Cost Accounting Systems and Financial Reporting Considerations

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NDIA AnnualEducational SeminarContracting for
Services March 31, 2008
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Contracting for Services

• Discussion Topics
• Procurement Methods
• Terms and Conditions
• Challenging Areas

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Procurement Methods and Contract Types

• FAR Part 37 - service contract is a contract
  that directly engages the time and effort of a
  contractor whose primary purpose is to perform an
  identifiable task rather than to furnish an end
  item of supply
• May be either non-personal services or personal
  services
• Non-personal services contract personnel
  rendering the services are not subject, either by
  contract terms or manner of administration, to
  the supervision and control usually prevailing in
  relationships between the government and its
  employees
• Personal services contract characterized by
  employer-employee relationship under supervision
  and control of government officer or employee
• Areas which service contracts are found include
• Maintenance, overhaul, repair, servicing,
  rehabilitation, salvage, modernization,
  modification of supplies, systems, or equipment
• Routine recurring maintenance of real property
• Housekeeping and base services
• Advisory and assistance services
• Operation of government-owned equipment,
  property, and systems
• Communications services
• Architect and engineering (FAR Subpart 36.6)
• Transportation and related services (FAR Part 47)
• Research and development (FAR Part 35)

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Procurement Methods and Contract Types

• Performance-based acquisition preferred
• Agencies shall generally rely on private sector
  for commercial services
• Non-personal service contracts are proper under
  general contracting authority
• Agency program officials responsible for
  accurately describing need
• Services obtained in most cost effective manner
• Sufficiently trained and experienced Agency
  officials to manage and oversee the contract
  administration function
• CO determines whether service is for personal or
  non-personal services

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Procurement Methods and Contract Types

• Competition - sealed bidding preferred
• Awards are not necessarily limited to price
  competition
• Contract types include fixed price, TM, and cost
  reimbursement subject to specific restrictions,
  the contracting officer has discretion over type
• Contract Term
• Funded by annual appropriations not extend past
  appropriation year
• Multi-Year Contracts are permitted basic and
  options should not exceed 5 years (FAR Subpart
  17.1 and 17.2)
• Extensions permitted to avoid Anti-Deficiency
  Act option may be exercised more than once
  total extension cannot exceed 6 months
• FAR Part 12 commercial services are limited to
  FFP and FP/EPA

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Contract Terms and Conditions

• Government prepared Performance Work Statement or
  Statement of Objectives
• Measurable performance standards and method of
  assessing performance
• Performance incentives innovation and
  cost-effectiveness
• Service Contract Act (FAR Subpart 22.10)
• Wage determinations prevailing rates, collective
  bargaining agreements
• Fair Labor Standards Act minimum wage
• Inspection of services/Quality assurance
  surveillance
• Uncompensated overtime
• Not encouraged
• CO must evaluate the use uncompensated overtime
  so as to not degrade level of technical expertise
  for competitive negotiations
• unrealistically low rates may result in quality
  or service shortfalls
• unbalanced distribution among skill sets and use
  in key technical positions
• Subcontracting plan is not required for personal
  services contracts

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Challenging Areas

• Service Contract Act
• Applicability
• Exemptions
• Labor categories
• Bundling of supplies and services
• Labor categories
• Contract Types
• Personal services vs. Non-personal services
• Government-wide contracts

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Wrap-up and QA
Questions/Comments Mark Dostal
312-298-2330 mark.s.dostal_at_us.pwc.com