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Showing results for tags 'T&M Estimates'.
Hi all, I'm being asked to determine whether or not a proposed profit of 10% is fair and reasonable on a sole source T&M contract we're planning on awarding. We haven't done this type of work before and I don't really have anything to base our decision off. I've read through FAR 15.404-4, The Time-and-Materials Contract: The Time Has Come for A Long, Hard Look, the DoD's weighted guidelines, and GSA's structured profit/fee approach and it doesn't seem like 10% is even close to something that should be fair and reasonable considering the contract type and risk involved, though I understand there's other factors to consider. GSA's GSAM says that only fixed price contract should be towards the high end of the profit range which they max out at 7%. I was also looking at the link below (table starting on page 18) where it appears to recommend a profit of 0% to 1% for a T&M contract. https://www.acq.osd.mil/dpap/cpf/docs/contract_pricing_finance_guide/vol3_ch11.pdf Am I off base in my thinking that 10% doesn't appear to be fair and reasonable at first glance for this type of contract? I was thinking, considering the factors in the GSAM, that a high profit objective for us should be closer to 3% which is leagues away from their proposed 10%. Appreciate any insight anyone can provide, thanks!
I'm the contracting officer on a new requirement which will encompass consolidating 15 smaller contracts (currently performed by small and large businesses) into 3 separate orders under the CIO-SP3 GWAC. We intend to award the 3 orders to a small business, a HubZone and a Woman Owned Small Business. Among the numerous questions that the program office has raised, they submitted this to me this morning: "What is best approach in structuring this contract/RFP so that it can accommodate unexpected surges in current work and new work, all within the same scope of "Operations"? While we want to stay honest and keep our estimates for level of effort real based on what we know today, we all know each year (Program) has "pop-up work" that was not planned at the time a contract is awarded. So to help minimize the work on both Acquisitions and (Program), we want to maximize the value and scope of this contract (say $23M over 5-6 year), either by adding hours, or adding say an SME labor category not currently needed, or adding optional tasks under one or more of our 5 functional areas (Testing, Sys Admin, Security, etc.), or other. And can we do something like a 9 month base period, with 5-6 one-year options under a T&M?" I'm trying to come up with the best way to respond to this. I see a few items of concern with what the program office wants to accomplish with this contract, but I would like someone else's perspective on it. The services that we're procuring are IT support services such as help desk, security, system admin, database admin and testing. Program has requested a T&M contract for these services. I dislike T&M (and LH) contracts, but since what we're essentially procuring is bodies, I think this is the route we'll take. However, is there a better contract type for procuring bodies? What I'm particularly uncomfortable with is "unexpected surges in current work and new work all within the same scope". For "surges to current work", the work may be the same, but depending on how much of a surge they experience, it may not be within the scope of the contract. But what if potential surges are contemplated in the solicitation? Is it appropriate to over estimate hours to account for potential surges? As for "New work", new work is definitely not within the scope of the order. But is it appropriate to add labor categories for related services that we're certain we won't need at the inception of the contract, but might require down the road if? And is it appropriate, once the contract is being performed, to modify it to reduce hours from one or more labor categories to increase hours in another labor category provided that the contract value remains essentially unchanged? Can doing this be considered a change in scope? Thank you.