joel hoffman

1 hour ago, ji20874 said:

Joel, because OP is talking about the negotiation for a new contract (and not about administration or the existing contract), your last comment about change of scope seems inapt.

My last post only addressed the initial contract, as if the contractor is seeking reimbursement…

The initial post didn’t differentiate, between the first contract and the follow on contract.

The initial responses questioned adjustments to the existing contract price.

On 2/7/2024 at 6:28 AM, Neurotic said:

No, nor the vendor or the agency foresaw the extended TDY. The pandemic created the situation during contract performance. The original POP ended so the agency is negotiating a follow on contract (although first time through my desk). The conditions for extended TDY continue.   

On 2/7/2024 at 6:25 AM, Neurotic said:

Contractor meaning a large business enterprise. The rate (assume you meant profit) increase is to get compensated for the tax differential, basically circumvent cost principles to get reimbursed for the add cost.  

On 2/2/2024 at 12:10 PM, Neurotic said:

The contractor is seeking reimbursement of the these taxes. 

To repeat- my post this morning only refers to the initial contract, if the contractor is seeking reimbursement. Neither side anticipated that the employees would have to go on extended TDY when the contract price was negotiated and permanent relocation or replacement of existing personnel wasn’t practical.

I previously said that, if the initial contract anticipated or required extended TDY then there would be no grounds for an adjustment.

Assuming that Neurotic is government employee:

22 hours ago, Neurotic said:

No, nor the vendor or the agency foresaw the extended TDY. The pandemic created the situation during contract performance. The original POP ended so the agency is negotiating a follow on contract (although first time through my desk). The conditions for extended TDY continue.   

I would consider the extended TDY to be a change of scope. If it was originally known at the time of negotiating the contract, the contractor could have increased the wage/salary rates “to attract or retain employees” who didn’t know they would be working on extended TDY. The contractor might be willing to simply accept an adjustment w/o all the markups…

5 hours ago, C Culham said:

Or maybe said another way...contractors risk increases therefore a higher profit is proposed as reasonable?!?

After thinking about it, that may be less expensive than increasing the labor costs to cover taxes on the travel reimbursement.

I don’t see a problem with paying higher wages to attract and retain employees, assuming that the extended TDY is the predominant scope of the T&M efforts.

On 2/2/2024 at 12:10 PM, Neurotic said:

I'm looking to see whether anyone has come across a similar situation and how they incorporated this type of cost into a contract. Tying anything (cost or Profit) to an indefinite quantity (hours) contract is likely not the best option business-wise. Any suggestions are welcomed as well. For what is worth, the Gov reimburses its own employees for this additional income tax. Thanks 

Apparently, upon some research of the tax code references, if the Contractor would directly pay vendors for long term lodging, the employee would still be taxed. If so, my suggestion would still be for the contractor to determine what wages or salaries would be necessary to attract and retain long term TDY employees.

Example: 

Many years ago (circa 1981),  my Corps of Engineers District Office negotiated a FFP construction contract for a new recreation area on the then under construction Tennessee-Tombigbee Waterway in Alabama with an 8(a) firm from the St Louis area.

The firm proposed using its own, home based construction trade labor at much higher than the prevailing local, rural Alabama wage rates, which I remember considered daily lodging and per diem expenses for its permanent trade labor. The agency agreed with that approach.

I was then working in a Tenn-Tom Resident Construction Office that administered the contract.  We reviewed the weekly payrolls to verify that all those employees were indeed TDY from the St. Louis area. To my amazement, they were!

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As an aside, that St Louis based contractor is still in business to date and was recently hired for a major, several mile long, forced main sewer line replacement project in Mobile Alabama for the Mobile Area Water and Sewer System (MAWSS). 

On 2/3/2024 at 4:04 PM, Retreadfed said:

This seems like a personal problem for the employees that is to be resolved between the employee and contractor.  Why is the government getting involved?  

Yes it is likely a matter between the employees and employer.

If the scope of the project anticipated or required long term TDY, the employer should have been aware of the taxation and planned for it, if they thought there would be a problem with retention or dissatisfaction by the workforce.

It appears that the original poster hasn’t been back since posting Friday at noon*. So, without further details, readers are left to ask for further clarifications and to speculate. Several questions by us were asked on Friday and on Saturday afternoon.  

*Edit: Still evident at 0915 CST on Monday morning.

**Edit. Add:

Upon rereading the initial post, it’s not clear to me now (Sunday morning) whether initial contract negotiations are ongoing or the contract has been negotiated and awarded.

If still under negotiation, the contractor could adjust the proposed wages or salaries to attract or retain employees that would be TDY. If awarded, I see no contractual basis for an adjustment (assuming that the location and length of assignments should have been known or otherwise anticipated. 

On 2/2/2024 at 12:10 PM, Neurotic said:

I'm looking to see whether anyone has come across a similar situation and how they incorporated this type of cost into a contract.

If the travel requirements were known at the time the sole source contract was negotiated, the contractor could have increased salaries or wages of travelers to cover the taxes on travel costs in order to attract and retain labor.

*Edit: That is a risk the contractor assumed.

Was the location of the work, whether extended TDY or otherwise, known at the time of the negotiation of the sole source contract?

*Edit: If so, on what basis would the contractor be entitled to a price adjustment?

7 minutes ago, ArrieS said:

It is for a service but not construction. It's R&D which is why the base period is 2 years.

Thanks for your clarification. I wanted to mention that there may be distinctions between different types of contracts. 🤠

18 hours ago, here_2_help said:

The government (in general) doesn't like to acquire commercial services. Period.

17 hours ago, C Culham said:

I will buy in but I do wonder, does not like to or does not know how to?

I didn’t mention above in my earlier post but agree with the additional Nash and Edwards critiques in their Postscript III article. 

I also agree with the two above quotes that the government in general does not like to and many don’t know how to acquire commercial services. 

Although not applicable to Vern’s example here, I will add that, when requesting quotes, the government has the opportunity to negotiate not only the price but the terms and conditions with those firms. That would be a practice often used in the commercial world by professional buyers.

As a former city engineer many years ago, I remember that our purchasing agent often negotiated with supply and service vendors.

I learned in a business law course many years ago and in reading books on effectively negotiating that almost anything is negotiable in the commercial contracting acquisition world, including posted or advertised prices and terms.

However, in my experience with the Federal government and the WIFCON Forum, I’ve observed that many Federal Government acquisition personnel don’t seem to effectively and/or want to negotiate with vendors or offerors/proposers.**

However, these days there are more and more “no haggle” vehicle and other prices being advertised. This trend seems to fit well with today’s population…
 

**Equally applicable to services, supplies,  construction, design-build, A-E acquisitions and modifications, REAs, claims, etc.

This was specifically in response to the last two posts, partially quoted above. Sorry to stray from the specific example in the Nash and Edwards Postscript III article and whether the current acquisition system is badly designed.

My remarks did address some general personal observations concerning whether the system is poorly executed. The government can have the best designed business processes but if  acquisition personnel don’t act like professional buyers, it will not be highly successful. 

Bob, I believe that this is the wrong topic area for this question. Perhaps Contract Award Process topic area  for purposes of future references to the subject? 

For the cited example, it is obvious to mention that the time allowed to digest, plan and respond to that RFP at a remote, Alaskan site seems to be unrealistic to anyone but, perhaps , the incumbent contractor and maybe not even to that firm.

52 minutes ago, C Culham said:

Looking from the side of the hotel I would think they might be, again by experience.   Staffing plans change for hotels based on their expereinced and anticipated occupancy.  As such cost of performance on their part is affected.   I know we all experience looking and seeking the best rate possible on an individual basis so while one might think rates are static and consistent many times they are not again by my experience.  Maybe it applies in such a service industry and maybe is does not but usually greater quantity generates less cost to a contractor.

Carl, I don’t necessarily disagree. It may depend upon the season, circumstances, location, etc. I’m advocating negotiating the terms of any proposed penalty for under attendance . I’d shoot for having the hotel show that they were, in fact impacted by the under attendance. Lately, it’s been very difficult to find room availability in certain areas but not always.

i don’t have a fundamental problem with the concept of an pre-agreed term or restitution for a breach, as Don suggests. Just add some condition to establish impact damages. It is likely that no shows are very likely to impact a hotel’s  ability to fill those rooms on the first night but they might be able to adjust and accommodate other travelers during a multiple day conference. 

I don’t think that a partial termination for convenience after the fact here is possible or practical. The dirty deed would already have be done. 

19 hours ago, Don Mansfield said:

I don't see this as paying for unused hotel rooms. It's a method of settlement in the event the Government breaches the contract.

I would agree with that assessment.

13 hours ago, C Culham said:

In the end it would seem it is a matter of negotiation. 

This is of overall importance.  The person(s) making Hotel conference arrangements should negotiate the details of such “attrition” terms, regardless of whether or not competition is involved. For instance, if the hotel occupancy rate isn’t affected by a certain under attendance (e.g., they are able to rent those unused reservations), then it wouldn’t suffer any loss and shouldn’t assess a penalty, in my opinion.

Is it for services?

EDIT: The reason that I ask is that, for construction contracts, the periods might vary, depending upon Agency policy/regs.

For instance, US Army Corps of Engineers (USACE) Regulation ER 715-1-17 (dated 2012) requires an interim Contractor Performance Evaluation (CPE) at the midpoint of a contract or task order with a performance period of 24 months or longer. The Contracting Officer (KO) may require additional interim CPE(s).

For a contract with multiple on-going task orders, there are various alternatives. Examples are, contract level interim CPE or individual task order level CPE’s, depending upon the type of work, single or multiple locations of the work, effects on project performance by design subcontractor firms on a design-build task order, performance by key subs, such as  trade subs, etc.

The USACE regs require that the contract admin office (CAO) discuss the topic of interim and final CPE’s with the Contractor during the post award and/or pre-construction conference

The agency regs also discuss how to reflect design firm and/or key subcontractor(s) performance in the interim and/or final CPE. There are no separate CPE’s prepared for design firm(s) or other key subs.

2 hours ago, Vel said:

Perhaps it originated from FAR 14.201-8: (c) Advantages or disadvantages to the Government that might result from making more than one award (see 14.201-6(q)). The contracting officer shall assume, for the purpose of making multiple awards, that $500 would be the administrative cost to the Government for issuing and administering each contract awarded under a solicitation. Individual awards shall be for the items or combinations of items that result in the lowest aggregate cost to the Government, including the assumed administrative costs.

The question concerning a “rule” for assuming an estimated cost to “execut[e] a modification” may have originated from the above, totally ridiculous, 1990 estimate of administrative cost to the government to both issue and administer each contract.

However, those are separate scenarios, no matter what “executing a modification” refers to. “Issuing and administering each contract [of more than some nominal amount] awarded under a solicitation” generally entails much more direct and indirect labor costs and efforts alone let alone other direct and indirect costs than “executing” each modification under that contract.

As such, it is an “Apples to Oranges” comparison with little correlation.

@S. Nimrod, I’m still curious about what what you specifically mean by the term “executing a modification”. It’s an ambiguous term, without further clarification.

How do you expect an answer if you don’t define what you are asking about? 

Thanks.

12 hours ago, S. Nimrod said:

Question- does anyone know what is being taught in the 1102 circles the "unwritten" or written rule for the cost associated with executing a modification (SF30)?

Please explain what act or actions you are specifically referring to when you say “executing” a modification [on an] SF 30. 

Thank you. 

9 hours ago, bob7947 said:

This bill was introduced on January 18, 2024.  Unfortunately, the bill hasn't been posted yet.  That is why you don't see it yet.  It should be posted by the end of the week.  Check here.

 

This appears to be the bill discussed in the Wifcon.com Home Page of 1/23/24.

On 1/23/2024 at 10:44 PM, govt2310 said:

[Quoting Vern Edwards:] “Phased evaluation is simply progressive winnowing of the field of competitors through phased application of the evaluation factors.

The idea is to start with the easiest factors to evaluate -- generally: legal acceptability, experience, and bottom-line price -- so that by the time you reach more difficult factors to evaluate you won't have as much work to do. There is no reason for the concept to be controversial, except to the eternally blockheaded.”

Phased evaluation processes and multiple phased, down-select quote or proposal submission processes are different, distinct processes.

I believe that govt2310 was initially referring to a phased submission approach, not a phased evaluation approach. One must be careful not to confuse the two, separate processes

In my opinion, if preparing an offer/proposal or quote requires significant time, resources and expense, then requiring full proposals in a phased evaluation with the primary intention to simplify the government’s workload can be onerous and unfair to industry.

This is particularly onerous and aggravating in construction and even more so in design-build (D-B) competitions. Both require significant time, resources and expenditures to compete and prepare technical and price proposals.

A construction or D-B firm must first plan and organize a team, solicit subcontractors (who also have to invest time and resources to participate). There are significant cost estimating efforts required to develop price proposals for both construction and D-B competitions.

In D-B, there is significant effort and expense by both the prime and design firms/teams to develop preliminary designs and price proposals.

Fortunately, due to significant industry involvement (including Professor Ralph Nash, I believe), in conjunction with the government agencies then using the onerous DoD one step design-build approach, the two-phase D-B process (FAR 36.3) was adopted by Congress.

Phase 1 was specifically aimed at using a performance capability based short-list selection process, with no design development  or pricing requirements. Phase 1 was intended to have some similarity to the quality-based, Brooks Act A-E selection process.

The short-listed firms them compete for contract award(s) in phase 2.

Multiple Award Task Order, ID/IQ contracts can offer less expensive competitions for both industry and government for services or construction.

A relatively simple and economical two phase,  down-select task order process could be used where there are large numbers of contract holders (e.g., the various GSA schedules).

The referenced Central Care, Inc. GAO decision is an example of this approach.

Agency construction MATOCs should and Agency design-build MATOCs must purposely have small pools of contract holders to provide attractive, yet effective competition for task orders. Then, there should be no need to use multi-phase evaluations.

12 hours ago, joel hoffman said:

govt2310, since this is a “hypothetical” situation, did the solicitation state that the basis for the phase one “mandatory down-select” is “go/no-go” and describe a minimum  standard of acceptability (“go”)?

For a go/no go, phased down-select, the process should describe the standard for the determination of the minimum for a go, since firms are going to invest their time and resources to respond to your action.

”Keep it Simple” doesn’t mean to say nothing at all.

But the bottom line with this method is that it might not result in a manageable number of vendors for phase 2, rather it would include all “qualified” vendors or at least those  vendors that the government has some stated minimum level of confidence in. 

If the object is limit the phase 2 participation to some manageable range or number, then one should at least explain the range or upper limit (maximum number) and that only the most highly rated vendors, based upon… (relevant experience? Past performance of that experience?,  confidence of successful performance, etc.?) would be invited to participate in phase 2.

“I’ll know it when I see it” level of simplicity isn’t fair to the  universe of a schedule vendors, in my opinion. 

govt2310, since this is a “hypothetical” situation, did the solicitation state that the basis for the phase one “mandatory down-select” is “go/no-go” and describe a minimum  standard of acceptability (“go”)?

You said the circumstances were “very similar” to the Central Care, Inc. Decision.

 In that Decision, the solicitation stated that it was a best value, trade off process, with only the highest rated vendors in phase one invited to proceed with the submission of phase II quotations.  Those vendors that were not amongst the most highly rated would be eliminated from the competition. 

9 hours ago, govt2310 said:

This hypothetical is very similar to Central Care, Inc., B-420959.13 et al. (Jan. 11, 2024).  GAO denied the protest, finding that it was ok for the agency to eliminate the "Low Confidence" protester after Phase 1.

If this I hypothetical is very similar to Central Care, why are you asking? The agency assigned the protestor’s experience factor low confidence , thus not one of the most highly rated phase 1 proposal submissions. 

Who says that “experience” isn’t a technical factor? It’s not a price factor. Experience has been a common technical (non-price ) factor. The Corps of Engineers used it for many years in hundreds of single phase and two-phase competitive acquisitions.

Past performance is also a technical factor, which some agencies have combined with experience for a “confidence” rating.

There are numerous protests denied for lack of or very little relevant experience. This topic has been discussed over the years in this Forum.

The point of two phase processes or multi-step evaluations  is to down select in phase (or step) 1 using discriminators, such as relevant experience. Probability of successful performance…

Could one of us be able to call or otherwise contact the staff office for ASBCA to inquire? 

On 1/3/2024 at 4:52 PM, Birdsong said:

I have a FFP contract that has procurement funding and is severable. Can the period of performance be extended beyond 12 months?

The DoD PROC funds are multi-year funds available for obligation for three years (5 years for ship and aircraft outfitting, etc.), correct?

Adding scope to an existing contract might or might not require out of scope justification. But in-scope mods extending the time to meet the scope of the contract would seem to be allowable. What is the purpose of the contract and the extension?

See, for example, https://www.dau.edu/acquipedia-article/procurement-funds#:~:text=The Procurement appropriation is used,for operational use or inventory.

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We used PROC funds from multiple appropriation years for the acquisition,  installation and systemization, training, etc. of process equipment for Chemical Weapons Demilitarization (Chem-Demil) Plants during and after construction of those plants under the decades long Chem-Demil Program.

The Chem-Demil Program was a Major Defense Program, with Systems Contracts (Services with Construction or design-build phases) for nine plants at separate locations in the US and Johnson Island and one plant in Russia for the Russian Federation.

Each plant used multipke funding types (e.g., PROC, MILCON, Army and DoD O&M, etc.

The Process Equipment for the majority of the plants was Government Furnished, under multiple contracts and installed by the Systems Contractors..

(Some plants were design-bid-build, systemization, pilot ops, operations, closure phases. Other plants used Design-Build in-lieu of government furnished design. There was a mix of Cost Plus and FFP used.)

Some Systems contracts were simply phased, others were single award, task order, ID/IQ.