Search the Community
Showing results for tags 'cost realism'.
Found 4 results
What are your thoughts about a business using salary surveys to determine direct labor hourly rates as opposed to their experience? Salary surveys can come from three sources: 1. Published salary surveys of government contractors 2. Published salary surveys of industry (e.g. IT) 3. Department of Labor BLS statistics As a small business, we do not have fixed salaries for job classes, but rather negotiate salaries individually for each hire. When we bid on a contract, we don't always know who we'll staff it with, and we may need to make new hires. There's a lot of volatility in our direct labor rates. Thus, we'd like to bid using rates from salary surveys. How do you think COs will react? How should we support this? How would you react as a CO, and what support or justification would you like to see?
I requested rate verification from DCMA for a significant subcontractor. DCMA did not have any direct labor information on file for the subcontractor so DCMA decided to call the subcontractor to have him explain the calculation of his direct labor rates. The subcontractor offered to provide payroll information to validate the calculation of his proposed direct labor rates. Maybe I am over analyzing but is this the typical process for DCMA to follow if historical rate information is not available? Since this is a competitive procurement and if this is not the typical process, could this be cause for a protest by the prime? If I decide to tell DCMA not to proceed with receiving the payroll information would comparing the proposed rates to established industry rates be enough to support a cost realism analysis?
It is my belief that, if an agency posts a solicitation with a hybrid contract type, say CPAF and FFP. meaning some CLINs are CPAF and some CLINs are FFP, then the agency must conduct a Cost Realism Analysis for the CPAF CLINs. However, I have a colleague who believes differently. They asked me where does it say Cost Realism Analysis must be done for those CLINs? All I can come up with is to say it just seems logical and fair to do it that way. That is not good enough for them. Anybody got anything else?
Scenario: Competitive cost-type solcitation, two offerors received. We are performing cost realism analysis as required by FAR 15.404 and have evaluated some areas of the offerors proposal as low in comparison to what we feel is their probable cost. We will be entering discussions to hopefully cure these concerns with the offerors via evaluation notices ; however, there are some in our approval chain who believe that all concerns that effect evaluation criteria (realism in this case) should be classified as deficiencies. If after discussions these concerns are still not resolved to our satisfaction they maintain that we must eliminate the offerors based on the fact they haven’t cured an identified deficiency and are not realistic. My point of view is that logically why even establish a probable cost as laid out in the FAR if we’re just going to eliminate offerors for deviation from that cost? (All of the GAO cases I’ve read seem to bear this out as well) Further I don’t think we need to classify all ENs that fall under the cost realism evaluation as deficiencies. I don’t see how they represent “a material failure to meet a Government requirement” Those above me are also concerned that awarding a contract at the proposed cost as opposed to the probable cost represents some sort of fiscal law violation because we are admitting that we believe the contractor will overrun the effort based on their proposed cost and are conciously underfunding the effort based on that admission. My point of view on that issue is I have no problem funding the contract at the probable cost (although I haven’t consulted with anyone whether that violates some sort of fiscal statute), but I would think the contract needs to be awarded on the offeror’s proposed price and any sort of fee calculation should be done on the proposed price as well. The bottom line is I feel it just makes smart business sence to award to an otherwise acceptable offeror even if their proposed cost differs from our probable cost (assuming that their probable cost is still the lowest probable cost, all other things being equal). This issues is still very much in flux, but I’m having a hard time convincing those above me, and I feel strongly that this is the right thing to do. What I would like is for the input of more experienced heads in this forum to tell me if I’m wrong, and why. If I’m right, then any sort of back-up rationale/citations I could use would be appreciated. Or I’m also open to the idea that I’m misunderstanding this somehow and I should be looking at this completely differently. Thanks in advance!