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  1. The problem: we (company) have a T&M contract. The agency is close to the employees and wants them to get salary raises. We’ve given raises to all employees at a minimum 2% up to 5% each year but the agency wants ‘significant increases in their salaries since we’re making so much money!!’. We’ve submitted our certified cost buildup for each rate prior to award; they have our cost buildup for each rate and they know the employee's salary (they should know I'm losing money). I’ve requested several meetings with the CO to discuss economic adjustment for the rate or to put the employees in different labor categories IF they want raises for the employees. The email response I got was “you pay them $Xhr and charge us $Xhr, how about sharing some of that ‘profit’ with the employees! You charge us almost double what you pay the employees and put the rest in your pocket!!” (yes, in an email). This is a contract won from an incumbent (same employees surviving multiple contract holders); I paid the employees exactly what they made the prior year +2-3% increase while bidding a rate a bit lower than the incumbent. I’m already stretched – but that’s my problem - I'm not asking for more money, they want me to give the employees raises without changing the rate. In my mind, the statements from the CO are absurd. I tried contacting a contracting department head but this CO is apparently the ‘senior CO’ (whatever that means) and the other CO’s aren’t helping out in finding this CO's 'boss'. What are my options?
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