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I thought I understood the difference between FFP and FFP-LOE contracts. This decision – URS Federal Support Services, Inc., B-407573, Jan 14, 2013 - proves me wrong.

See it here: http://www.gao.gov/p...573#mt=e-report

“The PWS, in general terms, requires the contractor to provide qualified labor in support of the TYAD maintenance mission and perform tasks ranging from minor repair to depot-level overhaul of various electronic systems and support equipment. AR, Tab 8, PWS, at 2-4. The PWS includes various metrics (e.g., reject rate, communication) by which to measure the quality of the contractor’s performance.[2] Relevant to the protest here, the PWS also includes a minimum number of full-time employees (FTE)--referred to as the “minimum team complement”--that the contractor is to propose and provide during performance: at least 107 FTEs under the fixed-price CLIN.[3] Id. at 36-41.”

“As set forth above, the PWS requires the contractor to provide augmentation labor to support the TYAD maintenance mission. In addition to certain performance metrics, the PWS includes minimum staffing levels--the minimum team complement--that the contractor is to both propose and provide during task order performance. Quite simply, the Air Force has decided to define its requirements here in both performance and staffing terms. We find this to be reasonably within the broad discretion afforded contracting agencies, and to the extent URS challenges how the Air Force has defined its needs, we find this challenge to be without merit.”

So, if the successful contractor is meeting the performance requirements with only 105 FTEs, it is in breach of contract?

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It is clear from the FON that the government wanted a minimum staffing level of 107 FTEs, from day 1 on. If the order required a minimum staffing level of 107, and the contractor is providing only 105, then I would say yes, the contractor is in breach.

But, it's not a level of effort contract.

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Guest Vern Edwards

O&M contracts that specify both performance quality and "manning"(level of effort) have been around for a long time. I once administered several of them. Like any contract, a party must comply with all terms. Failure to comply with a contract term is breach of contract. Such a contract is not a level of effort contract as described by FAR.

The government's position will be that (a) failure to meet quality requirements, or (B) failure to provide the minimum manning, or ( c) both would be breach of contract. If the contractor performs well using less than the required minimum manning the government will say that the contractor has not performed as required.

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So, if the successful contractor is meeting the performance requirements with only 105 FTEs, it is in breach of contract?

Yes, it would be in breach of contract with only 105 FTEs. However, this one is a real head scratcher. The FFP portion of the contract has a PWS (or "performance based" SOW), which per the FAR "shall" to the maximum extent practicable describe the work in terms of the required results rather than either “how” the work is to be accomplished or the number of hours to be provided. However, as stated in the decision "the Air Force is essentially buying qualified staffing" (FTE hours). Sounds like a personal services contract? But it's not. The requirements are stated in both performance and staffing terms. Pricing and therefore payment are established by staffing levels, and not by task completion. What? So the Air Force has defined the requirements (with regard to staffing), and established the pricing and payment scheme in such a way that would appear to be in conflict with the whole idea of a performance based services contract? While this may not be prohibited by the FAR, it seems rather odd to me. I'd be curious to see if there was a schedule of deductions for not meeting the performance standards included, or if they try to "supervise" the contractor's employees.

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O&M contracts that specify both performance quality and "manning"(level of effort) have been around for a long time. I once administered several of them. Like any contract, a party must comply with all terms. Failure to comply with a contract term is breach of contract. Such a contract is not a level of effort contract as described by FAR.

The government's position will be that (a) failure to meet quality requirements, or ( B) failure to provide the minimum manning, or ( c) both would be breach of contract. If the contractor performs well using less than the required minimum manning the government will say that the contractor has not performed as required.

Over the past 5 plus years, DoD has discouraged the use of fixed price “body shop” contracts (i.e. contracts that pay on the basis of hours used rather than tasks accomplished). Fixed priced “body shop’ contracts are viewed as being almost “cost plus percentage of cost” contracts since the contractor earns a fixed profit for every hour expended.

Initially, the DoD focus was on T&M and LH contracts. As DoD agencies and the services were impacted, some shrewd, unscrupulous contracting officers, ones who didn’t want to use a cost reimbursement contract type, turned to FFP LOE contracts to avoid challenges to their fixed price “body shop” approach. As DoD began to scan the FPDS data more carefully, the use of FFP LOE contracts was recognized and discouraged.

The approach seen in the protest allows a contracting officer to issue a firm fixed price (vice fixed price) body shop contract by developing a few “performance metrics” and the "specified skills/quantities” of labor (i.e. labor categories, job descriptions and FTEs).

It’s a win-win-win outcome for the DoD, the contracting agency and the contractor.

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Guest Vern Edwards

The requirements are stated in both performance and staffing terms. Pricing and therefore payment are established by staffing levels, and not by task completion.

Not necessarily. It might be based on both.

What? So the Air Force has defined the requirements (with regard to staffing), and established the pricing and payment scheme in such a way that would appear to be in conflict with the whole idea of a performance based services contract?

Yes. So what? PBC for this kind of requirement is virtually impossible. Trying to write a PWS would be either stupid or fraudulent.

While this may not be prohibited by the FAR, it seems rather odd to me. I'd be curious to see if there was a schedule of deductions for not meeting the performance standards included, or if they try to "supervise" the contractor's employees.

You seem troubled by the fact that the government is combining performance requirements with staffing levels. They've been doing that for decades. It is inconsistent with the definition of performance-based acquisition in FAR 2.101, for sure. But why does that surprise you? PBC is a impracticable when it comes to the type of requirement involved in this case.

As for the government supervising the contractor's employees -- of course it will. How else will the work get done?

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Guest Vern Edwards

Over the past 5 plus years, DoD has discouraged the use of fixed price “body shop” contracts (i.e. contracts that pay on the basis of hours used rather than tasks accomplished). Fixed priced “body shop’ contracts are viewed as being almost “cost plus percentage of cost” contracts since the contractor earns a fixed profit for every hour expended.

A fixed-price "body shop" contract, in my experience, stipulates a monthly fixed-price for X numbers of certain kinds of workers (full-time equivalent hours). It does not pay by the hour.

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"Not necessarily. It might be based on both."

Quote: "The PWS simply does not require the CFT contractor to perform a defined number and type of tasks (nor does the FON establish pricing by task completion)." Isn't the payment arrangement usually consistent with the pricing arrangement?

"Yes. So what? PBC for this kind of requirement is virtually impossible. Trying to write a PWS would be either stupid or fraudulent." But didn't they write a PWS?

"How else will the work get done?" By describing the work in terms of outcomes to be accomplished (if possible), and holding them to it.

I'm not troubled by combining performance requirements with staffing levels as long as it's clear what they buying. Based on the protest there would seem to be some confusion, and based on the pricing arrangement and decision they are essentially buying qualified staffing. If that's what they want, then fine by me.

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A fixed-price "body shop" contract, in my experience, stipulates a monthly fixed-price for X numbers of certain kinds of workers (full-time equivalent hours). It does not pay by the hour.

Ok, by the hour, by the week, or by the month. The contractor still receives a fixed increment of profit for every increment of labor expended. If, as is the case with the AF contract, there is additional labor in a T&M portion, it makes it a more "bulked up" body shop contract.

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Guest Vern Edwards

"Not necessarily. It might be based on both."

Quote: "The PWS simply does not require the CFT contractor to perform a defined number and type of tasks (nor does the FON establish pricing by task completion)." Isn't the payment arrangement usually consistent with the pricing arrangement?

I don't understand your question. What do you mean by "pricing arrangement"? To me, pricing arrangement refers to the contract type and the line item pricing structure. Please clarify.

"Yes. So what? PBC for this kind of requirement is virtually impossible. Trying to write a PWS would be either stupid or fraudulent." But didn't they write a PWS?

They wrote something that they called a PWS. Whether it really was a PWS is another matter entirely. Most "PWSs" don't conform to the description in FAR 37.602. I have seen very few real PWSs.

"How else will the work get done?" By describing the work in terms of outcomes to be accomplished (if possible), and holding them to it.

That's not possible for a requirement like the one in question. I don't have time to explain in detail now, but I have written extensively about that. See e.g., my article in Defense Acquisition Review Journal (September 2007), http://www.dau.mil/p...5_complete.pdf.

I'm not troubled by combining performance requirements with staffing levels as long as it's clear what they buying. Based on the protest there would seem to be some confusion, and based on the pricing arrangement and decision they are essentially buying qualified staffing. If that's what they want, then fine by me.

Okay. But in fairness to them, all any of us have to go on is a brief summary in a GAO decision.

My point is this: What they did appears to be consistent with what contracting offices have been doing for decades. The PWS stuff was probably added on to satisfy bean counters at higher headquarters.

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vern,

Yes, by pricing arrangement I mean contract type and line item pricing structure, which per the decision was Firm Fixed-Price and based on staffing levels. (Example CLIN 0001 Base Year FFP Staffing / QTY 12 / Unit of Issue MONTH X Unit Price = Total Line Item Price) At least that's what I gathered from the decision.

I've read the relational contracting article before, and it's a truly great concept. But until it's adopted we have to use performance based service contracts whether they really work well as they are supposed to or not

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I've read the relational contracting article before, and it's a truly great concept. But until it's adopted we have to use performance based service contracts whether they really work well as they are supposed to or not[.]

Oh, gosh, that's silly, and it's bull. You can pretend to use PBC, but if it doesn't work well you can't. You'll be doing something phony, which is what most people are doing. They label their SOW a PWS and then write the same old SOW they always wrote. The more ambitious come up with silly measurable performance standards. I'm going to move on. I don't see any point in discussing this further with someone who would say something like that. It's okay to b.s. the staffers and higher ups, but not each other at Wifcon. I'll let what I have written speak for itself.

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