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Sunday, July 1, 2018

Contract Line Item Structure - The Heart of Your Federal Government Business Deal


Contract Line Items (CLINs) specify products or services being procured and the negotiated prices for them. 

Carefully review (CLIN) relationships to other critical elements of your contract for consistency before proposing, accepting and signing your deal.

Housed in Section B of your contract, contract line items are critical for reporting and billing purposes in your accounting system. Invoices to the government for supplies or services delivered must reference the associated CLIN. 

For service contracts that are cost-based such as Time and Materials (T&M) or Cost Plus and for progress billings under fixed price contracts, your job cost accounting system must be able to track labor, material and other direct costs at the CLIN level or below to provide auditable details for payment approval.


Government requisition and appropriation data against the CLIN are carried throughout the government finance and accounting system that makes payment on your invoices. CLIN’s form the backbone upon which all the other contract sections are built. If the CLIN structure is defective, it is likely many other areas of the contract will also be deficient.


During the “Sources-Sought”, “Pre-solicitation” or “Draft RFP” stages of a procurement the government often invites industry to comment on the evolving solicitation. The CLIN structure should be evaluated in relation to such items as the Work Breakdown Structure (WBS), the Statement of Work (SOW) and the contract schedule from the perspective of visualizing the work underway, tracking and reporting the status and finances of deliverables, inspection and acceptance and accurately billing the deliveries on invoices.

If the agency is establishing a poorly integrated CLIN structure you should comment appropriately to the contracting officer, suggesting corrections and additions to establish a framework against which your enterprise can estimate effectively, operate efficiently, report accurately and bill without experiencing delays. Most agency contracting shops appreciate such contributions.


SECTION C - DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK
As you read the narrative in this section, carefully establish that it adequately covers all the CLIN's in Section B. During the proposal process it is wise to matrix each paragraph of the SOW to its associated CLIN so you are sure your CLIN level prices have adequately covered the scope described in the SOW and that the SOW addresses each of the CLIN's identified in Section B. If there appear to be omissions point them out. Note where the SOW conflicts with or does not adequately describe the applicable CLIN's in Section B. Also note where there may be missing CLIN's. Then offer either a revision to the CLIN structure, a revision to the SOW, or both.
SECTION D - PACKAGING AND MARKING
Insure that the instructions in this section cover each of the CLIN's in Section B and that your company can comply with any specifications referenced.
SECTION E - INSPECTION AND ACCEPTANCE
Review the criteria for accepting the products and services to be delivered by CLIN as well as the location where deliveries will take place. Insure your company can comply with the criteria for acceptance. A payment will not be made without government acceptance of your delivery.
SECTION F - DELIVERIES OR PERFORMANCE
This section will replicate Section B and specify the due dates for deliveries by CLIN. Insure you can comply with the dates indicated.
SECTION G - CONTRACT ADMINISTRATION DATA
The accounting and appropriation data in this section must be replicated where necessary in your bill to the government by CLIN. Please see the article at this blog entitled, "Government Contract Billing":
SECTION H - SPECIAL CONTRACT REQUIREMENTS
Check for any special requirements, such as Earned Value Management Systems, the requirement for a Work Breakdown Structure against which to report cost and schedule data and other clauses such as Design to Cost/Life Cycle Cost, Reliability, Safety and Failure Analysis reporting requirements and similar specifications. If you find such requirements, carefully review the reporting structure therein for consistency with the CLIN structure of the contract and point out any disparities to the Contracting Officer.
SECTION I - CONTRACT CLAUSES
Carefully review this section in the same manner as Section H.
SECTION J - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
The Contract Data Requirements List (CDRL) will be in this section. Insure there is a separate CLIN for data items. Most contracts price data at zero cost and include the cost to prepare the data in other CLIN pricing. Determine which of the CLIN's will be affected by the data items required in this section and insure the pricing for those CLIN's includes that cost. Perform an identical review of any other documents contained in this section.
SECTION K - REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS
Insure that all information provided in this section is consistent with the data specified in each of the sections above.
SUMMARY
By conducting a thorough review of the CLIN structure against all other sections of your prospective contract you will establish a consistent framework and an integrated approach to tracking and reporting the status and finances of deliverables, inspection and acceptance of same and billings that will be promptly paid.  

The following is an example of a typical federal government contract CLIN structure:

SECTION B - SUPPLIES OR SERVICES AND PRICES

ITEM NO SUPPLIES/SERVICES
0001 SBIR RESEARCH AND DEVELOPMENT
Firm Fixed Price
The contractor shall perform research and development efforts in
accordance with Section C and the Contractor's SBIR Phase I
proposal dated September 2002 in response to SBIR Topic N02-140

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AA Monthly Status Report 1 LOT $11,000.00
The contractor shall perform research and development efforts and
provide the First Monthly Status Report in accordance with CDRL AO01.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AB Monthly Status Report 1 LOT $11,000.00
The contractor shall perform research and development efforts and
provide the Second Monthly Status Report in accordance with CDRL A00I

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AC Monthly Status Report 1 LOT $11,000.00
The contractor shall perform research and development efforts and
provide the Third Monthly Status Report in accordance with CDRL A001.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AD Monthly Status Report 1 LOT $11,000.00
Phase 11 Program plan
The contractor shall perform research and development efforts and
provide the Fourth Monthly Status Report in accordance with CDRL A001
and the Phase 11 Program Plan in accordance with CDRL. A002.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AE Monthly Status Report/ 1 LOT $11,000.00
Preliminary Report
The contractor shall perform research and development efforts and
provide the Fifth Monthly Status Report in accordance with CDRL A001
and the Phase I Preliminary Report in accordance with CDRL A003.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AF Contract Summary 1 LOT $13,587.00
Report
The contractor shall perform research and development efforts and
provide the Phase I Final Report in accordance with CDRL A004.

CLIN 0001 TOTAL $68,587.00

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0002 DATA 1 LOT *NSP *NSP
DELIVERABLES
Firm Fixed Price
The contractor shall provide the data deliverables in support of
CLIN 0001 in accordance with attached CDRLs.
* - Not Separately Priced

ITEM NO SUPPLIES/SERVICES
0003 OPTION CLIN
SBIR RESEARCH AND DEVELOPMENT
Firm Fixed Price
The contractor shall perform research and development efforts in
accordance with Section C and the Contractor's SBIR Phase I proposal
dated September 2002 in response to SBIR Topic N02-140.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0003AA Monthly Status Report 1 LOT $9,000.00
The contractor shall perform research and development efforts and
provide the First Monthly Status Report in accordance with CDRL A001.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0003AB Monthly Status Report 1 LOT $9,000.00
The contractor shall perform research and development efforts and
provide the Second Monthly Status Report in accordance with CDRL AOO1.

ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0003AC Contract Summary 1 LOT $11,490.00
The contractor shall perform research and development efforts and
provide the Phase 1 Final Report in accordance with CDRL A004.

CLIN 0003 TOTAL $29,490.00
-
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0004 OPTION CLIN 1 LOT *NSP *NSP
DATA
DELIVERABLES
Firm Fixed Price
The contractor shall provide the data deliverables in support of
CLIN 0003 in accordance with attached CDRLs.
* - Not Separately Priced

CLINS 0001 - 0004 TOTAL $98,077.00


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