By Bruce Jervis
Generally, the cost of administering a contract is built into the fixed contract price. It is part of the contractor’s general and administrative overhead. Sometimes, however, government demands can necessitate extraordinary efforts by a contractor. In those cases, the cost of legal, accounting and consultant services are recoverable as extra work in the administration of a contract.
A recent example is a project in which flaws in the government design necessitated substantial revisions of the contract drawings. The government asked the contractor to prepare an itemized request for an equitable price adjustment. The government was not happy with the requested amount and demanded a DCAA audit, forcing the contractor to pay for even more accounting services.
The contractor was awarded some of its accounting costs. The amount was greatly reduced from the contractor’s request, however. The written consultant agreement did not cover the full scope of work, the consultant’s billing statements were vague, and there were no written work products to corroborate some of the billed tasks.
Do you agree that consultant costs necessitated by government mismanagement of a project should be recoverable as extra costs of contract administration? Or, should these costs be anticipated and factored into the G & A rate? If the costs are to be allowable, are the stringent standards of proof mandated by the Federal Acquisition Regulation appropriate? Your comments are welcomed.