AUDIT OF RTC MORTGAGE TRUST 1995-SN1
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January 10, 2001Audit Report No. 01-001Audit of The Ratcliff Architects'Professional Fee BillingsUnder Contract 97-00384-S-JWFederal Deposit Insurance Corporation Office of Audits Washington, D.C. 20434 Office of Inspector GeneralDATE: January 10, 2001TO: Arleas Upton Kea, DirectorDivision of AdministrationFROM: Sharon M. SmithAssistant Inspector GeneralSUBJECT: Audit of The Ratcliff Architects' Professional Fee BillingsUnder Contract 97-00384-S-JW (Audit Report No. 01-001)This report presents the results of the Office of Inspector General's (OIG) audit of professionalfee billings that The Ratcliff Architects submitted to the Federal Deposit Insurance Corporation(FDIC) for services performed under contract 97-00384-S-JW. Ratcliff billed the FDIC$607,730 on this contract, which covered the period May 16, 1997 through December 31, 1998.This is the first of two contracts the FDIC awarded Ratcliff for architectural and engineeringservices associated with the renovation of the San Francisco Regional Office located at 25 EckerSquare.BACKGROUNDThe FDIC awarded contract 97-00384-S-JW, effective May 16, 1997, to The Ratcliff Architectsas a time and materials contract with total compensation not to exceed $500,000. Ratcliff was toperform architectural, engineering, design, and contract construction administration and oversightservices for the ...
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Extrait
anuary 10, 2001 Audit Report No. 01-001
A udit of The Ratcliff Architects' Professional Fee Billings Under Contract 97-00384-S-JW
Federal Deposit Insurance Corporation Office of Audits Washington, D.C. 2043 4 Office of Inspector Gene ral
DATE: January 10, 2001 TO: Arleas Upton Kea, Director Division of Administration
FROM: Sharon M. Smith Assistant Inspector General SUBJECT: Audit of The Ratcliff Architects' Professional Fee Billings Under Contract 97-00384-S-JW (Audit Report No. 01-001) This report presents the results of the Office of Inspector General's (OIG) audit of professional fee billings that The Ratcliff Architects submitted to the Federal Deposit Insurance Corporation (FDIC) for services performed under contract 97-00384-S-JW. Ratcliff billed the FDIC $607,730 on this contract, which covered the period May 16, 1997 through December 31, 1998. This is the first of two contracts the FDIC awarded Ratcliff for architectural and engineering services associated with the renovation of the San Francisco Regional Office located at 25 Ecker Square.
BACKGROUND The FDIC awarded contract 97-00384-S-JW, effective May 16, 1997, to The Ratcliff Architects as a time and materials contract with total compensation not to exceed $500,000. Ratcliff was to perform architectural, engineering, design, and contract construction administration and oversight services for the renovation of the San Francisco Regional Office. For satisfactory work performed under approved task assignments, Ratcliff was to be paid for actual productive labor hours worked at "fully loaded" hourly rates by occupational classifications as specified in the contract. The fully loaded hourly rates included any and all wages, overhead, general and administrative expenses, and profit or fee. Ratcliff was also to be paid for materials upon the FDIC's approval. The contract included seven phases of work and initially was to be completed by December 31, 1997, but on December 30, 1997 the FDIC issued Amendment 1 to extend the contract term to December 31, 1998. On November 2, 1998, Amendment 2 added additional services to complete the detail design development phase of the project and deleted from the scope of work Phase VI for the graphics/signage program and Phase VII for construction design and contract construction administration and oversight. Amendment 2 also increased the compensation by $125,000 raising the total contract ceiling to $625,000. The FDIC's Division of Administration (DOA), Irvine, California office awarded the contract to Ratcliff and assigned its Acquisition Services Branch responsibility for contract administration and its Corporate Services Branch responsibility for contract oversight. With the Irvine office closure in September 1998, the DOA office relocated to the San Francisco Regional Office with
DOA staff continuing to be responsible for contract administration and oversight. DOA used three different contracting officers on this contract with the present contracting officer being assigned on January 18, 1999, after the contract performance period ended on December 31, 1998. The DOA San Francisco’s Chief, Corporate Services Branch, served as the oversight manager for the contract.
In addition to its own staff, Ratcliff used six subcontractors: Adamson Associates, Dasse Design, Englund Design, Glumac and Associates, Johns/Rife Group, and Charles M. Salter Associates to complete the work. To proceed with the work, Ratcliff submitted 27 work authorizations totaling $625,000 (including revisions) to the FDIC for approval. Each authorization set forth the general scope of work to be performed and specified the maximum fee amount to be charged.
OBJECTIVE, SCOPE, AND METHODOLOGY The objective of our audit was to determine whether Ratcliff's billings totaling $607,730 were adequately supported and allowable under the contract terms and conditions. The audit covered Ratcliff's billings for the contract period that began May 16, 1997 through the December 31, 1998 completion date. Further, because our initial audit work identified possible problems in contract administration, we expanded our review to determine whether the FDIC's DOA, San Francisco Region, administered the contract in accordance with established policies and procedures.
To accomplish the audit objective, we reviewed Ratcliff's proposal, the contract and all amendments and modifications, DOA's contract and oversight files, and applicable FDIC acquisition policies and procedures. We also reviewed Ratcliff's invoices, work authorizations, accounting records, and billing support; subcontractors' and vendors' invoices; and obtained and reviewed contractor and subcontractor employee original timesheets and employee resumes and other documentation.
Additionally, we performed tests to evaluate the allowability and support of Ratcliff's billings. Specifically, our tests were designed to determine whether (1) hours billed by work authorization were accurate and supported by original employee timesheets; (2) labor categories and labor rates billed were consistent with the contract, individuals met the minimum contract qualification requirements for the labor category billed, and employees were billed at the correct labor category; and (3) the FDIC approved the subcontractors' labor hours and labor rates in advance. When Ratcliff or its subcontractors increased an employee's hourly billing rate, we determined whether DOA approved the rate increase. We also determined whether the material expenses Ratcliff invoiced the FDIC were billed in accordance with contract terms and conditions.
Because Ratcliff did not submit subcontractor labor hours and labor rates for the FDIC's approval, we determined whether the subcontract labor rates billed were limited to the contract labor rates for the applicable labor category. In those two instances where resumes were not available for our examination because the employees were no longer employed and the employer did not maintain the data needed to contact the former employees, we used the lowest applicable labor category of the contract in determining the allowable labor rate. With the following
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exceptions, we examined 100 percent of the transactions in making the aforementioned determinations. For labor hours and labor rates billed for Ratcliff employees, we selected for examination the labor charges for five employees whose professional fees represented 83 percent of Ratcliff's total labor charges. In determining whether subcontractor employees met the minimum qualification requirements, we selected for examination the resumes of all employees who charged 40 or more hours to the contract. We did not examine billings for the subcontractor Englund Design because of the minimal amount charged.
We also examined architectural plans, files, and records Ratcliff furnished us to identify the work products Ratcliff completed on the contract. We then compared those products for similarity to the general scope of work statements contained in Ratcliff's work authorizations that the FDIC approved. We could not compare the products to the contract deliverables because DOA's contracting officer did not define the deliverables.
Our review of the DOA San Francisco Region's administration of the contract was limited to determining whether the contracting officers and oversight manager carried out their respective responsibilities and adhered to established policies and procedures regarding (1) issuance of the contract-required task assignments to define, measure, and control the work; (2) approval to proceed with the work with appropriate delegation of authority; (3) enforcement of the contract provisions requiring the FDIC's advance approval of the contractor's material prices and subcontractor labor hours and rates; and (4) review and approval of Ratcliff's billings for payment.
We did not perform audit steps aimed at determining the quality of technical services provided to the FDIC by Ratcliff or its subcontractors. Also, the OIG did not perform a review of internal controls related to Ratcliff's billings. Instead, the OIG determined the cause of control breakdowns only when exceptions were identified and relied on substantive testing to achieve its objectives. Accordingly, the OIG expresses no opinion on the adequacy of Ratcliff's internal controls related to its billings.
The audit was conducted at the contractor's Emeryville, California, office; five of the six subcontractors' offices located in the San Francisco area; and the FDIC's San Francisco Regional Office. The OIG conducted the audit from September 1999 to June 2000 in accordance with generally accepted government auditing standards.
RESULTS OF AUDIT
DOA's San Francisco Regional Office did not always follow contract provisions and the FDIC acquisition policies and procedures to effectively administer and oversee Ratcliff's contract performance and billings. Specifically, DOA did not issue task assignments as the contract required to define, measure, and control the work. Additionally, DOA approved Ratcliff to proceed under different compensation terms and without obtaining the information needed to measure and control performance and costs, and before DOA's Director approved the funds for the $125,000 contract amendment. Further, DOA did not adequately follow the FDIC's acquisition policies and
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procedures that would have precluded the Corporation's payment of the unallowable fees questioned in this report. Of the $607,730 Ratcliff billed the FDIC, we concluded that $531,721 was adequately supported and allowable under the contract. We questioned the remaining $76,009, or 13 percent, because the fees Ratcliff billed did not conform with the contract and, therefore, are unallowable. The unallowable charges include fees incurred outside the contract period, fees for indirect personnel and expenses, fees for unsupported time charges, fees for labor categories charged at higher rates than allowed or the employees were not qualified for the rates charged, and other questionable charges.
CONTRACT ADMINISTRATION AND OVERSIGHT NEEDS IMPROVEMENT DOA's San Francisco Regional Office did not always follow contract provisions and the FDIC acquisition policies and procedures to effectively administer and oversee Ratcliff's contract performance and billings. Specifically, DOA did not issue task assignments as the contract required to define, measure, and control the work. Additionally, DOA approved Ratcliff to proceed under different compensation terms and without obtaining the information needed to measure and control performance and costs, and before DOA's Director approved the funds for the $125,000 contract amendment. Further, DOA did not adequately follow the FDIC's acquisition policies and procedures that would have precluded the Corporation's payment of the unallowable fees questioned in this report.
Task Assignments Were Not Issued to Define and Control the Work DOA's contracting officers did not issue task assignments to define the tasks, requirements, costs, delivery dates, and deliverables expected of the contractor even though the contract provided that Ratcliff would be paid based on satisfactory completion of task assignments. Additionally, the work authorizations Ratcliff submitted to DOA to proceed with work did not provide the level of detail needed to address the task elements. However, the oversight manager, without delegated authority, either in writing or verbally approved 22 of the 27 work authorizations or work authorization revisions that allowed Ratcliff to proceed. Because the task elements were not defined, the Corporation had limited ability to measure and control the contractor's performance to ensure that the desired scope of work was satisfactorily accomplished on time and within budget. The contract's statement of work (SOW) provided the basis for compensation to the contractor. Section IV of the SOW stated that Ratcliff was to be compensated for tasks performed satisfactorily provided that the contractor was engaged to proceed with work or assignments under a valid task assignment. To be a valid task assignment, section IV stated that the task assignment must be in writing and signed by the contracting officer. Although the SOW divided the work into seven general phases, listed steps the contractor was to perform within each phase, and included the staff qualifications necessary to complete the work, section IV specifically stated that the contracting officer was to issue task assignments to Ratcliff after award. The task
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assignments were to describe the work to be performed, identify the deliverables to be provided, and specify the performance schedule and completion date. Within 3 days of receipt of a task assignment, Ratcliff was to prepare and submit to the FDIC a "task plan" for completion of the task assignment. The task plan was to contain:
! a schedule, including milestones, goals, and the dates to start and complete the task;
! a staffing plan, including the names of the project team and team leader, an estimate of the labor hours by labor category needed to complete the task, and a full explanation of how the figures were derived;
! a detailed cost estimate, including a full explanation of how the figures were derived; and
a statement of the assumptions used or understanding reached about the nature of the task ! that formed the basis for the schedule, staffing plan, and cost estimate.
The task assignment process was designed to provide a measure of control over the contractor's spending and serve as a means for the FDIC to assess the contractor's performance. However, DOA's contracting officers did not issue task assignments to Ratcliff or require Ratcliff to provide the task plan information. Instead, Ratcliff prepared and submitted to DOA a total of 27 "work authorizations." The work authorizations were signed by Ratcliff's representative and included a brief title and general scope of work statement, specified a maximum fee amount to be charged, and provided space on the authorization for the FDIC's signature of acceptance. Because the contracting officer did not issue valid task assignments, for the purposes of this report we audited against the work authorizations.
According to information contained on the 27 work authorizations, DOA's contracting officer verbally approved Ratcliff to proceed with work on three work authorizations but did not approve any of the work authorizations in writing. The oversight manager, without authority, signed to approve 8 work authorizations (one initially was verbally approved by the contracting officer) and verbally authorized Ratcliff to proceed with the work on 14 other work authorizations. DOA representatives did not approve the contractor to proceed with three original work authorizations, but the oversight manager later approved two of the three work authorization revisions in writing.
In our opinion, the oversight manager acted outside of his authority by approving individual work authorizations for Ratcliff to proceed with the work. Provisions of the contract, the oversight manager's confirmation letter, and the FDIC's Acquisition Policy Manual (APM) show that the oversight manager was not delegated the authority to approve Ratcliff's work authorizations or to perform contract administration duties. Contract article 3.2 (a) identifies the oversight manager as the person the contracting officer designates in writing to represent the FDIC for the purpose of monitoring technical contract performance. The article further states that the oversight manager is not authorized to issue any instructions or directions which would result in an increase or decrease in the contract price or which change the delivery date(s) or period of performance. The contracting officer is the only person with FDIC delegated authority to enter into, modify, administer, and terminate contracts and orders per contract article 3.2 (b).
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Further, the contracting officer's April 9, 1997 letter to the oversight manager confirming his appointment, which the oversight manager signed to acknowledge receipt, explains the oversight manager 's authority. The letter explicitly states: ". . . this confirmation does not authorize the OM (oversight manager) to: (1) modify or alter the contract or any of its terms and conditions; . . . or (3) approve any actions which would result in additional charges to FDIC. All such actions must be made in writing by the cognizant Contracting Officer." Also, the FDIC's APM, section 7.B.2.a., provides: "The Contracting Officer is responsible for administration of the contract. A warranted Contracting Officer is the only person who may enter into a contract or change a contractual commitment on behalf of FDIC . . . "
Seven of the work authorizations the oversight manager approved altered the contract terms and could have increased the contract price. To illustrate:
! Two work authorizations (18 and 25) incorrectly stated the method of compensation as lump-sum rather than the contract-required actual productive labor hours worked at fully loaded hourly rates. Ratcliff later billed subcontractor fees for these two work authorizations based on lump-sum amounts, and the amounts billed exceeded the amounts allowed by actual productive labor hours worked. Because the oversight manager approved the work authorizations containing the lump-sum method of compensation, the Corporation could be at risk of paying Ratcliff the increased fees billed. We questioned the amounts billed in excess of actual productive hours worked totaling $21,541 as further discussed under the finding captioned "One Subcontractor Was Paid More Than FDIC's Contract Allowed."
! Five work authorizations (1, 2, 3, 8, and 9) the oversight manager approved contained statements that reimbursable (material) expenses would be charged at actual costs plus a 10 percent service fee. The contract did not contain any provision to compensate the contractor for service fees. On four of the five work authorizations, the statements were later revised to delete the wording "plus a 10 percent service fee" from the compensation provisions. Although our audit revealed that Ratcliff did not bill the service fees, the Corporation was at risk of being billed for such charges because the oversight manager initially approved the work authorizations with the service fees included.
In addition, the work authorizations did not fully address the task plan requirements. Specifically, the work authorizations did not identify the personnel and labor hours by labor category to be used to complete the work, state the deliverables to be provided, include the planned date for completion of the work authorization, or adequately define the scope of work. For example, Ratcliff issued Work Authorization 20, Design Development, for hourly fees not-to-exceed $87,500 on October 19, 1998, and stated that the scope of work was to "Complete as much design as possible with the remaining fee."
Further, the maximum fee stated in nine work authorizations did not serve as a work performance or cost control. Of the 27 work authorizations, Ratcliff submitted one or more changes to revise 12 work authorizations: 9 to add work and/or increase the fee and 3 to reduce the work and/or fee. However, on the nine work authorizations that Ratcliff increased, the increase in the fee amount ranged from 17 percent to 838 percent. According to information contained on Work Authorization 10, Schematic Design, Ratcliff initially increased the fee by
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$47,000 (from $8,000 to $55,000) without a revision in the scope of work to justify the fee increase. Without evidence of a scope change or other justification provided, Ratcliff also revised Work Authorization 20 on November 12, 1998 to increase the maximum fee by $21,800 to $102,180. Ratcliff, however, did not adhere to the fee limitation and invoiced the FDIC a total of $104,349 for Work Authorization 20. Without defining and identifying the information required by the task assignment and task plan, DOA was not able to effectively measure Ratcliff's performance and costs to ensure that the contracted scope of work was satisfactorily completed on time and within the contract ceiling amount. In light of the numerous deficiencies in work authorizations cited above, DOA's contracting officers and oversight manager did not properly discharge their respective corporate responsibilities.
DOA's Oversight Manager Approved Ratcliff to Proceed with Additional Work at Increased Cost Without Authority DOA's oversight manager, without delegated authority, verbally approved Ratcliff to proceed with additional services. Moreover, the oversight manager granted the approval before DOA's Director approved the funds for the $125,000 contract amendment. By authorizing Ratcliff to proceed with the work and granting the approval before the DOA Director approved the funding increase, the oversight manager put the Corporation at risk of receiving a contractor's claim in the event the Director did not approve the funds for the amendment. On October 19, 1998, DOA's Director approved the San Francisco Region's October 8, 1998 request to modify the Ratcliff contract and increase the expenditure authority from $500,000 to $625,000. In turn, DOA's contracting officer executed Amendment 2 with Ratcliff effective November 2, 1998. This amendment added additional services to complete the detail design development work and deleted the graphics/signage program, construction design, contract administration, and construction oversight activities from the contract. However, according to statements made in six work authorizations Ratcliff submitted to DOA as contained in the oversight manager's files, Ratcliff had already proceeded with the work based on the oversight manager's verbal authorization. Ratcliff stated in the six work authorizations (20R, 22, 23, 24, 25, and 26) that added the detail design development work and additional fees to the revised contract ceiling amount: "We have proceeded with the work based on the verbal authorization from (the oversight manager) received on September 25, 1998." Contract Amendment 2 did not include any language to ratify the oversight manager's action verbally granting Ratcliff the authority to proceed with the work on September 25, 1998. The oversight manager's action is in direct conflict with contract terms, the oversight manager's confirmation letter, and the FDIC's acquisition policies and procedures.
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DOA Did Not Adequately Review Ratcliff's Invoices Before Payment
DOA's contracting officers and oversight manager did not follow the Corporation's invoice processing procedures to adequately review Ratcliff's invoices before approving them for payment. As a result, the DOA officials approved about $76,000 in unallowable charges for FDIC payment. (This matter is discussed later in this report under the caption “RATCLIFF BILLED UNALLOWABLE CHARGES.)
Section 7.I.6.b., Review and Approval, of the FDIC's APM describes the minimum requirements for the contracting officer's and oversight manager's review and approval of invoices submitted by contractors. Per the FDIC's APM, section 7.I.6.b.(4), the contracting officer is primarily responsible for reviewing the invoice to ensure that it is correct and complies with the contract terms and conditions. The contracting officer is also responsible for ensuring that the total contractor payments and payments in process do not exceed the specified contract award amount and approved expenditure authority. The APM also includes Invoice Review Guidelines to provide the contracting officer with steps for reviewing contractor invoices. Further, APM section 7.I.6.b.(5) provides that the oversight manager will review the invoice to ensure that it properly reflects the goods and services received, all goods and services billed have been inspected and accepted, the total payments and payments in process do not exceed the contract ceiling price and the approved expenditure authority, and the invoice does not contain any errors or discrepancies.
DOA's contract files show that the contracting officers and oversight manager were involved in the invoice review and approval process and certified Ratcliff's invoices for payment. Although the contracting officers and oversight manager did identify and reject some unallowable and unsupported costs included in Ratcliff's billings, the reviews were ineffective to preclude payment of unallowable costs. Furthermore, DOA's contract files do not evidence that DOA representatives completed the Invoice Review Guidelines checklist in approving Ratcliff's invoices for payment. Had DOA representatives followed and enforced the contract terms and conditions and had they followed the Invoice Review Guidelines checklist, we believe that most, if not all, unallowable costs billed and disclosed in this report could have been detected and/or prevented. To illustrate:
! Employee Hours and Rates Billed. Invoice Review Guidelines, Services Step 1, asks whether the services have been itemized and billed at the units and rates contained in the contract. Also, Services Step 4 asks whether the number of hours and labor categories recorded on the supporting timesheets and/or subcontractor invoices agree with the number of hours and labor categories claimed on the invoice. DOA representatives, however, did not obtain and review original employee timesheets to ensure that the hours billed represented the actual productive hours that employees worked. The representatives also did not ensure that the rates billed for the applicable employees were the same as the contract rates and did not obtain and review contractor and subcontractor employees' resumes to determine whether the employees met the contract minimum qualification requirements for the labor category billed. Further, the representatives did not ensure that only qualified contractor or subcontractor employees worked on the contract. It is important to note that the contract did not require the contractor to submit original employee timesheets with its invoice.
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Had the review steps been followed, they would have disclosed that Ratcliff billed the FDIC for (1) subcontractor labor hours and rates without first obtaining the FDIC's advance written approval, (2) one subcontractor's services at lump-sum amounts rather than at actual productive labor hours worked, (3) subcontractor labor hours not worked for the period claimed or that the employees' timesheets showed that the hours were worked on a different work authorization than the work authorization billed, and (4) higher labor rates than the contract allowed or that were supported by the employee's qualifications. ! Fees and Expenses Billed for Work Performed Outside the Contract Period. The $6,897 that Ratcliff billed for work performed outside the contract period (see finding subcaption "Fees and Expenses Billed for Work Performed Outside Contract Period") could have been detected by applying Invoice Review Guidelines, Services Step 2. This review step asks whether the services were rendered during the contract period of performance. By reviewing vendor invoices and supporting documentation (included in Ratcliff's invoice package) and obtaining contractor and subcontractor original employee timesheets (Services Step 4), DOA representatives would have found that the work was performed outside the contract period. A basic tenet of internal control includes management's methods for following up and checking on performance to ensure that control procedures are complied with. As discussed above, the contracting officers' and oversight manager's lack of adherence to contract terms and conditions and established acquisition policies and procedures demonstrates that the San Francisco Region needs to strengthen its monitoring and control process. We discussed our audit findings with DOA, San Francisco Region officials and the DOA Director's audit liaison on September 12, 2000. The Regional Manager stated that the Regional office did not do anything on this contract without Washington, D.C.'s approval. The Regional Manager acknowledged, however, that the Regional office did not have any documentary evidence that DOA's Director gave verbal approval to proceed with the additional contract services before he approved the additional funding for the $125,000 contract amendment in writing.
Recommendation The OIG recommends that the Director, Division of Administration, take the following action: (1) Require the San Francisco Region to establish adequate internal controls to ensure that DOA representatives follow contract provisions and the Corporation's acquisition policies and procedures.
RATCLIFF BILLED UNALLOWABLE CHARGES Ratcliff billed the FDIC unallowable charges. The unallowable charges include fees for work outside the contract period, fees for management/overhead personnel, and fees for unapproved
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subcontract labor hours and rates. Ratcliff also claimed time charges that were not supported by employee timesheets and charged higher labor rates than allowed by the contract. Other unallowable charges include fees for one subcontractor's services that exceeded the amount allowed and fees for indirect expenses, printing and reproduction errors, and other charges that were not permitted by the contract. Of the total $607,730 Ratcliff billed the FDIC, we questioned $76,009, as shown in Table 1. A discussion of the unallowable charges follows the table. Table 1: Summary of Questioned Costs Questioned Activity Fees and Expenses Billed for Work Performed Outside Contract Period Management/Overhead Personnel Billed as Direct Labor Subcontractor Labor Hours Not Approved In Advance and Labor Hours Not Supported by Employee Timesheets
Labor Rates Not Billed or Approved According to Contract Terms One Subcontractor Was Paid More Than FDIC's Contract Allowed Unallowable and Unapproved Material Expenses Billed Total Source : OIG analysis of the invoices submitted to the FDIC.
Questioned Cost 6,897 9,570 9,294
20,223 21,541 8,484 $76,009
Fees and Expenses Billed for Work Performed Outside Contract Period Ratcliff billed the FDIC for professional fees and material expenses totaling $6,897 that were incurred outside the contract period. Article 2.1 of the contract provides that the contract shall have a period of performance starting on the effective date of May 16, 1997 and expiring on December 31, 1998, as extended by the FDIC. Ratcliff, however, billed $5,241 for prime contractor labor and material expenses and billed $1,656 for subcontractor labor (Charles M. Salter Associates) incurred before May 16, 1997 and after December 31, 1998. For example, Ratcliff billed $2,548 (13.5 hours at $110 per hour and 12.5 hours at $85 per hour) for labor performed by four of its staff from April 16, 1997 through May 15, 1997, which is before the contract began on May 16, 1997. Ratcliff officials agreed that the fees and expenses were incurred outside the contract period, but they stated that the fees and expenses were related to Ratcliff's performance on the FDIC contract and, therefore, Ratcliff should be paid the amounts billed. Although the fees and expenses may be contract-related, the contract does not include any provision to pay Ratcliff for fees and expenses incurred outside the contract period. Further, the FDIC did not formally ratify the work billed by Ratcliff for work performed outside the contract period nor did the FDIC amend the contract to include such work. Finally, the work performed by Ratcliff was not
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