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T&M - Moving Hours between Labor Categories


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On a T&M task order, where a table of hours and rates by labor category is incorporated into the task order, what is the procedure for transferring hours between labor categories (while still staying within the overall budget)? The project was started in 2020 and due to turnover, the hours mix will be different, but the overall cost will remain the same and the work will get done. 

 

However, the contracting officer is giving us a hard time about the change, without pointing to any guidance. I've reviewed the IDIQ, task order and FAR 52.243-3 and don't see reference to hours changes.

 

Thanks

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12 hours ago, Former_DCAA said:

On a T&M task order, where a table of hours and rates by labor category is incorporated into the task order, what is the procedure for transferring hours between labor categories (while still staying within the overall budget)? The project was started in 2020 and due to turnover, the hours mix will be different, but the overall cost will remain the same and the work will get done. 

 

However, the contracting officer is giving us a hard time about the change, without pointing to any guidance. I've reviewed the IDIQ, task order and FAR 52.243-3 and don't see reference to hours changes.

 

Thanks

If the table of hours and rates by labor category is part of the contract, you could propose a change (contract modification), showing how it will not increase the cost and explaining how it will get the work done. 

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There is no procedure.

If your T&M task order was prepared according to the FAR, there would be no table of hours -- there would be labor categories and hourly rates and a ceiling price, but no mandatory hours.

Inasmuch as your task order does not conform to the FAR and was prepared by someone who doesn't understand T&M contract principles, I cannot cite a FAR solution.  Joel gave you a good suggestion.

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12 hours ago, Former_DCAA said:

On a T&M task order, where a table of hours and rates by labor category is incorporated into the task order,

For what purpose is the table incorporated into the order?  Is compliance with the table a requirement of the order or is the table included for informational purposes?

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12 hours ago, Former_DCAA said:

However, the contracting officer is giving us a hard time about the change

I have the feeling that the CO may be confused about what constitutes scope of the TO.  I agree with all thoughts passed along but I thought the below nugget from a previous thread might assist in developing your discussion points for a conversation with the CO.

The quote is from a post by Vern Edwards .   Paraphrased the mix of hours to get the job done does not really matter its getting the job done within the ceiling price.  The rest of thread provides context but my intent is to share the post by Vern.

 

"A T&M or L-H contract does not require the contractor to deliver a level of effort, i.e., a specified number of hours or some other unit of labor. It requires a contractor to perform a job. The ceiling price is not a level of effort that the contractor must deliver, but a limit on the government's obligation, which is necessary in order to avoid a violation of the Anti-deficiency Act. An increase in the ceiling price is ordinarily akin to funding an overrun on a cost-reimbursement contract. However, if the parties are increasing the ceiling price to cover the addition of work that is beyond scope, then they must comply with certain requirements, such as a sole-source justification and a D&F. The FAR case requires COs to perform an analysis when they increase the ceiling price in order to determine if the increase is the result of a change in scope. The FAR case makes perfect sense."

 

The thread where this quote is found is here....

 

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31 minutes ago, Retreadfed said:

For what purpose is the table incorporated into the order?  Is compliance with the table a requirement of the order or is the table included for informational purposes?

It's strange, its just hanging out there on its own page with no reference to it. 

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11 hours ago, ji20874 said:

There is no procedure.

If your T&M task order was prepared according to the FAR, there would be no table of hours -- there would be labor categories and hourly rates and a ceiling price, but no mandatory hours.

Inasmuch as your task order does not conform to the FAR and was prepared by someone who doesn't understand T&M contract principles, I cannot cite a FAR solution.  Joel gave you a good suggestion.

I agree, this is my first time seeing a table of hours by category in the task order. 

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59 minutes ago, Former_DCAA said:

I agree, this is my first time seeing a table of hours by category in the task order. 

 Which party generated the table of hours? Was this provided by the government in the task order proposal request or did you, as the contractor, propose it? It had to have come from somebody. If the government provided it in the TO-RFP, did the RFP describe what it was for?

i find it difficult to believe that it just appeared in the task order without any context. If you originated it, somewhere in the task order it should probably be mentioned, if only as being incorporated. If the government generated it (or the content in it), it should have at least been described in the TO-RFP. There must have been some basis for pricing the task order proposal…

1 hour ago, Former_DCAA said:

It's strange, its just hanging out there on its own page with no reference to it. 

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Just now, joel hoffman said:

 Which party generated the table of hours? Was this provided by the government in the task order proposal request or did you, as the contractor, propose it? It had to have come from somebody. If the government provided it in the TO-RFP, did the RFP describe what it was for?

i find it difficult to believe that it just appeared in the task order without any context. If you originated it, somewhere in the task order it should be mentioned. If the government generated it (or the content in it), it should have at least been described in the TO-RFP.

I was not around at the time, but my understanding is that it's directly from our proposal to the gov't and they just copy and pasted it into the Task Order. 

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6 minutes ago, Former_DCAA said:

I was not around at the time, but my understanding is that it's directly from our proposal to the gov't and they just copy and pasted it into the Task Order. 

The question still is what is the context of the table?. The TO-RFP should provide some answers. The task order ought to but might not say that it is “ incorporated”.

IMO, you really need to find out what happened before “you were around”…

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2 minutes ago, joel hoffman said:

The question still is what is the context of the table?. The TO-RFP should provide some answers. The task order ought to but might not say that it is “ incorporated”.

IMO, you really need to find out what happened before “you were around”…

I will look for the RFP. In the Task Order section B.6, it says The Total NTE for this task order is 800K, has the PoP, Contract Type as T&M and then just has the table posted with no additional context. 

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It won’t be “ambiguous”, if the TO formation process provides the context.  You may have to look beyond the wording of the actual RFP. 

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Unfortunately, the government writers often neglect to write a mod or task order so that those other than the original participants can readily know what was understood by the original participants. I’ve often seen that over the years. 

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3 hours ago, Former_DCAA said:

I will look for the RFP. In the Task Order section B.6, it says The Total NTE for this task order is 800K, has the PoP, Contract Type as T&M and then just has the table posted with no additional context. 

 

4 hours ago, C Culham said:

I have the feeling that the CO may be confused about what constitutes scope of the TO.

 

15 hours ago, ji20874 said:

If your T&M task order was prepared according to the FAR, there would be no table of hours -- there would be labor categories and hourly rates and a ceiling price, but no mandatory hours.

Inasmuch as your task order does not conform to the FAR and was prepared by someone who doesn't understand T&M contract principles, I cannot cite a FAR solution.  

This sounds like a case of a contracting office that didn't know what it was doing. But we're getting our information from an OP that we do not know, and we all know that the information provided by OPs is often incomplete or otherwise misleading.

 

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17 hours ago, Former_DCAA said:

On a T&M task order, where a table of hours and rates by labor category is incorporated into the task order, what is the procedure for transferring hours between labor categories (while still staying within the overall budget)?

It would be a contract change that, assuming the contract does not specify a procedure, would require a supplemental agreement.

Just cut the deal, write the S/A, sign, and go about your business. Contracting 101.

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16 hours ago, joel hoffman said:

If the table of hours and rates by labor category is part of the contract, you could propose a change (contract modification), showing how it will not increase the cost and explaining how it will get the work done. 

 

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There’s a fairly prevalent misperception across the government that T&M/LH contracts must be awarded and managed this way - a set amount of hours for each labor category.  It translates to a ceiling by labor category.  I suspect automated documents (requisitions including funding commitments, orders, and contracts) may be to blame.  Program offices submit requisitions where labor categories get funding commitment at a line item basis for each labor category.  Then orders and contracts carry that over to the CLIN level.

Even when that’s not the case, there are common notions by many that labor categories must be managed as ceilings. 

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As contracting offices award ever more support services contracts so the government can avoid hiring more civil servants, they are functioning as personnel offices of sorts, and they are looking for ever more adaptable contractual devices. Arrangements based on on burdened hourly labor rate schemes must seem the most adaptable, since burdened rates are a convenient pricing mechanism and eliminate the need to audit indirect costs. Some such contractual concoctions do not match any of the traditional FAR Part 16 types, and though many are not true T&M contracts, the use of burdened hourly rates makes them seem T&M-ish, and calling them T&M means they are available for the purchase of commercial services. 

The U.S. Marines call that kind of thing improvising, adapting, and overcoming. The COs who know exactly what they're doing call it innovating. The ones who don't know what they're doing think they are following standard practice.

Our modern contracting statutes—TINA, CICA, FASA, and the rest—lock us into 19th Century thinking about contracting. OTAs and CSOs are band-aids. But good luck trying to get the attention of the D.C. crowd, getting it to pay attention to what's happening, persuading it to let us into the world of modern business practice, and convincing it to give us capable and inspiring long-term leadership at the top.

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7 hours ago, Vern Edwards said:

As contracting offices award ever more support services contracts so the government can avoid hiring more civil servants, they are functioning as personnel offices of sorts, and they are looking for ever more adaptable contractual devices…

Yep. There are some advantages to personal services and similar type contracts. Among them are reduced retirement burdens,  flexility in numbers of employees and relative speed and ease vs. the civil service hiring, promotion and relocation processes.

The government employee retirement system doesn’t directly incur long term retirement pension burden/liability for non-civil servants.

Temporary workers provide workload and assignment flexibility, vs. hiring and retaining permanent employees. One reason for (or one effect of) replacing CSRS with FERS was to make it easier for civil servants to move in and out of government employment. Using non-civil servants is a step beyond that.

The civil service selection and hiring process is laborious, complicated, time consuming and costly, especially costly for relocations.

It was much less burden and time consumption for me, as a supervisor, to use contract employees for special purposes and as augmentation for temporary assignments.

There are some disadvantages, too…

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3 minutes ago, joel hoffman said:

The civil service selection and hiring process is laborious, complicated, time consuming and costly, especially costly for relocations.

Yes, but, at least in theory, civil servants bring a professional commitment to the taxpayer and engage in disinterested decision making.

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11 hours ago, Vern Edwards said:

As contracting offices award ever more support services contracts so the government can avoid hiring more civil servants, they are functioning as personnel offices of sorts, and they are looking for ever more adaptable contractual devices. Arrangements based on on burdened hourly labor rate schemes must seem the most adaptable, since burdened rates are a convenient pricing mechanism and eliminate the need to audit indirect costs.

This made me think of another possible reason why labor categories get managed at individual ceilings.  The work might consist of various personal services arrangements instead of completion of some overall task.  So when John uses up all the hours and money assigned to him, the agency doesn’t want him to cut into Mary’s allocation without approval.  John may be doing completely different work than Mary and might even be assigned to different government managers.

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  • 3 weeks later...

Having sat on both sides of the fence at various points in my career, I have become ambivalent about the use of hours in a T&M contract mainly because that is how the NTEs were developed.  I'm not aware of any FAR prohibition on doing that.  DLA used to do that in my contract when I was a consultant and while it was useful in matching resources to contract requirements (DLA used sub-CLINs by LCAT), the CLINs inevitably became "unbalanced".   As the former 1102, I got the enviable task of sitting down with DFAS to untangle the mess created when the invoice and contract didn't match (i.e., overruns on some sub-CLINs and underruns on others).  

I think the use of hours in a T&M contract is an artifact of the estimation process that some COs don't know to not carry over to the contract.  I used to have that argument with my pricers when I was a contract PM as well.  

Not a good idea, but understandable.

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I dealt with unit priced civil works construction projects years ago. We had procedures for adjusting quantities for overruns and underruns. It was fairly routine.

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