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CMC200 FEES, FINANCING, AND PAYMENTS

CMC200 FEES, FINANCING, AND PAYMENTS. Module 3: Contracts with Interim Financing Introduction. Module Introduction. Graphic: Screenshot of FAR, screenshot of MOCAS, graph, excerpt from WAWF. What’s In It For Me (WIIFM ).

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CMC200 FEES, FINANCING, AND PAYMENTS

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  1. CMC200FEES, FINANCING, AND PAYMENTS • Module 3: Contracts with Interim Financing • Introduction

  2. Module Introduction Graphic: Screenshot of FAR, screenshot of MOCAS, graph, excerpt from WAWF.

  3. What’s In It For Me (WIIFM) The information presented in this module will help you to successfully administer all aspects of contracts with Interim Financing. Graphic: Contract cartoon character with thought bubble and question mark.

  4. Module 3 Terminal Learning Objectives • Given a Government contract and/or modifications with interim financing through progress payments based on cost, correctly apply progress payment requirements as needed. • Given a Government contract and/or modification(s) with interim financing through performance-based payments, correctly apply performance-based payment requirements as needed.

  5. Module 3 Lessons • Lesson 1: Contracts with Interim Financing through Progress Payments Based on Cost Requirements • Lesson 2:Contracts with Interim Financing through Performance Based Payment Requirements

  6. Up Next Contracts with Interim Financing through Progress Payments Based on Cost Requirements Graphic: Contract cartoon character holding pencil. Text, ‘NEXT’.

  7. CMC200FEES, FINANCING AND PAYMENTS Module 3: Contracts with Interim FinancingLesson 1: Contracts with Interim Financing through Progress Payments Based on Cost Requirements

  8. Lesson 1 Introduction: TLO Given a Government contract and/or modification(s) with Interim Financing by Progress Payments Based on Cost, correctly apply Progress Payment requirements as needed. Graphic: business men and women reviewing a document together.

  9. What’s In It For Me (WIIFM) This lesson will provide you with basic information to perform contract administration on contracts with Interim Financing through Progress Payments. Graphic: Contract cartoon character with thought bubble and question mark.

  10. Lesson 1: ELOs • Given a Government contract and/or modification(s), with progress payments based on cost, correctly determine contractor and contract eligibility. • Given a Government contract and/or modification(s) with progress payments based on cost, correctly perform risk assessment. • Given a Government contract and/or modification(s) with progress payments based on cost, correctly perform initial progress payment review.

  11. Lesson 1: ELOs, Cont. • Given a Government contract and/or modification(s), with progress payments based on cost, correctly apply progress payments. • Given a Government contract and/or modification(s), with progress payments based on cost and appropriate supporting documentation, correctly suspend or reduce progress payments.

  12. Lesson 1 Topics • Progress Payment Financing • Contract Receipt and Review • First Article Limitations • Mixed-Type Contracts • Risk • Baseline • First Progress Payment Submittal • Liquidation/Recoupment • Subsequent Submittals • Loss-Ratio Factor • Fair Value • MOCAS • Adverse Developments • Periodic Reviews • Other Progress Payment Topics

  13. Topic 1: Progress Payment Financing • Progress Payment Financing • Contract Receipt and Review • First Article Limitations • Mixed-Type Contracts • Risk • Baseline • First Progress Payment Submittal • Liquidation/Recoupment • Subsequent Submittals • Loss-Ratio Factor • Fair Value • MOCAS • Adverse Developments • Periodic Reviews • Other Progress Payment Topics

  14. Progress Payment Financing • Provides Interim Financing on fixed-price contracts or fixed-price portion of mixed contracts • Provided in recognition of contractor’s need for working capital Graphic: stack of accounting documentation, calculator, pencil.

  15. Contract Eligibility Requirements • Large business: contract is valued at $2.5M or greater • Small business: contract is valued over the Simplified Acquisition Threshold - now $250K class deviation April 13, 2018 • Contractor is not expected to be able to bill for delivery of products for substantial time after work begins: • Large business: 6 months • Small business: 4 months Graphic: excerpt from FAR site.

  16. Contract Eligibility Requirements, Cont. • Eligible Contracts (Method of Financing): • Fixed-price contracts • Fixed-price portion of a contract • Ineligible Contracts: • Not authorized for cost-type contracts or cost-type line Items • Cannot be used with PBPs Graphic: stamp of text ‘APPROVED’.

  17. Progress Payment FAR Citation and Clause • FAR 32.5: Progress Payments Based On Costs • FAR 32.503: Post Award Matters • Contracts with Progress Payments require this clause: FAR 52.232-16: Progress Payments Graphic: Excerpt from FAR site, gold-colored dollar signs. Graphic: Excerpt from FAR site, gold-colored dollar signs.

  18. Progress Payment FAR Citation and Clause, Cont. Graphic: excerpt from FAR citation, text in cursive font: ‘The contracting officer shall not make progress payments or increase the contract price beyond the funds obligated under the contract as amended.’

  19. Progress Payment DFARS Citation and Clause Graphic: screenshot from DFARS website.

  20. Progress Payment DFARS Citation and Clause, Cont. • DFARS 252.232-7002: Progress Payments for Foreign Military Sales (FMS) Acquisitions-- Applied to solicitations and contracts that contain FMS requirements and provide for Progress Payments • DFARS 252.232-7004: DoD Progress Payment rates-- States that the Progress Payment and liquidation rates are 90% for small businesses Graphic: several stampers, text on one stamp, ‘RULES & REGULATIONS’.

  21. Progress Payment Eligibility - Rates & PGI Codes Graphic: MOCAS screenshot. N00024 09 C6255

  22. IDCs and BOAs • Progress Payment rate used in individual orders must be consistent with both: • Provisions of basic agreement • Progress Payment rates in effect at time order was issued • PCO or ACO (if PCO delegates) updates IDCs/BOAs to reflect changes in rates • Orders issued before rate change must not be modified to include new rate Graphic: wooden desk top with documents and pens sitting on it.

  23. Knowledge Review • Customary progress payments rates • Pre-award matters • Post-award matters • Performance Based Payments • Which of these subjects is not covered in FAR 32.5?

  24. Multiple Progress Payment rates • Some contracts contain different Progress Payment rates or require segregation of disbursements • ACO must work with the contractor and DFAS to determine best method for submitting PPRs • An effective solution is to segment contract into lots for purpose of Progress Payment submissions • Refer to DCMA MOCAS Users Guide for Contract Administration, 2.2.6 – Progress Payment request Processing

  25. Unusual Progress Payments • IAW FAR 32.501-2: Unusual Progress Payments – The PCO may provide unusual Progress Payments: • Contract price • Contractor’s working capital and credit • IAW DFARS PGI 232.501-2: Unusual Progress Payments – approval is required from: • Office of the Under Secretary of Defense • DoD Procurement and Acquisition Policy • ACO must document and tailor risk management plan to address these special requirements

  26. Topic 2: Contract Receipt and Review • Progress Payment Financing • Contract Receipt and Review • First Article Limitations • Mixed-Type Contracts • Risk • Baseline • First Progress Payment Submittal • Liquidation/Recoupment • Subsequent Submittals • Loss-Ratio Factor • Fair Value • MOCAS • Adverse Developments • Periodic Reviews • Other Progress Payment Topics

  27. Contract Receipt and Review The ACO must: • Review a contract, upon receipt, to determine if it includes the Progress Payment clause • Contact the contractor, if the clause is in the contract, to determine if they plan to request Progress Payments Graphic: woman sitting at a desk, reviewing document with a pen in hand.

  28. Contract Receipt and Review, Cont. • Contractor needs a methodology for completing SF 1443 before first Progress Payment request • Government progress reviews follow this methodology • ACO may prompt contractor to provide this information Graphic: man in a suit looking through binoculars at a document. Text in cursive font, ‘Total cost eligible for Progress Payments is the sum of the paid and incurred costs.’. Total cost eligible for Progress Payments is the sum of the paid and incurred costs.

  29. Contract Receipt and Review:Sources of ACO Information • Pre-Award Survey (PAS) information: • For this award, or • From a prior award, if conducted within 12 months prior to current contract award date • Accounting System review completed (mandatory) to approve contractor for Progress Payments Graphic: accounting documents, pen, calculator.

  30. Contract Receipt and Review:Sources of ACO Information, Cont. • System reviews of contractor processes • Talk with Technical team member with prior experience with contractor • Information from continuous reviews as part of ongoing surveillance for other awards • Contract files for contractor from prior awards - data < 12 months old Graphic: three people working together. One holding calculator, one writing on a document, one pointing at a graph. Laptop computer, cell phone, and mug on the table.

  31. Pre-Award Survey PAS provides information in two areas: • Determining contractor’s financial ability to perform • Evaluating adequacy of contractor’s accounting system to accumulate cost information required by contract with Progress Payment clause Graphic: man with hand on his chin looking at a computer monitor.

  32. Pre-Award Survey, Cont. If PAS was performed, what information is available to ACO? If PAS was not performed, how will Progress Payment risk management occur without PAS information? Graphic: woman standing in a room looking up and to the right. Behind her six doors, each in a different color.

  33. Financial Capability Review The ACO determines whether the contractor’s finances are adequate for the contract. Has a Financial Capability review been conducted within the last 12 months? • If yes, use that information • If no, request DCMA Financial Center perform one Graphic: magnifying glass in front of the text, ‘REVIEW’.

  34. Financial Capability Review, Cont. Financial information reviewed: • Financial statements • Cash forecasts • Financial history of contractor • Guarantor agreements • Other data: • Accounts receivable • Inventory Graphic: two sets of hands working at a desk, one typing on a computer keyboard, the other writing notes on a yellow pad of paper.

  35. Knowledge Review • If an ACO wants to re-use a Pre-Award Survey it must be how old? • 6 years • Less than one year • Age does not matter • Over 12 months

  36. Accounting Systems Review Accounting system must be able to : • Provide appropriate allocation of costs to cost objectives • Generate specific cost information required Graphic: stack of documents, invoices, and folders; calculator, pencil.

  37. Accounting Systems Review, FAR 32.503-3 Graphic: excerpt from FAR, with section 32.503-3 highlighted.

  38. Accounting Systems Review: FAR 32.503-3, Cont. IAW FAR 32.503-3: Initiation of Progress Payments and Review of Accounting System The ACO will not approve Progress Payments for contractors before determining that: • The contractor’s accounting system and controls are adequate for proper administration of Progress Payments • The contractor will be capable of liquidating any Progress Payments • The Government is otherwise protected against loss

  39. Accounting Systems Review, FAR 32.503-4 Graphic: excerpt from FAR, with section 32.503-4 highlighted.

  40. Knowledge Review • Cost Requirements review • Property System review • Accounting Systems review • Risk Management review • DCAA conducts which review to provide recommendations to the ACO/DACO?

  41. Topic 3: First Article Limitations • Progress Payment Financing • Contract Receipt and Review • First Article Limitations • Mixed-Type Contracts • Risk • Baseline • First Progress Payment Submittal • Liquidation/Recoupment • Subsequent Submittals • Loss-Ratio Factor • Fair Value • MOCAS • Adverse Developments • Periodic Reviews • Other Progress Payment Topics

  42. First Article Limitations Graphic: excerpt from FAR, with section 52.209-3 and -4 highlighted.

  43. First Article Limitations, Cont. ACO Administrative requirements: • Verify that First Article limitation has been established. If not, ACO and PCO establish interim limitation based on value of: • First Article requirement • Any authorized long lead items • Enter First Article information into MOCAS Progress Payment master inquiry screen • Determine if First Article limitation requires in-depth evaluation in order to make an equitable determination of limitation amount

  44. First Articles and MOCAS: Acceptance Days Graphic: MOCAS screenshot with items outlined in red. N00024 09 C6255

  45. First Articles and MOCAS: Acceptance Date Graphic: MOCAS screenshot with items outlined in red. N00024 09 C6255

  46. First Articles and MOCAS: Special Provision Code F Graphic: MOCAS screenshot with items outlined in red. N00024 09 C6255

  47. First Articles and MOCAS: First Article Limitation Graphic: MOCAS screenshot with items outlined in red. N00024 09 C6255

  48. Topic 4: Mixed-Type Contracts • Progress Payment Financing • Contract Receipt and Review • First Article Limitations • Mixed-Type Contracts • Risk • Baseline • First Progress Payment Submittal • Liquidation/Recoupment • Subsequent Submittals • Loss-Ratio Factor • Fair Value • MOCAS • Adverse Developments • Periodic Reviews • Other Progress Payment Topics

  49. Mixed-Type Contracts Only fixed-price CLINs are eligible for Progress Payments on contracts with both fixed-price and cost-type CLINs. The CA/ACO: • Calculates an ACRN ULO, based on the amount allocated to fixed-price CLINs, for ACRNs that fund multiple types of line items - not on total ACRN amount • Verifies that Progress Payment does not include ACRNs for cost-type CLINS • Verifies that DFAS pays correctly per contract payment instructions

  50. Mixed-Type Contracts:Progress Payment Line Item Data Graphic: MOCAS screenshot with items outlined in red. N00024 09 C6255

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