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I see proposals where Program Managers are proposed in Direct Labor and some where the contractor states they are in Overhead. If a Program Manager is in Overhead, am I correct to assume that the PM is not going to be dedicated to my contract effort 100% of the time? These are FFP Labor Hour and T&M Task Order Proposals. Can a contractor have a system of accounting that allows PM's to be included in Overhead and also assigned to my effort 100% of their time?

Thanks

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Can a contractor have a system of accounting that allows PM's to be included in Overhead and also assigned to my effort 100% of their time?

Thanks

Are you saying that the cost of the PM is charged 100% to overhead but is proposed to be assigned 100% of the time to your "effort"? If that is not what you mean, then please clarify:

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Thanks Joel

It seems to me that if an employee of a company is going to be dedicated to my effort full time that he or she should be priced in Direct Labor. If the company says the employee is in Overhead are they not acknowledging that the employee will be part time to my effort and some time to other work. I want my PM full Time or at least some explanation of how much time I'm getting a PM instead of just saying the PM is in Overhead.

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I have seen a PM in an overhead pool and dedicated to one project 100% of the time. The explanation I got was that it was that company's accounting practice to place PMs in overhead, and that while PMs could be dedicated for a time to one project, in the future their time might be split amongst more than one project, so they wanted to put all PMs in overhead, rather than make individual placements each year.

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Thanks Joel

It seems to me that if an employee of a company is going to be dedicated to my effort full time that he or she should be priced in Direct Labor. If the company says the employee is in Overhead are they not acknowledging that the employee will be part time to my effort and some time to other work. I want my PM full Time or at least some explanation of how much time I'm getting a PM instead of just saying the PM is in Overhead.

I dont necessarily agree that requiring the PM to be "full time" makes economical sense, Would you expect the PM to be charged directly to the Labor Hour portion of the contract ? Would he/she be charged full time to various individual task orders? Does the workload warrant a full time PM? Will the PM work from the home office (another warning flag) or at the site? Moving a person out of an overhead pool to a direct cost should also require corresponding overhead rate adjustment, which isnt that easy or practical within the company. I would think seriously about whether dictating a full time, direct charged position vs. requiring performance as necessary to successfulloy manage the project before demanding such an action. As mentioned above, an alternative is for the proposer to describe how they intend to fulfill the PM role to your satisfaction.

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an alternative is for the proposer to describe how they intend to fulfill the PM role to your satisfaction.

Thanks everyone. I think Joel has the solution. Hopefully they will explain but most of these companies keep things sufficiently vague on purpose. Probably more important to advise them that if they are indirect, they stay indirect during the POP.

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You want the services of a PM 100% of the time but the PM can't charge to the contract? You realize you're going to pay for that PM regardless as it's only going to drive up the contractor's billable rates.

You're paying for it either way.

Have the PM charge to you can 'accept' the hours/services. It's not going to be that easy if they're on overhead.

And if you insist on the PM being on overhead - the odds of that PM staying 100% dedicated to the program is low .

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Guest Vern Edwards

DOECPA:

You have a task order contract under which you can issue FFP, T&M, and L-H task orders. Right?

Are you talking about a PM for the overall contract, or are you talking about PMs for individual orders? Or are you talking about PMs for both.

If the PM is for the overall contract, how is that cost to be invoiced? Is there a fixed-price line item for the PM or is the cost to be allocated among task orders and charged accordingly?

If the PM is for an individual order, is there an hourly rate for the PM?

As for charging a PM's time direct or indirect -- see FAR 31.202 and 31.203. If you are talking about a PM for the overall contract, and if the contract requires that PM to be devoted to the contract on a full time basis throughout the period of performance, then it is hard for me to see how the costs for that PM could be allocated to a company-wide indirect cost pool. PMs for individual orders could be a different matter, even if they are to be full time.

Your best course of action at this time is to sit down with the contractor and ask for an explanation.

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August's post is sound, as is Vern's advice.

The fact of the matter is that cost accounting practices vary by contractor. For example, I know of one very large contractor whose practice is that its Contracts folks charge G&A and never charge direct. Doesn't matter if they are assigned full-time to the contract or not. The labor is baked into the G&A rate and is never a direct contract cost.

Perfectly acceptable practice if followed consistently.

Have the contractor confirm that its proposed costs comply with its Disclosure Statement, if applicable. If no D/S, then have the contractor confirm that its proposed costs are consistent with how it treats PM costs on its other contracts.

Hope this helps.

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All of the responses have been very helpful and we will simply ask Offerors to explain how the PM position(s) are being priced and what percentage of time they will be devoted to our effort. These are Labor Hour (Fully Burdened Labor Rates for augmentation contracts to support vehicle repair and maintenance (Usually several hundred to about a thousand employees) May mix workforce skill mix based on weekly/monthly needs up to limitation of funds.

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Guest Vern Edwards

Will this be a task order contract? If so, will orders be priced on a labor-hour basis, with the contractor paid for each direct labor hour worked?

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