8? It has a very useful flowchart.

1. Per DCAA CAM, Chapter 8: "Any business unit (as defined in CAS 410.30(a)(2)) that is selected to receive a CAS-covered contract or subcontract of $50 million or more, including option amounts, shall submit a Disclosure Statement before award."

2. FAR 30.202-6:

Responsibilities.

(a) The contracting officer is responsible for determining when a proposed contract may require CAS coverage and for including the appropriate notice in the solicitation. The contracting officer must then ensure that the offeror has made the required solicitation certifications and that required Disclosure Statements are submitted. (Also see 48 CFR 9903.201-3 and 9903.202 (FAR Appendix).)

(b) The contracting officer shall not award a CAS-covered contract until the cognizant Federal agency official (CFAO) has made a written determination that a required Disclosure Statement is adequate unless, in order to protect the Government's interest, the agency head, on a nondelegable basis, authorizes award without obtaining submission of the required Disclosure Statement (see 48 CFR 9903.202-2). In this event, the contractor shall submit the required Disclosure Statement and the CFAO shall make a determination of adequacy as soon as possible after the award.

(c) The cognizant auditor is responsible for conducting reviews of Disclosure Statements for adequacy and compliance.

(d) The CFAO is responsible for issuing determinations of adequacy and compliance of the Disclosure Statement

Anybody ever done a solicitation where the offeror needed to discuss how it would handle the inevitable changes that would occur post-award? Was that an evaluation factor/sub-factor?

Seems important.

Vern and Matthew, I'll accept you are the professionals and not me.

I tend to think of competitive acquisitions of commercial items as sealed bidding. I know it's not, but I bias that way. Thus, I reacted to the OP as if somebody had conducted a sealed bid and then tried to negotiate a lower price. That was wrong of me.

My previous posts were based on my bias talking.

This is me walking my comments back.

H2H

Matthew your analogy is inapt. If I get a quote from a dealer on a new Ferrari and it's outside my price range, I'm not going to expect the Ferrari dealer to meet my budget. Instead, I'm not going to buy a new Ferrari because the price is outside of my budget.

Let me offer my analogy:

Next time I go to my auto mechanic and he tells me it will cost $500 for the repairs, I will either accept his quote or go find another auto repairman. I will not attempt to negotiate him down. The commercial price is the price.

And if I get 4 quotes from 4 auto mechanics for the same repair and they are all in the same range, I will either accept the lowest quote or not get my repairs done. I will not go back to the lowest price mechanic and tell him he can have my business if he can shave off 10%.

In summary:

There is no purpose in getting commercial item competition if you're going to ignore the pricing information provided by the commercial marketplace. If you're going to ignore that information, why not just go sole-source and negotiate a price? Why pretend the competition is a valid means of determining price reasonableness?

Open competition in the commercial marketplace has determined the price. The available budget is insufficient. Either cancel the requirement or get more money.

In my view the entire purpose of going to the marketplace to acquire commercial services is to provide assurance that the price is fair and reasonable. In this case there is no question about that. Trying to "negotiate" undercuts the entire philosophy of commercial item acquisitions.

I'm just saying.

Vern,

I appreciate your responses. Let me offer one of my own.

1. There was a contract. There was a written agreement executed by both parties that meets the definition of contract at 2.101. It was called a "purchase order" and, based on the purchase order, the contractor provided services and (presumably) received payment. The contract had terms, including a period of performance.

2. The contractor continued to provide services after the period of performance.

3. The contractor wishes to be paid for the services it provided, and for which the government received benefit.

4. The government acknowledges benefit received but believes the contractor is not entitled to payment because it should have stopped providing services at the end of the contractually specified period of performance. To be clear: performance WAS rendered but the issue is that performance continued after the contract's specified PoP had ended.

5. The contractor's argument will be that it was willing to end performance but the government failed to cancel the service, which was of a nature that it would be continually provided until cancelled. If the government didn't want the service to continue, it should have switched to another provider. That it failed to do so indicated it wanted performance to continue even past the contractual PoP. The government's argument is that the contractor had a duty to cease providing the service upon completion of the contractual PoP. Who's right? To be decided.

My only point in all this is that the contractor has a valid claim that must be heard. The claim is not based on an implied contract, but on the actual contract that the parties executed. The contractor is arguing that the contract continued beyond the agreed-to PoP because of the government's inaction. Essentially it would be saying that the government waived the PoP by continuing to accept and use the services. Reasonable people can and will disagree with that argument. If the CO denies the claim, that's fine and the contractor can appeal the denial.

I do agree that a valid claim must be related to one of the parties' discharge of its obligations under the contract. However, the term "related to" is to be read broadly (Todd Construction L.P., Federal Circuit, 2010 [s. p. 10]). In this case, the contractor would be arguing that its claim is related to the P.O. -- and I think that argument would be sufficient to get it a hearing on the merits.

The interesting thing (to me) about the ABB Enterprise Software appeal is that the Navy essentially told the contractor just what Vern's hypothetical dialog did: "We're done talking. If you think you have a CDA claim, go ahead and file one." When the contractor did indeed file its claim, the CO denied it on the grounds that the CDA did not apply to the contractor's claim. Imagine how confused the contractor felt ... on one hand they have written correspondence telling them to file a CDA claim, but on the other hand they have a COFD saying they were not entitled to file a claim under the CDA.

Fortunately Judge Prouty at the ASBCA saw things differently than the CO did, and will let the contractor's claim be heard. The contractor may or may not win on the merits, but its claim will be heard.

2 hours ago, Vern Edwards said:

Continued performance of work by a firm, not due to an act or omission by the government, but at its own initiative or due to its own neglect after a contract has expired and performance is no longer contractually required cannot be the basis for any demand for payment or assertion of a right to payment under that expired contract.

Vern, you have assumed the contractor performed at its own initiative and not due to an act or omission by the government. Those assertions are for a trier of facts to decide. The trier of facts decides those things because the contractor files a claim and it gets heard.

Now, back to your post that I already quoted: "In order to submit a Contract Disputes Act claim under FAR Subpart 33.2, there must be a contract. If the PO had expired, then I don't think that the contractor can submit a claim." That's wrong.

My proof:

FAR 2.101 defines a contract and expressly includes a purchase order in the list of mutually binding agreements that fall under the definition. Thus: A purchase order between government and contractor is a contract. FAR 33.206(a) states that "Contractor claims shall be submitted, in writing, to the contracting officer for a decision within 6 years after accrual of a claim..." The six-year period is not lessened by the expiration of a contract's period of performance. Thus, the expiration of the P.O. is irrelevant for purposes of determining whether or not the contractor can file a claim. It may be quite relevant for purposes of determining whether or not the contractor is entitled to the relief it may be seeking. But that's a different thing entirely.

You have posted that an expiry of the PO eliminates the contractor's ability to file a claim. That's wrong. The contractor has six years from the date of claim accrual to file a claim.

You should admit you were wrong and we can be done with this nonsense.

Vern,

In my view you are conflating claim entitlement with claim accrual.

The contractor may or may not be entitled to its claimed amount (assuming it files a claim). However, that has nothing to do with whether or not the contractor may file a claim, have that claim adjudicated by a contracting officer, and appeal that COFD if it desires.

You said the expiration of the PO means the contractor cannot submit a claim that arises under or is related to that PO. That is wrong.

16 hours ago, Vern Edwards said:

In order to submit a Contract Disputes Act claim under FAR Subpart 33.2, there must be a contract. If the PO had expired, then I don't think that the contractor can submit a claim.

Vern,

Surely you are not asserting that the CDA Statute of Limitations for filing a claim is zero, are you? The contractor has six years from the date of claim accrual to file. The expiration of the PO is irrelevant.

Claims can "arise under" or be "related to" a contract, and those terms are interpreted broadly by the Boards and Courts. The ASBCA just went through the logic in the ABB Enterprise Software decision on the Government's motion to dismiss for lack of jurisdiction.

38 minutes ago, dmuir said:

We have a situation of a 2 year old contract whereby the employment situation has radically changed from award and now personnel are multiple times as expensive as originally anticipated.  The CO refused to relax requirement that personnel perform on base and despite completed deliverable still gave us a bad CPAR rating because one position was unfilled. This is FFP labor. (Yes, we tried to explain that's not how FFP works...)

The situation is so bad we are looking for a way out. But I can't find anything that allows a contractor to petition for adjustment based on a change in labor force situation.

Any suggestions on what to research? new route to pursue?

Here's where my head is at. I think I'm with ji20874 to a large extent.

When you look at the original proposal, what do you see? Do you see a labor forecast and associated cost estimate that was reasonably achievable, or do you perhaps see a management "buy-in" situation, one where headcount was minimized and so were the associated labor costs? To me, that's where the rubber meets the road. Was the original proposal and contract price negotiated based on that proposal reasonable, or did management intend to "invest" in order to win the work?

If you conclude that the original proposal was reasonable and the associated price was reasonably achievable, then you need to answer ji'20874's questions -- what changed over the past two years? Your statement "the employment situation has radically changed" is too general to let us give you any good advice. You may as well follow PepetheFrog's advice.

If you conclude that management "bought in" to the original bid, then they need to suck it up. Perform and quit trying to get well from the original buy-in.

*****

Some of my clients have been faced with a recent realization that their independent contractors are actually employees. That is causing lots of angst because the payroll withholdings are going way up. In addition to the FICA and other withholdings the company now has to make, there are suddenly additional benefits available to the employees, such as paid leave and healthcare.

I wonder if this could be your situation? Having to incur all those unplanned-for costs would certainly impact any financial models used for FFP labor pricing.

Just idle speculation....

*****

Hope this helps.

Apologies, Don. I was confused by your response.

1. Depends on the contractor's standard practices and who performs the work. If the work is performed by direct-charging personnel and the contractor consistently charges same or similar reporting labor as direct costs, then yes - direct labor.

2. No. The prohibition would only apply to direct labor. On the other hand, if the indirect labor amount was large enough to impact the contractor's indirect cost rates, then maybe somebody could make an argument the labor was unallowable. I would not make that argument (unless the personnel performing the reporting were 100% dedicated to the reporting), but somebody else might. That being said, if the contractor would normally charge the labor as direct labor and only charges it now as indirect labor to avoid the contract prohibition, then that would be a big no-no.

Don,

This is not particularly my area of expertise, so I defer to you. On the other hand, the FAQ you cite as the basis for your answer contains the following language:

"This page does not necessarily contain an exhaustive or current treatment of the DBA and should not, under any circumstances, substitute for a party's own research into the statutory, regulatory, and case law authorities on any given subject addressed by the following FAQs. The FAQs are an informational tool, not a final authority, and should not be cited or otherwise considered an authoritative statement of agency policy."

1 hour ago, Junius said:

The DBA clause is not included in the contract.

If a contractor employee, based in the United States, goes TDY to an overseas location during the course of performance of a DoD service contract, does the Defense Base Act  (DBA) apply?

If the clause is not in the contract the contractor did not procure DBA. If the contractor did not procure DBA then there is no coverage.

I believe that the contractor's normal insurance would cover the employee.

Would it violate the rules of government contracting to create a hybrid contract, where certain CLINs are CPIF and other CLINs are CPAF? If not, that's what I would do. I would have the CPIF CLINs follow the usual sharing and standard incentive fee clause, and the CPAF CLINs have the award fee criteria based on the desired performance specs.

Hope this helps (somebody).

Navy,

No and you're wrong. Sorry, not trying to be a jerk about this. In addition to being wrong, you are ignoring the phrase "OR OTHER EQUITABLE RELATIONSHIP
 which clearly identifies that "relative benefits received" is not the only acceptable criterion that identifies an acceptable cost allocation.

*Shrug* Don't know what else to say. I wouldn't argue with you about a Part 15 best value trade-off analysis ... I would hope you'd give me some of the same respect in return.

H2H

I think we've pushed this rock about as far up the hill as it's going to go. So I'm going to excuse myself from further discussion.

My last comment pertains to the statement that this employee has a "unique skillset" that may justify some of this special treatment. Okay. Whatever. It's possible, I suppose.  If the skillset were so unique it might even justify a sole-source award to this contractor! On the other hand, I've been doing this work for a very long time and I have only very rarely seen any individual employee with such a unique skillset that said employee could not be replaced if enough money were on the table to attract a replacement. For instance, if one were to add up the annual reimbursement for travel and lodging and M&IE for this employee and convert it to salary, who knows what that level of compensation might attract?

Retreadfed,

I believe you are taking a myopic view. I agree with Joel. If the company is paying for an employee's commuting cost, then that is not company travel. it's reimbursement of a personal expense.

Bob7947,

We acknowledge receipt of the solicitation amendment. Here is our response.

1. You get the software you want. No more, no less. Options are pre-selected for each employee stratum.

2. Internal WiFi cards are no problem. We'll install them in the factory before shipping.

3. I don't know what "organizational software" means but we'll ship directly to the IT group that's associated with each employee. You will have to identify the IT Group that's associated with each employee and provide a shipping address. Government acceptance will be deemed to have taken place not later than 7 calendar days after the IT group receives the equipment.

4. 1 year warranty is standard and already priced-in. If you want an extended warranty period, it is available but will cost more.

5. We only ship what is ordered. If you don't want bags, let's not make them an option for your employees to order.

6. No I don't think you will. Either the building has it already or else GSA can provide it. Or the employees can go to the local Starbucks and get it for free.

We look forward to executing the contract and equipping your workforce with the equipment they have told you they need.

So here's how it works "in the real world" (or Silicon Valley tech companies if you prefer).

1. A standard configuration is decided-upon by IT in conjunction with finance. The standard configuration is stratified by job level and function. For example, a mid-level manager gets [blank] but an engineer gets [blank+]. Everybody gets Windows 10 (unless everybody gets Apple's IOS because the company is standardizing on Apple products). Cell phones options are similarly mapped to employees by job level and function. And it's not like there's only one choice. There are options but the options are limited. If an employee believes they should have more than the standard that goes with their stratum, then they can request a deviation and, if the right level of management signs-off, then they get it.

2, A supplier/distributor is chosen -- could be multiple based on what the configuration options are. A per-each price is negotiated. Could be the current catalog price discounted for expected volume, but could also be the Dell or Lenovo or whatever catalog price already offered to the entity.

3. Steps 1 and 2 are all done in the background. When an employee shows up for the first day of work (or in this case it's the first day of the technology refresh) then they go to a website and they enter their employee information and the pre-selected choices appear. The employee clicks the appropriate boxes for hardware, software, and phones. The checkout process involves routing any requested deviations to the appropriate management level. Approval/rejection for requested deviations is obtained via check box. It takes the employee less than 15 minutes to check the boxes and there is a delay of maybe a day if management deviation approval is requested.

4. The choices are routed electronically to the vendor/distributor, who fulfills the order (including loading requested software on the laptops) and who then drop ships to the employee (or the local IT group) at the employee's location. Ideally, the employee opens the package and plugs-in the laptop, and voila! If necessary the local IT support, supports.

Application of the foregoing to Bob's situation:

My agency--about 20,000 people around the country--wants lightweight laptops with some (tell me how many we would need) external DVD R/W drives.  I'm not telling you how many you need because the demand will be established as the employees order what they are pre-approved to order. For pricing purposes, let's assume all 20,000 employees get everything. In any case, we'll only bill you for what is ordered by the employees. The website will track who ordered what, and when. Also when it was delivered. Each confirmed delivery will generate a unique invoice. You've used Amazon, I presume? Just like that.  I want MS Excel and Word to be installed in the laptops when they are delivered. I don't want MS IE since it was abandoned by MSFT now that it is pushing its new browser--Edge--to Window's 10 users and Edge won't work on earlier Win operating systems.  Each employee will be able to customize the software load for their laptop. We'll bill based on the individual loads. I have plenty of printers compatible with Win 7 and I am concerned about compatibility issues with Win 10.  Don't be worried. Let us introduce you to Windows Printer Driver wizard. However, I want a free Win 10 upgrade if we go with Win 7 Professional as the operating system.  If we go with Win 7 as the operating system, make sure it is Win 7 Professional. You get Windows 10 because everything is Windows 10 these days. I want cell phones with the android operating system and I want to be able to download the free apps from the Google Play Store on my phones. Yeah, no problem. If you can get WiFi you can download. I don't want apple or Ios.  Remember IBM?  I want state of the art items.  My laptops should have the 6th Gen Intel Core i7 Processor with at least 8GB of memory, 17" screen and at least 1 Tb of solid state drive.  I want a wireless mouse and separate keyboard with each laptop too. If that's the standard configuration we pre-load on the ordering website then that's what you'll get and that's what we'll price and bill.

I want you to begin installing the laptops on my desk and the phone in my pocket within a month after you award the contract.  Can you do this for my agency while avoiding the problems quoted above? Yeah, we'll install everything before it leaves our site and your employees can just plug in the laptops when they get them. Order fulfillment takes about 2 weeks. We'll work with your IT group for local support and we'll also establish a customer service hotline call center for your employees (actually we already have that but we'll give your employees a special number because it won't cost us much and it will make you feel special).

[And that's where my head is at.]

This is so sad and funny at the same time. I remember having this same discussion about 20 years ago with Dee Lee (not that she would remember me). I tried to explain how simple it could be, based on how tech companies did it. I could not get through.

Let me know when the time is right for me to post "how it's done in the real world" because I don't want to spoil the thought exercise.

Yes bob7947, that's the one I was thinking of...

Thank you, again

Vern,

Don't forget the language at 31.205-6(f) --

(f) Bonuses and incentive compensation.

(1) Bonuses and incentive compensation are allowable provided the—

(i) Awards are paid or accrued under an agreement entered into in good faith between the contractor and the employees before the services are rendered or pursuant to an established plan or policy followed by the contractor so consistently as to imply, in effect, an agreement to make such payment; and

(ii) Basis for the award is supported.

In addition, there has been a least one article discussing whether or not a "special allocation" under 9904.410-50 or under another CAS Standard is, or is not, a cost accounting practice.