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FFP Contract Allowable Rate Increase


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Good Afternoon,

I awarded a FFP comericial Item contract using FAR Part 8 proceedures. At the direction of the governments onsite project manager the contractor completed an unauthorized change to the contract.

The contractor has submitted an REA, and a cost break-out for the additional work completed. The cost break-out includes a line item for labor burden at 52%. The contractor has also included an overhead and jobsite support rate of 10%, and profit rate at 10%.

Question number one, can a contractor request an EA against a FFP contract that doesn't contain an EPA clause? Question number two shouldn't the contractor negoiated GSA pricing already contain direct/indirect overhead and G&A (labor burden)?

Thanks in advance

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Good Afternoon,

I awarded a FFP comericial Item contract using FAR Part 8 proceedures. At the direction of the governments onsite project manager the contractor completed an unauthorized change to the contract.

The contractor has submitted an REA, and a cost break-out for the additional work completed. The cost break-out includes a line item for labor burden at 52%. The contractor has also included an overhead and jobsite support rate of 10%, and profit rate at 10%.

Question number one, can a contractor request an EA against a FFP contract that doesn't contain an EPA clause? Question number two shouldn't the contractor negoiated GSA pricing already contain direct/indirect overhead and G&A (labor burden)?

Thanks in advance

Why do you say it was an unauthorized change?

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Why do you say it was an unauthorized change?

Good morning,

I think it's an uauthorized change because the change was not approved by the contracting officer nor was the contractor given a change order prior to the contractor completing the work.

The contract states that only a duly appointed contracting officer has the authority to change or alter this contract, weather or not any other government employee informs you of work intended to be done, prior to completion or termination of the contract.

Thanks for any help that you can provide. I'm really concerned about the labor burden, if the contractor is triple dipping (this overhead is included in the hourly rate, and seperate line items for project overhead).

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Economic price adjustment (EPA) has nothing to do with your situation. Does the contract contain a Changes clause?

Good morning Vern,

Good to hear from you, the contract does not contain the changes clause, but I would like to make the contractor whole for the extra labor associated with the out of scope work he completed.

I'm really concerned about the labor burden, if the contractor is triple dipping (is this overhead already included in the hourly rate, plus separate line item for this o/h, and another line items for project o/h).

This contract was awarded off the contractor's GSA schedule.

Thanks for any help that you can provide.

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Thanks for any help that you can provide. I'm really concerned about the labor burden, if the contractor is triple dipping (this overhead is included in the hourly rate, and seperate line items for project overhead).

More explanation is necessary. What line items are in the contract (e.g, hourly rates?) and what did the change or added work are involved? Also, Vern asked if there is a change clause or other provision for change in the contract...

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Good morning Vern,

Good to hear from you, the contract does not contain the changes clause, but I would like to make the contractor whole for the extra labor associated with the out of scope work he completed.

I'm really concerned about the labor burden, if the contractor is triple dipping (is this overhead already included in the hourly rate, plus separate line item for this o/h, and another line items for project o/h).

This contract was awarded off the contractor's GSA schedule.

Thanks for any help that you can provide.

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Good morning Vern,

Good to hear from you, the contract does not contain the changes clause, but I would like to make the contractor whole for the extra labor associated with the out of scope work he completed.

I'm really concerned about the labor burden, if the contractor is triple dipping (is this overhead already included in the hourly rate, plus separate line item for this o/h, and another line items for project o/h).

This contract was awarded off the contractor's GSA schedule.

Thanks for any help that you can provide.

Vern,

The contract does contain the changes clause.

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More explanation is necessary. What line items are in the contract (e.g, hourly rates?) and what did the change or added work are involved? Also, Vern asked if there is a change clause or other provision for change in the contract...

Good morning,

The contract is firm fixed price, one line item, unit of issue one job. The contract called for the contractor to load, transport, and unload 1733 vertical office file cabinets. The SOW states that the contractor shall unload the file cabinets IAW the directions of the onsite government project manager.

The change/added work required the contractor to mark floor lines for the alignment of the file cabinets. This preparation work was not included in the SOW.

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Good morning,

The contract is firm fixed price, one line item, unit of issue one job. The contract called for the contractor to load, transport, and unload 1733 vertical office file cabinets. The SOW states that the contractor shall unload the file cabinets IAW the directions of the onsite government project manager.

The change/added work required the contractor to mark floor lines for the alignment of the file cabinets. This preparation work was not included in the SOW.

What was meant by unload? Take them off the truck and leave them in the parking lot?

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Question number one, can a contractor request an EA against a FFP contract that doesn't contain an EPA clause? Question number two shouldn't the contractor negoiated GSA pricing already contain direct/indirect overhead and G&A (labor burden)?

Thanks in advance

1. Yes.

2. Did the contractor propose full-up GSA pricing, or did the contractor propose bare direct labor rates plus allocable indirect costs to facilitate your cost analysis of the REA?

Hope this helps.

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Thanks everyone,

I was able to get a hold of the GSA contracting officer. The contracting officer explained to me that GSA's contract hourly rates are loaded (all inclusive). Therefore the contractor's proposal for the change order work should not include additional fees for overhead and profit.

The contractor has revised their proposal removing the additional fees.

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1. Yes.

2. Did the contractor propose full-up GSA pricing, or did the contractor propose bare direct labor rates plus allocable indirect costs to facilitate your cost analysis of the REA?

Hope this helps.

These may seem like pretty basic questions. However, one must understand how the contract was originally priced and what the contractor is now considering to be the extra work.

1) what is the basis of the pricing for this contract? Lump sum? Did it base this on unit priced labor line items in a GSA contract?

2) what is the basis of pricing for the REA?

3) From the nature of your questions, I'm not really sure what you are asking. Are you trying to determine what the contractor is actually saying is extra work and/or extra costs?

If laying out the locations for the new cabinets is extra work beyond the scope of the contracted work, who performed the extra work and when? The hired labor or the supervision? If the supervision did it and it required extra time for someone to be at the site, then perhaps that is additional direct or indirect cost. If both the hired labor and the supervision laid out the site, then its tricky because the rates for the direct hire labor may or may not include amounts to cover associated indirect and supervision costs. And how much additional time was actually involved for the crew itself? If the crew was there while the lines were laid out and if it wasn't delayed any extra time while the supervisor laid out the lines, would there be any extra cost at all?

I asked you earlier how the contract was originally priced.

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Guest Vern Edwards
Question number one, can a contractor request an EA against a FFP contract that doesn't contain an EPA clause?

Answer number one: Yes, if the contract includes a clause that provides for an equitable adjustment, like the standard FAR changes clauses.

Question number two shouldn't the contractor negoiated GSA pricing already contain direct/indirect overhead and G&A (labor burden)?

Answer number two: Presumably, prices in a GSA schedule contract include both direct and applicable indirect costs.

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Good Afternoon,

I awarded a FFP comericial Item contract using FAR Part 8 proceedures. At the direction of the governments onsite project manager the contractor completed an unauthorized change to the contract.

The contractor has submitted an REA, and a cost break-out for the additional work completed. The cost break-out includes a line item for labor burden at 52%. The contractor has also included an overhead and jobsite support rate of 10%, and profit rate at 10%.

Question number one, can a contractor request an EA against a FFP contract that doesn't contain an EPA clause? Question number two shouldn't the contractor negoiated GSA pricing already contain direct/indirect overhead and G&A (labor burden)?

Thanks in advance

One thing that has not been made clear is whether the supposed unauthorized work was the type of work that is covered by the contractor's GSA schedule contract. If it is not, why would the contractor's GSA pricing have anything to do with it?

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