Since he is quoting the same rates for both Government agencies why should we have 2 sets of billing rates? It seems to me if DOD ends up questioning these cost so would the Civil Agencies.
With regard to external restructuring costs billing to the Federal Government the policies and procedures differ
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among the Civil Federal Agencies and the Department of Defense (DoD). According to FAR Part 31, costs are allowable
when it is reasonable, allocable, Cost Accounting Standards (CAS) compliant, applicable to the terms of the
contract, and does not exceed any limitation set forth in the FAR. There is no restriction in FAR Part 31
disallowing contractor’s from charging restructuring costs and it is allocable under CAS. However, DFARS and
the PGI 231.205-70 prescribe DoD’s policies and procedures for allowing contractors to charge external
restructuring costs. In order for a contractor to charge external restructuring Costs to DoD contracts,
like Civil Federal Agencies, the cost must be allowable in accordance with FAR Part 31 and DFARS Part 231.
Furthermore, DFARS establishes limitations of cost allowability of external restructuring costs. The costs are
not allowed unless: an audit of projected restructuring costs and restructuring savings is performed; and the
Cognizant Administrative Contracting Officer (ACO) reviews the audit report and projected costs and projected
savings, and negotiate an advance agreement. If the restructuring amount is expected to exceed $25 million over
a 5-year period the Under Secretary of Defense (AT&L) or the Principal Deputy must determine in writing that the
audited projected savings on a present value basis, for DoD resulting from the restructuring will exceed
the cost allowed by a factor of at least two to one; or the cost allowed and the business combination will
result in the preservation of a critical capability that might otherwise be lost to DoD. For cases where the
restructuring cost is less than $25 million, the Director of the Defense contract Management Agency (DCMA) is
the designated official who must put the audited findings in writing. Refer to the DFARS and PGI for procedures
and ACO responsibilities regarding external restructuring cost.
For additional information regarding DoD and industry restructuring costs refer to GAO reports: T-NSIAD-97-141, Apr 15, 1997 and NSIAD-99-22, Dec 1, 1998.
Also, refer to your agency’s policy to determine if there are specific requirements that apply to your
situation. Also consult with your legal office for further guidance.