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mrsbadexample

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Everything posted by mrsbadexample

  1. Does anyone have any experience with applying the following HHSAR clause to a firm fixed price commercial item subcontract? We are being told by an HHS agency CO that this salary rate limitation applies to subcontracts for fixed price commercial items as well as non-commercial item subcontracts. They are requesting documentation to prove that subcontractors who will be providing firm fixed price commercial items (services) are not using contract funds to pay the salary of anyone involved in the contract in excess of this rate limitation. As the commercial item services are based on market pricing, and as the individuals performing work will not be invoicing for their direct labor, I am having trouble understanding how this limitation could/should be applied and documented. Note that the clause does not prohibit a contractor from paying its employees a salary in excess of this rate; it only limits the portion of their salary that may be paid with Federal funds. On a fixed price subcontract, how can one determine what portion of an employee's salary is being paid with Federal funds? The CO is asking for the quoted prices for the subcontracted services to be broken out by labor, fringe, materials, overhead, etc. As commercial for-profit entities providing market priced services, subcontractors may not have a method for doing this, and it may be in conflict with their company policies. Per 331.101-70, the clause is only required to be included in prime contracts "when a cost-reimbursement, fixed-price level-of-effort, time-and-materials, or labor-hour contract is contemplated". The clause itself states that the salary rate limitation also applies to individuals under subcontracts, but it does not limit that flowdown to the same contract types. Can an argument be made that it should only apply to cost-reimbursement, fixed-price level-of-effort, time-and-materials, or labor-hour subcontracts as well, even though this isn't stated in the clause?
  2. HHS Salary Rate Limitation

    Navy - I assume you are objecting to HHS's interpretation in the policy memo Q&A referenced above and not to my interpretation of their response to Question 11. I personally find the clause somewhat ambiguous; I was merely interpreting HHS's Q&A. Michael - Yes, applying the limitation on an annual basis requires more tracking of hours/costs charged to the contract by highly paid employees. I have also seen this clause interpreted differently by some contractors and COs. Many are not aware of this HHS policy memo.
  3. HHS Salary Rate Limitation

    The Q&A on the site you referenced is somewhat convoluted, but I think the response to Question 11 is pretty clear. It is an annual limit, so in your scenario charging direct labor costs of $144k to the HHS contract should be allowable (as long as it meets all the other criteria for an allowable cost). This clause should not be included in a FFP prime contract. Per HHSAR 331.101-70, this clause is required "when a cost-reimbursement, fixed-price level-of-effort, time-and-materials, or labor-hour contract is contemplated." In a fixed-price level-of-effort, time-and-materials, or labor-hour contract the employee would be required to record the number of hours spent working on the contract, so you could calculate the percentage of his salary that is allocable to the contract. However, since the clause does not restrict the salary that a company pays employees out of its own funds, I agree that it would be difficult to show whether the contract funds were actually used to pay for that portion of the employee's salary. If you have provided details on how the price for each hour of service was derived (direct labor plus fringe plus overhead, etc.), then I suppose one could use the direct labor amount per hour of service from that calculation and multiply by the number of hours incurred during the year to derive the total annual salary paid out of contract funds.
  4. We are considering bidding on a solicitation that was just released as an RFQ. The presolicitation indicated that a cost-reimbursement type contract was anticipated. The posting in FBO for the solicitation, however, states "Upon further review and market research, it is determined that it is in the Government's best interest to release the solicitation under FAR 12, Commercial Items." The solicitation document states, under the "Structure of Contract" section "This Level-of-Effort contract will consist of two parts:" and then goes on to describe the number of employees that are "currently needed to maintain all essential functions" within the program. No total number of hours was provided, but the number of full time personnel is listed. The solicitation includes 52.212-1, 52.212-2, 52.212-3, 52.212-4, and 52.212-5 (curiously, with no applicable clauses marked). When we called the CO for clarification of the contract type, she stated that they were issuing it as a firm-fixed-price, level-of-effort contract because the agency is no longer issuing T&M contracts. I have a couple of questions regarding this contract type (and many more that we need to ask the CO). 1. Is it possible to have a firm-fixed-price, level-of-effort contract for a commercial item? Per FAR Part 12: Even though FFP-LOE is a type of fixed-price contract, I was under the impression that it was not allowed under Part 12, since this clause does specifically list two types of FFP contracts described in FAR 16.2, but it does not include FFP-LOE. 2. FAR 16.207-3 states that this contract type may only be used when "The contract price is $150,000 or less, unless approved by the chief of the contracting office." This contract will be for several million dollars. I know it is possible that this has been approved by the chief of the contracting office, but I'm wondering if this is a common occurrence. Is anyone aware of the frequency of exceptions being made to this clause? 3. This contact will also include numerous different types of non-labor costs that would be billed as materials if this were a T&M contract. Not all of them could be accurately estimated and included in the fixed price. I don't have any experience with FFP-LOE contracts, so I'm wondering how those costs would typically be handled. A separate cost reimbursement line item might make sense, except that this is being done under FAR Part 12. A separate T&M line item seems like a ridiculous thing to suggest, since they are trying to avoid a T&M contract in the first place. This may be a moot point, depending on the answer to Question 1.
  5. Wifcon.com: My Legacy; My Albatross

    While you may not be able to hear our collective applause every day, I would wager that most of us feel this site is a far more valuable legacy than that of a saxophone player.
  6. Thanks, Vern. I also found the new 2012 version here: http://www.loc.gov/r...Department.html
  7. I wonder who wrote that clause.

    To answer Vern's original question (several years late): Since at least 1994 when Clinton signed an extremely similar EO, including the exemption of disputes from Contract Disputes Act coverage and a contract clause. It was more limited in scope, and it was later revoked by Bush. http://www.archives....s/pdf/12933.pdf
  8. HHS Salary Rate Limitation

    I have, but I did not find it particularly illuminating:
  9. By the way, why can't one search for a three letter word on this forum? Off topic, I know, but I've been trying to search for FTE, FFP-LOE, etc. for the last two days. There should be a no-three-or-less-letter-acronym rule in the forum policies if they aren't searchable. (Nobody on here uses many acronyms, anyway, right? )
  10. Here's another question: If the LOE is stipulated in terms of FTEs, is there a standard or generally accepted definition of an FTE? The number of hours each employee will actually perform direct work on the contract, even if they are full-time and only working on that contract, will vary based on how much sick/vacation time they take. If one of the employees is out on medical leave for a couple of weeks, and assuming the Government does not want the Contractor to replace him with another employee for that period, would that mean that the LOE had not been satisfied? Contractor100's example above used 2080 hours per year per employee, but I have to assume that those employees had some holiday/sick/vacation time. I have a feeling that I'm going to need a definition of an FTE in my contract as well...
  11. Can you please clarify this sentence? Are you talking about how changes to the LOE would be handled?
  12. I would think that they would have to issue a bilateral mod to the contract to change the LOE, or else terminate the contract for convenience. I'm not sure why your CO would be reluctant to do that. By the way, I edited my earlier post. I meant to say contract mod, not change order (per 52.243-1). We've asked the question about non-labor costs. I'll be curious to see the response.
  13. Well, you can't invoice them for the full 20800 hours unless you deliver the full 20800 hours. My question is, without a change order, contract modification, can you just keep providing the hours even if they don't want them? I suppose if you are working at a government facility, or if you have no work that you could be doing, that might be difficult... That's a problem with using this contract type as a substitute for T&M rather than for it's real purpose as Vern has stated. Absolutely.
  14. Well, so far. It was 16 hours yesterday...
  15. Understood. Your and Don's way does make more sense. I was suggesting a different grouping if that was the intention, that's all. There's nothing to say that the Part (or the whole FAR) couldn't be revised to be more logical and eliminate ambiguity and conflicting passages. I wish that you and Don could rewrite it...
  16. It sounds like the problem is that some agencies/COs seem to be executing FFP-LOE contracts as a substitute for the now-out-of-favor T&M contracts, and they seem to be trying to structure them so that they are more or less the same (billing by the hour). As you suggest, this is not a "true" level of effort contract. I'm not sure what would be the advantage to the government of this contract type vs. a T&M contract, other than that it doesn't seem to violate the agencies' ban on T&M contracts. Thanks for the link to the article, Vern. I look forward to reading it when I'm not working 13 hour days. Does anyone have any insight into how non-labor costs would properly be invoiced in a FP-LOE contract for commercial items, assuming that they cannot be accurately estimated at the time of contract award and built into the firm fixed price?
  17. Thanks for both of your perspectives on this. That may well have been their intention when drafting FAR Subpart 16.2. If I were writing it with that intention, I wouldn't have structured it in this manner. But there are many parts of the FAR that I would have written differently...
  18. I understand your logic, but I'm not sure I agree that FFP is the "class" in this case. FAR permits use of "firm-fixed-price contracts or fixed-price contracts with economic price adjustment" for commercial items. These both fall under "Subpart 16.2—Fixed-Price Contracts" (specifically in 16.202 and 16.203), and "Firm-fixed-price, level-of-effort term contracts" also fall under "Subpart 16.2—Fixed-Price Contracts" (specifically in 16.207). But note that Subpart 16.2 (what I was considering the "class") is "Fixed-Price Contracts", not "Firm-Fixed-Price Contracts". In this Part, "Firm-Fixed-Price contracts" seem to be a species under "Fixed-Price Contracts".
  19. Got me! I knew that, but I am guilty of using this word in accordance with the general definitions from Merriam Webster, rather than in accordance with the definition in 2.101. 1: a group of words containing a subject and predicate and functioning as a member of a complex or compound sentence 2: a separate section of a discourse or writing; specifically: a distinct article in a formal documentI know I should refrain from this usage when discussing the FAR, but it is a hard habit to break.
  20. Thanks. There may not be. Oh, and I should have said "I interpreted this clause to mean" instead of "I assumed".
  21. Yes, it is a fixed price contract, but as 12.207 specifically references two types of fixed-price contracts (i.e., those described in 16.202 and 16.203), I assumed that other types of fixed-price contracts (i.e., those described in 16.204, 16.205, 16.206, and 16.207) would not be allowed. I would be happier if they went for a commercial item T&M contract. But you're right, I'm not going to file a protest, and I'm hoping that nobody else does after we win the contract. Even if I do nothing with regards to this solicitation with the information, I still like to try to understand the FAR and its application (including when it is being applied incorrectly) as much as possible. Surely you won't fault a contractor for trying to be well-informed? So few of us make the effort...
  22. Perhaps I should rephrase: Is it possible to have a firm-fixed-price, level-of-effort contract for a commercial item that is in compliance with FAR Part 12? Of course, it is possible to have all kinds of contracts that are not in compliance with the FAR, so I"m not sure if your response was alluding to that or suggesting that my interpretation was incorrect. Thanks for your response to #2. That's what I figured, but I was just curious. The $150K limit seems very low if exceptions are going to regularly be made for multi-million dollar contracts.
  23. My company is negotiating a subcontract to provide a commercial item in support of our client's prime contract. Our client is asking us for a Small Business Subcontracting Plan, which they say is required as part of their prime contract. Are there any circumstances in which a subcontractor providing a commercial item should be required to submit a Small Business Subcontracting Plan? 52.219-9 includes the following exclusion: (j) Subcontracting plans are not required from subcontractors when the prime contract contains the clause at 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items, or when the subcontractor provides a commercial item subject to the clause at 52.244-6, Subcontracts for Commercial Items, under a prime contract. It seems to me that a prime contract should always contain the clause at 52.212-5 or 52.244-6, so wouldn't subcontracts for commercial items always be excluded from the requirements of 52.219-9? Am I missing something, or is the prime contractor asking for something they do not really need under the terms of their contract?
  24. What are you listening to?

    Leonard Cohen's new album - Old Ideas. The man is a genius.
  25. Teaming agreements (between a proposed prime and subcontractor) often include exclusivity language such as the following: Since this Agreement requires the full cooperation of the Parties, both Parties agree that they will not in any manner participate in or undertake efforts that are competitive to this Agreement, nor will they compete for the Procurement or respond to the Solicitation, independently or in conjunction with any other Party, during the term of this Agreement. 52.203-6(a) prohibits contractors from entering into any agreement with an actual or prospective subcontractor "which has or may have the effect of restricting sales by such subcontractors directly to the Government of any item or process (including computer software) made or furnished by the subcontractor under this contract or under any follow-on production contract." 52.203-6( b ) then states that this prohibition "does not preclude the Contractor from asserting rights that are otherwise authorized by law or regulation". I guess I have two questions, which may be related. First, why aren't teaming agreements containing the above language prohibited by 52.203-6(a)? (Or are they?) Second, what is the intent of 52.203-6( b )? Is this a convoluted way of saying that 52.203-6(a) doesn't apply as long as the agreement is otherwise legal, or is this referring to some other unnamed rights of the contractor? (Okay, maybe I really had four questions...)
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