Potential Subcontractor won't disclose NICRA

If their subcontract is CPFF they must invoice their incurred direct costs as part of their total invoice reimbursement.

If you negotiated a fixed fee, isn’t it possible for you and the government to determine what the negotiated indirect cost rate portion of the invoice is?

The government can confirm to you that the invoiced indirect rates are what they agreed to, can’t they?

I don’t understand how the sub can refuse to provide you the budgeted direct costs either..

How do you manage a cost reimbursement subcontract without being able to track their earned value (formal or informal- doesn’t matter)?

You have the contract award. If they are a direct competitor and “won’t budge”, can’t you select another company that you can work with?

Do they have approved forward pricing rates? Is the government maintaining cognizance over them on on ongoing basis either onsite or remotely? Have you asked the government for audit assistance of their proposal? What cost elements have been displayed in the proposal? Did the proposal include a Form SF1411 cover sheet? Would they agree to sign a certificate of current cost or pricing data certifying the certificate to your company and the government? Would they agree to a contract clause that payment of claimed cost invoices may be delayed pending government review of the amount claimed?

On 11/9/2023 at 5:12 PM, joel hoffman said:

If their subcontract is CPFF they must invoice their incurred direct costs as part of their total invoice reimbursement.

If you negotiated a fixed fee, isn’t it possible for you and the government to determine what the negotiated indirect cost rate portion of the invoice is?

The government can confirm to you that the invoiced indirect rates are what they agreed to, can’t they?

I don’t understand how the sub can refuse to provide you the budgeted direct costs either..

How do you manage a cost reimbursement subcontract without being able to track their earned value (formal or informal- doesn’t matter)?

You have the contract award. If they are a direct competitor and “won’t budge”, can’t you select another company that you can work with?

Their indirect costs are compiled of fringes, general & administrative, as well as an indirect rate; given that there are three different rates, it's impossible to back into the rate. 

The government could provide confirmation that they invoiced their indirect costs correctly; however, that would require disclosing a level of detail in our invoicing to the government that we'd prefer not to give. Additionally, as the prime, we have the ultimate responsibility to monitor our subcontractors. The Contracting Officer or Contracting Officer Representative could ultimately not review the rates, and we would have very little recourse if it became an audit finding.

For the benefit of readers, NICRA - NEGOTIATED INDIRECT COST RATE AGREEMENT.

On 11/8/2023 at 4:29 PM, VA_CPA said:

I am unwilling to reimburse them for their indirects without a copy of their NICRA given that the risk is on us as the prime to ensure that their costs are reasonable, allowable and allocable.

Do you intend on using an indemnification clause in the subcontract?  If so, why don't you specifically address this issue in that clause?

VA_CPA said:

Their indirect costs are compiled of fringes, general & administrative, as well as an indirect rate; given that there are three different rates, it's impossible to back into the rate. 

The government could provide confirmation that they invoiced their indirect costs correctly; however, that would require disclosing a level of detail in our invoicing to the government that we'd prefer not to give. Additionally, as the prime, we have the ultimate responsibility to monitor our subcontractors. The Contracting Officer or Contracting Officer Representative could ultimately not review the rates, and we would have very little recourse if it became an audit finding.

My recommendation is to Ditch them. You can’t properly manage the cost reimbursement subcontract without cost or budget data, which would effectively require the government to do it.

VA_CPA said:

however, that would require disclosing a level of detail in our invoicing to the government that we'd prefer not to give.

I didn’t understand your comment. In a cost reimbursement contract, what level of invoicing detail are you intending to provide the government??

@VA_CPA, it sounds like your company has the same outlook regarding disclosure of incurred/proposed cost details that you are complaining your subcontractor does.

joel hoffman said:

I didn’t understand your comment. In a cost reimbursement contract, what level of invoicing detail are you intending to provide the government??

In a cost contract you must be transparent to the government about the makeup of your rates and the details of your direct and indirect costs…