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G&A for Prime and Subs on Invoice Submissions - Allowable?

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Hi ALL, Government customer is pushing back on our Prime invoice submission which included (a reduced) G&A on top of a Subcontractor ODC where they (sub) applied G&A to ODCs (Travel). Basically our sub incurred travel expense that are allowable and billable to the program and sub applied G&A to ODCs when submitting their invoice to Prime for processing. Prime applied G&A when processing the subs ODCs (at a reduced rate) onto final invoice (in customers mind we are "doubling up" G&A -  I should also note this is the first time this long standing contract (FFP) has had a sub on it so this is new to this group of GS that handle this program). We've been in contracting for 20+ years and been through a ton of audits both with DCAA and other firms and the only push back we've ever received on this was "why we were applying a discounted G&A instead of our actual G&A to these?" never that it was unallowable, speaking to colleagues in the industry this seems pretty standard practice.

My question is, does anyone know of FAR clause relating to this or have a better way of explaining to customer? I tried to explain that both companies are applying G&A to it because we are both incurring expense to process these ODCs (was worded better than that) but he still has doubts. 

I appreciate any and all feedback!

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  • 2 weeks later...

 I just noticed this March 15 post. Here to help can chime in if he wants to but I will try to tackle it. You said that the contract is firm fixed price. Therefore it must have a separate Other Direct Cost CLIN, correct? Or is it a reimbursable travel CLIN?

What does the contract say regarding allowable payments for the applicable CLIN?

What is your standard accounting practice for allocating general and administrative  expenses? Are such other direct costs included in the cost base?

If there is a reimbursable “travel CLIN“, the cost principle in 31.205-46 only addresses the direct costs for travel. Any indirect cost markups on those costs would seem to me to be allowable only if the applicable contract line item allows other than the direct travel costs. 

Edited by joel hoffman
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On ‎3‎/‎15‎/‎2019 at 10:07 AM, Aburns1 said:

 Prime applied G&A when processing the subs ODCs (at a reduced rate) onto final invoice

"Final invoice" for a FFP contract type? Not sure how the customer would see anything other than the price @ delivery.

Why is the Prime applying G&A to the sub's ODCs? Wouldn't the Prime apply G&A to the entirety of the subK's invoiced costs (assuming that was the allocation base).

Something is not computing ....

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