Today we start with the ASBCA position on what constitutes "adequate support" for professional and consultant service costs.
SMI was a consultant hired by TSI to provide it with both marketing and lobbying services. It had separate agreements with TSI for each and invoiced TSI separately for each. The contracting officer disallowed about $51,000 for the marketing services on the grounds that TSI did not provide enough documentation to permit an understanding of the work performed nor did it provide the "work products" and other itesm that the ACO believed were required in accordance with the provisions of FAR 31.205-33(f)(2) and (3).
FAR 31.205-33, Professional and consultant services costs provides that fees for services rendered are allowable only when supported by evidence of the nature and scope of the service provided and that evidence necessary to determine that work performed is proper and does not violate law or regulation shall include agreements, invoices, and work products.
That seems pretty clear, right? Not so fast. Here's what the Board ruled:
The government labors under the false impression that the FAR requires a consultant to create "work product" merely for the purposes of proving its costs. Though the FAR language in question is not as clear as we might like, it can be read - as we read it here - to impose no such requirement. Moreover, we have factually found the invoices submitted by TSI to be adequate to support a finding that TSI incurred the charged costs for SMI's marketing activities.
The government makes a superficially persuasive argument, that the FAR's statement that the evidence necessary to determine that the work is proper "shall include ... work products" and related documents, makes the provision of such documents mandatory. The problem with this interpretation of the FAR is that it does not account for the case in which such documents were never created by the consultant. Moreover, it does not account for the case where, as here, the invoices include the data that the FAR defines as work product, such as persons visited and subjects discussed. We further note, that DCAA's own audit manual reflecting the government's own interpretation of this FAR requirement, provides that "the auditor should not insist on a work product if other evidence provided is sufficient to determine the nature and scope of the actual work performed.
Thus, we conclude that FAR 31.205-33(f) may require the provision of a consultant's work product, if it exists, but is not so rigid as to require its creation when it would not otherwise be necessary for the consultant to perform its duties. To be sure, any lack of work product makes it more difficult for a contractor to prove that it incurred the costs for which it seeks compensation, and the lack of work product in an instance where the consulting work was of such a scale or scope that work product would be expected may properly subject the costs to question. As with most things, the proper amount of documentation and work product to be expected will largely depend on the scope of work performed, and we do not conclude that the FAR intended to impose "make work" upon consultants that would only lead to higher costs to the contractor which would then be imposed upon the taxpayer.The burden of supporting professional and consultant service costs (as with any costs charged to Government contracts) is squarely on the contractor. However, if, as in this case, there is no formal work product, FAR allows for alternative evidence to support the nature and scope of the actual work performed.
The full ASBCA decision may be downloaded here.