Deobligation of cost reimbursable travel costs-not contract closeout

FAR 16.201 (a) - "Fixed-price types of contracts provide for a firm price or, in appropriate cases, an adjustable price. Fixed-price contracts providing for an adjustable price may include a ceiling price, a target price (including target cost), or both. Unless otherwise specified in the contract, the ceiling price or target price is subject to adjustment only by operation of contract clauses providing for equitable adjustment or other revision of the contract price under stated circumstances. (EA)"

So you have CLIN for travel, with obligated funds, for the base period. This CLIN has a ceiling for reimbursement and at the end of the year all of the funds are not used. The funds should be de-obligated and the TO order amount should be reduced to reflect the appropriate value spent (actual v. target) for reporting purposes. 

The scope of the contract is not affected by the de-obligation. If you expect (target) 10 days of travel, obligate funds (ceiling) for 10 days of travel and only use 5, then you report the 5.

Milcon, 

Who is deobligating funds for travel? A finance office or the contracting office?

It sounds like your order has two CLINS - a fixed price one for performance of the work and a cost reimbursable one for travel.  The total order value is the sum of both CLINS.

Only the cost reimbursable travel CLIN is decreased from less travel.  The first CLIN remains unchanged in scope and amount.  You can say the total order value is reduced from less travel but the scope of the order hasn’t changed.

Milcon said:

I have a FFP task order with a cost reimbursable CLIN for travel.  After an option year is over any travel funds remaining are deobligated.  I noticed that the total task order value is decreased based on the deobligation.  Is this correct?  Or should the total task order value stay the same as the deobligation was not a change in scope?

Yes, the travel CLIN is adjusted to reflect the actual travel costs and the total contract amount is adjusted, accordingly. There is no change in scope.

formerfed said:

Milcon, 

Who is deobligating funds for travel? A finance office or the contracting office?

It sounds like your order has two CLINS - a fixed price one for performance of the work and a cost reimbursable one for travel.  The total order value is the sum of both CLINS.

Only the cost reimbursable travel CLIN is decreased from less travel.  The first CLIN remains unchanged in scope and amount.  You can say the total order value is reduced from less travel but the scope of the order hasn’t changed.

Formerfed,

The contracting office is deobligating the unused travel funds. This has nothing to do with the FP CLINS, only the CR travel CLIN.  I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value). 

The thing is is the original dollar amount on the CLIN is an estimate- we often add another CLIN for more travel when needed-(it is all based on new hiring training).  If we don't use it, it is deobligated.  But do I reduce the total task order value when the money is deobligated? Or does the total task order value stay the same.

joel hoffman said:

Yes, the travel CLIN is adjusted to reflect the actual travel costs and the total contract amount is adjusted, accordingly. There is no change in scope.

Joel,

Is it stated anywhere that this is what we do.  Or this this "just what we do"?

Milcon said:

Formerfed,

The contracting office is deobligating the unused travel funds. This has nothing to do with the FP CLINS, only the CR travel CLIN.  I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value). 

The thing is is the original dollar amount on the CLIN is an estimate- we often add another CLIN for more travel when needed-(it is all based on new hiring training).  If we don't use it, it is deobligated.  But do I reduce the total task order value when the money is deobligated? Or does the total task order value stay the same.

What didn’t you understand or agree with in what I said?

Milcon said:

Joel,

Is it stated anywhere that this is what we do.  Or this this "just what we do"?

If you have separate CLINs for 1) the FFP effort and 2) the CR travel, which total up to 3) the task order amount, please tell me why you have to move  the excess funding to the FFP effort and then increase that CLIN amount, accordingly. The FFP CLIN and its scope are fixed, correct? 

What you are saying doesn’t make sense.

1. • 2. = 3). 
        If 2) is reduced, then 1) must increase for 3) the task order amount to remain the same.

BUT 1) is FFP. What scope are you going to add to 1) in order to increase it? The task order amount must equal the total of all CLINs. 

It doesn’t have to state that anywhere. Where does it state how to do what you said you must do? 

What am I missing from your scenario?

joel hoffman said:

What am I missing here?

This...

Milcon said:

I was just told by policy

Milcon said:

Is it stated anywhere that this is what we do.

Another way to explain to hopefully help. "policy" who?   I do not believe that fiscal management policy supports "I was just told".

The issue you have brought up is a fiscal management matter as much as it is a contract management issue.   On the fiscal management side I suspect that if you talk to your budget and accounting folks they will provide specific detail as to the need to deobligate.   I suspect it will be something like you no longer need the funds fenced by the obligation to pay for more anticipated needs (travel) so therefore they are unfenced (de-obligated) to return funds to the big pot for other use and/or make the accounting books right on what your agency has actually spent.  As the CO has the only authority to obligate/de-obligate the funds fenced pursuant to a contract then the CO is assisting in fiscal management of the contract funds.

As already provided by other comments of the this thread the "Scope" of the contract is not reduced it is simply trued up to reflect what actually happened and make the fiscal books right.   

I might also suggest that you do some reading regarding scope and fiscal management stuff related to contracts.   As GAO has a expressed expert view on scope as related to a contract and also gives direction of sorts with regard to fiscal policy related to contracts a good place to start is to meander through what is commonly known as the GAO Redbook.  Here is a link that will get you to the full Redbook.  Do not be fooled by the bonafide needs link as it is important but the full book is accessible here as well.

/legacy/reg/b85d2ee8afc2a1f7.html

MILCON, does the same total  CR travel CLIN  amount span multiple option years with funding current to the FY of actual travel used? In other words, funding source for travel  would change but total CLIN for travel would be constant.. 

I did not assume that scenario.

joel hoffman said:

MILCON, does the same total  CR travel CLIN  amount span multiple option years with funding current to the FY of actual travel used? In other words, funding source for travel  would change but total CLIN for travel would be constant.. 

I did not assume that scenario.

No.  Each year has its own travel CLIN.

Milcon said:

No.  Each year has its own travel CLIN.

Milcon said:

No.  Each year has its own travel CLIN.

Okay, then you reduce the travel CLIN when you remove the excess funding for it, thus reducing the task order amount accordingly. I don’t know why you require a written policy reference from me for that.

What is with the snarky comments?  Has WIFCON started being rude to people trying to get clarification.  I apologize if something I stated wasn't clear or if I offended someone by asking follow up questions or that I asked where something is stated.  

My policy team is telling me not to reduce the total task order value.  If I go back to them stating that what we are doing (reducing the total task order value) is correct and we will continue, I would like to have something to show them stating what I am doing is correct- hence asking "Is it stated anywhere that this is what we do.  Or this this "just what we do"?"

@Milcon Doesn't your policy team have the burden of proof? Shouldn't they have to justify their position?

C Culham said:

This...

Another way to explain to hopefully help. "policy" who?   I do not believe that fiscal management policy supports "I was just told".

The issue you have brought up is a fiscal management matter as much as it is a contract management issue.   On the fiscal management side I suspect that if you talk to your budget and accounting folks they will provide specific detail as to the need to deobligate.   I suspect it will be something like you no longer need the funds fenced by the obligation to pay for more anticipated needs (travel) so therefore they are unfenced (de-obligated) to return funds to the big pot for other use and/or make the accounting books right on what your agency has actually spent.  As the CO has the only authority to obligate/de-obligate the funds fenced pursuant to a contract then the CO is assisting in fiscal management of the contract funds.

As already provided by other comments of the this thread the "Scope" of the contract is not reduced it is simply trued up to reflect what actually happened and make the fiscal books right.   

I might also suggest that you do some reading regarding scope and fiscal management stuff related to contracts.   As GAO has a expressed expert view on scope as related to a contract and also gives direction of sorts with regard to fiscal policy related to contracts a good place to start is to meander through what is commonly known as the GAO Redbook.  Here is a link that will get you to the full Redbook.  Do not be fooled by the bonafide needs link as it is important but the full book is accessible here as well.

/legacy/reg/b85d2ee8afc2a1f7.html

Thank you. I will review.  

Don Mansfield said:

@Milcon Doesn't your policy team have the burden of proof? Shouldn't they have to justify their position?

I think we both have burden of proof.  

Thank you to all who have commented.  I appreciate your help.

If you reduce the CLIN to match the funding then you MUST, by the rules of arithmetic, reduce the task order amount to match the new total CLINs amount.

@Milcon  The most recent post brought something to mind for me.    I am not sure it will be of an assist for your discussion with the policy folks but you might take a detailed read of FAR subpart 4.10 regarding Uniform Use of Line items.   There might be a hidden gem in it to assist in your conversation.

Milcon said:

After an option year is over any travel funds remaining are deobligated.  I noticed that the total task order value is decreased based on the deobligation.  Is this correct?

This is okay, especially if the option year is over.

C Culham said:

@Milcon  The most recent post brought something to mind for me.    I am not sure it will be of an assist for your discussion with the policy folks but you might take a detailed read of FAR subpart 4.10 regarding Uniform Use of Line items.   There might be a hidden gem in it to assist in your conversation.

Thank you.  I will check this out.

@Milcon

I haven't seen any mention of this, and I may have missed it, but I'm wondering where in the order the "total task order value" appears. Some questions:

1. Was the order issued under DD Form 1155 or Optional Form 347? Some other form? 
2. If DD 1155, are you talking about the amount that goes in box 25?
3. If OF 347, are you talking about the amount that goes in box 17(h)?
4. If neither form, where does the "total task order value" appear?
5. Is the "total task order value" the sum of (1) the firm-fixed price (for performance) and (2) the estimated cost of travel?

On 3/18/2021 at 3:38 PM, Vern Edwards said:

5. Is the "total task order value" the sum of (1) the firm-fixed price (for performance) and (2) the estimated cost of travel?

Yep, this is one of the basic questions (in addition to Vern’s other questions).

Secondly, when the excess funding for the CR travel CLIN was de-obligated, was the amount of the travel CLIN reduced accordingly?  I don’t think that it has been clearly stated one way or another but I may have missed that. You said that the excess funds for the CR CLIN have been deobligated.  I  assume that the line item amount for travel was reduced accordingly but please confirm.

Thank you.

EDIT: If the answers to these two questions are yes and one of those forms or a similar form was used, the total amount of the task order will change when you change the total amount of any CLIN.

Thank you.

On 3/17/2021 at 11:12 AM, Milcon said:

Or should the total task order value stay the same as the deobligation was not a change in scope?

Milcon is asking whether it makes sense to change the "total task order value" in light of the fact that the deobligation of funds associated with the travel CLIN does not reflect a change in the scope of the order.

In order to answer that question, those of you who have chosen to respond to Milcon should ask yourselves:

     What, if anything, is the (1) contractual and (2) administrative significance of the "total task order value"?

The answers to those questions depend in part on the location and context of "total task order value" in the task order.

Maybe "total task order value" is just an entry on a form, with no contractual or administrative significance whatsoever, and Milcon should just go along with his policy shop's program. Maybe it's just a product of simple arithmetic.

Or maybe Milcon's question is just a bureaucratic mystery, like the proper entry in SF 30, Block 13C.

Vern Edwards said:

Maybe

I really hate to drag this thread out but what the heck.   Actually what needs to be clarified is the mixed metaphors.

Is not the real intent of the OP's  post whether an "obligation" or "deobligation" of monies on a task order is an implication of "scope".  The answer to which sometimes it is and sometimes it is not.   And, I would offer that the  "deobligating the unused travel funds" is not a change in scope.  Likewise it follows that "the total task order value is decreased based on the deobligation" is not a change of scope.  So if the total value of the task order is reduced it makes no sense to say the total value must remain the prior higher value as that value dictates the scope of the task order.  

By example ----

Task Order issued in one fiscal year and has the ability to cross fiscal years which just happens to be consistent with the option year of the task order.   The money funding the travel CLIN is one year money.   Not all the one year money was used so it needs to be deobligated and the end of the fiscal/option year to go to the big pot in the sky.  The deobligaton occurs and the total value of the Task Order is reduced, yet not the scope as the work is still needed as the deobligation had nothing to do with a task order change, it was an fiscal management need.  An administrative modification.   Now the task order need continues to the next fiscal/option year.  If no further travel is needed yet the work continues the scope did not change.   Or in the alternative and in anticipation that the work will continue and travel will be needed the new one year money of the new fiscal year will be added back into the travel CLIN.   All the while scope of the work never changed.

Now considering the example I strongly suspect that the task order is in some sort of electronic order writing system as I would be absolutely amazed that a task order is typed or hand written ( not that I can't be amazed and might be!) and manually entered into an accounting system.   As such this electronic system to write the task order is probably tied to the fiscal/fund management system as well.   So I suspect the OP went into the system and did the deobligation and "noticed that the total task order value is decreased based on the deobligation." and now wonders "is this correct".  And I say yep that is correct as a deobligation of a CLIN on a Task Order does lower the value of the obligation associated with the task order regardless of the form as again I bet it is in the electronic system.   

 "I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value)." is not a factual or sensible statement considering the obligation or deobligation of funds on a task order, or any contract for that matter, as many times  funds  can be obligated and deobligated as demonstrated by the example above on a task order and the scope of the work is not changed.

So the real question remains who the heck is "policy" and what is their reasoning to say what they have and then, with the thoughts passed along in this thread, Milcon could go along with "policy" that they are right scope has not changed but clarify to them that scope is some cases does not have to be tied the value of an obligation.   Policy's contention is my book is incongruent the rules of fiscal management regarding obligation of funds, the concept of scope as it relates to obligation of funds and yes I will even include math.

This was the opening post:

On 3/17/2021 at 11:12 AM, Milcon said:

I have a FFP task order with a cost reimbursable CLIN for travel.  After an option year is over any travel funds remaining are deobligated.  I noticed that the total task order value is decreased based on the deobligation.  Is this correct?  Or should the total task order value stay the same as the deobligation was not a change in scope?

The very first response to that should have been:

If the "total task order value" is the sum of the values of the individual order line items, then a change that reduces the value of any of the order line items should result in a commensurate reduction to the "total task order value."

Period. However, an amusing addition to that would have been, Duh.

On 3/18/2021 at 8:07 PM, joel hoffman said:

If the answers to these two questions are yes and one of those forms or a similar form was used, the total amount of the task order will change when you change the total amount of any CLIN.

Thank you.

And yes, “this is just what we do” (to be consistent with the fact that the total amount of the task order equals the total of all the CLINs).

Thank you.

@joel hoffman I don't understand your last post.

On 3/17/2021 at 8:17 PM, joel hoffman said:

Yes, the travel CLIN is adjusted to reflect the actual travel costs and the total contract amount is adjusted, accordingly. There is no change in scope.

Milcon is now seeking written policy or some kind of instructions stating that total task order value is adjusted when excess funding on a CR CLIN is deobligated:

On 3/18/2021 at 8:07 AM, Milcon said:

Joel,

Is it stated anywhere that this is what we do.  Or this this "just what we do"?

On 3/18/2021 at 9:45 AM, Milcon said:

My policy team is telling me not to reduce the total task order value.  If I go back to them stating that what we are doing (reducing the total task order value) is correct and we will continue, I would like to have something to show them stating what I am doing is correct- hence asking "Is it stated anywhere that this is what we do.  Or this this "just what we do"?"   

On 3/19/2021 at 9:56 AM, Vern Edwards said:

On 3/19/2021 at 9:56 AM, Vern Edwards said:

This was the opening post:

The very first response to that should have been:

If the "total task order value" is the sum of the values of the individual order line items, then a change that reduces the value of any of the order line items should result in a commensurate reduction to the "total task order value.”

Vern said that he doesn’t understand my last post.

I was answering Milcon’s question to me: “Joel, Is it stated anywhere that this is what we do.  Or this this ‘just what we do’?”:

On 3/18/2021 at 8:07 PM, joel hoffman said:

EDIT: If the answers to these two questions[**] are “yes” and one of those forms or a similar form was used, the total amount of the task order will change when you change the total amount of any CLIN.

And yes, “this is just what we do” (to be consistent with the fact that the total amount of the task order equals the total of all the CLINs).

[** The “two questions” I referred to are:

1. Vern asked: “5. Is the "total task order value" the sum of (1) the firm-fixed price (for performance) and (2) the estimated cost of travel?”

2. Joel asked: “Secondly, when the excess funding for the CR travel CLIN was de-obligated, was the amount of the travel CLIN reduced accordingly?”]

I asked the second question above seeking clarification and verification as to whether the Travel CLIN was reduced to reflect the de-obligation of excess funds. MILCON hasn’t responded yet.

I’m  trying not to be “snarky” to MILCON, who posted this thread under the “For Beginners Only” topic area.

I noticed that MILCON has been a member since June 29, 2010 though. That is almost 11 years ago.

I think Milcon has left the building.

When I read the opening question I wondered why there had to be a "total task order value." I assumed it was required by some form, such as DD 1155 or OF 347, otherwise it serves no obvious purpose. If the total task order value is needed to fill a space on one of those forms, then the answer to the opening question should be obvious. If the "total task order value" is the sum of the individual CLIN values, then if you change any CLIN "value" (i.e., amount) you change the total task order value, as well. In my opinion, that should have been the first and last response to Milcon.

On 3/20/2021 at 9:17 AM, Vern Edwards said:

If the "total task order value" is the sum of the individual CLIN values, then if you change any CLIN "value" (i.e., amount) you change the total task order value, as well. In my opinion, that should have been the first and last response to Milcon.

It essentially was.  But Milcon, not  thinking inferentially, subsequently wanted to see specific instructions or policy to support the obvious that:

WHEN X + Y = Z;  and when you reduce Y,  therefore Z is reduced. 

You are probably right. We should have stopped there. Trying to take it easy on someone posting as a “beginner”.

The answer to the initial question was simple and straightforward. That wasn’t good enough for Milcon to support his argument with the “policy group”, who apparently don’t know how to write a simple mod to adjust a CR line item.

The answer to the subsequent second question was also straightforward but isn’t contained in a written instruction. It simply requires an understanding of contract admin procedures and how contracts and task orders are priced. 

I’ll stop there.

He did no worse than most beginners. Better than many.

On 3/20/2021 at 11:01 AM, Vern Edwards said:

He did no worse than most beginners. Better than many.

It would have been nice to know specifically whether or not the “total task order value” refers to the “total amount” of the task order, as shown in typical forms used to award task orders.   There has been no rebuttal to stated assumptions that they are the same*. Thus the “total value of the task order equals the total amount ( the sum) of the CLINs.

There has been no rebuttal to assumptions that the estimated amount of the CR CLIN was decreased by the amount of the deobligation to reflect actual amount,  in that mod. So they correctly reduced the value, amount or price of the CR travel line item and the total task order value, amount, price.

It is then clear that “policy’s” position is wrong.

Therefore:

On 3/20/2021 at 9:17 AM, Vern Edwards said:

the answer to the opening question should be obvious. If the "total task order value" is the sum of the individual CLIN values, then if you change any CLIN "value" (i.e., amount) you change the total task order value, as well.

The only proof necessary to rebut “policy” (subsequently asked of me by Milcon) is to tell policy that Total $ amount of FP CLIN(s) + $ amount of the CR CLIN equals task order amount (equals the “total task order value”,).  This is defined in the task order award form.

When the amount of any CLIN changes or if there are any new CLINs added - by definition in the task order - the “total amount” (or “total value”)  of the order changes.

Show policy the task order award form. Boom. Debate is over.

Therefore, Milcon’s contract action is confirmed to be correct.

* Note that “amount”, “cost” and “price” are some synonyms of “value” (non-FAR terms) in common language usage.

joel hoffman said:

It is then clear that “policy’s” position is wrong.

I agree but you keep hammering the "math", a "form: etc. and that is off-base to the "policy" contention.   If I were Milcon I would be frustrated with your continued dialog on math and form too.  By further clarification by Milcon "policy" never said the value by math or form was wrong.   What  "policy" was telling Milcon was that the original value of the TO, no matter the math, the form, etc., must stay the original value of TO when CLIN values are deobligated because the original value denotes scope of the work under the TO.     

Milcon probably thinks it would be nice if the thread just stopped!

On 3/21/2021 at 8:18 AM, C Culham said:

I agree but you keep hammering the "math", a "form: etc. and that is off-base to the "policy" contention.   If I were Milcon I would be frustrated with your continued dialog on math and form too.  By further clarification by Milcon "policy" never said the value by math or form was wrong.   What  "policy" was telling Milcon was that the original value of the TO, no matter the math, the form, etc., must stay the original value of TO when CLIN values are deobligated because the original value denotes scope of the work under the TO.     

Milcon probably thinks it would be nice if the thread just stopped!

Vern has answered the initial post’s question, as at least four others of us also did. And Vern had the benefit of several various clarifications. But I don’t want to argue over that.

Carl, If the amount of the task order after deobligating excess funds was not being questioned, then it wasn’t a contract question. Policy regarding “value” for overall program fiscal purposes isn’t relevant here. This is a simple contract mod question concerning revising the task order amount or price.

Milcon has said that he/she also wanted a policy or other proof to be able to refute the “policy” person(s).  He/she asked me: “Where is it written...?”

He/she didn’t say what “value” means and did not verify or deny that it is synonymous with the “amount” of the task order, as shown in an award format. I assume here that it means the amount or price of the task order.

I provided an answer to the second, later question that Milcon specifically asked of me.

Milcon probably won’t find written instructions in the FAR that say if a contract line item changes, recalculate and revise the total task order amount (price, value, etc.). Instead, one simply uses the format provided in the award document to adjust the total amount or price to match the sum of line item prices. It’s not rocket science.

Only an idiot wouldn’t be able to see that when something included in calculation of the contract amount changes, then the contract amount changes, too!!!

Simply show “policy” how the contract amount, value, price or whatever is calculated. Show them the MATH. I began negotiating mods in 1972 with the Air Force and negotiating and writing mods for the Army Corps of Engineers in 1980. The concept is still the same.

If  Milcon uses either answer or not, so be it.  

Agreed that the Scope of the task order did not change.  But the total price, cost, amount or value of the order contractually changed when the amount of the travel CLIN was adjusted to match actual reimbursed travel costs. It was a mod for a CR line item reconciliation and de-obligation of excess funds.

By the way, my agency’s various District contract administration SOP manuals (dating back as far as 1975) do address formatting of price revisions in modifications.  They say that, in addition to showing revisions to affected line items, state any applicable revisions to and the revised (contract or task order) price and time in the modification.  If there are no overall price and/or time revisions, then state that.

The agency now has an Enterprise contract admin software system that does the math and addresses it on the mod forms and line item schedules.

joel hoffman said:

It would have been nice to know specifically whether or not the “total task order value” refers to the “total amount” of the task order, as shown in typical forms used to award task orders.   There has been no rebuttal to stated assumptions that they are the same*. Thus the “total value of the task order equals the total amount ( the sum) of the CLINs.

There has been no rebuttal to assumptions that the estimated amount of the CR CLIN was decreased by the amount of the deobligation to reflect actual amount,  in that mod. It is then clear that “policy’s” position is wrong.

Yes, it would have been nice. Maybe the responders should have asked some clear questions before responding. And maybe they should have ignored the inquiry if the OP did not provide timely and informative responses, instead of launching into the typical Wifcon Forum free-for-all.

joel hoffman said:

It is then clear that “policy’s” position is wrong.

C Culham said:

I agree...

@C Culham On what basis, if not "math" and "form"? Why is policy wrong?

What rule says that a task order must state a "total task order value," however measured? And if there is such a rule, what is the point? What information other than math is it supposed to communicate? Could it not have been intended to communicate "scope"?

And why total task order "value" instead of amount? Is there some significance to the use of the word "value"?

And yes, I read your post of Friday at 07.24.

Vern Edwards said:

On what basis, if not "math" and "form"?

Scope is not determine on math for form.

Vern Edwards said:

Why is policy wrong?

Because "scope" has to do with more than math or form.   It has to do with  the type of work, the performance period, and costs between the contract as awarded and the order as issued.  The "and" is not an "or".

Remember Milcon provided this  "I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value)." 

Vern Edwards said:

What rule says that a task order must state a "total task order value," however measured?

Well FPDS-NG rules for one and if I wanted to do research further I suspect there are accounting rules that require it as well or at least strongly imply it along with FAR 4.10.   

Vern Edwards said:

And if there is such a rule, what is the point?

To properly account for obligations from the inception of creating one via a contract action to the end.   Or in other words it has nothing to do with scope.

Vern Edwards said:

What information other than math is it supposed to communicate?

Well for starters aCLIN is to communicate the appropriation the money is coming from.  Again FAR 4.10 and then go from there.

Vern Edwards said:

Could it not have been intended to communicate "scope"?

You bet but not as the singular matter of scope.  Plus you want to get involved in some extended dialog and throw in the ? when in fact in this instant discussion thread "policy" was pinpointing one particular matter, that decreasing travel to what was spent was decreasing scope.   

Vern Edwards said:

And why total task order "value" instead of amount? Is there some significance to the use of the word "value"?

Yes to some that want to nitpick Milcon about value and amount and those that side with him that the comments were inappropriate.  In context of the question I do not think value is important because it was never about value, as clarified by Milcon,  It was about some "policy" dude saying you can't change the total value with the deobligation because you (Milcon) would be changing scope. 

That is it for me on this one as I am sure everyone gets the "math" so carry on with it as you and Joel will.   What I am sure is that not everyone, most especially ,"policy", does not get scope.

On 3/18/2021 at 8:02 AM, Milcon said:

Formerfed,

The contracting office is deobligating the unused travel funds. This has nothing to do with the FP CLINS, only the CR travel CLIN.  I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value). 

The thing is is the original dollar amount on the CLIN is an estimate- we often add another CLIN for more travel when needed-(it is all based on new hiring training).  If we don't use it, it is deobligated.  But do I reduce the total task order value when the money is deobligated? Or does the total task order value stay the same.

My apologies to Milcon. I overlooked the instance where he/she referred to the term “total task order amount” in the same context as “task order value”.

Whether originally stated that way or later edited in response to responders’ questions asking what is meant by “task order value”, it appears now that the term “total task order value” means the “total task order amount” (price).

C Culham said:

Scope is not determine[d] on math for form.

Because "scope" has to do with more than math or form.   It has to do with  the type of work, the performance period, and costs between the contract as awarded and the order as issued.  The "and" is not an "or".

Remember Milcon provided this  "I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value)."

From Government Contract Changes, by Nash and Feldman, 4:5: "A dramatic increase (or decrease) in the contract price also should be an indicator of a cardinal change. Indeed, this issue is frequently a key component for whether the change is out of scope, although it is not a conclusive consideration."

Thus, while scope may involve more than price or total price, a change in price may well be a factor in determining whether there has been a change in scope. And thus, your assertions that "Scope is not determine[d] on math for form." and "Or in other words it has nothing to do with scope." are not correct.

C Culham said:

Well FPDS-NG rules for one and if I wanted to do research further I suspect there are accounting rules that require it as well or at least strongly imply it along with FAR 4.10.

FPDS is not a "rule." A CO can determine a total contract or order "value" for purposes of FPDS reporting without stating such a value in a contract or order. And as far as I know nothing in the FPDS-NG User Manual requires that a contracting officer state a "total value" in a contract or an order. If you know of such a requirement, please cite it specifically. And where in FAR Subpart 4.10 does it state that a contract or order must state a total "value"? While every CLIN has a total, I've never heard of establishing a CLIN for something called "total value" or "amount." Did I miss it in FAR Subpart 4.10?

C Culham said:

To properly account for obligations from the inception of creating one via a contract action to the end.

COs account for obligations at the level of CLINs, not "total value."

C Culham said:

You bet but not as the singular matter of scope.

Well, it seems to me that if the purpose of stating "total task order value" is to account for even just some component of scope, it makes the policy shop's stance a reasonable one. Note again the Nash and Feldman reference, above. 

Look, Carl, I also think the policy shop is wrong. But I think it's wrong because "total value" is obviously the sum of the individual values that go into the total, which I presume are CLIN values. And, therefore, I think that when you change any CLIN amount common sense dictates that you should change the total amount. I think my belief is  easily validated by looking at the forms used for orders, which I think are primarily DD Form 1155 and Optional Form 347.

I don't think the policy shop's argument relating a stated "total task order value" to scope makes much sense, not because total value has no bearing on scope, as you so vehemently assert, but because if a scope-of-the-order issue arises the value of the order will be determined on more evidence than any stated value or amount on a form or elsewhere on an order document.

Now, Carl, I can tell that you're upset about this thread (typos). So I don't want to provoke you further. I'll leave that to Joel.

😌

Easy does it, buckaroo. None of this matters. I've learned that.

Vern Edwards said:

Now, Carl, I can tell that you're upset about this thread (typos). So I don't want to provoke you further. I'll leave that to Joel.

😌

Easy does it, buckaroo.

Provoking and provocative but not correct.  Like your inference that FPDS-NG isn't a rule.   Reference FAR 4.6.  

Carry on...

@C Culham

😊

Milcon, Here is my reason for reducing the task order amount,  in response to the stated policy team’s reason for not reducing the task order value, price, total amount here.

The policy team is wrong. The fact that there is no change in scope has no relevance to the instant case here.

The task order contains a CR CLIN for estimated travel. The task order CLIN provides for payment of actual travel costs, not necessarily the estimated travel cost. 

There is no obligation to pay the Contractor the estimated travel CLIN amount that exceeds actual travel costs.

There is no “value” to the task order for funding which exceeds the government’s total obligation to pay the contractor.

The Government can and should deobligate excess travel CLIN funding and reconcile the final CLIN amount with actual,  payable amount of travel cost during the time period for travel covered by the CLIN. The modification does not affect the substantive rights of the parties.

Therefore, reducing the amount of the CLIN, reduces the total task order amount, which is the sum of the CLINs. When a CLIN is revised by the deobligation Mod, the total task order amount is revised, accordingly.

Show policy team how your contracting office calculated the revised total task order price, consistent with the above stated reasons.

Thank you to everyone that has responded to this thread.  I didn't realize at the time of posting that it would garner so many responses.  I believe that I have the information to go forward and speak to my policy office intelligently and in the future if I decided to ask another question I will make sure there is enough detail so it leads to less confusion.  

Just to clear up any confusion there are two dollar amounts that are tracked- the obligated amount and the total task order value/amount. This team always notes these two numbers on modifications and the obligated amount and total task order value/amount are always different $ amounts due to unfunded options.  This is a FP task order with a CR line for travel that is fully funded at the time of option exercise.  When the travel money is not fully used we deobligate and we would reduce the CLIN by the amount we deobligate which reduces the total task order value/amount. What my policy person in my office is saying is the we should not reduce the CLIN amount but still deobligate the funds- ie we are deobligating 5k from an funded 10K CLIN- the CLIN would still be for 10K but now only funded for 5K.   

From everything that everyone has posted it looks like my team has been doing it correctly and reducing the CLIN to match the amount actually spent.  Again I appreciate all the help!

Milcon, thanks for the clarification to the policy person’s position.

Milcon said:

Just to clear up any confusion there are two dollar amounts that are tracked- the obligated amount and the total task order value/amount. This team always notes these two numbers on modifications and the obligated amount and total task order value/amount are always different $ amounts due to unfunded options.

Gee whiz, Milcon, you just confused me again. 🤠

Unfunded options are generally not awardable until funded. They should not be included in either the obligated amount or total task order amount/value.

I don’t know why the fiscal amount of unfunded options would be noted in a contract modification. Those are internal government project or program numbers, not part of the contract between the parties.

I’ve never seen contracts or mods track unawarded options. If they are potentially awardable, they are managed outside the contract, aren’t they?

How about this?  Either way is okay.

If a contractor underruns a cost-reimbursement CLIN, it is not necessary to establish a new estimated cost.  For example, it is okay if the estimated (and initially obligated) amount is $10,000 but the actually expended (and amount after de-obligation of excess/unused funds) is $7,000 -- in such a case, it is not necessary after performance is complete to re-establish the estimated cost as a figure that matches the actual cost.  Many contracting persons might do it, and some simple-minded automated systems may require it, but it is not necessary from the perspective of correct principles.

ji20874 said:

How about this?  Either way is okay.

If a contractor underruns a cost-reimbursement CLIN, it is not necessary to establish a new estimated cost.  For example, it is okay if the estimated (and initially obligated) amount is $10,000 but the actually expended (and amount after de-obligation of excess/unused funds) is $7,000 -- in such a case, it is not necessary after performance is complete to re-establish the estimated cost as a figure that matches the actual cost.  Many contracting persons might do it, and some simple-minded automated systems may require it, but it is not necessary from the perspective of correct principles.

I don’t disagree concerning the technical necessity to de-obligate excess funding, unless agency policy or agency contracting automated systems require reconciliation.

However, for fiscal management, it ties up underrun obligations that could and probably should be made available to cover other agency needs. Even appropriations that are expired for new obligations remain available for a period of time to cover antecedent  liabilities, such as in-scope modifications. See, for example this thread: 

Maybe a  project/Program management team would want to keep the underrun funding tied up so that it can be made available for other possible in-scope needs on the instant contract. So a program manager may be “bogarting” the funds (not in this thread).

joel hoffman said:

However, for fiscal management, it ties up underrun obligations that could and probably should be made available to cover other agency needs.

No one in this thread has suggested leaving unused funds sitting on the CLIN -- everyone on this thread has supported deobligation of unused/excess funds.

ji20874 said:

No one in this thread has suggested leaving unused funds sitting on the CLIN -- everyone on this thread has supported deobligation of unused/excess funds.

Correct. A requirement or desire not to de-obligate excess funding would be a “policy” matter by a project or program management team, not contracting.

The actual question in this thread may well stem from policy outside the contracting office.  I’ve suspected that the “policy team” is not in the contracting office. But they don’t object to the de-obligation, only the adjustment to the CLIN.

However, when the excess funding is de-obligated, the CLIN amount and task order amount must decrease, accordingly.

ji20874 said:

If a contractor underruns a cost-reimbursement CLIN, it is not necessary to establish a new estimated cost.

@ji20874That is not true in all cases. It is vastly overstated. You should clarify, especially since this is a "For Beginners Only" thread.

Help me out, Vern.  While it is true that a new estimated cost must be established before a contractor is entitled to reimbursement for an overrun (FAR 52.232-20 or -22), I am not aware of any requirement to establish a new estimated cost for an underrun.  FAR 52.232-20(b)(2) requires a notice from the contractor when the contractor has reason to believe that its costs will be substantially less than the estimate, but it does not require that the agency establish a new estimated cost for that projected underrun.

@ji20874 If the contractor reports a significant underrun, and you deobligate funds to use them elsewhere but do not change estimated cost, what happens to future applications of 52.232-20, under which notifications and limitations on government liability are tied to estimated costs?

Vern Edwards said:

@ji20874 If the contractor reports a significant underrun, and you deobligate funds to use them elsewhere but do not change estimated cost, what happens to future applications of 52.232-20, under which notifications and limitations on governmenb liability are tied to estimated costs?

In this thread, we're talking about actions after the performance period is over.  If the period of performance is over, as stipulated in the original posting, I see no need to establish a new estimated cost to match a lower actual expended amount.  I am okay with the estimated amount differing from the final obligated amount.

Just now, Vern Edwards said:

governmenb

😍

ji20874 said:

In this thread, we're talking about actions after the performance period is over.  If the period of performance is over, as stipulated in the original posting, I see no need to establish a new estimated cost to match a lower actual expended amount.  I am okay with the estimated amount differing from the final obligated amount.

So you agree that there are cases in which a cost underrun requires a reduction in the estimated cost. Thanks.

Now, Vern, let's be professional...  You know full well that I didn't say that.

I am not aware of any requirement to modify a contract to establish a new estimated cost in the event of an anticipated or actual underrun on a cost-reimbursement contract.  I am okay with the estimated amount differing from the final obligated amount after the end of a performance period.

If there is a requirement to modify a contract to establish a new estimated cost in the event of an anticipated or actual underrun on a cost-reimbursement contract, please point to it.

ji20874 said:

If there is a requirement to modify a contract to establish a new estimated cost in the event of an anticipated or actual underrun on a cost-reimbursement contract, please point to it.

@ji20874I didn't think I had been unprofessional.

And I didn't think you were one of those professionals who believe that there must be an express rule in FAR requiring that a CO do what is obviously necessary in order to protect the government's interests under either FAR 52.232-20 or 52.232-22.

Having signed and worked more than my share of cost-reimbursement contracts, in more than one agency, the notion of deobligating funds on a fully or incrementally funded cost-reimbursement contract while the work is still ongoing without also reducing the associated estimated cost or total funds allotted strikes me as not just unprofessional, but professionally incompetent.

Do we really need a rule for everything?

From a Contractor standpoint in cost reimbursement contracts, I would question any unilateral change in contract estimated cost by the Government whether it is due to an apparent overrun or underrun, at any time. It could affect the fee payable where there are contract incentives on cost. Also, a downward adjustment in estimated cost where the negotiated contract fee was fixed, could make it look like the effective contractor fee rate was more than negotiated, which might raise concerns that are unwarranted.

@Neil Roberts 

Neil Roberts said:

From a Contractor standpoint in cost reimbursement contracts, I would question any unilateral change in contract estimated cost by the Government whether it is due to an apparent overrun or underrun, at any time. It could affect the fee payable where there are contract incentives on cost. Also, a downward adjustment in estimated cost where the negotiated contract fee was fixed, could make it look like the effective contractor fee rate was more than negotiated, which might raise concerns that are unwarranted.

Why have you made that point? It seems to come out of nowhere.

Have you read something here that suggests that the CO should unilaterally reduce the estimated cost in response to the contractor's revised cost estimate? Why would a CO do that? Why would it be  necessary to do so if the contractor has notified the contracting officer that its estimate has changed? Why wouldn't the contractor readily agree to a change by supplemental agreement?

A revised estimated cost based on an anticipated cost underrun would not entitle the government to a fee reduction unless the revised estimate is based on a contract change. And who but someone who does not understand cost-reimbursement contracting would worry because a reduction in the cost estimate would result in an arithmetical increase in the rate of fee? Are we supposed to refrain from doing the right thing in order to avoid worrying the clueless?

In the context of this thread, once travel is completed and the contractor agrees or advises that all travel was invoiced against the line item, the government is deobligating excess funding, reconciling the line item quantity with actual invoiced travel costs and adjusting the task order price accordingly. That’s my interpretation based upon the provided scenario. The remaining work is Fixed Price.

I’ve seen that or similar type cost reimbursement line item reconciliations on FFP construction contracts from a contract admin oversight perspective numerous times and have processed similar actions myself over the years. While mods might sometimes be unilateral, there was agreement on the invoiced quantities first. We didn’t invite trouble by unilaterally establishing quantities without contractor involvement. Contrary to popular opinion, contractor and government employees often work well together.

We routinely handled them as admin mods for years, until we were informed that the new “tail wagging the dog” DoD contracting software system rejected any admin mod that changed the contract price, even when the price adjustment was provided for by self-operation of the contract terms and conditions.

Other examples of such line items included utility relocations or extensions for a construction project by one or more utility companies and work on railroad rights of way that the railroads would perform or have performed rather than allowing the construction contractor to perform it on live rail lines. 

Utilities and railroads are notorious for refusing to commit to pre-price their work. The line items included a plug estimated amount and the contractor would invoice for the actual utility company or railroad project or work order costs.

I don’t ever recall a problem with this type reimbursement arrangement.

Ok- so more clarifications: the deobligation happens after the POP for that option year is over, the contractor agrees that they have completed invoicing and have been paid for all travel for that option period and they also sign the modification (sometimes) I have seen it done both ways as we do have them agreeing in writing before the mod is issued (what a CO has told me).  The travel money is always an estimate when the task order is awarded.  I have seen modification to add another CLIN for travel when more money is needed as well as the deobligations. 

The CLIN is always for 1 LOT and is not by quantity- so it is a "pot" of money that is available to reimburse the contractor for travel that is preapproved.

The total contract value is tracked on the modification because it can change based on increases due to REAs ect.. or deobligations and it is not necessarily an internal number as the same number is on FPDS that is tracked and reported to congress.  Additionally the contractor can tract this number too as at time of award they would know the total task order value/amount (inclusive of all the unfunded options)

It makes perfect sense to finalize the task order amount after completion of the task order. The “value” or total cost of the task order won’t exceed the funding of the task order or the actual final cost. When closing out a task order, “professional “ contract administration would be to reconcile the task order amount, price, value. If not already done, de-obligate excess funding and adjust the task order amount, value, price. The final amount of the task order should be tracked for the life of the ID/IQ in management systems.

There is no good reason not to adjust the final task order value, price, amount. Expired appropriations legally remain available for Paying for meritorious   REA’s and claims.

This is in addition to keeping the contract amount current during performance period if de-obligation is appropriate then. 

Its good, “professional” contract administration.

In my opinion, the official “value” of a task order stated in any contractual document shouldn’t document  a “value” or amount of pending claims,  pending REAs or estimated final value of undefinitized mods/contract actions except for any “not to exceed amount(s)” noted in undefinitized mod(s) for change orders, etc.

The contract file should contain the necessary information concerning pending options and the contractor should be responsible to know what the pending options are. But if the basic task order has options, I wouldn’t object to an attachment to the task order listing them. Why would each mod have to track and repeat those? 

The F&A and project management systems should acknowledge and track pending actions, including reservation of any additional funds necessary to finalize those pending actions.

If anyone here has ever had to take over contract admin during performance, due to retirement, re-assignment, illness or death, etc. of previous personnel, you’d know how important it is to have up to date contract documents, data and documentation.

Anyone assigned to closeout completed contracts or task orders, especially those long held open, should understand and appreciate the importance of “professional” administration and documentation. Documentation isn’t just for those assigned to administer contracts with intimate personal knowledge. It’s critical for anyone else reviewing for oversight purposes or picking up administration or closeout.

There is an art to good ‘, “professional” contract administration, regardless of “where it is written “ what the minimum requirements, if any, are.

@MilconQuestion: Does the contract include, applicable to the cost-reimbursement travel CLIN, the clause at FAR 52.216-7, Allowable Cost and Payment, and the clause at 52.232-20, Limitation of Cost?

joel hoffman said:

finalize the task order amount after completion of the task order.

Now @Milconcan correct me but in following the thread it seems that it was provided and not changed that the adjustment as proposed originally and restated in a recent post is at end of option year.   Milcon has added POP to that end of option year.   I take that to mean at end of option year of the TO and not necessarily of performance for the TO as performance might stretch into another option year.    Also at all times option has been used and not the parent contract option year.

Vern Edwards said:

Question

Considering my above read of the matter I would like to add a question myself.   Is the funding for the TO one year or more than year year funds?  Additionally is 52.232-22 in the parent IDIQ or TO?

Vern Edwards said:

@MilconQuestion: Does the contract include, applicable to the cost-reimbursement travel CLIN, the clause at FAR 52.216-7, Allowable Cost and Payment, and the clause at 52.232-20, Limitation of Cost?

Vern, interesting question.

However,  I question whether either clause would be necessary or appropriate for a FFP contract with a  travel cost CLIN, if the appropriate instructions and conditions can be described in the line item description and the statement of work, etc.

The clauses are prescribed for cost reimbursement contracts, not for single CR line items in FFP contracts/task orders, correct?

Is there a need to separately invoice and/or pay for one line item with an estimated cost? In my opinion, it could be paid with normal invoicing for the FFP performance items.

It’s more difficult to implement different, possibly conflicting terms, conditions, payment intervals, etc. for one line item.

C Culham said:

Now @Milconcan correct me but in following the thread it seems that it was provided and not changed that the adjustment as proposed originally and restated in a recent post is at end of option year.   Milcon has added POP to that end of option year.   I take that to mean at end of option year of the TO and not necessarily of performance for the TO as performance might stretch into another option year.    Also at all times option has been used and not the parent contract option year.

Considering my above read of the matter I would like to add a question myself.   Is the funding for the TO one year or more than year year funds?  Additionally is 52.232-22 in the parent IDIQ or TO?

Good point, Carl. However, why would one not reconcile the task order amount regarding the previous period of performance as soon as possible after awarding an option for the next period of performance, with  separate funding for performance and travel? Keep the total value, amount, price current.

Equally important to keep the task order value reconciled for extended task orders with multiple performance periods and separately funded CR travel CLINs. I can easily envision multiple contract administrators over the course of an extended length task order. It’s not uncommon for a significant turnover of assigned contract administrators - especially if they are in the 1102 series or if the contracts are for OCONUS.

@joel hoffman

joel hoffman said:

Vern, interesting question.

However,  I question whether either clause would be necessary or appropriate for a FFP contract with a  travel cost CLIN, if the appropriate instructions and conditions can be described in the line item description and the statement of work, etc.

You question? Why?

A contract with both an FFP CLIN and a CR CLIN is an example of a combination of types," FAR 16.102(b). If you put a CR CLIN in a contract, whether for travel or spacecraft development, you must apply the clauses applicable to that contract type to that CLIN. If you don't do that, you may find yourself being invoiced for unallowable costs, and you may not have established a limit to the government's cost liability, which could create Anti-deficiency Act issues. Think about it.

To me, that is Contracting 101. I was taught it more than 44 years ago, when I was a GS-05, and I have no reason to think it is not as valid now as it was then. It is the kind of knowledge that a professional must have in order to protect the government's interests, but for which there is no express statement in FAR. If FAR had to contain an express statement of every logical consequence of stated rules, it would be 10,000 pages long, instead of 1,990.

@joel hoffman I know that agencies use CR travel CLINs without applying the applicable clauses, but such use does not justify the practice.

So, you’d have separate invoicing procedures for the FFP and one CR travel line item on one task or contract?  I’ve never seen that done with  DFAS  and with the automated contracting systems that we used for FFP but it might be possible.

One can establish the terms and conditions fir allowability and payment - depending upon how complex the travel line item is and whether we’re talking about labor and travel or just cost of travel.

At any rate, I’d be interested in how Milcon’s travel line item is used and whether or not they include the separate contract clauses for that item.

@joel hoffman 

joel hoffman said:

I’ve never seen that done...

So what?

You are hiring a contractor to do work. In doing that work the contractor must travel. You could estimate the number and duration of trips and include the cost in the FFP. But you have chosen instead to reimburse the contractor for the cost of travel. Are you going to limit the government's cost liability? Are you going to limit the costs to those that are allowable under FAR 31.2? Are you going to require proof of cost incurrence?

I admit that the travel cost CLIN, which is wildly popular these days, raises questions about clause inclusion. But a CO's job is to protect the interests of their client, the government, and how do you implement the government's policies applicable to cost-reimbursement without using appropriate clauses? On a large enough project, travel costs could run into the hundreds of thousands of dollars, even a million or more.

Vern Edwards said:

@MilconQuestion: Does the contract include, applicable to the cost-reimbursement travel CLIN, the clause at FAR 52.216-7, Allowable Cost and Payment, and the clause at 52.232-20, Limitation of Cost?

In the Base IDIQ 52.216-7 was included in the award.  52.232-20 was not.

Milcon said:

In the Base IDIQ 52.216-7 was included in the award.  52.232-20 was not.

Milcon is this essentially what the CLIN looks like?

CLIN#    Item -Travel    Quantity - 1   Unit - LOT   Unit Price - $$$$  Amount - $$$$

So what you are truing up is the Amount?    And is wording that implies its an estimate used on the CLIN such as EST or possibly stated in contract verbiage elsewhere that it is an estimate.   And by any chance is there an "Estimated Quantity" type clause in the TO/contract?   Usually such a clause is a 52.211-XXX  clause.

Milcon said:

In the Base IDIQ 52.216-7 was included in the award.  52.232-20 was not.

Thanks, Milcon. Interesting. If indirect costs are part of travel costs, some of those costs may not be known until months after completion of the task and the deobligation of funds. You could get a surprise bill for additional costs, unless the CO included some other term in the contract that limits the government's cost liability.

Vern Edwards said:

Thanks, Milcon. Interesting. If indirect costs are part of travel costs, some of those costs may not be known until months after completion of the task and the deobligation of funds. You could get a surprise bill for additional costs, unless the CO included some other term in the contract that limits the government's cost liability.

Vern, The travel costs are pre approved before travel is taken and then they submit invoices and we reimburse what they pay along with minimal G&A cost so there are no surprise costs.

C Culham said:

Milcon is this essentially what the CLIN looks like?

CLIN#    Item -Travel    Quantity - 1   Unit - LOT   Unit Price - $$$$  Amount - $$$$

So what you are truing up is the Amount?    And is wording that implies its an estimate used on the CLIN such as EST or possibly stated in contract verbiage elsewhere that it is an estimate.   And by any chance is there an "Estimated Quantity" type clause in the TO/contract?   Usually such a clause is a 52.211-XXX  clause.

Yes that is pretty much what the CLIN looks like.  I do not believe there is anything that states this is an estimate but there is language stating that travel is cost reimbursable so if we approve the travel cost we pay them for it.  If we need more money, we add a CLIN and then if they don't use all the money the remaining is deobligated after the end of the option period.

Milcon said:

Vern, The travel costs are pre approved before travel is taken and then they submit invoices and we reimburse what they pay along with minimal G&A cost so there are no surprise costs.

@Milcon Why do you call that cost reimbursement? It sounds to me like you effectively negotiate a  pre-approved travel cost before each trip and agree to pay the lesser of the pre-approved amount or the actual cost of the trip. I wouldn't consider that a cost-reimbursement line item in the FAR sense. I must be missing something. What is it?

I am only describing the process as it was told to me. The CLIN is CR and this is what they do.

@MilconInteresting, Milcon. Thanks.

Milcon said:

Yes

Thank you

Vern Edwards said:

@Milcon Why do you call that cost reimbursement? It sounds to me like you effectively negotiate a  pre-approved travel cost before each trip and agree to pay the lesser of the pre-approved amount or the actual cost of the trip. I wouldn't consider that a cost-reimbursement line item in the FAR sense. I must be missing something. What is it?

I used a similar CLIN structure to add $400,000 Lump Sum line items to the roughly $400 million FFP Construction Phases of two similar Systems Contracts for Chemical Demilitarization Plants around 2000.  One plant was at Umatilla, Oregon and the other was at Anniston, AL. Essentially the same design at both Sites.

The Plant industrial process included chopping up chemical agent filled rockets, disassembling and draining agent from various chemical weapons such as artillery shells, mortars, land mines as well as draining ton containers of liquid nerve agents and semi-solid mustard agent.

The liquid nerve agents and mustard were incinerated in large furnaces. The contaminated metal parts and propellants went through a metal parts furnace. The wood pallets went through a dunnage furnace, if contaminated by leakers.

The Plants and their Pollution Abatement Systems (PAS) for the furnaces and exhaust building air were huge and very complex. The plants and process lines were designed around government furnished process equipment that hadn’t been built at the time the plants were designed.

The contractors at each site were encountering numerous small field conditions and interferences in the complex PAS structural framing,  piping systems and PAS equipment.

We established the large lump sum line items to facilitate quick solutions to avoid delays, disruptions and other impacts had we been required to stop and issue hundreds of small field changes and definitize each one.

There were close to 600 trade craftsmen working on the plant, in close proximity. The delay impacts to the construction schedule by having to formally develop and issue change orders with all the design configuration management and RCRA procedures would have impacted a Chemical Weapons Treaty deadline with Russia to mutually destroy each nation’s Chemical Weapons Stockpiles.

I devised a job order system within the LS CLIN to use when a field interference or other small condition was encountered in the PAS.

The Systems Contractor’s foremen would  engage field engineering staff to identify the problem and recommend a fix, e.g., re-routing piping systems, and provide sketches and rough order magnitude cost estimates of time and materials on forms developed for job orders against the LS line item. Note that all labor and overheads, G&A,  etc. used audited rates.

Our Resident Engineers were ACOs for construction. After reviewing the job order request, if they agreed with or adjusted the proposed job order cost, the ACO signed off, authorizing the job order on a not to exceed basis, under the LS line item.

The contractors tracked their actual costs and submitted the completed job orders with copies of the actual time sheets and material invoices as backup  with their regular monthly progress payment requests.

The Resident Engineer staff and the contractors managed the job orders and line items. The teams mutually developed the detailed procedures for the job orders.

It worked out well.

So I am going to attempt to go 360.

Milcon has a FFP TO for training of new hires.   The work entails travel.  The contract provides that travel will be pre-approved by the government and payment for the travel will be its actual cost plus what sounds to be a fixed G&A rate that both the contractor and government have assented to.  No fee has been stated as being included.

A LOT CLIN is established in the contract from which the travel is paid.  This CLIN is funded based on anticipated needs at the beginning of an option year.  If actual need exceeds anticipated needed additional money is added to the TO via a different CLIN.   For the original CLIN if needs are less than anticipated and money is left over in the CLIN that money is deobligated at the end of an option year. In this later case when the money is deobligated the total amount or value of the task order reflects this deobligation/decrease in funds and shows a lesser value than when the TO was originally awarded.

Now an arm of the agency called “policy” has stated to Milcon that with the decrease the total amount or value of the TO should not reflect the decrease in the CLIN because doing so reflects a change/decrease in scope of the task order.  Does the decrease action really change the scope?

I would offer no it does not.   The scope of the work is dictated by the whole of the terms and conditions of the contract.  By the sounds of it the contract scope is to provide training for new hires and as such new hires fluctuate but contract scope is to provide the training.  The travel reimbursement is therefore a moving target based on need that is covered the under the contract and is simply adjusted via modification of an existing payment CLIN or by addition of CLIN(s) so that adequate money is available to pay for the travel.   The adjustment at end of option year to make the CLIN show actual funds used for the travel for that option year is not changing the contractual requirements under which the contractor is to perform training and travel but is an administrative change to reflect the total value/amount of the TO based on its original terms.   Therefore the adjustment that has the sole purpose of reducing the travel funding CLIN to show what was actually used/spent in the option year is not a change in scope.

My position on the matter of scope seems to be supported in part by this…..emphasis added.

16.301-1 Description.

Cost-reimbursement types of contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer.

C Culham said:

So I am going to attempt to go 360.

Milcon has a FFP TO for training of new hires.   The work entails travel.  The contract provides that travel will be pre-approved by the government and payment for the travel will be its actual cost plus what sounds to be a fixed G&A rate that both the contractor and government have assented to.  No fee has been stated as being included.

A LOT CLIN is established in the contract from which the travel is paid.  This CLIN is funded based on anticipated needs at the beginning of an option year.  If actual need exceeds anticipated needed additional money is added to the TO via a different CLIN.   For the original CLIN if needs are less than anticipated and money is left over in the CLIN that money is deobligated at the end of an option year. In this later case when the money is deobligated the total amount or value of the task order reflects this deobligation/decrease in funds and shows a lesser value than when the TO was originally awarded.

Now an arm of the agency called “policy” has stated to Milcon that with the decrease the total amount or value of the TO should not reflect the decrease in the CLIN because doing so reflects a change/decrease in scope of the task order.  Does the decrease action really change the scope?

I would offer no it does not.   The scope of the work is dictated by the whole of the terms and conditions of the contract.  By the sounds of it the contract scope is to provide training for new hires and as such new hires fluctuate but contract scope is to provide the training.  The travel reimbursement is therefore a moving target based on need that is covered the under the contract and is simply adjusted via modification of an existing payment CLIN or by addition of CLIN(s) so that adequate money is available to pay for the travel.   The adjustment at end of option year to make the CLIN show actual funds used for the travel for that option year is not changing the contractual requirements under which the contractor is to perform training and travel but is an administrative change to reflect the total value/amount of the TO based on its original terms.   Therefore the adjustment that has the sole purpose of reducing the travel funding CLIN to show what was actually used/spent in the option year is not a change in scope.

My position on the matter of scope seems to be supported in part by this…..emphasis added.

16.301-1 Description.

Cost-reimbursement types of contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer.

Very good description!  So if as you say that it’s not a change in scope should the total contract value/amount be changed or not?

Milcon said:

So if as you say that it’s not a change in scope should the total contract value/amount be changed or not?

😐

posted 8 minutes ago

  1 hour ago, Milcon said:

So if as you say that it’s not a change in scope should the total contract value/amount be changed or not? 

Vern Edwards said:

😐

and so begins my dilemma

Milcon said:

posted 8 minutes ago

  1 hour ago, Milcon said:

So if as you say that it’s not a change in scope should the total contract value/amount be changed or not? 

and so begins my dilemma

You certainly Can do it. It’s a good contract administration practice as at least two of us have advised with stated reasons. 

My question to you is “Why wouldn’t you do it?”

@C Culham You tried, buckaroo. You tried.

joel hoffman said:

You certainly Can do it. It’s a good contract administration practice as at least two of us have advised with stated reasons. 

My question to you is “Why wouldn’t you do it?”

Well- it is currently being done so....  

Vern Edwards said:

@C Culham You tried, buckaroo. You tried.

Yes.  Great description of the issue at hand except the question of total task order value and how it should be handled was not answered.  Unless he is in agreement with my policy person who says that because we are not decreasing the scope then we shouldn't decrease the total task order value.

Milcon said:

Well- it is currently being done so....  

Yes.  Great description of the issue at hand except the question of total task order value and how it should be handled was not answered.  Unless he is in agreement with my policy person who says that because we are not decreasing the scope then we shouldn't decrease the total task order value.

I’m pretty sure that Carl answered the question - reduce the total task order value when you reduce the excess funding. Did not appear to support the policy person’s position. Please reread Carl’s post:

“The adjustment at end of option year to make the CLIN show actual funds used for the travel for that option year is not changing the contractual requirements under which the contractor is to perform training and travel but is an administrative change to reflect the total value/amount of the TO based on its original terms.   Therefore the adjustment that has the sole purpose of reducing the travel funding CLIN to show what was actually used/spent in the option year is not a change in scope.”

...and - I intended to mention in my last post that your contracting office IS currently adjusting the contract “value”/amount/price.  Just forgot to say it.

What then is the “dilemma”??

Your contracting office should keep doing what they are doing - reducing the CLIN amount and the contract value/amount/price, accordingly.

The policy person is off-base. The policy person isn’t in Contracting are they? I certainly hope not.

If they aren’t and if you aren’t, it’s not the policy person’s call anyway.

I think you are saying that policy guy says do not change the value because the scope is not changed.

I think Carl said the scope isn’t changed but change the task order value. It’s an administrative change to reflect the decrease in the Travel CLIN unused funding.

Milcon said:

So if as you say that it’s not a change in scope should the total contract value/amount be changed or not?

Others have reflected my position and as supported by the FAR quote I provided that the effort is related to issues of obligating/deobligating funds inclusive of total value/amount not changing scope.

That said I had this thought.  Does policy take the same stance when you add a new CLIN to add $$$ for the new option that the total value/amount should change?   If not then my question to policy would be why not?

I think or at least hope that the policy team is outside of contracting. The contracting office is currently de-obligating excess funds and reconciling the line item and task order option year final prices. I say, Let ‘em do their job. They appear to be correct.

C Culham said:

Others have reflected my position and as supported by the FAR quote I provided that the effort is related to issues of obligating/deobligating funds inclusive of total value/amount not changing scope.

That said I had this thought.  Does policy take the same stance when you add a new CLIN to add $$$ for the new option that the total value/amount should change?   If not then my question to policy would be why not?

That is a very good question and one I will ask them.

joel hoffman said:

I think or at least hope that the policy team is outside of contracting. The contracting office is currently de-obligating excess funds and reconciling the line item and task order option year final prices. I say, Let ‘em do their job. They appear to be correct.

This is the contracting policy team that this person is part of.

We seem to be beating a dead horse here.

I don’t understand the actual reason given not to adjust the line item amount in order to revise the original estimated travel cost to match the actual travel cost “because the scope” (of what??) did not change. So what? The payable amount of the task order changed.

The payable amount of the task order, as of the end of the period of performance has changed because payable travel costs were less than estimated.

So, the excess line item funding was reduced by de-obligation.

Therefore, no additional value beyond what was actually expended can be achieved from that line item. The period of performance is over. There is no more funding.

Yet, the line item amount is still estimated to exceed the value of the travel which occurred. No more travel can occur under that line item.

Okay, so the task order value/amount/price, which is the sum of the CLIN amounts,  still reflects a theoretical amount beyond the value achieved/payable/spent during the expired period. There will never be any additional value achievable to match that total task order price.

The inflated value/amount/price of the task order is then increased by award of the next option period of performance.

Yet, the revised task order value/amount/price exceeds any possible value/amount/price payable to the contractor or of value to the government.

For any reporting purpose, the task order amount is reported at an inflated value.

How screwy does that look?

Is any more effort required  to revise the CLIN and task order price when the deobligation mod is issued? I don’t think so. 

That seems like pretty goofy looking contract administration.  It doesn’t reflect the reality and appears that the task order could cost the government as much as the inflated price.

Noting in the task order mod that the total task order price/value/amount doesn’t match the total task order amount payable also looks goofy to me.

Please feel free to pass that on to “policy”.