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Applicability of Incumbent Contractor's Collective Bargaining Agreement to New Procurement


SarahH

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Scenario: The agency is procuring custodial and other related services (which are recurring) from the Federal Supply Schedule. The incumbent contractor's option was not exercised since the collective bargaining agreement (CBA) they entered into with the union (for a period of 4 years) was found to be unreasonable by the Contracting Officer. Unfortunately, the CO missed the window (see FAR 22.1021(d)(2)) for requesting a substantial variance hearing from the Dept. of Labor; however, the CBA has never been incorporated into the contract and the contractor has since filed a claim. They are still performing services under the Option to Extend Services while the new contract is being competed. Since the CBA was not incorporated into the present contract, it was not provided to the other quoters in the solicitation. The incumbent has also submitted a price quote in response to the RFQ. Their pricing has been reviewed and it is very clear that the CBA rates have not been included in the price quote. The question is whether or not the incumbent is required to consider/include pricing based on the CBA they currently have in place as it would be more realistic. Thanks in advance for any insight you can provide!

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From what you have written, I assume the contract is subject to the Service Contract Act.  If that is the case, the SCA  requires contractors to pay service employees working on a covered contract not less than the wages and fringe benefits called for by the relevant wage determination.  The SCA does not require contractors to price contracts in any particular way.

Out of curiosity, what were you using to determine compliance with the SCA wage and fringe benefits requirements?  In other words, what did you consider the relevant WD?  Was one referenced in the contract?

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Yes, the contract is subject to the SCA and we included the prevailing wage rates for the local area in the RFQ. However, if the incumbent contractor is locked into a CBA for a certain amount of time, it would seem necessary for them to quote prices in consideration of the agreement they already have in place. The RFQ was done in haste and an LPTA methodology was selected so it is likely the incumbent will be the lowest-price, technically acceptable quoter. The problem, I think, is that when we make the determination of price fair and reasonableness, can we really do so knowing that the incumbent's pricing isn't realistic?

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When a contractor has a CBA, that agreement becomes the SCA for those workers.  The incumbent or any replacement contractor must pay the wages and benefits of the CBA for the first year.  During that year the workers can try to negotiate a new CBA. 

Don't feel too bad about missing the DOL deadline.  We submitted a protest to DOL about the new CBA and even though it was substantially above the SCA, they would not declare it a substantial variance. Once my client got over the sticker shock, they loved the new CBA because turn over was reduced 50% and the workers were more motovated.

You can get all the fine details about CBAs and the SCA from the DOL wage and hour Division website. 

 

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Regrettably, you are fighting a losing battle. It is an age old problem, the contractor and his employees' union representatives negotiate  the CBA. The Government Agency (bill payer) is not even allowed at the table, once the CBA is negotiated, the rates get incorporated into the contract.  The cognizant Government agency has to pony up the funds. End of story. BTW, it won't matter what vendor you select, the CBA will be binding on them, too. Also, makes no difference on what rates you negotiate when you award the contract, if a new CBA gets accomplished you will be modifying your contract to incorporate the new rates.   Please keep us posted on the outcome.

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The CO determined it unreasonable as it was almost 30% higher than the prevailing wage rates in the area. Unfortunately, I did not state that quotes would be evaluated for price realism. However, since the RFQ has to be amended (based on a protest from the incumbent that the specifications were incorrect) anyway, I was thinking of adding some language about price realism in Section M. 

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SarahH - I would like to make a very strong suggestion  that you contact the GSA FSS CO with regard to the specific GSA FSS contract that your reference in your original post.   The GSA FSS already includes appropriate wage determinations usually in a GSA FSS contract.   Additionally, I am confused how your CO can determine GSA FSS rates to be unreasonable if the GSA FSS CO already has determined them to be reasonable, unless your needs are "open market".

Noting the above the GSA FSS CO is the most appropriate person to give you guidance on the matter of the CBA versus SCA rates, inclusive again of the reasoning you are using to determine that the quoted rates are unreasonable.

I found this on a GSA website as an example of how you find wage determinations for a specific GSAFSS.

"To determine the SCA WD at the FSS Contract level I will use FSS 899 Environmental Services as an example:

1.    Go to www.gsaelibrary.gsa.gov

2.    Type 899 in search field.

3.    Click on 899 (upper left)

4.    Click the Vendors box to access the solicitation on FedBizOpps

5.    Download the SCA Wage Determinations (attachment 12).

Caveat: When the Solicitation Refresh is issued, it takes time for all existing FSS contracts to be modified via a process we call “MASS MODS.”  Until the MASS MOD is processed, then the existing contractors have the previous SCA WD index from the previous Solicitation Refresh.  So, it is possible to have two competing contractor's off the same FSS that have differing applicable SCA Rev #'s.  While there is nothing prohibiting this scenerio,  If concerned, the Ordering Activity can contact a particular contractor’s GSA CO to inquire if the contractor has accepted the latest “Solicitation Refresh MASS MOD".

 

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