Proposal evaluation T&M rates

[Neurotic]

Our office is preparing the evaluation criteria for a T&M contract for computer engineering/software development. It is not commercial. Adequate competition is expected so we would like to do price analysis on the fully burdened rates. There is no current contract for the same effort.

It has been determined that clause  52.222-46 -- Evaluation of Compensation for Professional Employees will be included in the contract. Therefore, a question has been raised about whether price analysis on the fully burdened rates would satisfy the language of this clause since it requires to look into compensation (salaries, fringe benefits)...and suggests price realism?

We are not asking for cost breakdown in the RFP because do not plan to do realism. We will say in the RFP that we reserve the right to do realism. (and no, we do not say that a price too low may result in no award-because that statement mandates realism. We may have to go back and request more data if the unlikely need for realism arises. 

Other than this clause, we do not see the need to evaluate further than fully burdened rates per labor category. Even in some cases some contractors do not "build" (salary+FR+OH+fee) the rates, they propose going market rates for the type of labor so there is no breakdown.

Have you had any experience on non-commercial competitive labor hour evaluations when 52.222-46 is on the solicitation? 

Have you analyzed the compensation or have you been able to do price analysis without reviewing compensation?         

[Guest Vern Edwards]

Neurotic (Really? Neurotic?):

You wrote:

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We are not asking for cost breakdown in the RFP because do not plan to do realism.

The following sentences appear in paragraph (a) of the clause:

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As part of their proposals, offerors will submit a total compensation plan setting forth salaries and fringe benefits proposed for the professional employees who will work under the contract... Supporting information will include data, such as recognized national and regional compensation surveys and studies of professional, public and private organizations, used in establishing the total compensation structure.

The statement that I quoted from your post seems inconsistent with the language I quoted from the solicitation provision (not "clause"). Did you read the provision? Please clarify.

 

[Neurotic]

Vern

Thanks for your response. I think that's my point. The provision is inconsistent with what we would like to do (price analysis). The provision seems to mandate that we do realism any time the provision is included: 

...The Government will evaluate the plan to assure that it reflects a sound management approach and understanding of the contract requirements. This evaluation will include an assessment of the offeror’s ability to provide uninterrupted high-quality work. The professional compensation proposed will be considered in terms of its impact upon recruiting and retention, its realism, and its consistency with a total plan for compensation... 

Should I interpret the inclusion of this provision as a requirement to perform realism?

 

[Guest Vern Edwards]

Yes, to the extent required by the provision itself. See Portfolio Management Solutions, LLC; Competitive Choice, Inc., B-408846, Dec. 12, 2013:

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As discussed above, FAR clause 52.222–46 states that the agency will evaluate an offeror's proposed compensation plan “to assure that it reflects a sound management approach and understanding of the contract requirements,” and further states that the evaluation “will include an assessment of the offeror's ability to provide uninterrupted high-quality work.” FAR §52.222–46(a). As relevant here, the clause also states that the compensation plan “will be considered in terms of its impact upon recruiting and retention, its realism, and its consistency with a total plan for compensation.” Id. In the context of a fixed-price labor hour contract, our Office has held that this FAR clause anticipates an evaluation of whether an awardee understands the contract requirements, and has proposed a compensation plan appropriate for those requirements--in effect, a price realism evaluation regarding an offeror's proposed compensation. See Apptis Inc., B–403249, B–403249.3, Sept. 30, 2010, 2010 CPD ¶237 at 9. The depth of an agency's price realism analysis is a matter within the sound exercise of the agency's discretion. Navistar Defense, LLC; BAE Sys., Tactical Vehicles Sys. LP, B–401865 et al., Dec. 14, 2009, 2009 CPD ¶258 at 17.

Emphasis added.

 

 

[Neurotic]

Thank you