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The complications of cost and pricing

September 9, 2014 By ei2admin

One of the most controversial areas in government contracting surrounds cost and pricing: the means by which a contracting officer makes a “fair and reasonable” price determination. This can be expensive to bidders, especially if they are required to provide “certified cost and pricing data” and respond to Defense Contract Audit Agency or contracting officer questions. Recent inspector general reports have highlighted the problem.

Commercial companies don’t have similar requirements and aren’t structured for it. They maintain that creating such cost-accounting compliance would incur extra overhead costs, drive up prices, and hurt them competitively. Contractor concerns involve onerous government requirements, inapplicability, and potentially abandoning the government market.

Perhaps the biggest difference between government and commercial buying practices is symbolized in the Truth in Negotiations Act (TINA). Its main intent is to ensure accuracy of a contractor’s costs before negotiating with the government and includes providing government access to all cost or pricing data the contractor used to develop its offer. If the cost rises and the bidder is found to have withheld any data, the government can get back the added costs.

Keep reading this article at: http://www.federaltimes.com/article/20140826/BLG06/308260017/The-complications-cost-pricing

Filed Under: Contracting Tips Tagged With: applicability, certified cost and price data, cost and price, cost and price analysis, fair and reasonable, marketplace, reasonableness, TINA

Federal Circuit’s Metcalf decision a big win for contractors

May 15, 2014 By ei2admin

In a recent decision, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) the supervising court for the Court of Federal Claims and the Boards of Contract Appeals, among others) clarified important legal principles concerning the federal government’s duty of good faith and fair dealing and its responsibility for differing site conditions. Metcalf Construction Company, Inc. v. United States controls disputes with the federal government and also provides authority and rationale useful to contractors in disputes with any project owner, public or private.

In October 2002, Metcalf Construction, a small business based in Hawaii, was awarded a $48 million contract to design and build 212 housing units for the U.S. Navy on a Marine Corps base in Hawaii. Saying the project did not go smoothly is an understatement. Metcalf’s performance was hindered and delayed by unanticipated soil conditions and other issues made worse by the Navy’s failure to administer the contract fairly and according to its terms. By the time the Navy finally accepted the project as complete in March 2007, almost two full years after the original completion date, Metcalf had incurred costs in excess of $76 million — leaving the contractor with losses of approximately $27 million.

Keep reading this article at: http://www.mondaq.com/unitedstates/x/311802/Building+Construction/Federal+Circuits+Metcalf+Decision+a+Big+Win+for+Contractors&email_access=on

Filed Under: Contracting News Tagged With: claim, contract administration, contract dispute, Court of Appeals, Court of Federal Claims, fair treatment, good faith, Marine Corps, Navy, price adjustment, reasonableness, recovery, site conditions

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