kevlar51

If it's sole source, then their justification for adjusting your hours to put you on equal footing with other bidders makes little sense.

Agreed with Joel--you're in a much better position in a sole source environment to negotiate and reach a clear meeting of the minds. Discuss your concerns with the Government, and figure out their concerns. Then resolve them in the contract document.

You still need to pay it. The IFF is incorporated into your schedule pricing. It's not something to be added after the fact. 

20 hours ago, Vern Edwards said:

You should charge the government for all of the work that you must do to fulfill its request, not just the cost of the laptop.

This bears repeating. More often than you think, Government program management won't be expecting an invoice for higher than the laptop's sticker price. Be prepared to fight them on this, because procuring material has additional costs associated with it, and if you only bill the laptop sticker price, then you're losing money. And I don't know if your contract type allows profit on materials.

This whole deal can be a slippery slope. You might buy the laptop now, and then the program team decides it's a lot easier and quicker to have you buy their equipment rather than their contracts office. That's not a good position to find yourself in, and it's made significantly worse if you're losing money on every purchase. I suppose an extra benefit to billing actual costs is the Gov't might be less inclined to come back for more due to sticker shock (not always the case).

I had a Government customer years ago that would consistently insist that they did not want, and would not pay for a warranty. OK, fine with us. But once something happened with the equipment, they (rightly or wrongly) claimed it was a latent defect.

47 minutes ago, Vern Edwards said:

I'm not sure it makes a difference. Remember, the contract is cost-reimbursement. The contractor invoices on the basis of allowable cost incurred to deliver the level of effort. not by the hour at a fixed rate. There could be more to the cost of the level of effort than direct labor hours. If the subcontract cost is allowable, then the contractor invoices for it and the government reimburses up to the estimated cost or the total funds allotted.

All fair points. And with that, I'm now more confused at what the OP is concerned with "losing."  Though the chances of an overzealous COR are high, at which point it's hard to apply the rules when the "rules" are all in one person's head.

5 minutes ago, Vern Edwards said:

Extra funding? I don't understand what you're talking about. I presume that the contractor included the cost of the subcontract in its estimated cost for the LOE.

I suppose that's a question for the OP. Was the subcontract price included included in the overall estimated cost? Was the estimated cost tied exclusively to an LOE?

On 12/8/2017 at 8:48 PM, Vern Edwards said:

Suppose you have a CPFF LOE Term contract with a 6,000 hour LOE, a $10,000,000 estimated cost, and a $600,000 fixed-fee. You are obligated to deliver the LOE in order to get the $600,000. You are not obligated to work beyond the LOE.

You expect to have to burn the 6,000 hours with your own employees. You hire an FFP consulting sub to advise you, but you still expect to have to use your own people to deliver the 6,000 hours.

Along comes the COR and tells you, to your surprise, that you must count the sub's hours against your LOE obligation. You realize that if you do that you can get to the 6,000 hours and collect your $600,000 with fewer hours from your own people.

Why would that be a bad thing for you?

It depends on whether you're a shareholder or an employee. Shareholders (and mid/upper management) will want to see maximum profit and will be quite pleased with your example. Employees (and lower management assigning them to tasks) will want to maintain as many hours as possible for their own staff to keep them working on Government funds. 

In OP's case, I'm not sure where the extra funding is coming from for the FFP subcontract if he doesn't want to tie it to the LOE (assuming the estimated cost is tied to the LOE).

16 hours ago, Vern Edwards said:

See Darst, Sales Commissions & Contingent Fees In Government Contracts, 05-10 Briefing Papers 1 (September 2005).

The author provides a complete history and legal analysis of the covenant against contingent fees.

You can read the rest yourself.

Thanks very much for the cite, Vern. This has been informative--I've printed out the full article for some light reading later on. 

How much should Whynot be concerned with the covenant against contingent fees? I'm not well-versed on the exceptions but flags go up when I read about arrangements like this.

Sounds like the logical solution would be to get the Prime to pay the sub in accordance with the subcontract terms.

What does the solicitation text say regarding changes in Key Personnel?

Here's another recent GAO protest (YWCA of Greater Los Angeles), dealing more with agency action after notification, but I feel to be relevant:

https://www.gao.gov/assets/690/686617.pdf

On 10/12/2017 at 3:02 PM, REA'n Maker said:

You might try "the FFP contract is based on an 1,880 hour standard" shtick.  Despite the glaring logical fallacy, it has always worked for me (I don't know whether to be pleased or horrified).

Ha, I don't think that argument applies to my current scenario. But I'm absolutely guilty of making it when the need arises (and with equal success on my end).

1 hour ago, Vern Edwards said:

Emphasis added.

I'm pretty sure that letter contracts are UCAs. See DFARS 217.7401(d).

Please don't use facts and citations to prevent my decent into disgruntled oldmanhood.

Purely anecdotal, but it's been years since I saw a true UCA. Large contractors I've worked with tend to shy away from them and have established rather strict internal approval requirements. I imagine it's tough for a CO to put one in place for similar reasons. Both sides of the table seem to think that a UCA is a huge advantage for the other party--Gov't sees it as a license for the contractor to run costs up and contractors see it as a license for the Gov't to kill their profit on the backend.

Since these stricter internal requirements have been put in place, I don't see UCAs. I instead see lots of ATPs, NTPs, Letter Contracts, At-risk-orders, etc.  Basically come up with anything you want. Just don't call it a "UCA" because that has to get signed off up top.

You won't be able to compel the Government to make award.

It's curious that they went through negotiations with you (did you agree to a price?) and then decided against it. But it's far from unheard of, especially in the last two weeks of September.

49 minutes ago, Vern Edwards said:

 

Acquisition personnel are thoughtless about their work. It's maddening. They do the things they do because that's the way things have always been done, and they infect their trainees with cut and paste disease. Brain death is rampant in the ranks, from political appointeeS, through the ranks of the SES (especially), down to the journeymen. All I can hope for is ruthless insurgency by the young.

 

 

To add to this, Contract Specialists I'd work with were constantly in multi-week training seminars. Yet I'd absolutely never see any changes in outcomes, because training all gets forgotten when they get back to whatever procurement culture their agency has fostered over the decades.

Do you have a disclosure statement that identifies these costs as G&A?

15 hours ago, here_2_help said:

Does the contract contain a Termination for Convenience clause? Has it been exercised?

I haven't personally seen an IDIQ contract terminated for convenience. From a contractor's perspective, I've seen plenty of dead IDIQ contracts that probably should have been (and two that I really wished would have been).  But the folks on the Government side I've worked with always seemed to go with the "we might be able to use this in the future" approach, figuring at worst they'd just stop ordering from it and it'd go away.

On one occasion, an agency had an IDIQ with Company X for a specific solution. Then the agency combined Company X's solution with our own and placed it under a new IDIQ with Company X as sub to us. The agency left Company X's IDIQ open and stagnant, which created a toxic environment in the program because Company X (a necessary sub) held the very vocal belief that once we inevitably failed, the agency would pull the program from our IDIQ and place it back under theirs.

I had a very good working relationship with the CO, and brought that issue up. Perhaps a bit presumptuously on my part, I asked if he'd terminate the sub's IDIQ--it wasn't utilized and its existence was having a negative effect on the program the agency was paying for. The CO was understanding, but didn't want to lose the IDIQ, because if some unforeseen event came up and they needed it, it'd be there for them.

GeoSystems (B-413016, 2016) made the argument that 15 pages was insufficient for their tech volume. But it was a post-award protest--they'd shoved lots of their solution in other areas of the proposal and protested when the evaluation team didn't count the information. The Comp. Gen. denied the protest.

Sort of on topic (but the protest makes me laugh)--DKW Communications (B-412652.3, 2016), where the awardee fit their tech volume into the 10-page limit by significantly reducing the line spacing. It might have actually gone unnoticed if they hadn't used normal spacing in the rest of their proposal. The Comp. Gen. counted 66 lines/page in the tech volume and 44 lines/page in the rest.

A joint venture is a separate legal entity from its individual members, so it would need its own contract. An alternative is a contractor team arrangement, but both members would need to have something to offer from their respective schedules to meet a specific solicitation's requirements.

On 5/16/2017 at 0:31 PM, REA'n Maker said:

Occam's Razor: the contracting agency doesn't know what they are doing.  

I've seen this more times than I can count:

1. CO determines that FFP is appropriate
2. IGCE uses labor hours and rates as the BOE
3. CO issues FFP RFQ
4. Award is made at an FFP, yet Section B retains the hours/rates pricing used in the IGCE and evaluation
5. Micromanaging COR who only knows how to count butts in seats takes over administration of contract
6. 1 FTE goes to Disneyland for a week
7. COR decrements invoice for "40 hours not worked"
8. Repeat until PoP expires

Lesson: it's much easier to award a LH contract when you call it FFP.  

(But the real fun comes when you try to close a physically complete FFP vehicle and there's a bunch of unexpended funds still on it, which, of course, should be impossible.)

This is a BS argument, but it's worked for me in the past: Explain to the government that the contract labor price was based on an 1880 hour year, which is 5 weeks short of the total number of workdays in a typical year; therefore, until the government can show that each FTE has  taken more than 5 weeks off , you can't decrement the  invoice. (one other tactic I have used is to price the deliverables individually.  At least that keeps the attention where it should be, which is on DELIVERIES) . 

You post describes incredibly well an issue that recently fell into my lap (at least up to item 6), in my case the COR is rejecting invoices for "incorrect labor rates"--a discrepancy that has arisen due to rate differences between the schedule, BPA, and orders. The BPA and orders are unambiguous--services are to be performed on a firm fixed price basis, with no mention of LOE. But it's being administered as a T&M contract, and I'm told "that's just how it's always been done."  Multiple CORs, COs, and Contractor PMs have been involved in this and I can't determine who initiated the process.

I'm hoping I can sit everyone down and explain how much easier, less time consuming, and contractually correct managing a FFP contract like a FFP contract will be.

But the Government recently sent the contractor a bilateral mod for a completed order to decrease the price by the unbilled value (the contractor has not signed it), so I'm not confident the discussion will go well.

For a FFP contract, the output should be your primary concern (I can't comment on whether your contract allows for others).

If you are satisfied with the end result, even when the contractor put forth measurably less effort, then consider that fact for any follow-on solicitations.

On ‎7‎/‎23‎/‎2017 at 7:48 PM, huwen119 said:

Agreed, not sure what capture team negotiated with sub but this was not a well positioned effort to go after.

A general comment, we want to be a good prime who honor workshare to subs who help us win, but I always find hard to finanlize in writing especially when capture team has made some promises to subs...

thanks here 2 help.

If their workshare is based on a percentage of revenue (agreed with above that this was a bad idea), then they’ll figure out what the contract value is once they get their subcontract. And if you still won’t tell them your contract value, then they’ll assume you’re lying to them. I realize proposal values are not necessarily the same as final contract value, but if you’re going to need to ultimately disclose the contract value then hiding the proposal value won’t accomplish much.