As USAID contractors and recipients continue to build their cases for costs they must continue to incur under their stop-work orders and suspension notices, I wanted to address a few more points to consider beyond justifying SWO costs as reasonable. In this article, I address:
1. Key considerations for setting up charge codes;
2. Identifying which costs to direct bill to the SWO cost objective;
3. Whether or not you get to charge fee/profit; and
4. Seeking reimbursement for costs incurred during the period of the SWO.
While the below generally mentions “contracts” and your “CO”, the below guidance may be applied to contracts, grants, CoAgs and subs to those, unless otherwise noted. However, the discussion on fee only applies to contracts and subcontracts.
Charge Codes
Setting up a separate charge code for each project that has received a SWO or suspension notice is critical. Some clients have asked if simply identifying the start and end dates of the SWO is sufficient to separate SWO costs from costs that are billable to the contract, while continuing to bill SWO costs to the contract charge code. This is not a recommended practice.
The reason for setting up the new charge code goes beyond simply separating SWO costs from project costs; it also highlights the fact that the SWO is a separate cost objective entirely (i.e. project/initiative) from the contract/award that has been suspended. Meaning, SWO management costs are not actually allocable to your contract, as they do not benefit your award and are not incurred in support of achieving SOW objectives. Rather, the costs you incur to manage the SWO/suspension notice benefit the SWO only, and are therefore allocable to the SWO. As such, you want to be sure you are drawing that distinction in your accounting system through the creation of a separate code. The codes you set up should be used for direct costs to the SWO. OH and G&A costs that benefit multiple contracts or the organization as a whole do not need separate charge codes.
Which Costs to Bill to SWO Charge Codes
Another question that clients have asked is: Which costs should be billed to the SWO charge code? Should HO staff bill to these direct codes or continue billing to their requisite indirect cost pools? Beyond the obvious (salaries for keeping long-term project staff in place, where doing so is less costly than terminating them, project office rent, etc.), costs you incur to manage the SWO, and which are costs that would not be incurred if not for the SWO, and which "benefit" or are allocable to the SWO should be billed to the SWO charge code as a direct cost to the SWO. This can include legal fees, HO staff time dedicated to managing the SWO, and any other costs you incur exclusively for the stop work order in question. Without regard to whether the work is administrative in nature, or whether the workers typically charge an administrative pool (such as G&A), labor and other costs caused by the SWO are direct costs of the SWO. These direct costs should continue to be burdened with your indirect cost rates, just like any contract, grant or CoAg would be.
Fee/Profit
In case you were wondering, yes, you are eligible to build in profit/fixed fee to your SWO costs if you have a CPxx contract or subcontract. Fee is explicitly called out in FAR 52.242-15 (Alt I) for reimbursable contracts, and may be incorporated in your equitable adjustment. For Fixed Price contracts, adjustment to price, which is cost plus profit, is called out in FAR 52.243-1 and, if applicable, one of the alternates. And do not neglect FAR 15.404-4 “Profit” which discusses elements the CO must consider when evaluating the reasonableness of the proposed fee/profit. While you may not be working towards a particular deliverable or milestone under a SWO, continuing profit or fee factors include the contribution of contractor investments in resources applied, indirect cost contributions to performance, and conversion of (SWO-related) labor (which requires even more diversity, skill, and coordination). Contract Cost Risk is an element the CO must consider in accordance with the FAR Profit clause when assessing the reasonableness of the profit proposed.
Seeking Reimbursement for SWO Costs
One of the murkier issues that has come up during this period is the question of whether or not companies may invoice and be reimbursed for SWO costs incurred. This is a difficult one to address, as the answer should have come from your CO/AO/prime. Since USAID has effectively dissolved/shut down and many remaining staff seem to still be under instruction to not communicate outside the agency, that option seems to be off the table. If your SWO contained instructions about invoicing and reimbursement, then follow that order. If your SWO was silent, then you can certainly make a written request to your CO/AO, but you are unlikely to get an answer. Attempting to contact USAID's billing department or paying office would normally be an option if the CO/AO doesn’t respond but, again, given USAID’s current condition, this is probably a losing endeavor.
Once your CO/AO is back online, add the question of reimbursement procedures to your items to discuss.
For those of you in a sub role, since most primes are not getting guidance (as per above), expect to be told by your prime that reimbursement is off the table for the time being.
In short, most partners will be required to carry these costs until the SWO is lifted or a notice of termination lands in your inbox. At that point, your requests will be analyzed by USAID and an equitable adjustment (if the SWO/suspension is lifted) or a termination settlement (if your award is terminated) will be negotiated.
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