Determining Reasonableness
Started by Whynot · Mar 10, 2014 · 9 replies
- WOriginal post
Whynot
Mar 10, 2014 · 12y ago
Under a cost reimbursement contract a cost is being challenged by the government as unreasonable. It is for a fixed priced service by a subcontractor. The government has prior experience with the service and has seen a very similar service performed by other vendors at half the cost. The service was not itemized in the original contract proposal, nor was it competitively procured – it is below the small purchase threshold of $150,000. However, following the prime’s procurement procedures, costs were determined to be reasonable by the prime - this analysis was provided to the government along with a sole source justification. Further, the subcontractor has charged similar fees to other government contractors under other contracts and presumably has been paid. We had the subcontractor provide this information directly to the government in support of our invoice. I would like to hear of possible solutions to this impasse without resorting to disputes or filing a claim.
- j
ji20874
Mar 10, 2014 · 12y ago
"...a cost is being challenged by the government..."
Does this mean that a contractor's invoice or voucher has officially been rejected by the Government?
- W
Whynot
Mar 10, 2014 · 12y ago
The invoice is being held and not paid. I am not sure if that constitutes rejection.
- j
ji20874
Mar 11, 2014 · 12y ago
Does the contract include the clause at FAR 52.242-1, Notice of Intent to Disallow Costs?
If YES, well, that clause offers you an approach.
- W
Whynot
Mar 11, 2014 · 12y ago
Yes.
I believe that this process has been followed albeit not with official written notification. I am not looking to drive the CO to a final decision. That’s not my problem. I am looking for a way beyond what I have already tried to convince the CO that my cost is reasonable. Something that I missed.
- R
Retreadfed
Mar 11, 2014 · 12y ago
Whynot, you say the cost is being challenged because of reasonableness. This indicates you have had some communication with the government over non-payment of the invoice. If you have had these communications, has the government told you why the cost is considered unreasonable?
- W
Whynot
Mar 11, 2014 · 12y ago
The government has prior experience with the service and has seen a very similar service performed by other vendors at half the cost.
- R
Retreadfed
Mar 11, 2014 · 12y ago
Unless you can show that there has been a change in circumstances, e.g., the services will be performed in a danger zone as contrasted to the US, that the particular services require a higher level of expertise than the other contracts or something of that nature, I fear that you are in for a long fight with a short stick. Remember, you as the contractor have the burden of proving the cost is reasonable.
- W
Whynot
Jun 25, 2014 · 11y ago
It is nice to get a little feedback.
I got paid.
"Further, the subcontractor has charged similar fees to other government contractors under other contracts and presumably has been paid. We had the subcontractor provide this information directly to the government in support of our invoice."
This avenue worked, actually as it turned out, the same CO paid another prime for these same services in the past under another contract but had not realized it. When we pointed it out to them they retracted their position and paid us.
- h
here_2_help
Jun 25, 2014 · 11y ago
Did you get interest on your invoice (per Prompt Payment Act)?