ConstructionPro Week, Volume: 5 - Issue: 8 - 02/26/2016

Can Support Services Be Recovered as Extra Administrative Costs?

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.

 

COMMENTS

If the delays is attributed to the Employer risk event and which has so long time and the Contractor has informed the Employer of his intention to claim for the delays caused by the Employer.

The Contractor will have to substantiate properly in itemise steps what he is claiming with particular reference to the contract. it will also depends on the necessity for the requirements of the consultant, if it is necessary for works of the original scopes or for any additional scopes that may require the services of specialist consultant to enable the extra scope of works to be completed. The Contractor must have very good reasons for why he brings in the consultant during the extended period for the same works of the contract that he did not use consultant previously but wants to use now that the works are extended due to Employer's risk events.

Ordinarily, Employer cannot pay for contractor's consultant to audit contractor's in-house account to proof entitlement to the Employer, for preparing claim to the Contractor, wherein contractor can do them with his key staff.
Posted by: Ekwere Ufot - Friday, February 26, 2016 12:20 PM


Please include citations for cases that you mention. Thanks.
Posted by: Peter Kraemer - Friday, February 26, 2016 1:43 PM


Mr. Jervis: Do you have the cite for the case you discuss above?
Posted by: Jeffrey S. Hurst - Friday, February 26, 2016 3:02 PM


The cases are included with the member version of the newsletter. You need to either login or subscribe to access them.
Posted by: Anna Motuz - Monday, February 29, 2016 7:10 AM


 









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