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We are a subcontractor. The ultimate Government client has "tripwire" rates, where if a contractor rate in a certain category is over a certain rate, it requires SES-level approval for funding. An engineer must not cost more than $130/hr for example. The prime contract is CPFF, and our subcontract is CPFF. This makes it strange because they basically take CPFF rates and roll them up like a T&M rate and compare them against this tripwire. Is there any reason we have to bid the same fee percentage on each person? We have one expensive engineer that is close to the tripwire rate. Could we bid her fee percentage lower than the other two engineers on the task? Since it is CPFF, not cost plus percentage of cost, it seems to me that this would be ok. As long as the bid makes it clear which dollar amount is cost and which is fee, it seems like we could bid the "rates" however we want, understanding their cost is their cost and that cannot be changed for the bid.

Please let me know if you see any issues with this approach.

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You can negotiate whatever you want with your prime, the Government doesn't have privity over subcontractors.

What you should remember is that they are looking at fully burdened labor rates, not just what you pay directly to the engineer. So, if your fully burdened rate is say, $125/hr, the prime is going to hit the tripwire most likely due to the indirect rates they place on top of your fully burdened rate as well. The point of the tripwires isn't to avoid them, it was more to bring to attention where the Navy is spending a large amount on a single labor category and to ensure they aren't paying excess where it isn't warranted.

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Thank you, dcarver. Yes, we did consider the pass through from the prime. Understand the point of the tripwires. I really appreciate your response.

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