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Hello All,

New to gov contracting and ran into an interesting topic. My firm is in the process of submitting T&M rates for a development effort we’re we are a sub to a prime with the DoD being the end user. With that being said, my firm’s value is going to be under 500k (no material being quoted) in our estimation based on the SOW. This is non competitive request.My questions are as follows:

1. Prime is requesting full rate build up, I don’t believe we have to offer this as it’s well below the TINA threshold. Can we request this be removed?

2. We have foreign workers (Canadians) who are going to do the bulk of the work. Obviously we don’t have rate build up I.e. dcaa/dcma approved indirect rates etc. Is it sufficient to use recent POs as justification and simply state that rate and state build up will not be provided.

Thanks,

Newtogovcon 

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I agree that TINA does not require you to provide certified cost and pricing data. However, that's not the same thing as providing non-certified cost information necessary for the prime to assure price reasonableness of your rates. If you're going to use foreign workers then your fringe benefit model for them will be entirely different--if you applied the same fringe rate to their labor, you'd (potentially) be making a windfall profit. The prime has a responsibility to assure itself (and its customer) that's not happening.

To your questions:

1. Yes, you can try. But what if the prime declines? What then?

2. Maybe but what if the PO prices include inter-company profit? Now you are pyramiding profit. How to you show your prime that's not happening?

Good luck.

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On 10/10/2022 at 4:24 PM, NewToGovCon said:

Prime is requesting full rate build up.

To add to what here_2_help said:

What's a "full rate buildup"? That term does not appear anywhere in the FAR System, and it's not an acquisition term of art that I recognize. I Googled it and found a wide variety of descriptions.

So, what exactly is the prime asking for? A cost breakdown? That term does appear in the FAR System, but it's not cost or pricing data.

I suggest that you go to FAR 2.101 and look up "cost or pricing data" and "certified cost or pricing data" and determine whether that is what the prime is asking for and whether you really have a TINA issue.

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On 10/10/2022 at 6:24 PM, NewToGovCon said:

1. Prime is requesting full rate build up, I don’t believe we have to offer this as it’s well below the TINA threshold. Can we request this be removed?

This is a non-competitive subcontract proposal. The contractor is apparently requiring a cost breakdown of your labor rates , including markups as well as profit. 

See, for example the following excerpts from FAR 15.4:  

15.403-3 Requiring data other than certified cost or pricing data.

(a)  (1) In those acquisitions that do not require certified cost or pricing data, the contracting officer shall—

                 (i) Obtain whatever data are available from Government or other secondary sources and use that data in determining a fair and reasonable price;

                 (ii) Require submission of data other than certified cost or pricing data, as defined in  2.101, from the offeror to the extent necessary to determine a fair and reasonable price (  10 U.S.C.2306a(d)(1) and 41 U.S.C.3505(a)) if the contracting officer determines that adequate data from sources other than the offeror are not available. This includes requiring data from an offeror to support a cost realism analysis;

                 (iii) Consider whether cost data are necessary to determine a fair and reasonable price when there is not adequate price competition;

                 (iv) Require that the data submitted by the offeror include, at a minimum, appropriate data on the prices at which the same item or similar items have previously been sold, adequate for determining the reasonableness of the price unless an exception under 15.403-1(b)(1) or (2) applies; and

                 (v) Consider the guidance in section  3.3, chapter 3, volume I, of the Contract Pricing Reference Guide cited at  15.404-1(a)(7) to determine the data an offeror shall be required to submit.

            (2) The contractor’s format for submitting the data should be used (see  15.403-5(b)(2)).

            (3) The contracting officer shall ensure that data used to support price negotiations are sufficiently current to permit negotiation of a fair and reasonable price. Requests for updated offeror data should be limited to data that affect the adequacy of the proposal for negotiations, such as changes in price lists.

            (4) As specified in section 808 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Pub. L. 105-261), an offeror who does not comply with a requirement to submit data for a contract or subcontract in accordance with paragraph (a)(1) of this subsection is ineligible for award unless the HCA determines that it is in the best interest of the Government to make the award to that offeror, based on consideration of the following:

 (i) The effort made to obtain the data.

 (ii) The need for the item or service.

 (iii) Increased cost or significant harm to the Government if award is not made.

…15.404-3 Subcontract pricing considerations.

       (a) The contracting officer is responsible for the determination of a fair and reasonable price for the prime contract, including subcontracting costs. The contracting officer should consider whether a contractor or subcontractor has an approved purchasing system, has performed cost or price analysis of proposed subcontractor prices, or has negotiated the subcontract prices before negotiation of the prime contract, in determining the reasonableness of the prime contract price. This does not relieve the contracting officer from the responsibility to analyze the contractor’s submission, [Not applicable here: including subcontractor’s certified cost or pricing data] .

       (b) The prime contractor or subcontractor shall-

            (1) Conduct appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices;

            (2) Include the results of these analyses in the price proposal; and

            (3) When required by paragraph (c) of this subsection, submit subcontractor certified cost or pricing data to the Government as part of its own certified cost or pricing data.

       (c) Any contractor or subcontractor that is required to submit certified cost or pricing data also shall obtain and analyze certified cost or pricing data before awarding any subcontract, purchase order, or modification expected to exceed the certified cost or pricing data threshold, unless an exception in  15.403-1(b) applies to that action.            

… (2) The contracting officer should require the contractor or subcontractor to submit to the Government (or cause submission of) subcontractor certified cost or pricing data below the thresholds in paragraph (c)(1) of this subsection and data other than certified cost or pricing data that the contracting officer considers necessary for adequately pricing the prime contract.

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