6973GH-22-R-00025 Amendment 0002.pdf

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

1. CONTRACT ID CODE

5. PROJECT NO. (If applicable)2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ.NO.

PAGE OF PAGES

6. ISSUED BY CODE 7. ADMINISTERED BY (If other than Item 6)

8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and ZIP Code)

CODE

9A. AMENDMENT OF SOLICITATION NO.

9B. DATED (SEE ITEM 11)

10A. MODIFICATION OF CONTRACT/ORDER NO.

10B. DATED (SEE ITEM 13)

CODE FACILITY CODE

11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended , by one of the following methods: (a) By completing

Items 8 and 15, and returning is extended, is not extended.

12. ACCOUNTING AND APPROPRIATION DATA (If required.)

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x) A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT

B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO THE AUTHORITY OF:

D. OTHER (Specify type of modification and authority) appropriation date, etc.) SET FORTH IN ITEM 14.

E. IMPORTANT: Contractor is not, is required to sign this document and return

ORDER NO. IN ITEM 10A.

1 3

0002 06/21/2022

AAQ-731 FAC. & AVIATION SAFETY ACQ

FAA AERONAUTICAL CENTER

PO BOX 25082

BLDG 014-AHQ, ROOM 233A

AAQ0731-AFN

OKLAHOMA CITY OK 73125

AAQ-731 FAC. & AVIATION SAFETY ACQ

FAA AERONAUTICAL CENTER

PO BOX 25082

BLDG 014-AHQ, ROOM 233A

AAQ731-AFN

OKLAHOMA CITY OK 73125

x

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT

THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted , such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted ; or (c) By ___________ 1 x x

6973GH-22-R-00025

1 copies to the issuing office.

06/21/2022

(x)

The purpose of this amendment is to adjust the following:

I. The proposal due date and the past performance questionnaire due date is hereby extended to August 5th, 2022 3:00 p.m. Central Time

II. Attachment 01 Performance Work Statement dated 10/29/2021, 49 pages is superseded and replaced by Attachment 01 Performance Work Statement Rev 2 7-11-22 dated 07/11/2022, 49 pages.

III. Attachment 02 Section B Supplies or Services Price Cost dated 03/30/2022, 1 page is superseded and replaced by Attachment 02 Section B Supplies or Services Price Cost Rev 1

Continued ...

16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)15A. NAME AND TITLE OF SIGNER (Type or print)

15C. DATE SIGNED 16B. CONTRACT AUTHORITY 15B. CONTRACTOR/OFFEROR 16C. DATE SIGNED

(Signature of person authorized to sign) (Signature of Contracting Officer)

Cynthia L. Cooper

Except as provided herein, all terms and conditions of the document referenced in Item 9 A or 10A, as heretofore changed, remains unchanged and in full force and effect .

ITEM NO. SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

NAME OF OFFEROR OR CONTRACTOR

2 3

CONTINUATION SHEET

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE OF

(A) (B) (C) (D) (E) (F)

6973GH-22-R-00025/0002

7.11.2 dated 07/11/2022, 1 page.

IV. A building list is hereby attached as

"Attachment 11 Building list 7-11-22".

V. A list of preventative maintenance equipment is hereby attached as "Attachment 12 PM

Equipment 7-11-22".

VI. A grounds maintenance map is hereby attached as "Attachment 13 Grounds Map 7-11-22".

VII. A listing of Metasys equipment is hereby attached as "Attachment 14 Metasys Equipment

7-11-22".

VIII. A copy of "Cost Principles" is provided under the SAM.gov posting for reference as outlined in AMS Clause 3.3.2-1 FAA COST

PRINCIPLES (OCT 2019)

IX. A copy of the Questions and Answers 1 through 55 posed in response to this solicitation is hereby provided as "QA #1 6973GH-22-R-00025 OM

Services"

Period of Performance: 10/01/2022 to 09/30/2027

LIST OF CHANGES:

Section J - List of Documents, Exhibits and Other Attachments was revised as follows.

Attachment List was revised as follows.

Table has been revised and now reads as follows:

ATTACHMENT TITLE DATE NO. OF

PAGES

01 Performance Work Statement 10/29/2021 49 01 Performance Work Statement Rev 2 7-11-22 07/11/2022 49 02 Section B, Supplies or Services Price/Cost 03/30/2022 1 02 Section B Supplies or Services Price Cost Rev 1 7.11.22 07/11/2022 1 03 Operations and Maintenance Past Performance Survey 03/30/2022 9

04 IBEW CBA 2022-2025 04/04/2022 21

05 International Association of Machinists and Aerospace Workers 04/04/2022 32

06 United Association of Journeyman and Apprentices of the Plumbing and Pipe Fitting Union 04/04/2022 27

07 Wage Determination 1986-8773, Revision 46 04/04/2022 2 08 Wage Determination OK22-0049 02/25/2022 7 09 Wage Determination 2005-5315, Revision 17 03/15/2022 11 10 Client Authorization Letter 07/06/2022 1 11 Building list 7-11-22 07/11/2022 4 12 PM Equipment 7-11-22 07/11/2022 477 13 Grounds Map 7-11-22 07/11/2022 1 14 Metasys Equipment 7-11-22 07/11/2022 6

MMAC Operations & Maintenance Services

6973GH‐22‐R‐00025 Q&A #1

Questions and Answers #1

Question Number

Ref Question Answer

SIR, Section L.1 and L.10, page 68

On page 68, Section 3.2.2.3‐20 indicates that offers should be submitted to Joni.l.haynes@faa.gov. Section L.1 indicates that proposals should be submitted only to the CO and COR. Should proposals be submitted to Joni.l.haynes?

Proposal should NOT be submitted to Joni.l.haynes@faa.gov. All proposal submission must be sent to cynthia.cooper@faa.gov and andre.casiano@faa.gov.

SIR Section L.5, Would the FAA like copies of emails to be attached to the submittal as separate documents, or would the FAA accept pictures of emails embedded in the proposal as evidence? If required to be submitted within the technical proposal, do these count towards the page count?

Embedded pictures will not be accepted within the proposal. Emails are to be attached to the submittal as separate documents.

SIR Section L.3, Would the FAA consider removing the requirement for text to be double spaced or allowing 1.5 spacing?

Proposals must be double spaced

SIR Section L.3, Page 65 refers to a Client Authorization Letter, but it does not appear to be in Section J.

Could the Government provide this form?

Attachment 10, Client Authorization Letter was left off the initial SIR posting and has been corrected with amendment 0001

SIR Section L.3, Some of our relevant references have a policy against providing references in writing.

Would FAA accept a verbal reference provided over the phone in lieu of a survey?

The government will not allow verbal references

SIR Section L.5, Does FAA request that copies of each PPS are included in the technical proposal (in addition to being submitted by each reference)? If so, does this count towards the page count?

SIR has been amended to reflect no page limit for Factor 3. This was corrected in Amendment 0001

7 SIR Section F.1

Section F.1 Transition Period and Period of Performance. In this section, the RFP states that this contract includes a 45‐day transition. However, in Section H.1 Transition and Phase‐In Requirements, the section states that the transition period is 30 days. Can the government please clarify the transition period?

Transition Period is 30 days, this inconsistency has been corrected in Amendment 0001.

PWS Section 1.14.1, page 5

The safety management program required is only for JLL/JV, not the entire population of the buildings, correct? Will this be outsourced?

The safety management program is intended for the O&M contract company and covers the items listed in section 1.14 of the PWS. Additional safety programs for occupants in all buildings are not the responsibility of this contract.

PWS Section

1.14.1.7, page 5 What kind of materials are contemplated? Will this be outsourced?

The materials required to fulfill the PWS in section 4.6 and 4.11 are the required to be managed by the contractor. This is the responsibility of the contractor and will not be

PWS Section 1.14.1.6

Is handling, removal and disposal of CFC part of “management”? Handling, removal, and disposal of CFC are required.

PWS, Section 4.5, Will any automobiles or larger licensed vehicles be repaired? Only low speed vehicles and equipment are required to be repaired.

PWS Section

4.6.5.6, page 22 What kind of hazardous materials are contemplated to be stored? Flammable, corrosive, and acoustic chemicals in conjunction with the PWS will be stored.

13 N/A Will operations be conducted within secure (airside) aviation operations areas?

We do have Hanger facilities with an active flight line. Access is regulated to these facilities.

Maintenance of flight line equipment is not required in the PWS.

SIR Section I –

Contract Clauses, Can the Government provide a copy of the FAA Contract Cost Principles? A copy of the FAA Contract Cost Principles has been posted for reference.

15 N/A Can the FAA provide the name of the current electrical service (IR, switchgear testing) provider?

OG&E provides electrical power to the center.

16 N/A Can the FAA provide the name of the current fire alarm service provider?

Simplex is the current fire alarm system vendor. Fire alarm and sprinkler techs are part of the contract staff.

17 N/A Can the FAA provide the name of the current building automation service provider?

Metasys is the current building automation system. The system is maintained with contract staff and JCI as needed.

18 N/A Can the FAA provide the name of the current fire sprinkler testing and inspections service provider?

The fire sprinkler testing and inspections must be an approved licensed vendor in the state of

Oklahoma.

19 N/A Can the FAA provide the name of the current landscape and snow removal service provider?

We do not use a landscape company. CLINs 7‐10 cover the grounds and center cleaning.

Center wide cleaning with heavy equipment for clearing may be needed for large scale weather events.

20 N/A Can the FAA provide the name of the current water treatment service provider? Water treatment will need to be performed in house under CLIN 2.

21 N/A Can the FAA provide the name of the current generator service provider? Generator services are provided by this contract.

22 N/A Can the FAA provide the name of the current pest control service provider? Pest control service is provided by this contract.

23 N/A Can the FAA provide an equipment list? See attached GFP document.

24 SAM.gov The solicitation posting on Sam.gov references additional documents only available to approved roles. After obtaining the approval, we were unable to see additional documents – is this an error?

This is an error, all required documents are avialble for public access via SAM.gov

PWS, Technical

Exhibit 2 Would the FAA consider making the aeronautical maps and buildings list, along with building square footage, available to contractors to use as we prepare our proposals?

The building list has been added as an attachment via amendment 0002

26 PWS, Task 7 The grounds maintenance scope references drawings from the AMP‐400. Could the FAA provide these drawings, particularly the AMP‐400‐D‐2012026804?

The grounds maintenance map has been added as an attachment via amendment 0002

27 PWS, Para 3.3 Can the government provide a listing of government furnished equipment? The GFP Listing has been added as an attachment via amendment 0002

28 PWS, Para 3.4 Can the government provide a listing of government furnished non‐routine equipment and tools?

The GFP Listing has been added as an attachment via amendment 0002

29 PWS, Para 3.8 Can the government provide a listing of GSA vehicles available for use by the contractor?

Currently we have a 2022 and 2019 Dodge Ram 1500, 2022 Chevy 2500 HD, 2022 Chevy

G2300 Van, 2014 F‐150

30 PWS, Para 4.1 Will the government provide a detailed listing of the items required for preventative maintenance?

An equipment listing for preventative maintenance has been added as an attachment via amendment 0002

PWS, Para 4.1.9 Para 4.2.8.4 Para

4.2.12.4 Para

4.4.2.4 Para

4.5.3.4 Para

4.6.8.4 Para

4.7.5.4 Para

4.8.7.4

Provide no services in this task? Why would no level of service be priced out in Schedule B?

The government can choose to order service level 1 which is "no services" based on budget constraints.

32 PWS,Para 4.2.1 Will the government provide a breakout of routine trouble calls by function instead of just totals? This would provide the contractor to have the appropriate amount of staffing to maintain compliance to the requirements of the PWS.

The trouble calls are complex and ever changing especially during COVID max telework and facility reopening.

33 PWS, Para 4.2.4 Will the government provide a detailed listing of types of heating/cooling systems, electrical components and systems, types of fire alarm/fire sprinkler systems, etc.?

Equipment has been added as an attachment via amendment 0002

34 PWS, Para 4.3.3.7 Will the government provide a listing of all components of the CCMS systems? Metasys equipment list has been added as an attachment via amendment 0002

35 Site Visit Are the AHU filters MERV‐13 rated? We use MERV‐13 filters where applicable.

36 Site Visit What is the current work order system being utilized? Archibus is the current system. This system is used for PMs, TC, and inventory.

37 Site Visit Is mixing for pesticides done on‐site at the MMAC? We only have concentrated pesticides that mix with water.

38 Site Visit How is initial equipment handover done for new equipment being added to the O&M

Services Contract for maintenance?

PWS 4.1.7.2

39 Site Visit Are there other buildings where O&M Contractors will work out of or is it just the main

O&M building?

Other buildings will be necessary to work out of such as mechanical spaces, battery shop, water treatment plant, logistics center support, grounds maintenance, and others when required are some examples.

40 Site Visit Are there special access requirements for the Flightline? Training, documentation, or questioners may be required.

41 Site Visit Do all O&M contract employees require Flightline access? No, flight line access is not required for all O&M contract employees.

42 Site Visit Are there any GSA leased vehicles under this contract, and if so, does the contractor need to coordinate maintenance service for them?

Currently we have five GSA vehicles used by this contract and some coordination may be necessary.

43 Site Visit Are there are satellite locations outside of the Mike Monroney Aeronautical Center that service must be provided at?

901‐TRW Thomas Road Warehouse at 3601 S. Thomas Road is a warehouse space.

44 PWS 4.13

Program to meet all Federal, State, Local and FAA regulations to include ERO and COOP.

The COOP abbreviation is explained in the PWS but ERO is not. Will the Government define ERO for bidders to better understand the deliverable requirement?

This is incorrect. The PWS will be updated and added via amendment 0002.

45 PWS 1.14

For PWS 1.14, ENVIRONMENTAL / SAFETY / QUALITY CONTROL / QUALITY ASSURANCE, there is no work load level requirements (in hours) or level of effort baseline requirements to build our estimate. For example in PWS 1.14.1.7, the requirement states, “The Contractor shall transport hazardous and universal waste to the appropriate site in accordance with an approved Environmental Management Program that complies with all

Federal, State and Local ordinances and regulations.” Will the Government provide historical hazardous waste transport history so that bidders can appropriate estimate the labor needed for this requirement?

The contractor will be responsible to ensure proper handling, labeling, storing and transportation on Center for any produced hazardous waste in accordance with this PWS. The FAA has other contracts that cover the proper DOT transportation and disposal off Center.

46 PWS

Will the government please provide work order history? This information and asset lists are critical pieces of information for bidders to build a labor estimate. We understand that the RFP has provided labor baseline requirements to price. For example, 36,000 hours are required for automated work orders. Given the differences in CBA labor rates (from below $20/hour to almost $40/hour), it is not realistic to provide a competitive price to meet the government’s labor requirements without this information.

The government will not provided detailed historical labor hours for this requirement. We will incorporate the FY21 Closed Work Request into the updated PWS and will be included in the amendment. The requirements of this PWS are similar to industry standards when comparing types of equipment and the square footage maintained.

47 General Will the Government please provide a two week extension from the release date of all questions/answers and requested information?

Yes. The new due date will be listed amendment 0002.

PWS 4.9.7 Service Levels Per Order

PWS Section 4.9.7.1‐6 shows six service levels. Could the Government please direct the Contractor on how to provide pricing for the PWS which shows only 4 levels.

The Schedule B was incorrect, revised Schedule B has been attached via amendment 0002.

PWS 4.5 and price sheet

In the PWS, Section 4.5 is AUTOMOTIVE SHOP SUPPORT; in the price sheet it is Flight Line Maintenance IAW PWS Section 4.5. How would the Government like the forms populated?

The Schedule B was incorrect, revised Schedule B has been attached via amendment 0002.

PWS 4.6 and price sheet

In the PWS, Section 4.6 is LOGISTICS MANAGEMENT PARTS AND MATERIALS in the price sheet it is Base Maintenance Automotive Shop IAW PWS Section 4.6. How would the

Government like the forms populated?

The Schedule B was incorrect, revised Schedule B has been attached via amendment 0002.

PWS 4.7 and price sheet

In the PWS, Section 4.7 is Grounds Maintenance Mowing. In the price sheet it is Logistics Management Parts and Materials IAW PWS Section 4.7. How would the Government like the forms populated?

The Schedule B was incorrect, revised Schedule B has been attached via amendment 0002.

PWS 4.8 and price sheet

In the PWS, Section 4.8 is Grounds Maintenance clean up/ irrigation; in the price sheet it is Grounds Maintenance Mowing IAW PWS Section 4.8. How would the Government like the forms populated?

The Schedule B was incorrect, revised Schedule B has been attached via amendment 0002.

PWS 4.9 and price sheet

In the PWS, Section 4.9 is Chemical Treatment/ Fertilizing. In the price sheet it is Grounds Maintenance General IAW PWS Section 4.9. How would the Government like the forms populated?

The Schedule B was incorrect, revised Schedule B has been attached via amendment 0002.

PWS 4.10 and price sheet

In the PWS, Section 4.10 is Storm Preparedness and Recovery Operations; in the price sheet it is Grounds Maintenance Chemical IAW PWS Section 4.10. How would the

Government like the forms populated?

The Schedule B was incorrect, revised Schedule B has been attached via amendment 0002.

PWS 4.11 and price sheet

In the PWS, Section 4.11 is ADDITIONAL SERVICES; in the price sheet it is Storm Preparedness/Recovery Operations IAW PWS Section 4.11. How would the Government like the forms populated?

The Schedule B was incorrect, revised Schedule B has been attached via amendment 0002.

Chapter 13: Cost Principles

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13. COST PRINCIPLES

Table of Contents

13.1 INTRODUCTION.............................................................13-2

13.2 COST PRINCIPLES VERSUS COST ACCOUNTING

STANDARDS............................................................. 13-2

13.3 APPLICABILITY TO FAA CONTRACTING........................... 13-3

13.4 ELEMENTS OF ALLOWABILITY.......................................... 13-4

13.5 ENFORCEMENT............................................................. 13-5

13.5.1 Disallowance of Cost During Contract

Performance.............................................................13-5

13.6 ADVANCE AGREEMENTS................................................ 13-5

13.7 THE COST PRINCIPLES....................................................13-7

13.7.1 The FAA Contract Cost Principles.........................13-7

13.7.2 Cost Principles for other Situations........................13-7

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13.1 INTRODUCTION

The allowability of costs is a prominent subject in the formulation and administration of contracts. Analysts must be very knowledgeable of cost principles to accurately perform cost analyses and adequately support the contracting officer (CO) during contract administration. This chapter introduces cost principles, specifically the FAA Contract Cost Principles (FAA AMS Procurement Guidance T3.3.2) and highlights key concepts. In addition, this chapter will discuss the following as they relate to commercial organizations:

• Cost Principles versus Cost Accounting Standards (CAS)

• Applicability

• Elements of Allowability

• Enforcement

• Advance Agreements

• Highlights of FAA Contract Cost Principles

13.2 COST PRINCIPLES VERSUS COST ACCOUNTING STANDARDS

CAS and cost principles are related, but are not interchangeable. CAS addresses accounting--the measure-ment, assignment, and allocation of costs to Government contracts. Cost principles address cost allowability.

Cost allowability is a procurement matter and is a function of law, regu-lation, or contract clauses. Costs may be allocable but not allowable.

Some of the cost principles have di-rectly incorporated certain CAS. If costs related to cost principles are not accounted for in accordance with CAS, then the cost is unallowable.

Table 13-1 provides examples of the link between certain cost principles and CAS.

Allocable Cost: A cost that is assignable or chargeable to one or more cost objectives on the basis of relative benefits received or some other equitable relationship.

Allowable Cost: A cost that 1.)

meets the test of reasonableness and allocability, 2.) is in accordance with standards promulgated by the Cost Accounting Standards Board (if applicable) or otherwise conforms to generally accepted accounting principles, 3.) follows specific limitations or exclusions set forth in the FAA contract cost principles, and 4.) abides by the terms of the contract.

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Table 13-1. Cost Principles Versus CAS

13.3 APPLICABILITY TO FAA CONTRACTING

The FAA’s AMS has established Contract Cost Principles which are used for: 1.) the pricing of contracts, subcontracts, and modifications to contracts and subcontracts when cost analysis is performed, and 2.) the determination, negotiation, or allowance of costs when required by a contract clause (e.g., economic price adjustment or fixed-price incentive contracts). In accordance with FAA AMS, section 3.3.2.1, the CO will incorporate the cost principles and procedures in contracts with commercial organizations as the basis for the following:

1. The determination of allowable, allocable, and reasonable costs under cost reimbursement contracts and cost reimbursement subcontracts and the cost reimbursement portion of time and materials contracts except when material is priced on a basis other than cost;

2. The negotiation of indirect cost rates, when any of the following conditions exist:

a) FAA has division or corporate contract administration responsibilities;

b) Quick close-out procedures are used; or

c) Indirect rate caps are negotiated in the contract;

3. The determination or negotiation of costs under terminated contracts;

4. Price revision of fixed-price incentive contracts;

5. Price redetermination of price redetermination contracts; and

6. Pricing changes and other contract modifications.

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When division or corporate contract administration responsibilities rest with another Government agency (i.e. when the largest percentage of the company or segment’s business base is with another agency), the FAA will yield to the cost principles of the administering agency for the settlement of indirect costs under a FAA contract.

13.4 ELEMENTS OF ALLOWABILITY

Cost principles contain explicit rules concerning whether certain costs are allowable and under what conditions they are considered reasonable and/or allocable. However, cost principles are only one of five factors which should be considered when determining allowability [FAA AMS Procurement Guidance T3.3.2A.2.b(1) (Contract Cost Principles)]. Each of the five criteria is discussed below.

1. Reasonableness. The nature and amount of the cost must not exceed that which would be incurred by a prudent person in a competitive business. The cost must be ordinary and necessary for running a business or performing a particular contract. The analyst must scrutinize costs particularly in situations where the cost is not significantly influenced by competitive market forces.

2. Allocability. The cost must be assignable to the contract either directly or indirectly. A cost should be charged directly if it is specifically incurred for a particular contract. If the cost benefits the contract as well as other cost objectives or the cost is necessary for the overall operation of the business, the cost should be charged indirectly through overhead or G&A, respectively.

3. CAS Standards. The contractor should follow CAS if applicable;

otherwise, the contractor should follow generally accepted accounting practices and principles.

4. Terms of the contract. The contractor and the FAA CO can negotiate terms that would make certain costs unallowable, for example, charging local travel directly to the contract. However, the CO cannot make an unallowable cost allowable under any circumstances, for example, holiday parties cannot be made allowable by the CO.

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5. Any limitations set forth in AMS T3.3.2A.2(b) “Contracts with Commercial Organizations”.

13.5 ENFORCEMENT

A major responsibility in contract administration is the enforcement of the cost principles in contracts that are not fixed-price or fixed-price with Economic Price Adjustment (EPA) provisions. The administering CO can disallow costs that are unallowable and can assess a monetary penalty for unallowable costs which are included in indirect cost pools.

13.5.1 Disallowance of Cost During Contract Performance

The CO may disallow costs that are unallowable prior to or after incurrence of the subject costs. The CO may issue a “Notice of Intent to Disallow Costs” in accordance with FAA Clause 3.10.1-1. The contractor has 60 days to respond and justify the allowability of such costs. Upon receipt of the response, the CO shall review the contractor’s justification and either withdraw the notice or issue a final decision. The final decision is subject to the FAA’s Dispute Resolution System.

The CO can still take exception to costs incurred without issuing a notice. The CO can disapprove and withhold vouchered costs considered unallowable. If the contractor disagrees, it can send a written request to the CO to reconsider the withholding and/or it can file a claim subject to the FAA’s Dispute Resolution System.

13.6 ADVANCE AGREEMENTS

Disputes concerning cost principles can be avoided through the use of Advance Agreements. Advance Agreements record the common understanding of the contractor and the CO on the reasonableness, allocability, and allowability of various costs. Since there are many complex contracting situations and many accounting systems, Advance Agreements are encouraged particularly for special circumstances, unusual costs or on statistical sampling procedures.

(FAA AMS Procurement Guidance T3.3.2A.1.i (Contract Cost Principles)) However, there is no requirement to negotiate Advance Agreements, and the lack of an advanced agreement will not affect the reasonableness, allocability, or allowability of costs.

Advance Agreements can be negotiated before or during contract performance and can apply to a single contract, a group of contracts, all contracts of the agency, or all contracts of many agencies. Advance Agreements should be negotiated before the costs involved have been incurred. The agreement must be in writing, be signed by both parties, and be incorporated into current and

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The following are some examples of costs where Advance Agreements may be important:

• Compensation for personal services (including but not limited to:

off-site pay, incentive pay, location allowances, hardship pay, cost of living differential, and termination of defined benefit pension plans);

• Use charges for fully depreciated assets;

• Deferred maintenance costs;

• Independent research and development and bid & proposal costs;

• Royalties and other costs for use of patents;

• Selling and distribution costs;

• Travel and relocation costs, as related to: 1.) special or mass personnel movements, 2.) travel via contractor-owned, leased, or chartered aircraft, or 3.) maximum per diem rates;

• Costs of idle facilities and idle capacity;

• Costs of automatic data processing equipment;

• Severance pay to employees on support service contracts;

• Plant reconversion;

• Professional services (e.g., legal and engineering);

• General and administrative costs (e.g., corporate, division, or branch allocations) attributable to the general management, supervision, and conduct of the contractor’s business as a whole. These costs are particularly significant in construction, job-site, architect-engineer, facilities, and Government-owned contractor operated (GOCO) plant contracts;

• Costs of construction plant and equipment;

• Costs of public relations and advertising;

• Training and education costs; and

• Pre-contract costs (treatment of costs only; should not use to authorize costs).

CAUTION:

The CO cannot make an otherwise unallowable cost allowable. For example, bad debt cannot be made allowable.

Furthermore, Advance Agreements are not contracts; they merely document mutual agreement on the treatment of costs.

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13.7 THE COST PRINCIPLES

13.7.1 The FAA Contract Cost Principles

The actual cost principles are available in the AMS Procurement Guidance T3.3.2.D, Appendix 2 (http://fasteditapp.faa.gov/ams/do_action?do_ action=ListTOC&contentUID=3). The Cost Principles are not all-inclusive;

the exclusion of an item of cost does not imply that it is either allowable or unallowable. When more than one principle applies to an element of cost, the determination of allowability will be based on the guidance contained in the principle that best captures the essential nature of the cost at issue.

13.7.2 Cost Principles for other Situations

There is special guidance in the principles regarding construction and architect-engineering and facilities contracts. Refer to the FAA AMS Procurement Guidance T3.3.2A.1.e for further information.