DE13151719

Hello!

Contractor here, with a CPFF contract for a research effort. Our original cost proposal included a slew of labor categories for (I believe) cost analysis purposes. Our final contract doesn't specify anything about LOE, or approved labor categories. We have a new individual working on this effort (COTR is aware), but he would fall into a different labor category than what was on the original proposal. From my perspective, the labor category name is a moot point as we aren't locked into any specific approved rates via a labor category.

Do we need to provide any sort of notification, or new proposal activity? As it is a cost type, and not T&M I can't find a requirement in writing anywhere. If this does require some sort of approval, what guidance specifies that?

Thank you.

25 minutes ago, C Culham said:

Your brief description of your situation makes me think of Procurement Technical Assistance Centers (PTAC).  One of the primary purposes of PTAC's is to provide FREE assistance to small business's that are in the position you are.   A PTAC, if you find it to be a good fit for you, could be a valuable resource through out your entire prime experience. 

Here is a link to find and explore abilities of the PTAC near you.   Checking a PTAC out might just be a good thing for you - https://www.aptac-us.org/

Thank you. I've been in touch with our PTAC on other matters and didn't consider their assistance in this instance. 

12 hours ago, Neil Roberts said:

1. Was FAR 52.244-2 included in your prime contract? Does it apply to the contemplated subcontract type, etc. Can we assume your company does not have an approved purchasing system?

2. What is the basis for DCMA having any contract right to "deny your sole source justification?" Perhaps a contracting officer might not approve the subcontract for consent per 52.244-2, but I never heard of DCMA having any right to be involved with denying any subcontract. What are the prime contract terms and conditions that establish such a right?

3. Whatever your written procedures say about how to accomplish solicitations and source selection is what your should do.    

Neil,

Thanks for your response.

1. Our contract does has 52.244-2 and it applies to the subcontract type, we do not have an approved purchasing system.

2. I was under the same impression - I've never worked with DCMA for subcontract approval. In our specific instance, our contracting officer delegated certain administrative duties to DCMA at contract award, pursuant to FAR 42.302(a)(51) - "Consent to the placement of subcontracts." In fact, my ACO said that they rarely are the source of permission of consent to subcontract which is why it seems they have more stringent requirements. He said that almost NEVER accept sole source justification, so at this point we'll be seeking out other companies for solicitations.

We're a small business with our first prime contract. We had a subcontractor we were planning on working with on our prime contract, and DCMA denied our sole source justification. 

So let's say our next step is to issue an RFP to do a competitive award for a subcontract. I understand issuing RFPs, reviewing proposals, and putting together our subcontract package. What avenue do we actually use to solicit proposals from potential subcontractors for this? 

12 hours ago, Vern Edwards said:

The link that the OP has provided is to "NATIONAL DEFENSE BUDGET ESTIMATES FOR FY 2022."

I have no idea what that has to do with an escalation rate for a subcontract for god knows what work.

 

Vern, 

The subtext I'm getting from your comment is that the contracting world (even in DoD contracting) does not normally reference the Green Book. That document contains what the DoD recognizes as accepted inflation rates for future estimating, so to me it seemed like a solid reference for inflation rates for future estimating. 

57 minutes ago, here_2_help said:

The BLS escalation rate is (unsurprisingly) associated with labor (salary & wages), right? Does the Green Book cover the same thing or does it cover something else? What costs are you applying the escalation factors to--labor only, or labor plus something else?

Regardless, it seems to me that whatever escalation factor you get will be the result of whatever you negotiate. As with all negotiations, I would start with the higher value (6.8%) and see what you can obtain. What would your bottom-line break-even price be (regardless of how you get there)? At what point would you decline the option because the price was too low?

My two cents.

Thank you Here 2 Help. We can handle the rate at 1% escalation. It's actually only for a handful of people, so in the grand scheme of things not a big deal. However, we anticipate that we will be working with the same prime on a similar effort in the future so it's more of a strategic move keeping future rates in mind. 

32 minutes ago, C Culham said:

My mind went here which is a little beyond the CPI matter of sorts.

Does the subcontract provide the CPI increase, if not are just using to help justify your position.  If the former maybe you ought to get clarification as to what CPI standard you are to use from your prime and possibly even get the wording modified in the contract to avoid future confusion.   If the latter I just wonder about using some sort of index as opposed to your actual experience.   Maybe I am not fair minded but I would rather negotiate with a sub ( and have) based on their actual experience as opposed to what indexes day.   By your very example you might use the Green Book but the prime might use a whole different document and view in considering what you propose.

Thanks for the response. The original subK did specify a 1% increase. The contract had three options periods (all exercised). The customer elected an extension based on covid delays. We are outside of the outyears originally negotiated 4 years ago, which is what prompted the prime to reach out to all of the subs specifically asking for new rates. I think 1% is extremely low, and our rate was lowballed to begin with 4 years ago. It sounds like what you are saying is that asking for a rate increase based on increased costs we are currently experiencing as a company (and have over the past 4 years) may be more convincing than citing a labor statistic. Do I have that right?

Vern - I would make the strongest argument by citing the FY22 Green Book instead of the BLS. The fact that there is a disconnect between the two means I am misunderstanding the way the CPI is calculated in the Green Book. Specifically I am looking for help (perhaps arithmetically) in understanding how to get an accurate CPI from the Green Book.

We've had an option year granted on a subcontract and I'm looking to negotiate for higher escalation rate than 1% due to the actual CPI. 

The BLS is publishing that the current CY21 CPI is 6.8% (Link - Table A). However, the index listed in the FY22 Green Book give a dramatically different answer - only 2%

in the Green Book, Table 5-1 on pg 59 (link), it lists 2021 as 98.04 and 2022 as 100 (as it is the base). Dividing 100/98.04 only yields 2%. I think I'm misunderstanding the table in the Green Book, or how to use it to get an industry accepted escalation rate. 

Any help would be appreciated!

2 hours ago, Retreadfed said:

DE, is your contract for services?

Retreadfed - No, it is a R&D effort.

Background: CPFF contract, funds come from different agency than the contract is issued by. Sometimes the MIPR takes time to hit the contract because of IAAs and the paperwork trail. We invoice costs monthly, however there is nothing stipulating that we need to invoice monthly. Cost vouchers are not connected to specific deliverables.

When we did similar work as a sub, we would occasionally work "at-risk" when the money on our subK was fully expended but we knew funds were enroute with a MIPR (with the permission of our prime). Now we are performing under our own prime contract. Is there anything in the FAR that precludes us from doing this? 

Hypothetically, say our funding runs out on 5 January. Funds have been sent from the customer, but aren't on the contract yet. Can we continue work until they are available? We technically don't need to invoice at any particular time, so couldn't we just hold off invoicing anything until the funds have been modded to our contract?

We provided the CO with the 75% of funds expended notification. 

THANK YOU!

We're contemplating a contract that invokes FAR 52.216-8 - fee withholding.

I understand that we will withhold invoicing fee up to $100,000 or 15% of the whole fee (whichever is less). Once we pass that threshold we will invoice fee as appropriate. That much makes sense. 

However, when I read the clause as written in the FAR, I don't see how 100% of the fee is eventually paid to the contractor - am I missing something? The clause says that the CO shall release 75% of fee withholds, and up to 90% of fee withholds based on past performance. So is it implied that the best you can hope is that the government keeps 10% of the fee withholds? It's certainly small potatoes compared to the overall contract value, but I want to clearly comprehend this clause.

Thank you as always!

Thank you to both Neil Roberts and here_2_help! 

Thanks for your help in advance. I have two questions, both pertaining to a CPFF effort. I am a contractor assembling a proposal to be a prime.

Question #1: The contract period is a base period of 1 year, followed by 2 option years. The government fiscal year and the contract period dates do not line up. I have costs broken down by element by both the government fiscal year and contract period. Will the fee $ amount be set based on the government fiscal year, base period, or base period plus option years (very unlikely I imagine)? The contract will be completion form, but the "end product" will be the monthly reports on a continual effort vice a term form with a set LOE.

Question #2: We do not currently have a certified final indirect cost rate proposal, and are using estimated indirect rates for the proposal. I want to make sure I understand the process - after a period of time, we will submit a certified final indirect cost rate proposal. Is that period of time a government fiscal year, or at the end of the base period?