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elgueromeromero

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Posts posted by elgueromeromero

  1. 1 hour ago, joel hoffman said:

    Good luck! By the way, did the government or the prime contractor add the extra words “and prices”?

    If you ever encounter this option clause with the added wording in the future in a govt or contractor solicitation, I would advise you to contact the solicitor prior to the closing date and advise them that the words “and prices” are not in the FAR option clause and ask for an explanation of what they mean by adding those two words.

    The Gov't added "and prices". Specifically, the USACE. Basically a paragraph that said something along the lines of: in accordance with FAR 52.217-8, the Government may require continued performance of any services within the limits and at the rates and prices specified in the contract. And then they went on to add that it applies to task orders as well. 

    Good point on raising the issue during the solicitation phase. I think in this case, we simply didn't notice it until after award. 

     

    Thanks

  2. Thanks, all. I appreciate the guidance. While I did use hypothetical scenarios, my company is dealing with some real life situations related to this clause. We've seen in more than one of our contracts with the Gov't language related, but in addition to, FAR 52.217-8 that states"...at rates and prices specified in the contract" [emphasis added]. So I wanted to make sure I understood how FAR 52.217-8 is supposed to work, and what rights it gives the Gov't, given the addition of "and prices" that we've seen in our contracts. We've also had a Prime try to force us to keep working for an additional 6 months at no additional cost. When we pushed back, they cited this clause, which was flowed down to us from their prime contract. I was pretty confident they were misinterpreting the clause, but wanted to ask here to be sure. Again, I appreciate everyone's guidance and expertise! 

  3. FAR 52.217-8 states, in part, that "The Government may require continued performance of any services within the limits and at the rates specified in the contract. These rates may be adjusted only as a result of revisions to prevailing labor rates provided by the Secretary of Labor. The option provision may be exercised more than once, but the total extension of performance hereunder shall not exceed 6 months."

    Scenario: FFP IDIQ contract that includes FAR 52.217-8. The contract includes various labor categories and rates. The contractor submits a proposal for a task order which consists of 100 hours of engineering support at the contract rate of $150/hour for a total proposed price of $15,000. Period of performance is 12 months. The Gov't issues a modification prior to the end of the POP to extend the task order by 3 months and cites FAR 52.217-8. 

     Question #1: Does this option clause obligate the contractor to continue providing the engineering support services for another 3 months at no additional cost to the Gov't? Or, is the contractor simply obligated to continue working under the $150/hr rate for the 3-month extension, but with a price increase to account for the additional hours? Let's say the 3-month extension translates to an additional 20 hours. Would the Gov't be required to increase the price by $3,000? In other words, when the clause states that "the Government may require continued performance of any services within the limits and at the rates specified in the contract", does "rates" really mean "rates", or does it actually mean "price"?

    Question #2: If the answer to Question #1 is that "yes, rates means rates", how is the level of effort determined for the extension period(s) given that the option can be exercised unilaterally?

  4. Scenario: We have a large remediation contract that contains both an SCA wage determination and a Davis-Bacon wage determination. Most of the work we do under this contract is service work, but there is some construction work occasionally that's subject to the DBA. Part of the remediation work under our contract requires drilling for, and installation of, monitoring wells as part of an environmental remediation system. We've previously determined that the drilling and subsequent installation of the monitoring wells is NOT subject to the DBA primarily because the wells are temporary and will be either abandoned and/or filled in after the  monitoring is complete and the remediation system is decommissioned, and as such, are not "works" because they are not improvements. 
    Note that our SCA WD includes a labor category of "well drilller" and our DBA WD includes a labor category of "drill operator". The DBA "drill operator" wage is quite a bit higher than the "well driller" wage. To add to the confusion, and what is causing me to reevaluate this, is that I just noticed that the DBA WD includes "Environmental Remediation" and "Monitoring Well" in its labor classification description of "Laborer". 

    I've spent a lot of hours  researching this issue and can't seem to find anything definitive, and I've read some conflicting information in various guidance documents and the like. Does anyone have any guidance or information that might be helpful in determining whether SCA or DBA applies to this type of work?

  5. Question: Does the prime contract scope or the subcontract scope determine wage requirements of the subcontract?

    Our prime contract includes both a DBA WD and an SCA WD. The subcontract we're issuing is for well drilling services. We previously determined (for various reasons) that this type of well drilling is not "construction work". However, our drilling subcontractor thinks that DBA should apply to their subcontract.

    Is the applicability of DBA vs SCA dependent on the Prime's scope of work and specific facts surrounding the drilling work, or is it strictly based on the subcontractor's scope, which is essentially just "drilling of wells"? 

     

  6. 3 hours ago, joel hoffman said:

    Is this an agency Indefinite delivery contract or one on a GSA or other Schedule? 

    If it is an A/E contract with the Army Corps of Engineers, there should have been some instructions for submission of your task order proposal, especially if it is the first task order. 

    Depending upon the complexity of the task, the task order request for proposal  might include something like this:

    “8. Provide detailed price breakdown with tasks, position classifications, labor-hours, costs and profit for all phases and sub-phases of work. Indicate which work will be performed by the prime firm and each subcontractor.[ Identify factual and judgmental items. ]  Discuss any assumptions made in developing the proposal. Include price quotes for any commercial supplies and services.“

    If not with the UASCE, I would not know what if any, experience or skill the government agency has in negotiated A/E services. It is a negotiated action.

    The agency should be using some level of price negotiations procedures as described in FAR subpart 15.4, or something comparable. EP715-1-7 is the A-E contracting procedures for USACE. 

    It might well be something simplified for a small task but the basic price negotiation principles are described in FAR 15.4 and, for USACE A/E Contracting, the EP 715-1-7.

     https://www.publications.usace.army.mil/Portals/76/Publications/EngineerPamphlets/EP_715-1-7.pdf

    At any rate, personally, I would expect that you would be an honest professional, truthfully negotiating.

    This is a small task that shouldn’t take very long for you to decide how you will plan to execute it.My advice is to be truthful.

    Otherwise, this looks like a poor (seemingly deceptive) way to kick off a contractual relationship for an IDC. 

     

    This is an IDIQ with USACE. It seems that you're suggesting Option #1, correct? 

  7. 35 minutes ago, joel hoffman said:

    Please define what “fully loaded labor rates” include . Is it the price to the government?  Is the subcontractor fully loaded labor rate the price to the prime? Thanks. 

    The Gov’t has defined “fully loaded labor rates” as direct rates plus applicable indirects. So the price to the Gov’t prior to adding profit. Same applies with the Sub rates.

  8. We have an FFP A/E IDIQ contract that includes a list of "maximum fully loaded labor rates for the Prime and Subcontractors". We've been selected to provide a price proposal for a Task Order and we're in the process of setting up a subcontract with "Sub A".  My question pertains to what is acceptable (allowable?) when it comes to the labor rates we use to price the TO proposal. If, for example, we're using "Sub A" for a particular labor category in which our maximum contract rate is $150/hr, but Sub A has proposed a rate of $125/hr, are we able to still use our $150 max contract rate to build up our price, or would we need to use Sub A's actual rate of $125? Alternatively, is Sub A allowed to build their price using our $150/hr contract rate even though their actual cost is $125/hr? Also, provided Sub A's person meets the qualifications for this particular labor category, do we even need to disclose to the Gov't that we're subcontracting out that particular labor category?

    Note that this is a FFP/lump sum TO estimated at $150K where labor is only a portion of the price. Also worth noting is that Sub A provided its $125/rate during the RFP phase for the base award, but because this was an overlapping labor category (in that it is one in which both us as the Prime and Sub A may use), we proposed our higher rate of $150/hr because the Gov't said they only wanted one rate for each labor category.

    It seems that there are three ways to handle this:

    1. Propose the sub's actual rate of $125/hr.

    2. Propose the max contract rate of $150/hr but issue a subcontract to Sub A with their originally-proposed rate of $125/hr, in which case we as the Prime would keep the difference as profit.

    3. Propose the max contract rate of $150/hr and issue a subcontract to Sub A with the max contract rate of $150/hr, in which case Sub A would keep the difference as profit.

    Thanks in advance.

  9. UPDATE: GSA just issued an amendment to clarify that the Mentor Protege agreement has to be approved prior to submission of the offer, not the Joint Venture agreement.

    Disregard my original post--I was wrong. The regulation states that the Mentor-Protege Agreement has to be approved prior to award. I thought I had read that the Mentor-Protege Joint Venture agreement had to be approved prior to award.

    Huge oversight on my part. 

  10. 17 hours ago, Retreadfed said:

    Have you read 13 CFR 121.103(h)(3)(iii)?  What, if any, impact does that section have on your analysis?  Note, that 13 CFR 124.520 requires approval of the JV prior to submission of an offer in order to receive "the exemption from affiliation." 

    Wow--interesting. Thanks for this reference. I have read this section before but didn't catch what I think you're pointing out, which is this part, correct?:

    If the procurement is to be awarded through the 8(a) BD program, SBA must approve the joint venture pursuant to § 124.513.  

    This does have an impact on my analysis in that it seems to create some ambiguity and confusion by contradicting 124.520(d)(1)(i)). 13 CFR 121.103(h)(3)(iii) first references 124.520 but then jumps to § 124.513 when discussing approval of the joint venture, when it seems they should have instead referenced 124.520. 

    I still think that there's a distinction in the regulations between the requirements for 8(a) Joint Ventures and 8(a) Mentor Protege Joint Ventures; however, this apparent oversight by SBA that you've pointed out does confuse the issue and may give interested parties a better chance of succeeding in a solicitation protest. And I can almost guarantee that this RFP will get protested for this very issue. 

  11. The following is from the GSA OASIS 8(a) Sub-Pool On-Ramp RFP:

    For Mentor-Protege JVs, the SBA must approve the Mentor-Protege Agreement before the firm may submit an offer (reference 13 CFR 125.9(d)(1)(i), 13 CFR § 124.520(d)(1)(i)).  For 8(a) Joint Ventures where all members are small under the applicable size standard per 13 CFR 124.513(e), the SBA must approve the JVA prior to award, not prior to submission of an offer.

    This requirement is causing a lot of heartache for 8(a) Mentor-Protege JVs. A lot of folks (including consultants and contracts attorneys) are saying that GSA is violating SBA rules in that they can't require approval of the 8(a) Mentor-Protege JV prior to submission of an offer because the regulations state that approval must happen prior to award. Of the 369 questions and answers provided in Amendment 04 Q&A, probably 20 of them were directly related to the above requirement. Admittedly, I also initially thought that GSA was going against SBA regulations with this requirement. Then I dug more into the regulations and now I actually think that GSA is correct. Here's why:

    GSA is essentially stating that 13 CFR § 124.513, which allows SBA approval of the 8(a) agreement prior to award doesn’t apply to 8(a) JVs formed under SBA’s mentor-protégé program, but rather 13 CFR § 124.520 and 125.9, which require approval of the JV agreement prior to submission of an offer, applies to 8(a) and SB Mentor-Protégé JVs. 13 CFR § 124.513 is almost entirely silent on Mentor-Protégés, whereas 13 CFR § 124.520 and 125.9 are specific to the Mentor-Protégé program. So the regulations contain two distinct requirements with respect to SBA's approval of joint venture agreements: If you're an 8(a) JV (meaning both or all members are 8(a) Participants) SBA approval of the JV agreement is required prior to award. If you're a Mentor-Protege 8(a) JV, SBA approval of the JV agreement is required prior to submitting an offer.

    Do you agree with this interpretation? If not, why?

  12. Our consultant (who's a former DCAA auditor) is telling us that DCAA's interpretation of 52.216-8 Fixed Fee (Jun 2011) is that the contractor is required to withhold 15% of the fixed fee, that the 15% is mandatory, and if contractors don't do this, they'll be cited with an accounting system deficiency. She's consulted for several other contractors and said that one of them was recently cited with an accounting system deficiency for this very reason, which was fully supported by the DCMA ACO. 

    My interpretation of this clause is that it does not impose any kind of obligation on the contractor. The clause does contain a requirement for the Contracting Officer to withhold a certain amount/percentage of the fee, and to release a certain amount/percentage as stated in the clause, but there’s no obligation for the contractor to withhold any of the fixed fee (i.e. underbill the Government on the fee). I think the contractor should bill the full amount of the fee and the Contracting Officer is responsible for withholding the required amount of fee from payment. If the contractor were to underbill the fee, there would be nothing for the Contracting Officer to withhold. If the Contracting Officer doesn’t do any withholding of the fee, that should be on the Contracting Officer, not the contractor.

    Our auditor then told me that DCAA pamphlet 7641.90 ("Information for Contractors") also states that it's the contractor's responsibility to withhold 15% of the fixed fee. I reviewed the manual and it doesn't actually state that, but rather refers back to FAR 52.216-8 and provides a sample voucher where the Contracting Officer has designated a 15% reserve for the fixed fee. I certainly don't view this sample voucher as direction or a requirement for the contractor to withhold/underbill 15% of the fee. While a withhold amount less than 15% is apparently almost unheard of, the FAR does state that the amount of the withhold is a subjective "not to exceed 15%, or $100,000, whichever is less, to protect the Government's interest", so the reserve technically could be a lower percentage, based on what the Contracting Officer feels is adequate to protect the Government’s interest. 

    That DCAA could cite a contractor for not doing something that isn’t required by contract is very frustrating and concerning to me. The clause/regulation states as clear as day that the Contracting Officer is to withhold a reserve not-to-exceed (discretionary amount) 15 percent of the total fixed fee, which is why I’m surprised that DCAA could expect contractors to interpret that to mean that the contractor must voluntarily underbill the fixed fee by exactly 15% (a non-discretionary amount). And apparently if contractors don't do the mental gymnastics required to arrive at this same bizarre interpretation of the clause, DCAA will cite the accounting system as deficient and may even require repayment of the fee reserve that "should have been withheld". 

    I should also mention that our company has had several CPFF contracts with both the DoD and EPA over the years and we've never been required to withhold a percentage of our fixed fee from billings and have also never had any portion of fee withheld by the Gov't. I'm not saying it shouldn't have been withheld (it should have), but it just hasn't happened.

    Am I missing something here?? Has anyone else had to deal with this?

  13. On 2/19/2019 at 1:44 PM, here_2_help said:

    Yeah, when the ceilings = the proposed rates then somebody is taking a shortcut to performing a solid cost realism analysis. If the proposed rates = contract ceiling rates, then make sure to bid rates that give you plenty of room on top. (Disclose your actual rates, of course. But propose higher rates.)

    Thanks, Help. I really appreciate your thoughts on this. And thanks for your contribution to this site. I can't tell you how many times I've found answers to these types of questions by coming here and reading your comments. 

  14. On 2/16/2019 at 9:28 AM, here_2_help said:

    So it's not a cost-reimbursable contract then? Clause 52.216-7 will not be included?

    I mean, if the rates I propose become fixed for the life of the contract then, to that extent, the contract is fixed-price.

    Reimbursable labor plus a fixed multiplier is common in commercial contracts (e.g., refinery maintenance) but I've never seen it in the government contracting world. How interesting! I wonder if the CO has obtained a deviation from FAR to create this contract type?

    Yes, it's a CPFF and 52.216-7 will be included. The indirect rates aren't fixed--they're actually ceilings. The Gov't is calling them capped rates. I apologize if I said they were fixed or made it sound like they're fixed. So we can bill at our actual indirect rates up to the ceiling/caps. Hopefully that clears things up.

  15. On 2/16/2019 at 3:13 AM, joel hoffman said:

    I’m not sure how “established capped rates” will apply to orders other than as a ceiling. Will you be billing for orders using the capped rates or your most currently available rates, if they are lower?

    You said “Retreadfed, the indirects proposed by each offeror will be the established capped indirect rates for proposal and billing purposes on task orders should the offeror be awarded a contract. 

    If billings will be based upon most currently available rates, then you have to decide what you are willing to limit your future cost recovery to, since your recent rates were actually slightly higher than your most currently available rates. Then it would seem that you are free to propose a cap that you can live with, also considering the fact that you are competing with other firms for the contract. 

     

    They're ceilings. The Gov't is calling them "capped rates". Yes, we will bill at our actual rates up to the NTE ceiling rates. 

     

  16. On 2/16/2019 at 10:42 AM, Retreadfed said:

    I'm still not clear as to what is happening.  Will the rates you are proposing be fixed rates so that no matter what your actual rates are, those are the rates at which you can bill and will be reimbursed on the final voucher, or are the rates you propose rate caps so that the final rates may be lower, but not higher?  If the former, how is this not a cost plus percentage of cost contract?

    The proposed indirects are ceilings for proposal and billing purposes. So we can bill actual indirect rates but NTE the ceiling/capped indirect rates established in the contract. Does that clear it up?

  17. On 2/14/2019 at 2:17 PM, Retreadfed said:

    El, if you have an idea as to what the cap on indirect cost rates will be, have you done an analysis to determine if you will perform the contract  at a loss after you have figured in all your anticipated allowable cost that will be allocated to the contract as well as all of your unallowable costs that also must be allocated to the contract but not reimbursable?

    Retreadfed, the indirects proposed by each offeror will be the established capped indirect rates for proposal and billing purposes on task orders should the offeror be awarded a contract. 

  18. 1 hour ago, Retreadfed said:

    El,  I'm confused about what you are saying.  You said you have been told you are in the competitive range for the procurement.  This indicates that this is a competitive procurement.  Yet, you say you are "covered by the requirement for current, accurate, and complete cost or pricing data?  This indicates that there is not adequate price competition.  Reconcile these statements.  If the latter requirement is correct, have you looked at the instructions for submission of certified cost or pricing data in Table 15-2 found in FAR 15.408?

    Next, you are referring to incurred indirect cost rates.  This indicates final rates for the years to me.  What you would use going forward are either forward pricing rates or billing rates.  Do you have billing rates for 2018-2019?

    I'm sorry, I misspoke. We aren't covered by the requirement for cost or pricing data as this is a competitive procurement. 

    From what I understand, we also don't have billing rates. We have very few cost-reimbursement contracts so we calculate our rates on a contract by contract basis, and usually just end up using our most recent DCAA-accepted rates. 

    1 hour ago, ji20874 said:

    You are supposed to use a current projection of future rates, based on anticipated costs and anticipated revenues (or FPRA, if still accurate).  A mechanical reliance on approved billing rates or approved past-year final indirect cost rates is improper for new proposals. A FPRA is different from approved billing rates or approved final indirect cost rates, but you don't have a FPRA.

    So your proposal should explain the basis for all of the indirect cost rates included in your proposal.  You might be audited during the proposal evaluation period to help the contracting officer negotiate your proposal. You will want to be sure that the information in your proposal is current, accurate, and complete.

    What you're saying makes sense. However, our experience has been that Contracting Officers almost always want to see SOMETHING from DCAA, and our "accepted" rates letter from DCAA is what we typically provide. I think it gives the Contracting Officers a sense of security to see that DCAA has reviewed our rates and accepted them. The impression we get is that they expect our proposed rates to match what DCAA has accepted. But you're saying that we shouldn't rely on these rates as they likely aren't the most current, accurate, and complete data, which seems to make more sense given we don't have an FPRA.

    So back to my question, would you suggest that we forget about the rates we used in our initial proposal and that we update our rates for our final proposal revision to reflect" a current projection of future rates, based on anticipated costs and anticipated revenues"? 

  19. 25 minutes ago, ji20874 said:

    Are you going to be covered by the requirement for current, accurate, and complete cost or pricing data? 

    Yes

    Are you going to be asked to submit a proposal revision after negotiations?

    Yes

    Do you have a forward pricing rate agreement (FPRA)?

    No

    Are the 2017 rates generally higher or generally lower than the 2016 rates?

    2017 Fringe and OH are slightly lower than 2016. G&A is slightly higher. Combined effective rate for 2017 is slightly lower than that of 2016.

    If the contracting officer learns about the DCAA-accepted 2017 incurred indirect rates from DCAA or some other source, rather than from you, and forms conclusions based on learning this from another source, is that okay with you?

    I don't know. Our DCAA letter says not to use the accepted rates for pricing proposals, which seems kind of odd to me (because what are we supposed to use then?), but I'm thinking we could point to that if they asked why we didn't use them. Also, I don't know if it matters, but the Gov't is capping indirect rates.

     

  20. We used our 2016 incurred rates to come up with our estimated cost for a CPFF proposal. DCAA did an informal review (not a full-blown audit) of these rates and they were "accepted". It's been about a year since we submitted our proposal and we finally received notice that we've been included in the competitive range and we're now in negotiations with the Gov't. We now have DCAA-accepted 2017 incurred indirect rates, which have changed slightly from our 2016 rates. I don't know if we should use the 2016 rates that we originally used to estimate our cost for the proposal, or if there's some expectation or requirement that we update our rates to the more current 2017 incurred rates. The RFP and negotiations letter are both silent on this matter.

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