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Is there such a thing?!

We are a small business subcontractor responding to an RFP with a large business prime. We previously provided a T&M proposal, as requested. We just received a revised RFP to now price TIME & MATERIAL / Incentive Fee labor rates, which requests a T&M rate with a base fee and another T&M rate to include an incentive fee. I have never heard of this contract type. Has anyone ever encountered this? Is there information out there? My google searches have not returned any results.

Thank you for your time!

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Never heard of it? Neither have I. So what. See FAR 16.102:

"Contracts negotiated under Part 15 may be of any type or combination of types that will promote the Government's interest, except as restricted in this part (see 10 U.S.C. 2306(a) and 41 U.S.C 3905(a))."

The bosses say they want innovation. Well, there you go.

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I would be interested to know what the incentive is based on. It is based on costs? (I.e., if you offer lower labor rates you get a higher incentive fee.) How does that work with FFP labor rates?

Is the incentive based on achieving quality or service level agreements?

Is it based on timely completion of schedule milestones?

Thanks

H2H

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I would be interested to know what the incentive is based on. It is based on costs? (I.e., if you offer lower labor rates you get a higher incentive fee.) How does that work with FFP labor rates?

Is the incentive based on achieving quality or service level agreements?

Is it based on timely completion of schedule milestones?

Thanks

H2H

That was the first question I asked H2H. What is the criteria for the incentive? The answer was vague, so I am trying to figure out my plan for pricing this. I was curious to know if others out there had encountered this before.

Thanks for the feedback.

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If the incentive is in the revised RFP, the answer to your questions should be in the RFP itself. No one here can say what the incentive is, since there is no standard incentive for use in a T&M contract and none of us has seen the RFP. So what does the revised RFP say?

Has anyone encountered "this" before? How can we know, since we don't know what this is? So what does the revised RFP say? If the RFP is not clear on its face, ask the people who issued it.

The most obvious incentive for a T&M contract would be completion of the work for less than the ceiling price or in fewer hours than the ceiling price is based upon. The incentive would be based on efficiency.

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Vern,

That's a great answer. If applicable to this situation, then the new T&M rates would be lower (less profit in each labor hour rate) and there would be incentive fee available for billing fewer hours and thus a cost savings to the customer. That makes sense. Or should I say, it makes sense if you first grant that T&M would be the correct contract type rather than cost reimbursement.

Thanks

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Based on the first post, It sounds like the incentive is a base labor rate and an incentive labor rate that includes higher profit in return for greater labor efficiency. Fewer hours at a higher rate could mean savings to the government. But who knows? If the RFP isn't clear, then the OP should ask the CO.

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Thank you for the feedback gentlemen. The criteria regarding the incentive still remains vague and we have a meeting set up this afternoon but I think you are on the right track Vern. It appears it will be performance driven. Appreciate you taking the time to discuss.

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