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T&M Proposed Labor Rate buildup question


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T&M rates for IDIQ as submitted to prime (govt customer DHS) were computed as follows:

(example)

Direct Labor Overhead G&A Loaded Cost Profit % Profit T&M Labor Cat Per Hour 50% 10% Per Hour (varies) Amount Rate Programmer $ 50.00 $ 25.00 $ 7.50 $ 82.50 11% $ 9.08 $ 91.58 Analyst $ 40.00 $ 20.00 $ 6.00 $ 66.00 6% $ 3.96 $ 69.96 Engineer $ 30.00 $ 15.00 $ 4.50 $ 49.50 8% $ 3.96 $ 53.46

Question:

Is the profit % varying by Labor Category going to pass audit? The pricer is saying risk of hiring suitable personnel at the bid DL (which was based on BLS) varies per LC so profit % should vary based on this risk. I've only seen one profit % applied to all LCs in a given proposal before.

Opinions?

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As a follow-on to retreadfed's comment, what's important is whether the labor rate is reasonable and affordable. It is permissible for a contractor to propose 11% profit within the Programmer hourly rate, 6% within the Analyst hourly rate, and 8% within the Engineer hourly rate. It is also permissible for the Govenrment to try to negotiate lower hourly rates (not lower profit, per se, but lower hourly rates). The parties to the negotiation may reserve their own interpretations regarding the effect of the negotiations on individual elements of the hourly rate.

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This also isn't a whole lot different than negotiating varying profit/fee percentages with contract types. A contract may contain multiple CLIN with varying contract types. Based on associated risks by CLIN, you would expect different profit rates.

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