Wednesday, April 21, 2010

The Importance of Documentation

Once again, we have a case where a contractor's claim for reimbursement was denied due to inadequate documentation. We bring this subject up frequently to underscore the importance of documentation. Just remember, you may be entitled to reimbursement of costs but the Government has no obligation to pay those costs if they are not adequately documented.

In this recent case, the Comptroller General denied a claim for costs where a protestor failed to adeuqately documents its claim and aggregated allowable and unallowable costs such that the allowable portion could not be determined on the basis of the record (or on the basis of avilable documentation). [GAO Decision B-401466.2 dated April 7, 2010]. This case began with an earlier bid protest. The protestor dropped its protest when the Government agreed to pay the contractor's reasonable proposal preparation costs. The GAO cautioned the protestor that costs were only recoverable to the extent that they are adequately documented and shown to be reasonable. Additionaly, the documentation must identify and support the amounts claimed for each individual expense, the purpose for which that expense was incurred , and how the expenses related to the claim.

The contractor submitted invoices for two firms that, according to an affidavit from its managing director, was related to services by the two firms in the preparation of the proposal. However, upon review of the documentation, the invoices indicated a much broader scope of work than just the proposal preparation. It included terms like market, demographic, financial, cost, and assistance. The Government asked for further details including an analysis of the work performed and the correlation between the work and the costs. The contractor was unable to provide this information. As a result, the GAO denied the claim.

GAO concluded that there might have been a portion of the cliamed costs that related to proposal preparation. However, in sutuations such as this one where a protestor has aggregated allowable and unallowable costs and provided insufficient documentation to support the allowable portion, the entire amount must be disallowed.

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