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We are a subcontractor for a multi-year FFP DoD contract. Our Prime was awarded an Order under Basic Ordering Agreement (BOA). The award to the Prime was non-competitive, as the Order supports a pre-existing Contract for which the Prime, ourselves and our subcontractors are the only sources with the requisite knowledge, experience, and technical expertise to provide the required supplies and services under the Order. The Prime has asked for the T&M proposal for our participation. We have historically avoided T&M efforts but the proposal scope is too broad for us and our suppliers to provide a traditional FFP for the effort. Our participation alone and the participation of several subcontractors will exceed $150,000. I have many questions but I’ll limit it two; I suspect the response may help answer the others. 1) Based 16.601(c)(2)(ii), do I understand correctly that we need to provide the hourly rates for ourselves and the hourly labor rates for each of our subcontractors separately? My understanding is the lack of competition restricts us from submitting blended labor category rates. 2) If I’ve understood the first, how do I capture the overhead costs related to subcontractor management? We don’t have a standalone role/position of subcontract manager, that task is shared between PM and CM. Can I add a fixed fee (e.g. 10%) to all subcontractor hourly rates? We’re still waiting on rates from our subs, in the interim can we bookmark the proposal by stating “xxxx will invoice at the subcontractor rates plus 10%.”? I’m hesitant with this approach and uncertain whether it would create a prohibited CPPC. A few notes: (1) we and the majority of our subcontractors are not supply COTS or Commercial Items; (2) no Materials will be provided – a technical labor effort; 52.216-30 was not included in the flowdowns. As always, appreciate the feedback and support from this forum.

Hello Wifcon Forum Members, I've recently began reviewing a physically completed T&M/LH for closeout purposes. This particular T&M/LH contract has the following specifications under the heading "Maximum Hours and Cost" for the following two labor categories: Sr. Software Engineer - 656 hours at $/hour Program Manager - 18 Hours at $/hour A review of the contract invoices shows the following amount of Labor Hours billed/charged during the course of the contract: Sr. Software Engineer - 381 hours Program Manager - 38 hours As you can see, the SSE was well under the allotted hours and the PM was slightly over. My main questions concerning this situation are : Given that the PM charged more than the 18 allotted hours, would our company need to issue a refund of the 20 hours paid in excess of the PM allotted hours? Would the fact that we were well under the total amount of allotted hours (SSE & PM allotted total hours) and came in well under the funded amount (DE obligated the excess funding) to finish the job make any difference? I read through FAR 52.232-7 - Payments under Time and Materials and Labor Hour Contracts, specifically the section concerning "Hourly Rates" and more specifically part 3 (see bold below). Would hour allotments fit into the "labor qualification" mentioned below in part 3? "(a) Hourly rate. (1) Hourly rate means the rate(s) prescribed in the contract for payment for labor that meets the labor category qualifications of a labor category specified in the contract that are— (2) The amounts shall be computed by multiplying the appropriate hourly rates prescribed in the Schedule by the number of direct labor hours performed. (3) The hourly rates shall be paid for all labor performed on the contract that meets the labor qualifications specified in the contract. Labor hours incurred to perform tasks for which labor qualifications were specified in the contract will not be paid to the extent the work is performed by employees that do not meet the qualifications specified in the contract, unless specifically authorized by the Contracting Officer. (4) The hourly rates shall include wages, indirect costs, general and administrative expense, and profit. Fractional parts of an hour shall be payable on a prorated basis. (5) Vouchers may be submitted not more than once every two weeks, to the Contracting Officer or authorized representative. A small business concern may receive more frequent payments than every two weeks. The Contractor shall substantiate vouchers (including any subcontractor hours reimbursed at the hourly rate in the schedule) by evidence of actual payment and by— (6) Promptly after receipt of each substantiated voucher, the Government shall, except as otherwise provided in this contract, and subject to the terms of paragraph (e) of this clause, pay the voucher as approved by the Contracting Officer or authorized representative. (7) Unless otherwise prescribed in the Schedule, the Contracting Officer may unilaterally issue a contract modification requiring the Contractor to withhold amounts from its billings until a reserve is set aside in an amount that the Contracting Officer considers necessary to protect the Government’s interests. The Contracting Officer may require a withhold of 5 percent of the amounts due under paragraph (a), but the total amount withheld for the contract shall not exceed $50,000. The amounts withheld shall be retained until the Contractor executes and delivers the release required by paragraph (g) of this clause. (8) Unless the Schedule prescribes otherwise, the hourly rates in the Schedule shall not be varied by virtue of the Contractor having performed work on an overtime basis. If no overtime rates are provided in the Schedule and overtime work is approved in advance by the Contracting Officer, overtime rates shall be negotiated. Failure to agree upon these overtime rates shall be treated as a dispute under the Disputes clause of this contract. If the Schedule provides rates for overtime, the premium portion of those rates will be reimbursable only to the extent the overtime is approved by the Contracting Officer. (i) Performed by the Contractor; (ii) Performed by the Subcontractors; or (iii) Transferred between divisions, subsidiaries, or affiliated of the Contractor under a common control. (i) Individual daily job timekeeping records; (ii) Records that verify the employees meet the qualifications for the labor categories specified in the contract; or (iii) Other substantiation approved by the Contracting Officer." Any guidance/advice would be appreciated. V/r, KR_2016

SITUATION: I work for the Department of Defense (DOD), and my office executes a healthy number of time-and-materials/labor-hour (T&M/LH) determination and findings (D&Fs). My leadership has decided, at legal counsel's suggestion, that the requirements of DFARS 212.207(b)(iii) can apply to all commercial T&M/LH D&Fs, including those done under the authority of FAR 8.404(h)(3). The upshot is that nearly all such D&Fs require Head of Agency (HOA) signature, since nearly all are defined under paragraph (6) of the "commercial item" definition. As you can imagine, this has created an administrative inconvenience. (The idea of delegating this approval authority to the Head of Contracting Activity (HCA) has been raised and rejected.) QUESTION: My question can be phrased specifically or broadly: Specifically, should HOA signature on commercial T&M/LH D&Fs, in accordance with DFARS 212.207(b)(iii), be required when using FAR 8.4 procedures? Broadly, where FAR 12 specifically instructs the reader to defer to FAR 8.4 on a topic, can DFARS 212 "override" FAR 12? DISCUSSION: I suspect that the answer is "no" (acknowledging that my response is at least partially biased). Part of the challenge here is that for DOD employees, there are no less than 5 different regulatory parts that provide T&M/LH guidance. I will attempt to address each in a logical order in walking through my thinking on this: FAR 16.601(d) provides general guidance for a D&F, and directs the reader to FAR 12.207(b) for "further limitations" when purchasing commercial services. Diverting for a moment to FAR 12.102(c), this assigns precedence to FAR 12 over conflicting FAR parts when purchasing commercial items. FAR 12.207(b)(1) and (2) provide commercial item D&F guidance; however, 12.207(b)(4) states: "See 8.404(h) for the requirement for determination and findings when using Federal Supply Schedules." In my opinion, this language unambiguously intends for the reader to exclusively defer to 8.4 for T&M/LH D&F guidance when using 8.4 procedures. (Compare the language in (b)(4) to the "additional approval" language in (b)(3).) Based on #3, there is no conflict as described under #2. FAR 12 defers to FAR 8 on this specific topic. As promised, 8.404(h) creates its own set of D&F requirements. Significantly, the highest stated approval authority here is HCA. Strangely, DFARS 208 is silent on the topic of T&M/LH contracts. DFARS 212.207(b), however, creates additional limitations when using T&M/LH contract types for commercial items. Specifically, (b)(iii) requires HOA approval when paragraph (6) of the "commercial item" definition applies. DFARS 216.201(d) provides additional limitations and guidance for T&M/LH D&Fs. My opinion is that if DFARS intended to impact the FAR guidance to defer to FAR 8 in these situations, it should have unambiguously done so by addressing it under DFARS 208 (as it did under DFARS 212 and 216). The most compelling counter-argument I've heard is that this reading would nullify the intent of NDAA for FY 2008 (on which DFARS 212.207(b) is based), which views T&M/LH contracts with skepticism and attempts to limit their usage. I agree that it would have been odd for DOD to intend to allow for a FAR 8.4 T&M/LH loophole, but in effect I believe this is what it did by neglecting to address the topic under DFARS 208. What say you, Wifcon community?

I recently received feedback on a T&M proposal that is prompting my question about fee maximums on time and material contracts. We had to submit a breakdown of the proposed labor categories which included the rate buildup and proposed fee. The proposal was made up of prime and subcontract labor and each category was clearly identified in the file. A fee percentage (greater than 10%) was put on prime labor while a lesser percentage was added to subcontractor labor. The contracting officer has referenced FAR 15.404-4(d)(1)(ii)(C) and advised that fee shouldn't exceed 10%. My understanding is that the maximum referenced in that clause is a contract maximum, not a limitation on each element of cost. Do you agree?

I recently perused the U.S. Commerce OIG report entitled "The Department’s Awarding and Administering of Time-and Materials and Labor-Hours Contracts Needs Improvement". See link below, if interested. One of the findings was that the Program Office failed to provide proper oversight of work completed under T&M tasks. Are there any sample QASPs out there for T&M work that anyone here would recommend? http://www.oig.doc.gov/OIGPublications/OIG-14-001-A.pdf Thank you in advance!

Hello, My company has a BPA with FFP labor rates. The 'Calls' to follow have not said T&M or FFP; However the Contracting Officer says these are T&M/Labor hour Task Orders; We'll deal with that separately, My questions are pretty general regarding normal practice on T&M contracts, because this will now change how we price in the future (we've been pricing them per month, FFP). 1. Let's say the employee has 15 days of PTO and 10 Holidays for a total of 200 hours paid off. This leaves 1880 billable hours, very standard. However, with T&M contracts and option years...what if this person doesn't take their PTO and they work more than 1880? Can we still bill all of those hours (example: 1900 worked or whatever)? 2.Do we have to make them lose the PTO if they don't take it by contract "Base Year" end? Essentially, the bucket of money for the "Base Year" will go away and a NEW bucket will be given the "Option Year 1". *The employee not taking PTO in Base year and instead taking it in Option Year 1 will cause us to Over-bill hours in Base Year and Under-bill in Option Year 1. An example with numbers as how exactly this Task Order was awarded BASE YEAR (fictional numbers but real structure) is: 1880 Hours $100 Hour Rate $188,000 Total Award T&M Labor Hour Task Order What are your thoughts and experience. Feel free to correct me on my points, as this is our first T&M contract.

Scenario: Lower-tier subcontractor performing on a DO issued under the restricted suite of an IDIQ MATOC for maintenance and services. The DO contained 2 types of CLINS: 1. FFP (for preventative maintenance) and 2. T&M (for corrective maintenance). Prime contractor (Company A) submitted hourly labor rates to Govt.; the resulting award contained the hourly rates but no details are given regarding whether the rates for each labor category are for the prime or its subs. NOTE: lower-tier sub was not involved with prime contract in any capacity until well after the award. As such, it was unable to participate in the hourly rate discussions/negotiations between the prime and first-tier sub. In addition, the lower-tier sub was not given any information about said discussions/negotiations. First-tier sub to Company A issued subcontract to lower-tier sub for both CLINs. Beforehand, lower-tier sub quoted its GSA FSS contract hourly rates to first-tier sub; the first-tier sub accepted said rates. Lower-tier sub hourly rates accepted by first-tier sub were was much as $14.00/hr higher than those in listed Company A's prime contract. To the best of this writer's knowledge, the rates in Company A's prime contract had not been disclosed to the lower-tier sub prior to it submitting its proposal to, or receiving its subcontract from, the first-tier sub. CAVEAT: the lower-tier sub is also a contract holder under the same MATOC (lower-tier sub's award was in the unrestricted suite) and most likely has the same KO administering its contract as Company A. The lower-tier sub's hourly rates negotiated with (and accepted by) the Govt. on its award are the same as above - its GSA FSS contract hourly rates. The Govt. is definitely aware the lower-tier sub is also performing under Company A's award as a lower-tier sub. Issue: Lower-tier sub performed multiple CLIN 2 corrective maintenance services over several months, during which time it invoiced its labor at the $14.00/hour higher rate. Govt. accepted all invoices and lower-tier sub was paid at the higher rate. During this time, the lower-tier sub is still unaware of Company A's negotiated rates. Out of the blue, the Govt. decides it no longer wants to pay the lower-tier sub's higher rates and directs Company A to pay the lower-tier subs at Company A's lower negotiated rate. Argument: Lower-tier sub is well aware of the regulations governing T&M work and concurs it must abide by the rates in Company A's contract. The lower-tier sub does, however, take issue with the Govt. changing its position "midstream" on the hourly rates. Does the lower-tier sub have any valid arguments to make? If so, what are they?

A company being 100% stock-acquired is a T&M subcontractor to large prime. Certified Cost or Pricing Data was not required during proposal process. Subcontract includes non-assignment clause by prime and flowdown of 52.215-19 Notification of Ownership Changes. Since the sub is being purchased in whole, assignment doesn't apply. Would a T&M subcontract be subject to postaward cost redetermination if there are immaterial ODCs, thereby requiring the notification of ownership change?