Question: Is there anything out there that governs allowable costs for federal agencies?

My agency provides technical and specialty services to State governments under Title III of the Intergovernmental Cooperation Act of 1968. There is no specific form for these types of agreements. Prior to entering into such agreements we must determine that the services we provide are not reasonably available from private industry through ordinary business channels. We must also be reimbursed by the State for our actual costs.

Saying all that, we have a State that wants to include a provision stating all costs will be determined to be allowable in accordance with State and Federal laws. Now I know my agency's costs are governed by Federal and not State laws and I realize there are cost principles that relate to non-profits, state and local governments, educational institutions, commercial organizations, but, are there any cost principles that apply to the Federal Government?

By Anonymous on Thursday, August 16, 2001 - 04:10 pm:

If the state wants the services of the federal government, give them A-25 below.

http://www.whitehouse.gov/omb/circulars/a025/a025.html

If they don't like it, tell them to walk.

By Anonymous on Thursday, August 16, 2001 - 04:23 pm:

Thanks a bunch.

By Anonymous on Friday, August 17, 2001 - 09:08 am:

A couple more questions in the realm of Federal Agencies providing work to States...

If a State isn't satisfied with services provided by a Federal Agency could the State file suit against the agency, and if so, where? Also, what would be the Federal Agency's course of action if State failed to provide reimbursement for services?

By John Ford on Friday, August 17, 2001 - 10:30 am:

Whether a state could file suit against a Federal agency is a very complicated issue. Generally, these questions are decided on a case by case basis. The overriding question in such cases is has there been a waiver of sovereign immunity so that the Federal government has consented to be sued. On the other hand, the Federal government can sue a state if the state fails to make payments under a contract. Such a suit would be filed in U.S. District Court. Many such suits have been filed.

By Anonymous on Wednesday, August 29, 2001 - 10:42 am:

Along those same lines, we have debate with a State concerning the inclusion of a default provision in an agreement for our services (services of federal agency being provided to state agency). The state wants a clause that basically says they can withhold payment if the work performed by our agency isn't satisfactory to them. Our program managers, and a few others say that inclusion of the proposed default provision is reasonable. I and another contract specialist involved in reviewing the agreement say it shouldn't be there. We feel that a state enters into such an agreement with the federal government in good-faith, i.e., state has good-faith that federal government will provide it's best effort.

Further, we agree that a termination (for convenience) provision should be included to set the terms for halting work at desire of "either party". We believe the federal government is entitled to payment for all work performed under the agreement, as provided in OMB Circular A-97 and the Intergovernmental Agreement Act of 1968.
The program managers, on the other hand, think that it makes sense to allow the state not to pay for unsatisfactory work.

Any comments?