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    The contractor is trying to invoice the services that the contractor personnel provided, to include hazard pay and other uplifts while contractor personnel are in Jordan. The CLIN they are invoicing against is Firm Fixed Price. The Government questions if the hazard pay and other uplifts should be billable since the contractor personnel were not in a specified "War Zone" at the time of invoicing. Is there a FAR or JTR reference that addresses this type of situation?


    Answer

    This is a great question, but unfortunately extremely difficult to answer because it is HIGHLY dependent on the actual terms and conditions of your contract and the facts and communications that went along with the “demobilization” order for contractor personnel.  However, we can give you some references and things to think about which should significantly help you out.
     
    To start with, it appears from the question background that the contract period of performance and/or scope of performance were changed as a result of the situation occurring in Iraq (i.e. violence and instability).  The formal decision/notice to “demobilize” could have occurred in a number of different ways, the most common examples include:
    1) A formal demobilization procedure (term, condition, or clause) in your contract for such a likely event.  [Note: per communication with the submitter; the contract does include a Demobilization CLIN.]
    2) The written or oral issuance of a change order (FAR 52.243-1, Alternate I – assuming not a commercial contract format).  For purposes of this answer, we will not assume this was a “constructive change”.
    3) A partial termination for convenience.
     
    If #1 above, the contract should provide guidance and instructions which should help you determine what are allowable costs, supporting data the contractor should provide, etc.  Common places to look for demobilization instructions are in the PWS/SOW, Section H, Section C, or an attachment to Section J.
     
    If #2 above, this would be considered a request for equitable adjustment and DFARS 252.243-7002 Requests for Equitable Adjustment, should also provide you some guidance.
     
    If #3) above, the terminations clause you have in your contract (most likely FAR 52.249-1 or 2) should also provide you some guidance.
     
    Either way, it is unusual for the contractor to be submitting routine invoices for these incurred expenses against the normal performance CLIN.
     
    It then becomes a case of whether not the costs are allowable, allocable, and reasonable.
     
    I’ll start with “allocable”; the contractor should be able to justify with adequate documentation their submitted costs are allocable (either direct or indirect). 
     

    FAR 31.205 is your best resource for determining if costs are “allowable”.  See 31.205-35 and 32.205-6.  You will also want to check your contract to see if any costs are “expressly unallowable”.  The Joint Travel Regulation (JTR), mostly Appendix E, Part 3 will provide you some guidance on contractor related travel and relocation expenses.  See: https://www.defensetravel.dod.mil/Docs/perdiem/JTR.pdf
     
    When it comes to “Hazardous Duty” or “War Zone” allowances; the rules guiding military and government civil service personnel do NOT apply to contractor personnel.  OPM, DoD, and Department of State regulations clearly point this out.  This is normally a matter for negotiation and competition to determine.  That said, it is a common practice that individual government contract terms and conditions (especially for cost reimbursable contracts) specify what countries or operational areas a contractor is allowed to apply these types of allowances for their employees, or state “IAW with government guidance…”.  We did search the DoD Financial Management Regulation (FMR), 7000.14R, locate at: http://comptroller.defense.gov/fmr.aspx and could not find any reference that contractor personnel were prohibited from achieving this allowance in the event military or government civilians were not authorized that allowance.
     
    Either way, the contractor should be required to justify this with documentation.  This could include internal company policy on employment contracts, recruiting material, etc.
     
    Finally, the “reasonable” element; well this is going to be primarily a function of your research and negotiation skills.  Another potential resource is CENTCOM’s Contracting Officers’ Guide Theater Business Clearance – Iraq, unfortunately we do not have access to their Intranet where the latest one is located.  I’m sure they would be willing to provide you a copy.  There is a potential that this could clarify or provide advice as the allow-ability and reasonableness of some contractor expenses being claimed. 
    https://www2.centcom.mil/sites/contracts


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