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  1. I would like guidance on a Cost Plus Fixed Fee Proposal. We requested the labor buildup for each labor category so we could evaluate cost realism. A Prime offeror proposes subcontractor Fully Burdened Firm Fixed Price Ceiling Labor Rates for half the proposed effort. We do not anticipate any privity of contract with the subcontractor(s). Assuming that many smaller subcontractors have lower overhead this would allow the Prime to lower its proposed cost. The likely cost of performance however is going to be higher since the effort may not get subcontracted out by the Prime. It seems it would make more sense to evaluate at the Prime’s labor buildup amount which might result in an inflated fee pool. Alternatively, if after award, the Prime gets permission to subcontract out part of the effort, it would probably result in a cost underrun and a better cost performance rating. How are Firm Fixed Price LOE Subcontracts typically evaluated on Cost Plus Fixed Fee Efforts
  2. Yes, The primes did perform their own Price Reasonableness determination and most of the subcontracts were competed and have negotiated rates. The subcontractors have provided "other than cost and pricing" data directly to the Government and this was used to verify that the loaded rates were correctly calculated. Each subcontractor has certified that these are firm fixed price rates that may not be exceeded. We assume the Prime will use a tripwire to make sure it is not billed by the subcontractor for more than the ceiling amount.
  3. I was reviewing Decision B-277849.2 B-277849.3 and I noticed that the Government provided the incumbent contractors Exempt average labor rate for the use of Offeror's in developing their Cost Proposals and Transition Plans. I'm assuming this was a competition for a follow on cost type professional support services contract. In order to insure continuity in a program is it permissible to have Offerors cite a percentage of Incumbent Employees they will hire and reconcile their proposed rates (Mix of new and hired incumbents) with the Government provided incumbent Exempt average labor rate. Of course, I expect the proposed rates would fall within the Offeror's Total Compensation Plan. Thank You
  4. Went over like a Lead Balloon
  5. Please - One More Question. I doubt that an Incumbent Contractor or Incumbent Contractors would be very happy about the Average CY 2016 Exempt Direct Labor Rate getting published in a solicitation. Is this rate proprietary? We would not be giving out specific labor rates for single labor classifications. - perhaps an average Engineering/Scientific Rate and an average Computer Engineering/Computer Scientist Rate. Thank You
  6. I'm not certain I understand the impermissible part of your answer but it sounds like your opinion is that its permissible for the Government to request that Offerors address a percentage of professionals they intend to retain and is also permissible for the Government to include the average labor rate of the incumbent professional workforce (taken from incumbent contractor's most recent invoice submittal) i.e Average Incumbent Exempt Workforce at $43.17 per hour. Assuming that Offeror propose 75% Incumbent Capture and 25 % New Employee Hires may I ask them to reconcile in the Cost Narrative the proposed rates with the Incumbent Rate and New Hire Rate blended together. I further assume they would use a salary survey data like the BLS SOC to get the new hire rate. Thanks All
  7. Our organization has several multi-year knowledge based service contracts where continuity of service and retention of professional personnel is a concern. How do we solicit for a follow-on contractor in a very competitive marketplace and encourage potential offerors to begin recruiting incumbent personnel during the evaluation period. We mostly use Cost Type and award based on Best Value. Are we permitted to score the staffing plan based on a % retention of incumbent personnel. How would this get verified? I don't think it would be right to justify not competing these, but we continue to see new contractors that propose lower wages than the incumbents are earning. I read the responses on the Topic - "Are we encouraging the Poaching of Employees", and I am curious how other organizations encourage potential offerors to hire incumbent exempt personnel. In the old days company's used to open offices in the locality and accept resume's - now with internet I'm sure this is done a lot Thank You
  8. We have a requirement for one FTE each year for a base and several option years. If we anticipate that an employee would get 80 hours Federal Holidays and 80 hours for vacation then our LOE is 1,920 hours in each year. Does anyone have a good way to divide the 1,920 hours so that the contractor can bill for a completed level of effort that is less than a year? If we just divide evenly into monthly or other periods then are we forcing vacation on the employee. For example, if person wants to take one week off at some point or carry a week forward assuming its a new employee. Maybe this is purely a billing issue?
  9. Thank You for your responses. I'll take each under consideration and do the best I can.
  10. The contract will define the FTE as 1,920 hours, based on the calculation in my original post. We don't require a specific person, but also don't anticipate that a contractor would have someone on standby to fill in if/when the person performing the tasks took vacation. Since we are defining an FTE to account for vacation and holiday (this is a new position, so there is no previous experience for the SCA position and the WD defines it as two weeks), the level of effort for the full year is 1,920 hours. Although the contract could be set so that the contractor isn't paid until the full LOE is expended, that doesn't seem like a reasonable approach. It might be possible for this action with a single FTE, but if the LOE was for a larger number of hours, then contractors may not be williing to complete the full LOE before receipt of some of the amount. The contract is term, so there is only a requirement to provide the 1,920 hrs. The plan at this point is to allow billing for the level of effort expended for a month, but to include language that the contractor is in breach of contract if less than 1,920 hrs of effort are provided in the period of performance. So, if the contractor does work less than 1,920 hrs then we are at risk for the payments made before the full level of effort is complete. For this action, the risk seems reasonable.
  11. At first glance, I thought perhaps the person who wrote this was a member of the happy-hour shoe at Morton’s playing stump the government. I believe this related to how the percentage of subcontract dollars is calculated (Subcontract Cost/Total Contract Cost = Subcontract Percentage). What Prime Costs are included in the Subcontract Base, i.e. G&A; Profit? Then I read further into this and found this. (13 CFR 125.3(a)(1)(iii)): Exclude from the subcontract base - Internally generated costs such as salaries and wages; Employee insurance; Other employee benefits; Payments for petty cash; Depreciation; Interest; Income taxes; Property taxes; Lease payments; Bank fees; Fines, claims, and dues; Original Equipment Manufacturer relationships during warranty periods (negotiated up front with product); Utilities such as electricity, water, sewer, and other services purchased from a municipality or solely authorized by the municipality to provide those services in a particular geographical region; Philanthropic contributions. What kind of Government Gobbledygook is this – I have no ideal what this means. Happy Independence Day Everyone
  12. If a company is CAS covered and maintains a Disclosure Statement and additionally has DCAA Provisional Rates, are they required to use these rates in developing a proposal for a Fixed Price Non-Commercial Competitively Awarded Contract. It's my understanding that FFP Competitive Proposals are exempt from CAS; so are they also exempt from using these rates. What happens if its a T&M contract or FFP LOE type competitive proposal. Thank You
  13. here_2_help Thanks for responding In performing Cost Realism Analysis would we just accept the proposed indirect rates as realistic
  14. Good Morning, Are large contractors with approved estimating systems required to propose their estimated indirect rates (No FPRA) when proposing on large (> 700K) competitive cost reimbursement type contracts? Thank You
  15. I see proposals where Program Managers are proposed in Direct Labor and some where the contractor states they are in Overhead. If a Program Manager is in Overhead, am I correct to assume that the PM is not going to be dedicated to my contract effort 100% of the time? These are FFP Labor Hour and T&M Task Order Proposals. Can a contractor have a system of accounting that allows PM's to be included in Overhead and also assigned to my effort 100% of their time? Thanks
  16. All of the responses have been very helpful and we will simply ask Offerors to explain how the PM position(s) are being priced and what percentage of time they will be devoted to our effort. These are Labor Hour (Fully Burdened Labor Rates for augmentation contracts to support vehicle repair and maintenance (Usually several hundred to about a thousand employees) May mix workforce skill mix based on weekly/monthly needs up to limitation of funds.
  17. Thanks everyone. I think Joel has the solution. Hopefully they will explain but most of these companies keep things sufficiently vague on purpose. Probably more important to advise them that if they are indirect, they stay indirect during the POP. Thanks
  18. Thanks Joel It seems to me that if an employee of a company is going to be dedicated to my effort full time that he or she should be priced in Direct Labor. If the company says the employee is in Overhead are they not acknowledging that the employee will be part time to my effort and some time to other work. I want my PM full Time or at least some explanation of how much time I'm getting a PM instead of just saying the PM is in Overhead.
  19. Thanks Quote" "Why do you think that billing rates would have to be used in pricing a fixed price or T&M contract, whether CAS covered or not? " I guess I should have said Forward Pricing Rates. I know companies have estimating manuals and these get reviewed by DCAA. So if I'm a company bidding or proposing on a competitive non commercial FFP solicitation, I am not bound by an FPRR or FPRA since the awarded contract will not be subject to CAS. Thank You
  20. My opinion is that the Health Insurance Premium, whether or not mandated by the PPACA, is a component of the H&W Benefit, and that if a company does not provide coverage, opting to pay a penaly, they would still need to provide the $3.71 H&W Benefit per hour (cash in lieu of)
  21. I believe DCAA uses a Price Reasonableness criteria based on market survey regarding Foreign Duty Allowance. It is also my understanding that the Dept of State Allowance only apply to Government Employees. What the contractor pays his employees is a matter of Employee/Employer Agreement unless the contract cites that the employees gets specific allowances. Many of our contractor employees are 12 hrs 7 days or 84 hrs a week. A lot get Danger and Post on the first 40 hours. Overtime is not really an issue since FLSA doesn't extend beyound USA.
  22. I agree, We only see Labor escalation on non-exempt employees in Cost Type Contracts where cost realism gets evaluated.
  23. Working on Multi-Year FFP LOE Service Contracts. DOL issues revised WD increasing H&W Benefit by $0.15 cents per hour. Contractor has Fringe Rate of 39% based of its FPRP Rates when they initially proposed. I content that Fringe Rate included a contingency for escalation based on it being a FPR. Also content that current finge rate is adequate to absorb the increase, especially since contractor is paying cash-in-lieu-of bona fide H&W Benefits. FAR 52.222-43( B ) states "The Contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause.” I believe escalation is included in Fringe Rate and contract cannot warrant that it doesn't. If wage rate was $30.00 or $62,400 Fringe Load was 39% or $24,336 Deduct FICA @ 7.65% ($4,774) Deduct Time Off 160 Hrs ($4,800) Minimum H&W Benefit @ $3.71 per hour ($7,717) Surplus Fringe is $7,717 which is more than enough to cover W/Comp and FUTA/SUTA with plenty left over If I add $0.15 plus per hours I think I am unjustly rewarding contractor ? In the original cost proposal narrative the Contractor stated their Fringe Pool included: Statutory fringe elements such as Federal Insurance Contributions Act, (FICA) at 7.65% Personal leave time (vacation – average of 80 hours and holidays – 80 hours) Health & Walfare fringe elements: Medical, Dental and Vision Insurance Short Term Disability Long Term Disability Basic AD&D and Basic Life insurance Retirement savings plan (401K) Emergency Leave and sick leave (Although they pay cash in lieu of) Other fringe elements: Worker’s Compensation Insurance Federal / State Unemployment Tax Act (FUTA/SUTA).
  24. Let me start over:\ A contractor wants to propose on a Service Contract and uses the Wage Determination cited in the contract to establish its minimum labor rates for non-exempt employees. The wage determination also has Health and Welfare Minimum requirement including Paid Time Off for Holidays and Vacation, at least at the minimum level. When the contractor developes its pricing they don’t just put $3.71 cents per hour on every non exempt employee’s straight time hours. All contractor’s I’m aware of, propose using their established Fringe Rates or Overhead Rates to develop the Fully Loaded Labor Rates. If they have 39% or $8.00 per hour for Health and Welfare than why would I adjust upward if the DOL WD Rate goes from $3.71 to $4.19 let’s say. In fact, on another note, I believe excess wages over the minimum for non-exempt employees can also be used to cover some of the H&W Benefit, but not vice versa - meaning that if I'm actually paying an employee $16 per hour when all that required is $15.00 than that $1.00 can be counted toward H&W Benefit.