To address Brian's comments, when it appears that the COTR (of known integrity flaws) is at the source of the issue, compounded by an over-zealous prime's contracting officer, it would seem that getting the subcontractor's executives to address the issue with competent counsel would be the most positive approach. Enough people within the sub's staff have spoken to their executives about their concerns, and as a result, executives are addressing the issue with counsel. It is hoped that this will clear up the matter, since the contract itself does not specifically address the suspect practice.
One could infer from Brian's comments that one should shut up when a practice is suspect, rather than raise concerns to prevent one from having to address grand juries or hill committees. If a suspect practice IS proper, despite appearances, the contract would necessarily have to be worded such as to allay concerns unequivocally. Absent that precise data, the practice should, for appearances sake, be avoided until competent counsel has examined the practice and pronounced it appropriate and legal. If a concern IS raised that causes a contracting officer or administrator to be examined more closely, then perhaps the practice should be avoided until reworded to survive light of day.
I can see Ron's point about billing for a product used more than once, but there is a certain amount of justification in that re-use implies the labor of re-examination of the contents in the context of the new usage.
The bottom line here is that the practice is questionable based on the wording of the contract, and that executives are speaking with counsel to resolve the issue positively, unlike some who would sweep it under the rug.

By Ron Vogt on Thursday, March 30, 2000 - 03:17 pm:

This should be a good lesson on why it's important not to jump to conclusions based on assumptions. Many unwarranted whistleblower cases are directed at legal and proper practices that happen to offend the sensibilities of someone.

Let's look at it another way. Suppose Customer A contracts with Vendor to produce a study. There is nothing proprietary in the study, and there are no restrictions on Vendor's use of the study afterwards. That study has a certain value, measured largely by the cost to produce it. Now Customer B wants a similar study. According to some in this thread, Vendor would have an ethical obligation to charge Customer B little or nothing for the study, or maybe give some money back to Customer A to spread the cost between the two customers. What then happens when a Customer C, then D, E, F, ... want a study?

As you can see, the above scenario can get ridiculous. There is nothing improper or illegal with Vendor charging a price that Customers agree to pay, and charging it to every Customer that comes along. Besides, there are other ways to make sure the government is getting a fair deal, such as verification of price reasonableness.

Of course, it would be different if Customer A and B's contracts were time and material or some other sort of cost-type contract, and Vendor charged Customer B for the full effort without actually performing the full work. In that case, there would be some obvious false charging going on.

There are many examples of an effort being perfomed once, with multiple sales resulting. The software example from Steve Cohen is a good one. Books, studies, videos, etc. are more examples. In most cases the price is decided based on projections of sales. If you sell more than you projected, are you ethically obligated to send a rebate to the original buyers?

Naturally, we don't have all of the facts. However, I'm not ready to conclude that the practice even smells like a duck yet. For the original scenario to be illegal, lots of people would have to willfully sign false time sheets listing work not performed. Not impossible, but a hard act to pull off.

By Brian Fisher on Wednesday, March 29, 2000 - 08:41 am:

Z,

Your original post qualifies your facts with the phrase "as I'm told." Your subsequent post qualifies the facts with "to the best of my knowledge." The scant facts and suggestions that you have provided certainly raise a potential issue that should be understood fully before making the "walks like a duck/quacks like a duck" conclusion.

Your posts do not indicate whether you work for the Government or for the contractor, or whether you are a contract administrator, program person, or some other specialty. In either event, I urge you to review the express terms of the contract with competent legal counsel before making global statements that a practice "smacks of fraud."

For example, the contract might provide that the first report costs "X" dollars, and all subsequent copies of that report cost "X-Y" dollars (representing the administrative costs of making copies of the pre-existing product). There are many other scenarios under which the contractor's actions might be entirely appropriate. Of course, you won't know this for sure until you actually look at the CLINs, terms, and conditions in the contract.

The damage to a contracting officer's or contractor's reputation/career stemming from a hint (baseless or otherwise) of a tainted procurement could be immense; not to mention the bad press, and investment of resources into IG audits, GAO reports, testimony on the Hill, etc. that are triggered when something like this happens.

To minimize the risk to all parties (including yourself), talk to the Government contracting officer or the contractor's contract administrator. If you are still concerned, talk to counsel.

Well, it walks like a duck and quacks like a duck... And it sure does smack of potential fraud to the casual observer. To the best of my knowledge, it is NOT a fixed price contract. Neither has the practice been implemented, but it has been mentioned as an impending practice. Several people inside this organization are upset and preparing resumes to be distributed immediately, just on the chance that this potential practice can't be stopped willingly by management.
To answer Eric's concern, since it isn't yet a fully working thing, I believe that all would be better served by remedying the situation from inside by revisiting the legal and ethical aspects and correcting it.
To answer Steve's question, it is not an intellectual property issue.
To respond to John's question, let's say the contractor is tasked to produce studies and documents to benefit the agency. If two or three different divisions of that agency can benefit from the produced documents, the story told is that the contractor can bill each division for the full amount of the effort(s). The feeling within is that if all divisions request the documents and benefit from their production, then the cost of producing said documents is borne across the divisions proportionally, and is NOT billed fully to each division. Hpefully this adds dimension to the concerns.

By Steve Cohen on Tuesday, March 28, 2000 - 02:52 pm:

Z....Are you referring to intellectual property (knowledge)? Software developed at one's own expense can be licensed on a per copy basis and billed in the same manner....over and over again.

Steve

By Eric Ottinger on Tuesday, March 28, 2000 - 10:31 am:

I agree with John and I think that it would be a great public service if you identify these contractors.

To make a trivial but necessary point, this may be legal if the contracts are fixed price. Otherwise, the audit provisions should assure that the taxpayers only pay once for a particular product or service.

By John Ford on Tuesday, March 28, 2000 - 09:44 am:

As you have described it, this practice is illegal as it violates several criminal provisions. The rule is the government pays a contractor for each hour of services only once. This holds true even if more than one agency is paying the contractor. Can you provide more information so that we can get a clearer picture of what this is about?

By Z. Hrozsmencko on Tuesday, March 28, 2000 - 06:42 am:

I'm curious about a concept in billing that I've been told is legal under a TMS contract called "multiplex billing". As I'm told, a contractor can do the same task for a multitude of entities and bill each for the full amount of effort, despite the fact that the job is done only once. This strikes me as being highly unethical and possibly exposing one to legal difficulties. Can anyone provide enlightenment?