Sign In
  • Question

    1. May the contractor submit the next interim public voucher using the revised rates of 65% for overhead and 23% for G&A without the mutual consent of the contracting officer or congnizant auditor? 2. Same question as above, but the accounting system is "inadequate"? 3. Does a contractor ever have the unilateral right to adjust the billing rates applied on its interim public vouchers?


    Answer

    The answer to this question is rooted in the contracting officer’s authority, and responsibility, to determine reasonableness.  FAR 31.201-3 – Determining Reasonableness makes the clear statement that, “No presumption of reasonableness shall be attached to the incurrence of costs by a contractor.”  This exclusion of the presumption of reasonableness bars the possibility of the contractor unilaterally determining billing rate revisions.  Having efficient contractors is certainly a benefit.  Enjoying that benefit does not relieve the contracting officer of the duty to determine reasonableness regarding contract price and cost matters.  The specific answers to the sub-questions are as follows:
     
    Sub-Question #1 and #3: The answer is, “no.”  The contractor may not submit revised billing rates without mutual agreement.  Contracting officers may find this direction as follows: FAR 16.307(a) directs the inclusion of the clause at FAR 52.216-7 – Allowable Cost and Payment, in solicitations and contracts when cost-reimbursement contract or time-and-materials contracts are contemplated. FAR 52.216-7(e)(2) allows revision of the billing rates by mutual agreement only.  The clause also references FAR Subpart 42.7 where we find a further explanation that revision of billing rates, once established by the contracting officer or auditor, can only be accomplished by mutual agreement or unilaterally by the contracting officer if agreement cannot be reached (FAR 42.704(c).
     
    Sub-Question #2: The answer remains, “no,” but with the additional issue at FAR 16.301-3(a)(1) that a cost-reimbursement contract may be used only when the contractor’s accounting system is adequate for determining costs applicable to the contract.

    Open full Question Details