Jump to content

Night Differential Allowable Costs


Recommended Posts

I have a T&M contract that has CBAs which include a night differential premium. When this contract was in the RFP stage, the CO said that the night differential would be issued on a Task Order as a separate rate. Howver, that was never done and the contract was awarded to the vendor using the base rate, without the night differential included. In most other T&M contracts for the same services, the night differential from CBAs is 'loaded' into the base rate, based on the expected # of hours that will be worked duuting the night. This vendor has had price adjustments on their base rate under the SCA, but they want to claim all of the night differential costs that was never separately issued on Task Order, but was worked as part of a block of hours. The vendor has come in with a very loaded Night Differential rate. ie they took the CBA amount and then tacked on their G&A, profit, overhead, Fringe Pool, etc..It comes out to about 160% of the CBA amount. I told the SCA forbids adjustments that include those elements but they are claiming this is not an inflationary adjustment but just a claim for equitable adjustment. Is this allowable?

Link to comment
Share on other sites

I have a T&M contract that has CBAs which include a night differential premium. When this contract was in the RFP stage, the CO said that the night differential would be issued on a Task Order as a separate rate. Howver, that was never done and the contract was awarded to the vendor using the base rate, without the night differential included. In most other T&M contracts for the same services, the night differential from CBAs is 'loaded' into the base rate, based on the expected # of hours that will be worked duuting the night. This vendor has had price adjustments on their base rate under the SCA, but they want to claim all of the night differential costs that was never separately issued on Task Order, but was worked as part of a block of hours. The vendor has come in with a very loaded Night Differential rate. ie they took the CBA amount and then tacked on their G&A, profit, overhead, Fringe Pool, etc..It comes out to about 160% of the CBA amount. I told the SCA forbids adjustments that include those elements but they are claiming this is not an inflationary adjustment but just a claim for equitable adjustment. Is this allowable?

There is a lot of information you hinted at but did not come out and say. From what you have written, are we to assume that the contract is covered by the SCA? If it is, was the applicable wage determination based on the CBA? Was the proper wage determination included in the RFP?

Link to comment
Share on other sites

There is a lot of information you hinted at but did not come out and say. From what you have written, are we to assume that the contract is covered by the SCA? If it is, was the applicable wage determination based on the CBA? Was the proper wage determination included in the RFP?

Yes, this is covered by the SCA and the WDs based on the CBAs are incorporated into the signed award..The vendor is trying to claim for the night differential + all other costs, as it was not loaded into their base rate as is ususally the case..

Link to comment
Share on other sites

When this contract was in the RFP stage, the CO said that the night differential would be issued on a Task Order as a separate rate. Howver, that was never done and the contract was awarded to the vendor using the base rate, without the night differential included.

The vendor is trying to claim for the night differential + all other costs, as it was not loaded into their base rate as is ususally the case

Why would the vendor load the the differential into the base rate if it was instructed during the proposal stage that the differential would be issued on a Task Order as a separate rate? Was the instruction in writing?

Also, this doesn't appear to be an SCA/FLSA price adjustment for wage increases request. It's difficult to be sure on the facts given, but as a vendor I would consider requesting an adjustment based on either defective specifications during the bid process, or possibly on the contract's change clause. In either of those cases my adjustment proposal would apply G&A and fee to the increase.

Link to comment
Share on other sites

Guest Vern Edwards

You start by saying that the government wants the contractor to work at night, but the parties did not agree to a different hourly labor rate for night work. You indicated that the CO had intended to negotiate such a rate, but didn't. You then say:

[

[1] This vendor has had price adjustments on their base rate under the SCA, but they want to claim all of the night differential costs that was never separately issued on Task Order, but was worked as part of a block of hours. [2] The vendor has come in with a very loaded Night Differential rate. ie they took the CBA amount and then tacked on their G&A, profit, overhead, Fringe Pool, etc.. [3] It comes out to about 160% of the CBA amount. [4] I told the SCA forbids adjustments that include those elements but they are claiming this is not an inflationary adjustment but just a claim for equitable adjustment. Is this allowable?

Numbers in brackets added.

I hope that upon reading what you wrote you will recognize that that passage is somewhat incoherent. In any case, if what the contractor is trying to do is establish a rate for night work, then there is no prohibition against including G&A, profit, etc. in its proposal. You might be confusing the establishment of an additional rate with the adjustment of existing rates under the SCA price adjustment clause. As for the amount of the rate in light of the CBA, that is a matter of the reasonableness of the rate, which should be considered during any negotiations.

Link to comment
Share on other sites

You start by saying that the government wants the contractor to work at night, but the parties did not agree to a different hourly labor rate for night work. You indicated that the CO had intended to negotiate such a rate, but didn't. You then say:

[

Numbers in brackets added.

I hope that upon reading what you wrote you will recognize that that passage is somewhat incoherent. In any case, if what the contractor is trying to do is establish a rate for night work, then there is no prohibition against including G&A, profit, etc. in its proposal. You might be confusing the establishment of an additional rate with the adjustment of existing rates under the SCA price adjustment clause. As for the amount of the rate in light of the CBA, that is a matter of the reasonableness of the rate, which should be considered during any negotiations.

Hi Vern - Thanks for answering. I realize I may have not explained this clearly.. The vendor provided these services starting in 2008 through 2010. The CO did state they were going to establish a separate rate for night differential hours, but that never happened over the course of 2 years, why I do not know as the CO is gone and there is no documentation in the file. There have been SCA price adjustments to the base rate, but the night differential rate was never added to the contract or task order. The vendor originally supplied a proposed rate with their proposal for night differential in 2008, but their recent 2011 submitted revision is quite higher (based on their actual costs: overhead etc). I just wanted to verify that they can add the CBA night differential amount (~5% of the WD/CBA rate) and then add about 50% finge pool, 5% G & A, and then their profit to get a loaded night differential..They said they would then just invoice us for the 5% CBA Night Diff + loaded 'actual' costs time the # hours of night shifts worked..

Link to comment
Share on other sites

Guest Vern Edwards

If they are negotiating a new rate to be added to the contract, and not adjusting an existing rate, then, procedurally, they can propose any direct costs that they want and can load their indirect costs and profit onto their direct costs. However, you should accept the resultant proposed rate only if you find it to be fair and reasonable.

Link to comment
Share on other sites

Hi Vern - Thanks for answering. I realize I may have not explained this clearly.. The vendor provided these services starting in 2008 through 2010. The CO did state they were going to establish a separate rate for night differential hours, but that never happened over the course of 2 years, why I do not know as the CO is gone and there is no documentation in the file. There have been SCA price adjustments to the base rate, but the night differential rate was never added to the contract or task order. The vendor originally supplied a proposed rate with their proposal for night differential in 2008, but their recent 2011 submitted revision is quite higher (based on their actual costs: overhead etc). I just wanted to verify that they can add the CBA night differential amount (~5% of the WD/CBA rate) and then add about 50% finge pool, 5% G & A, and then their profit to get a loaded night differential..They said they would then just invoice us for the 5% CBA Night Diff + loaded 'actual' costs time the # hours of night shifts worked..

I assume that you need to negotiate the equitable adjustment with the vendor. Therefore, you need to obtain clarification of exactly what they are asking for.

I am assuming that they have already been paid at the standard rates for the night work. Thus you say they are entitled to an equitable adjustment for the difference between CBA and night differential rates, plus a reasonable markup on those additional costs.

You can discuss a clarification with the contractor before you determine your pre-negotiation objectives. Or you can develop a pre-negotiation objective then discuss with the contractor. I always like to understand the basis of the claim or request for equitable adjustment before finalizing a pre-negotiation objective.

Two keys to successful resolution of claims and REA's are to understand the basis of the REA and secondly to understand the basis of what you consider to have merit.

As an aside, you mentioned that the KO is "gone" and that there is no documentation that the KO recognized merit or intended to modify the contract. I'm assuming then that these assertions are coming from the contractor. Have you tried to locate or contact the KO to verify this? Is there a possibility that the contract already required a composite rate (not smart but possible)? I only mention this because of how you described the scenario. It seems funny that nothing was done over the course of a couple of years and that there is no documentation of this or any government position.

However from what I've read on WIFCON, this appears to be more common than I would imagine. Contract administration takes certain skills, dedicated time and the ability to organize tasks and files among other things. Plus, the FAR doesn't have all the answers...

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
×
×
  • Create New...