Paying for Mobile Hot Spots via ODC

Perhaps you can provide additional info. Does "customer" mean contractor. Are you a Government employee. Did the "customer" state they were going to bill the ODC CLIN? Did you ask the customer to provide its company financial system definition of ODC? What type contract is it...FFP, cost type, etc. What is the dollar value involved? Is it true about AFNET Wifi inability? Do you agree that the sites are needed to perform the test? What, if anything does the contract state about the test?

Customer means the program office. I am a PCO. No ODCs were identified at RFP release. FFP contract $27M task order. Contract states there will be assistance needed with the testing events but nothing about WiFi AT ALL. There is a totally different development contract that they support with testing. The Air Force networks blocks certain sites they feel aren’t needed or appropriate. The sites are actual testing sites but out COMM department blocks them. 

My issue is that the WiFi service on the existing contract is billed by Verizon to one of the contractor employees credit cards and they in turn are billing the contract for reimbursement. None of this to me fits any definition of ODC.

If it doesn't fit "ODC" then where would you expect it to go?

The contractor should have thought about this cost when they provided their price proposal.  This is a FFP task order.  To me this is a Other Direct Cost only if the WiFi is being use solely on this task order.

Was the AF blocking known by the Govt at the time the solicitation was issued?  Should that information have been part of the solicitation?  Is utilizing WiFi the only way to do the testing event or is there another way?  Did the solicitation include any specifics on this?

Now, having said all of that, the contractor could come back with a claim or an REA  - I'm not sure if they would if the cost is minimal.  The claim may cost them more than the actual reimbursement.

here_2_help said:

If it doesn't fit "ODC" then where would you expect it to go?

I would expect them to utilize the AF BPAs that are in place to purchase cellular services. These BPAs provide resellers that have been approved at cheaper pricing for these types of things.

leo1102 said:

The contractor should have thought about this cost when they provided their price proposal.  This is a FFP task order.  To me this is a Other Direct Cost only if the WiFi is being use solely on this task order.

Was the AF blocking known by the Govt at the time the solicitation was issued?  Should that information have been part of the solicitation?  Is utilizing WiFi the only way to do the testing event or is there another way?  Did the solicitation include any specifics on this?

Now, having said all of that, the contractor could come back with a claim or an REA  - I'm not sure if they would if the cost is minimal.  The claim may cost them more than the actual reimbursement.

The contractor is not requesting the devices, the program office is. Contractors other than those on this contract use the WiFi. I was not the CO for this one, I just awarded the follow-on.

1. It sounds like the program office may have induced, requested or approved the matter.

2. What is the total cost for the service? It may not be worth a CO's pay scale to spend much time with this. If you think it is fraud, ask for a DCAA audit.

3. It is not clear to me that the contractor is permitted to purchase under AF BPA's.

4. It sounds like it could have been an emergency while the test was in progress. Stopping the test support to obtain bids for cell service and/or research and obtain permission to use the AF BPA may not have supported the test or your program office.

Jenkins83 said:

Has anyone heard of paying for Mobile Hotspot devices and service using a contracts ODC CLIN?

Yes.  Doing so depends on what the contract says and/or contractor pricing.

Further response based on the dribbling of facts -

If the FFP contract does not provide for the mobile hot spot devices and does not provide for ODCs and does explicitly provide that  the government WiFi  will be used yet  the program office believes the devices are necessary to access other than government WiFi do the following.   Either 1)Get an authorization from the program office to modify the contract to add them into the pricing; and amend the contract to allow the contractor to purchase the devices off of the government BPA but only if the BPA provides that contractors can use the BPA otherwise just let the contractor get the devices as they see fit; or 1(a)) Provide the devices as GFP and modify the contract accordingly if GFP is not indicated in it; 3) Deny reimbursement on the basis that the contractor should have known the devices were going to be needed in the FFP arrangement and sit back and wait for the request to possibly be converted to a claim.

Consider the legal concept of constructive change as you work through what option you want to pursue.

Thanks everyone for the input. My stance has always been this is not ODC. I’m just curious if anyone has allowed it to be. The contractor would not order off the BPA, the program office would be. The contractor knows nothing about the need for WiFi which my other point.

Jenkins83,

You keep using the term "ODC" but I'm not sure you are using it correctly. If your question is whether the program office should have acquired hotspot services via an already existing BPA versus asking the contractor to provide, then the answer does NOT turn on what you or the contractor call the hotspot services. Totally separate issue.

However, if you have concluded that it is appropriate to ask the contractor to provide hotspot services, then you may reasonably ask how the contractor should account for the cost of the services and bill them to the government. If that is the question before you, then what you are asking encompasses questions about the contractor's disclosed or established cost accounting practices. For example, you could reasonably ask how the contractor has accounted for such services in the past, when charged directly to a government contract. Does the contractor consistently treat hotspot services, when charged direct, as a "subcontract" or as a material item or as an "ODC"? Those are reasonable questions that the contractor should be able to easily answer.

So which is it?

here_2_help said:

Jenkins83,

You keep using the term "ODC" but I'm not sure you are using it correctly. If your question is whether the program office should have acquired hotspot services via an already existing BPA versus asking the contractor to provide, then the answer does NOT turn on what you or the contractor call the hotspot services. Totally separate issue.

However, if you have concluded that it is appropriate to ask the contractor to provide hotspot services, then you may reasonably ask how the contractor should account for the cost of the services and bill them to the government. If that is the question before you, then what you are asking encompasses questions about the contractor's disclosed or established cost accounting practices. For example, you could reasonably ask how the contractor has accounted for such services in the past, when charged directly to a government contract. Does the contractor consistently treat hotspot services, when charged direct, as a "subcontract" or as a material item or as an "ODC"? Those are reasonable questions that the contractor should be able to easily answer.

So which is it?

My question was had anyone out there allowed the charging of WiFi services via an ODC CLIN. I’m not trying to get into their accounting system because I’m not allowing them to do it on MY contract (follow on). They’re currently charging it (at the governments request) on the existing contract. 

I was inquiring about the experience of others not necessarily the logistics of how it should be done.

The government should absolutely have used the BPA to procure these services.

Jenkins83 said:

My question was had anyone out there allowed the charging of WiFi services via an ODC CLIN.

So as I follow the thread my question back to you is what does it matter if anyone has or has not?  

I say this noting that you are clear that you are not going to allow it as an ODC even if a contractor could show you through their accounting system that they in fact make such devices a direct cost rather than covering it in  general and administrative in their accounting structure.  You want the government to provide this service pure and simple.

Seems like an answer to your question does not make a difference in what you want to do so I am lost as to why you are even asking it!

Jenkins83,

Thank you for your service and I really do wish you well. You might ask yourself some questions: 1) Am I looking for a solution or am I dug in? and 2) Have I noticed others offering ways to fill in the hole and help me (and the customer) move on?...and why would they do that? 

Its not personal...and It’s a bigger issue to DoD...one of the biggest; Look, we are not immune from the effect of dysfunctional relationships; why should we think we are? We see examples where scarcity problems (turf wars among them) and administrative inertia are liable to chase away many a good solution and leave us in the weeds.

I no of no lasting solution to this problem that would avoid focusing on the individual;  Each one of us would do well to ask as often as need be,  questions fitting two themes: “What is my part in this chase for solutions?” and “How am I doing?” The exact questions and insightful answers to these questions will probably change some each and every day, but the self assessment need never stop.

What's an "ODC CLIN"?

Vern Edwards said:

What's an "ODC CLIN"?

CLIN for offerors to charge approved other direct costs...

There is no such thing!

A CLIN is for specifying deliverable supplies, services or construction. Costs are not deliverable supplies, services, or construction. You do not establish a CLIN for a cost. You establish CLINs for deliverable work products.

If the wifi cost will be incurred by the contractor, why was it not  not estimated and included in the firm-fixed-price? If the cost will be incurred by the program office, why would you include it in the contract?

ODC is a cost category for proposal purposes. As a cost, the cost of wifi hotspots used for contract performance strikes me as falling into the other direct cost category. What the heck else would it be?

Are you with DOD?

Vern Edwards said:

There is no such thing!

A CLIN is for specifying deliverable supplies, services or construction. Costs are not deliverable supplies, services, or construction. You do not establish a CLIN for a cost. You establish CLINs for deliverable work products.

If the wifi cost will be incurred by the contractor, why was it not  not estimated and included in the firm-fixed-price? If the cost will be incurred by the program office, why would you include it in the contract?

ODC is a cost category for proposal purposes. As a cost, the cost of wifi hotspots used for contract performance strikes me as falling into the other direct cost category. What the heck else would it be?

Are you with DOD?

I am not sure if you all read all of each post I’ve submitted. Yes I’m DoD. I have stated multiple times that I do not plan to allow this charge. 

As it relates to an ODC CLIN that absolutely is a thing, just as a travel CLIN is a such thing. 

My question was had anyone ever heard of this being done, that keeps being missed.  I am not seeking ways to do it as I don’t agree with the cost. There are BPA in place for these services.

I know that you have said you are not going to do it. But I'm surprised that you asked if anyone has heard of anyone doing it. So what if someone has heard of it. It's not the right thing to do.

If you're with DOD, then you must be familiar with DFARS 204.7103-1, which is the rule setting the criteria for establishing a CLIN. DOD does not (or is not supposed to) establish CLINS for costs, direct, indirect, or otherwise. And that includes the cost of travel. CLINs describe supplies or services that the government is supposed to receive from the contractor. The government does not receive travel. It does not inspect or accept travel. Travel is something the contractor does when performing work.

See also PGI 204.7103.

I'm glad that you're not going to do it, but I'm confused by your explanation for why you're not going to do it.

You have said twice that the wifi cost does not fit the definition of ODC. To what definition are you referring?

To provide more regulatory support for Vern’s point, FAR 2.101 defines “line item” as “the basic structural element in a procurement instrument that describes and organizes the required product or service for pricing, delivery, inspection, acceptance, invoicing, and payment.”  Just as Vern described, line items are for the required end item or service, and require inspection and acceptance.  ODCs are not the required end items or service, they are costs associated with providing the product or service. They do not require inspection and acceptance. If you have made/seen ODC CLINs in the past, I hope that you will not in the future.

On 6/1/2018 at 7:39 AM, C Culham said:

So as I follow the thread my question back to you is what does it matter if anyone has or has not?  

I say this noting that you are clear that you are not going to allow it as an ODC even if a contractor could show you through their accounting system that they in fact make such devices a direct cost rather than covering it in  general and administrative in their accounting structure.  You want the government to provide this service pure and simple.

Seems like an answer to your question does not make a difference in what you want to do so I am lost as to why you are even asking it!

I mistakenly thought this forum was a place to ask questions and seek opinions of others. I am NEVER about to get into a spar war with anyone. As a PCO I often like to see what other people at different agencies think about certain things. Not that it will change my outcome but sometimes it does. I never want to be that person with my heels dug I’m so far as to not see other options or a way of looking at things. The rude and sarcastic comments are a bit much. Carry on if you like but that is not my character so I will not join in.

thanks.

On 6/1/2018 at 1:41 PM, Vern Edwards said:

I know that you have said you are not going to do it. But I'm surprised that you asked if anyone has heard of anyone doing it. So what if someone has heard of it. It's not the right thing to do.

If you're with DOD, then you must be familiar with DFARS 204.7103-1, which is the rule setting the criteria for establishing a CLIN. DOD does not (or is not supposed to) establish CLINS for costs, direct, indirect, or otherwise. And that includes the cost of travel. CLINs describe supplies or services that the government is supposed to receive from the contractor. The government does not receive travel. It does not inspect or accept travel. Travel is something the contractor does when performing work.

See also PGI 204.7103.

I'm glad that you're not going to do it, but I'm confused by your explanation for why you're not going to do it.

This is very interesting. I just responded to someone that I am always open to seeing things differently or other than the way I’ve been taught. I’m pushing pause on this one until I look into it more as to why we’re doing it if it’s not proper.....

A

On 6/1/2018 at 2:38 PM, snydra said:

To provide more regulatory support for Vern’s point, FAR 2.101 defines “line item” as “the basic structural element in a procurement instrument that describes and organizes the required product or service for pricing, delivery, inspection, acceptance, invoicing, and payment.”  Just as Vern described, line items are for the required end item or service, and require inspection and acceptance.  ODCs are not the required end items or service, they are costs associated with providing the product or service. They do not require inspection and acceptance. If you have made/seen ODC CLINs in the past, I hope that you will not in the future.

This is all true and I can’t negate any of it. I’m now wanting to dig further as I’ve been an 1102 for 8 years and a CO for 3 and I must say my organization has always established line items for travel and other direct costs hmmm.....

Jenkins83 said:

The rude and sarcastic comments are a bit much.

Sorry that you took my comments to be rude and sarcastic.   Was not my intent.  I was truly mystified as to why you kept raising the question when responses had been provided regarding the common use (FAR Part 15 and 31) of what a ODC is.  I now understand you were really asking about establishing CLINS to pay for a cost.  Now clarified I hope the additional posts help with your original post.

Jenkins83 said:

This is all true and I can’t negate any of it. I’m now wanting to dig further as I’ve been an 1102 for 8 years and a CO for 3 and I must say my organization has always established line items for travel and other direct costs hmmm.....

I'm not sure that this is the definitive answer, but DFARS 204.7103-1(f) states, "If a supply or service involves ancillary functions, like packaging and handling, transportation, payment of state or local taxes, or use of reusable containers, and these functions are normally performed by the contractor and the contractor is normally entitled to reimbursement for performing these functions, do not establish a separate contract line item solely to account for these functions. However, do identify the functions in the contract schedule. If the offeror separately prices these functions, contracting officers may establish separate contract line items for the functions; however, the separate line items must conform to the requirements of paragraph (a) of this subsection." (emphasis added)

So, it seems like the contracting officer can establish separate contract line items for other direct costs like transportation, provided it satisfies the listed requirements.  Or am I reading that wrong?

Lionel Hutz said:

I'm not sure that this is the definitive answer, but DFARS 204.7103-1(f) states, "If a supply or service involves ancillary functions, like packaging and handling, transportation, payment of state or local taxes, or use of reusable containers, and these functions are normally performed by the contractor and the contractor is normally entitled to reimbursement for performing these functions, do not establish a separate contract line item solely to account for these functions. However, do identify the functions in the contract schedule. If the offeror separately prices these functions, contracting officers may establish separate contract line items for the functions; however, the separate line items must conform to the requirements of paragraph (a) of this subsection." (emphasis added)

So, it seems like the contracting officer can establish separate contract line items for other direct costs like transportation, provided it satisfies the listed requirements.  Or am I reading that wrong?

This is the direction I am accustomed to but the posts have made me want to have a better understanding. I can’t imagine we’ve been completely doing this wrong as an entire organization and haven’t been written up.

C Culham said:

Sorry that you took my comments to be rude and sarcastic.   Was not my intent.  I was truly mystified as to why you kept raising the question when responses had been provided regarding the common use (FAR Part 15 and 31) of what a ODC is.  I now understand you were really asking about establishing CLINS to pay for a cost.  Now clarified I hope the additional posts help with your original post.

All is well. I just often want to know what other agencies are doing.

Jenkins83 said:

I’m now wanting to dig further as I’ve been an 1102 for 8 years and a CO for 3 and I must say my organization has always established line items for travel and other direct costs hmmm.....

You don't have to dig very deeply. Credit it to lousy professional education.

I was taught proper CLIN structuring by the staff of the Contract Writing Office of the USAF Space and Missile Systems Organization in my first year on the job, 1974. Real pros. They literally beat it into me. Of course, that was in the days when contracting people understood contracts and knew why it would make no sense whatsoever to create a line item for a cost. It was when people understood what a contract "schedule" was supposed to be.

Go ahead and ask them why they do it. They'll have some half-baked explanation. They might even try to claim that it's okay.

On ‎5‎/‎31‎/‎2018 at 3:37 PM, Jenkins83 said:

The Air Force networks blocks certain sites they feel aren’t needed or appropriate. The sites are actual testing sites but out COMM department blocks them.

Has anyone explained the issue to them? Maybe COMM needs to be aware it's a requirement.