We are: Prime Defense Contractor.
Customer: Government Agency
Prime Contract: Labor Hour w/ negotiated rates on contract (Labor Cats and Rates)
Subcontractor: Run of the mill Defense Contractor
Subcontract: T&M w/ negotiated rates on subcontract (Labor Cats and rates)
Q: Can a vendor have different rates for each slot/person on the subcontract even if they are the same LCAT/Level billed to the customer on the prime contract? This is execution, not proposal.
Q: Can we give the vendor a rate on their subcontract that is only to be used for one person that drops to a lower pre negotiated rate if that "special" person leaves?
We are a prime defense contractor with a Labor Hour Contract with our government customer. The contract has been operating for months with a mix of our employees and subcontractors working for various companies in the same industry. Recently a position has been vacated on our prime contract that we are filling with a subcontractor. The sub employee in consideration is significantly preferred by our customer. As such, we have agreed to pay the vendor a slightly higher rate for this person than others with the same Labor category and level on the same subcontract. We also added a stipulation that if this vendor employee leaves the contract, the backfill rate drops to the pre-negotiated rate for that LCAT and level. None of our negotiations with the sub impact our cost to the customer. Seems reasonable to me, but I want to check my logic.