Needforspeed Posted October 8, 2022 Report Share Posted October 8, 2022 Arguably this question should be in the beginner's forum. I have read many older threads that touch on pieces of it but wanted to ask in a new way. when contemplating a cpff award it seems there are various different ways you can propose (as a contractor) and evaluate (as the govt) the direct labor part of the award. Let's forget about indirect costs for a second. Contractors could submit "bid" rates for each position they expect to use in the absence of knowing all the staff that will work on a project. Or they could submit the current actual salaries of the known staff. The government could ask to verify the actual salaries with things like pay stubs and i expect to justify the estimated bid rates one would have to provide a more compelling justification in the absence of empirical data of the salaries. to price a future year of the contract, let's assume an option year, the contractor can build in an assumption that the labor rates will increase a certain percentage. Let's say 3%. The government evaluates that escalation for reasonableness. On its face 3% seems reasonable but 10% likely wouldn't fly with the government, would be deemed unreasonable. My question is what, if anything, controls, caps, or surveils the direct labor costs the contractor can charge in performance of the award, if it is silent in the award document? Other threads here would suggest the "contract" would dictate that, meaning if a proposal to an eventual contract said, "salaries will increase 3% per year" or "direct labor rates are capped for each contract year as stated in the proposal" or "direct labor rates will not increase by more than 5% per year". Whatever. What if the contractor just says for purposes of determining a price, we assume salaries will increase 3%. It is not a promise, just an assumption. If market conditions change during the third year of a five-year contract, and an engineer being paid $30 per hour negotiates a raise for themselves to $50 an hour. What, if anything, prevents the contractor from charging the time, business as usual? Would not notifying the government be operating not in good faith, assuming there is no breach of contract? Possibly this could depend on whether the award was made competitively or if the contract submitted certified cost and pricing data - let's assume the contract award was made by a competitive RFP. Quote Link to comment Share on other sites More sharing options...
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