Sunnyo

Again, Thank you for your insight.

Thank you for your explanation. This really cleared things up for me. Ex. If the revenue is $5MM, and it's a 60/40 nominal split, the FTE would need to be aligned to equal the 40% or $2MM. Correct?

Thank you all for your assistance

Here_2_Help Understood and thank you. Utilizing your definition, it would behoove one to have more FTE/labor hours because that could result in higher profit. Correct?

bob7947, My apologies. I'll consolidate the posts moving forward.

Vern Edwards, Thank you for your response. The Prime Contract will be Time-and-materials and I am inquiring on how the prime and the sub can split the prime's profits. The Prime, verbally, agreed to 60/40 split but I'm not sure how that works. I.e. would I take 40% of the FTE?

52.232-7 Payments under Time-and-Materials and Labor-Hour Contracts (4) The hourly rates shall include wages, indirect costs, general and administrative expense, and profit. Can someone explain, or help me understand, the profit and how it impacts the hourly rate? I understand how the wages and fringe benefits make a fully-burdened labor rate; however, it states profits as well. How is this calculated and/or accounted for on a T&M contract?

Thank you for your response--very insightful. One more question. If a fixed number of FTE is agreed to, then that is what we'll make our profit from? i.e. our profit will be made exclusively from our FTE. I'm just trying to see what's more pragmatic. As an example, for a 60/40 split (we have 40%), we'd take 20 out of 50 FTE for our 40%...and that's where our profits would come from (after cost and benefits)? I apologize in advance for the amount of questions. As I said before, we are a fledgling business, and I want to ensure we put ourselves in the best position to be successful--or not be taken advantage of.

Hello everyone, I am new to this website; however, it seems very informative and helpful. I had a couple of question that I hoped you all could provide some insight on. Background: We have teamed up with a Prime (we are the Sub). Due to our knowledge of the requirements stated in the solicitation, the Prime has asked us to write the Proposal—which we obliged to. The team that is built was recruited by our company as well. So, the only thing the Prime is doing…is being the Prime—which is allowing us to bid on the contract because we have no past performance. Questions. The Prime sent us a letter stating, “Upon award of contract they will utilize our company at the Sub”; however, this is very vague. Should we draft a subcontractor contract with the Prime stating an exact percentage? What normally happens in Sub/Prime relationships in a T&M contract? Does the Sub get a percentage of the “end profits” or the Sub receives funds based off of the Sub’s FTE allocation?