here_2_help

We're not that far apart, Vern. There is a (small) audience for in-depth discussions and analyses, sure. They want what you write but they can't afford to subscribe. (And thank you for often making your articles available to the public.) But it's hard to publish in-depth articles when NCMA's membership covers a wide spectrum of folks, from state/local government buyers to prime contract buyers to commercial buyers. For example, I was just speaking with somebody who's planning to join NCMA in a few weeks or months; she's a buyer for the local school district. She's not looking for--nor is she ready for--a deep dive into, say, FAR Subpart 15.4. In my view, Contract Management aims for a low common denominator that will be of general interest to the majority of its readers. I quote from current Editorial Guidelines below regarding what the Editors are looking for.

True but, in fairness, the audience is not there for in-depth analysis.

First of all, yes. The prime can ask you to bill less than you actually incur. (This assumes that you actually incur $102.31/hour for your employee's labor. See ji20874's post.) You don't have to agree, but the prime can ask. Second, if you were CAS-covered I would say that you have to be consistent in your cost accounting practices. Labor over there must be treated as labor everywhere. But you're not CAS-covered. Are there burdening differences between labor & ODC? I don't know your accounting system so I couldn't say. But if the transformation from labor to ODC changes the burdening, and your are required by 52.216-7 to submit a final billing rate proposal at the end of the year, then you may have an argument as to why that's a bad idea. I would suggest you get a consultant in to assist you with these types of questions ...

If you are a small business then no, you are not subject to CAS. So your prime is asking you to (a) request less reimbursement than actual costs incurred, and (b) to treat the additional labor as an ODC? (And burden the labor as an ODC instead of as labor, I assume.) Is that correct? Back to Vern's question then. What do you want to know?

Contractor500, is your company subject to CAS? Is the subcontract subject to CAS?

I have attended several NCMA conferences in the past, including a few World Congresses, where I was a presenter. I have attended NCMA National Education Symposia--and even instructed at one of them. I don't recall with absolute certainty if I've specifically attended a GCMS -- but I think I have (once). NCMA is a good organization--especially for people new to the field. That being said, I let my membership lapse several years ago (after being a member for ~ 20 years). Consequently, I no longer attend NCMA events. I can't speak for other WIFCONites, but the event may be worthwhile for YOU if you are new(er) to the field. No. I think interaction with decision-makers is limited, especially for attendees. The speakers are there to represent their agencies and the Federal government; they don't really have a lot of space to "let their hair down" and interact, assuming they wanted to. In my experience, the best way to get good one-on-one interaction is to be a speaker yourself and hang out in the green room.

When this issue comes up for companies have have supported, we typically turn to 31.205-6(h). (Emphasis added.) So, no. Contractors do not automatically get to claim reimbursement of underpaid wages via submission of an REA, because the compensation costs are unallowable in most circumstances. I guess we can split hairs about what "negotiated settlement means" in this context but, in my experience, the phrase refers to a negotiated legal settlement--an interpretation that is supported by the other two circumstances in that same sentence.

Vern is correct. If the company treats the situation as a contract between affiliated entities, then that's what it is. It is a buy. If the company treats the situation as an interorganizational transfer then no contract is necessary as it's a make. See FAR 15.401 Definitions, as well as FAR 15.407-2(b) Definition.

DCAA already does a lot of data analytics. Or at least the agency tries to. Results have been ... mixed. To my knowledge, nobody has tried to use data analytics on an individual contract (kind of defeats the notion of "big data"). On the other hand, as I noted, compensation is likely to be a cross-cutting issue well suited for ACO or DACO/CACO adjudication.

Interesting question. Most larger contractors have one or more ACOs, DACOs, and perhaps even a CACO. You'd like to think that compensation, likely being cross-cutting across multiple contracts, would be something addressed at a level higher than a PCO. On the other hand, see this DoD IG audit report, or perhaps this DCMA Manual at 3.7.d.

The thing is that DCAA auditors do not have the training, experience, or judgment to evaluate the reasonableness of contractors' compensation levels. See, for example, the appeal of J.F. Taylor at the ASBCA. Or the appeal of Metron. The auditors try but they (generally) cannot put together supportable positions. Which puts the responsibility back on the CO's shoulders--rightly or wrongly.

I agree that TINA does not require you to provide certified cost and pricing data. However, that's not the same thing as providing non-certified cost information necessary for the prime to assure price reasonableness of your rates. If you're going to use foreign workers then your fringe benefit model for them will be entirely different--if you applied the same fringe rate to their labor, you'd (potentially) be making a windfall profit. The prime has a responsibility to assure itself (and its customer) that's not happening. To your questions: 1. Yes, you can try. But what if the prime declines? What then? 2. Maybe but what if the PO prices include inter-company profit? Now you are pyramiding profit. How to you show your prime that's not happening? Good luck.

I deduce from your posts that you work at a small(er) contractor. I'll guess you're the contracts person, and are being asked to do things not found in the NCMA CMBOK. Good luck. Even if I'm wrong about you and your role, good luck.

DCMA Legal

I have used the rate of applicant turn-downs (i.e., the ratio of offers made to offers accepted) to show government auditors why we needed to jump the pay rate for certain positions. I should say that I have "tried" to use the ratio, because I have had mixed success in doing so. Generally speaking, most government folks are used to OPM scales/locality pay rates and have trouble accepting that contractor pay doesn't really work that same way.

Yes, the burden is on the contractor to demonstrate reasonableness if challenged. Normally, the contractor points to market survey data. Also, as part of an "adequate" accounting system, the contractor should have an adequate compensation system. In other words, a CO can rely (generally) on a contractor's accounting system adequacy rather than review every single wage rate actually paid. In addition, there are "salary caps" or ceilings that form an absolute barrier for labor cost allowability. (31.205-6(p).) Of course, if the CO disallows any costs (including labor) the contractor has the right of appeal. To your other question, I am not aware of any cases. I did a quick review of the Manos chapter on compensation, and the only cases I saw that discussed disallowance were focused on specific elements of compensation (e.g., severance or bonus) and not on general reasonableness.

That's not what I was looking for, Vern. I was hoping Joel could point me to the source of his assertion that the Chinese government "loosed" the virus on the world--implying intention.

Citation needed, please.

(Emphasis added.) (Emphasis added.)

I can help the United States in designing a cost accounting system that considers such concepts as "allocability" and helps to allocate costs in reasonable proportion to the benefits received by the parties. United States, if you're interested, call me.

As companies I have supported in the past have found out, to their di$may.

In my experience, contractors are expected to comply with prevailing wage requirements, whether or not the CO modifies the contract.

Okay. I have not asked but I suppose we can.

Legal won’t allow an FMS FFP contract. Background: The DFARS was revised 11/27/2019 (84 CFR 65304) to implement Sections 829 and 830 of the 2017 NDAA, which required use of FFP contract types for FMS (unless and exception or waiver applies). The DFARS was revised 08/30/2021 (86 CFR 48339) to eliminate the requirement to use FFP contract types for FMS. DFARS Section 225.7301-1 was removed and reserved. My understanding is that, currently, there is no direction regarding appropriate contract type to use for FMS. DFARS 225.7301 (b) states: Issue: To me, that DFARS guidance tells contracting officers to use the appropriate contract type, following the guidance of FAR Part 16 and DFARS Part 216. However, instead I'm being told (by DCMA contracting officers) that: Question: As I know there are many DCMA contracting officers here, I'm asking whether this is a local thing or something that's found in guidance outside the FAR or DFARS? To be clear, I am dealing with experienced COs who frequently deal with FMS cases. I would expect them to be aware of the latest guidance on the topic. However, this one seems to be an instance of the pendulum swinging a bit further than I would have expected. I'd like to push back but, you know, "Legal says" is kind of final these days. Should I push back, or should I simply accept what I'm being told?

I am grit personified, but unfortunately not a contracts person, so I probably skewed your poll results.