Incurred Cost Submissions using Blended Rates but No Advance Agreement Will Get Bounced | PNWC’s Government Contracting Update

Back in April, we published a four-part series on the use of blended labor rates to implement the new $487 thousand compensation cap that applies to all employees charging to Government contracts awarded after June 24, 2014. For a comprehensive look at the blending methodology, refer to that series Part 1, Part 2, Part 3, and Part 4. The Department of Defense came up with the blending methodology as a means of streamlining implementation of the lowered compensation cap while there is a mix of contracts under the old and the new caps. As a prerequisite to using a blended approach, a contractor must enter into an advance agreement with the ACO (Administrative Contracting Officer). The advance agreement includes detailed methodologies to calculate blended rates – which differ for incurred cost proposals and for forward pricing proposals.

Source: PNWC’s Government Contracting Update: Incurred Cost Submissions using Blended Rates but No Advance Agreement Will Get Bounced