Overtime on Fixed Price Service Contracts

[Dormer30]

I have inherited a service contract for some IT services which was previously done as T&M. We are no longer permitted to use T&M contracts, so it must be done as a FFP. The requirements have some need for OT and contingency/emergency services. How can I best incorporate an equitable payment to the contractor for working beyond their normal work hours on a FFP? Can I just give an estimated OT hours in the RFQ and have them incorporate that into their overall price? Any ideas will be appreciated.

[policyguy]

What did your research come up with? What course(s) of action did you develop? For instance can you even change the contract from T&M to FFP? If so how? Is the contract covered under SCA? You don't provide a lot of information so it is difficult to provide suggestions on how to proceed so doing additional research may be beneficial.

[Don Mansfield]

Can I just give an estimated OT hours in the RFQ and have them incorporate that into their overall price?

That's one way to do it. If you are reasonably confident about your estimate, I think that approach would be fine.

[joel hoffman]

The requirements have some need for OT and contingency/emergency services. How can I best incorporate an equitable payment to the contractor for working beyond their normal work hours on a FFP? Can I just give an estimated OT hours in the RFQ and have them incorporate that into their overall price? Any ideas will be appreciated.

I suggest including unit priced line item(s) for directed overtime in lieu of just including an estimated number of hours in the lump sum priced scope of services. You didnt explain the requirements for OT, so I'm guessing that it would be directed OT to cover occasional, urgent requirements.

Estimated OT hours identified in the lump sum line line item scope would be essentially priced in the contract as a contingency. The contractor will include OT costs, based upon 100% probability of occurrence.

So, why can't you can include a line item to be used - IF NEEDED? This is to cover the risk that there may be OT needed. Use that same number of hours as an estimated quantity. Since the contract is primarily priced as lump sum, it isnt a "T&M" contract type.

I guess that this is my construction contracting background influencing me. Pricing unquantifiable risks that may occur seems to me to be much smarter use of the (borrowed) taxpayers money - that we don't have - than having the contractor include the full cost to cover the estimated OT in its lump sum, fixed price.

Either way, the taxpayers are going to pay for directed, required OT. Either way, the taxpayers will have to pay for any directed, required OT that exceeds the number of estimated hours identified in the contract. The advantage of having a unit priced item is that it is only used as needed and can be easily managed.

Many government employees seem to have a great aversion to using unit priced items to manage risk for situations which may arise but that can't be 100% quantified ahead of time.