DCMA Guidance on use of Blended Rates to Address Multiple Compensation Limits

The DCMA issued January 29th, 2016 an internal guidance memo to the contract management office commanders and directors.

The memo provides guidance on blended rates related to implementation of multiple rate caps and is the resulting guidance addressing the October 2014 letter issued on same by Mr. Shay Assad.  Some highlights of this 11-page memo are noted below.  Of particular interest, is the DCMA guidance re-treatment of task orders, modifications and options.

  1. Compensation limits currently are $487,000 applicable to all personnel and all agencies for contracts awarded on or after June 24, 2014.
  2. Compensation limits prior to June 24, 2014 varied and were applicable to specific fiscal years and the top 5 contractor positions.
  3. Use of blended rates is not required, other methods are permissible.
  4. If a contractor elects to use blended rates, an advance agreement is required with the CO and the DCAA must review the calculations of the blended rate approach.
  5. Covered contracts are those subject to FAR Subpart 31.2.
  6. Task orders issued after June 24, 2014 applicable to IDIQ contracts awarded prior to June 24, 2014 are bound by the limit at time of the IDIQ award (not the task order).
  7. Modifications made after June 24, 2014 applicable to contracts awarded prior to June 24, 2014 are bound by the limit at time of the contract award (not the modification).
  8. Options exercised after June 24, 2014 applicable to contracts awarded prior to June 24, 2014 are bound by the limit at time of the contract award (not the option exercise).
  9. Delivery orders issued after June 24, 2014 applicable to Blanket Purchase Agreements (BPAs) awarded prior to June 24, 2014 are bound by the limit at time of the delivery order as BPAs are not contracts.

Items 1 – 5 above are fairly noncontroversial; however, items 6 – 9 appear to be a favorable interpretation to contractors as this definition will maximize allowable cost reimbursement.

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