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Travel Pricing Structure on FSS RFQ


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I had dinner tonight with someone who handles IT support services for a large federal agency. I described this thread and the reaction was shock. The person wanted to know who in his right mind would make travel cost-reimbursement. The discussion went something like this:

"Cost-reimbursement? Who wants to check all those receipts? Who has time for that? Hotel rate--okay. Taxes--okay. Porn movie--not okay. Bar tab--not okay. Hi Honey call--okay, but not for 64 minutes, and on and on."

"So--how do you handle travel?"

"Set unit prices. They have to travel from, say, Pittsburgh to Boise. Airfare between $600 and $400, depending on advance notice. We set it at $500. So what if you pay a little too much for airfare from time to time. It all evens out. Big deal on a $1 million IT project. You'd spend that much checking receipts. Per diem is fixed. Just set the applicable rate invoice per trip per day. Estimate the number of trips/duration for funding purposes and if you need more fund it. You'd have to do that for cost-reimbursement. Really--anybody who makes travel cost reimbursement must have a lot of spare time on their hands. That's a no-brainer. Do people really make travel cost-reimbursement?"

I guess it's all a matter of perspective.

I guess it is a matter of perspective. Does the government set the unit prices? Who is the "we" in "We set it at $500"? Since DOD can't normally just pick one FSS contractor to negotiate an order with (not counting sole source 8(a)), how do you make all these great detailed arrangements in a competitive ordering situation? By the way, somebody has to review and agree with quantities for all those great unit priced items in the invoices, too, unless "We" just skip that step in contract administration.

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"You'd spend that much checking receipts". Give me a break! The DCAA doesn't even check every receipt for crying out loud. They use sampling techniques. I've yet to see one of our 1102's track every receipt. I'm not even sure that they check math in receipts.

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Guest Vern Edwards
I guess it is a matter of perspective. Does the government set the unit prices? Who is the "we" in "We set it at $500"? Since DOD can't normally just pick one FSS contractor to negotiate an order with (not counting sole source 8(a)), how do you make all these great detailed arrangements in a competitive ordering situation? By the way, somebody has to review and agree with quantities for all those great unit priced items in the invoices, too, unless "We" just skip that step in contract administration.

"We" is the CO and the contractor--in negotiations. The contractor proposes the travel unit prices and the parties negotiate to agreement.

You say: "Since DOD can't normally just pick one FSS contractor to negotiate an order with... ." Why not? DOD can pick one contractor to negotiate with when competing an FSS order. Nothing in DFARS Subpart 208.4 (or in DFARS 216.5) precludes that. The discussion rules in FAR Part 15 don't apply to such transactions. You don't have to establish a competitive range and conduct discussions with all in the range. You ask for offers, consider each, select one for final negotiations, then work out the details. Tell prospective offerors what you're going to do and explain that FAR Part 15 doesn't apply.

Do you think you have to apply Part 15 to everything?!

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Guest Vern Edwards
"You'd spend that much checking receipts". Give me a break! The DCAA doesn't even check every receipt for crying out loud. They use sampling techniques. I've yet to see one of our 1102's track every receipt. I'm not even sure that they check math in receipts.

In some organizations, travel receipts under a separate travel CLIN are checked by the COTR, not an auditor or an 1102. COs don't always apply the Allowable Cost or Payment clause to the travel CLIN and they don't always include the Audit and Records clause.

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Guest carl r culham

Considering the whole of the thread including my posts my head continues to spin. In the end I have conclude that I would change my initial post and in retrospect my response to Contracting 123 would have been as follows ?

?Contracting 123 ? Try this logic on your legal counsel.

While an order under a FSS contract (inclusive of IDIQs in general) is concluded to be a contract (http://www.wifcon.com/discus/messages/8522/9575.html?1225840698) it is a contract written under the authority of the FSS contract not the FAR. Therefore FAR Part 16 does not apply nor does FAR Part 12 (and now FAR Part 15), the terms and allowances of the master FSS contract apply. Master contract clause C-FSS-370 allows for travel to be item that may reimbursed or it may be a fixed priced item but the election to do so is completely within the authorities of the master FSS contract and the parties to the order and again not within the authorities of FAR 12, 15, or 16. Further as the FSS contract Clause C-FSS-370 allows travel expenses the travel expense item is not an open market item but an allowable item of any resulting order and again FAR does not apply the master FSS contract does. I would note that by the specifics of Clause C-FSS-370 FAR Part 31, along with PL 99-234, would apply because the clause says it governs in determining the travel reimbursement.

If this logic fails I suggest the following idea for a clause in the order if you need a work around - For the purposes of this Order CLIN XXXX shall be priced on a fixed price basis at $1.00. The Government acknowledges that travel costs may exceed this CLIN and the Government will modify the order appropriately based on actual costs incurred under the Order on a monthly basis. ?

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When I pointed to C-FSS-370 in the base GSA contract which states travel costs are reimbursable by the ordering agency or can be priced as a fixed item, I'm told the clause is only descriptive (and I'm not sure what is meant by that.)

Contracting123,

Which payment clauses are in the base GSA contract? FAR 52.212-4 and 52.212-4, Alt. I? A GSA-specific payment clause? Anything else?

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"We" is the CO and the contractor--in negotiations. The contractor proposes the travel unit prices and the parties negotiate to agreement.

You say: "Since DOD can't normally just pick one FSS contractor to negotiate an order with... ." Why not? DOD can pick one contractor to negotiate with when competing an FSS order. Nothing in DFARS Subpart 208.4 (or in DFARS 216.5) precludes that. The discussion rules in FAR Part 15 don't apply to such transactions. You don't have to establish a competitive range and conduct discussions with all in the range. You ask for offers, consider each, select one for final negotiations, then work out the details. Tell prospective offerors what you're going to do and explain that FAR Part 15 doesn't apply.

Do you think you have to apply Part 15 to everything?!

Vern, Part 15 doesn't apply to everything. I never said that it does. DFARS 208.405-70 applies to FSS orders, implementing Section 803 of the Defense Authorization Act for FY2002. Paragraph (3)(bee) says that each order exceeding $100,000 shall be placed on a competitive basis, unless the requirement is waived per the exceptions in FAR 8.405-6. DFARS says to make the notice of intent to purchase the service to as many schedule contractors as practicable. It says to reasonably ensure that offers will be received from at least three contractors that can fulfill the requirements. It also says that at least three offers should be received from contractors who can fulfill the requirement, unless the KO can document that, through reasonable efforts to find other firms, no other firms that could fulfill the requirement could be identified...

I admitted that I'm no expert on FSS orders, but for orders exceeding $100,000 looks like DoD agencies must try to compete orders. How practical is it to negotiate unit prices for travel with multiple firms?

For orders under $100k, I wonder how much travel would be involved, anyway. It might not be enough to fool with on a unit priced basis, considering that it might have to be modified later. Or sure, if you're dealing with one firm, go ahead and negotiate unit prices if you want to. Heck, it isn't that darned difficult to review a couple of travel invoices on a small order, anyway.

My reference to DCAA was merely to explain that professional auditors don't even scour every piece of paper and review in detail every line in proposals or invoices. They use sampling techniques. If the so called experts don't go to that detail on the big buck acquisitions, does a voucher examiner have to on every voucher that includes travel? Besides, I sure as heck can speed read a hotel bill to see what was in it, if I had to.

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"We" is the CO and the contractor--in negotiations. The contractor proposes the travel unit prices and the parties negotiate to agreement.

You say: "Since DOD can't normally just pick one FSS contractor to negotiate an order with... ." Why not? DOD can pick one contractor to negotiate with when competing an FSS order. Nothing in DFARS Subpart 208.4 (or in DFARS 216.5) precludes that. The discussion rules in FAR Part 15 don't apply to such transactions. You don't have to establish a competitive range and conduct discussions with all in the range. You ask for offers, consider each, select one for final negotiations, then work out the details. Tell prospective offerors what you're going to do and explain that FAR Part 15 doesn't apply.

Do you think you have to apply Part 15 to everything?!

Aha, I see your point about picking one firm to negotiate final prices with!

Edit: Let me think about that for awhile. Seems funny that we go to all these lengths to tie down all pricing to FFP for some unknown reason (we say "because it is required". But why is it required? Because congress is worried about costs?) , then we pick one firm to negotiate with. Could that indicate, hey pricing might not be so important, qualifications or something else might be more important than the miniscule details of pricing that we seem to be insistent about? Just seems contradictory to worry about tying down all pricing details if price isn't that important. If price were really so important that we have to even fix travel costs, why not discuss final price with more than one firm?

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Guest Vern Edwards
Aha, I see your point about picking one firm to negotiate final prices with!

Edit: Let me think about that for awhile. Seems funny that we go to all these lengths to tie down all pricing to FFP for some unknown reason (we say "because it is required". But why is it required? Because congress is worried about costs?) , then we pick one firm to negotiate with. Could that indicate, hey pricing might not be so important, qualifications or something else might be more important than the miniscule details of pricing that we seem to be insistent about? Just seems contradictory to worry about tying down all pricing details if price isn't that important. If price were really so important that we have to even fix travel costs, why not discuss final price with more than one firm?

The requirement to consider price comes from (1) CICA via GAO case law now embodied in FAR 15.304--price must be a substantial factor and (2) DFARS 216.505-70(d). CICA does not apply to orders placed against existing contracts. The requirement to conduct discussions with offerors in a competitive range originated with TINA. Now it applies to competitions conducted under CICA. CICA does not apply to orders issued against existing contracts.

See my article: "Competitive Processes in Government Contracting: The FAR Part 15 Process Model and Process Inefficiency" (2003) http://www.wifcon.com/anal/analcomproc.htm. Keep in mind that it's more than six years old.

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The requirement to consider price comes from (1) CICA via GAO case law now embodied in FAR 15.304--price must be a substantial factor and (2) DFARS 216.505-70(d). CICA does not apply to orders placed against existing contracts. The requirement to conduct discussions with offerors in a competitive range originated with TINA. Now it applies to competitions conducted under CICA. CICA does not apply to orders issued against existing contracts.

See my article: "Competitive Processes in Government Contracting: The FAR Part 15 Process Model and Process Inefficiency" (2003) http://www.wifcon.com/anal/analcomproc.htm. Keep in mind that it's more than six years old.

Yes, I understand all that. The light bulb that turned on concerned a supposed great need or statutory requirement to tie down every little facet of travel as a fixed price, supposedly because FFP is a better deal for the government or something. Then, we might well pick the best firm, with little regard for the best overall price. Next we should negotiate travel details to maybe save a few bucks. Gee, is overall price important or not important? Or is only tying down the travel cost so important? Makes me chuckle at what seems to be ironic. Oh, but it is a "no-brainer", isn't it...

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Guest Vern Edwards
Yes, I understand all that. The light bulb that turned on concerned a supposed great need or statutory requirement to tie down every little facet of travel as a fixed price, supposedly because FFP is a better deal for the government or something. Then, we might well pick the best firm, with little regard for the best overall price. Next we should negotiate travel details to maybe save a few bucks. Gee, is overall price important or not important? Or is only tying down the travel cost so important? Makes me chuckle at what seems to be ironic. Oh, but it is a "no-brainer", isn't it...

Joel, I'm sorry, but I don't entirely understand what you've said.

What I would do is instruct the competitors to propose travel rates based on specified travel in the SOW (subject to adjustment after award based on actual travel): air fare per destination, per diem per destination, whatever else. I would then calculate total travel for each competitor and factor that into my overall price evaluation and pick a winner. Then, if necessary, I would negotiate a better deal with the selectee one-on-one. (Better air fare, etc.) Travel would be priced at firm-fixed unit prices, flights, days at site, etc. Its' really very simple and it's not a new approach.

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What I would do is instruct the competitors to propose travel rates based on specified travel in the SOW (subject to adjustment after award based on actual travel): air fare per destination, per diem per destination, whatever else. I would then calculate total travel for each competitor and factor that into my overall price evaluation and pick a winner. Then, if necessary, I would negotiate a better deal with the selectee one-on-one. (Better air fare, etc.) Travel would be priced at firm-fixed unit prices, flights, days at site, etc. Its' really very simple and it's not a new approach

So at the end, a simple solution to what was a complicated problem. It might take a little bit more work upfront to pick out anticipated destinations and durations but that's minimal. Compare that work to the Government's administrative time and expense validating receipts with what's billed on a cost reimbursement type.

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Guest Vern Edwards

This is the 64th post in this thread. My first post was No. 29. I had ignored the thread until then, because I thought the topic was stupid. I only posted when I saw who was participating and realized that the thread had become a jailhouse lawyer session with no end in site. All of the posts until then had focused on the legal issue. A chronicle of wasted time. No one proposed a simple (and long-used) fixed-price alternative to cost-reimbursement for travel until I did. And what happened then? Did anyone say: Give us some details. How would that work? Nope. All of the whiners and would-be legal eagles have gone on to other things. Except for Joel, they haven't asked any questions or made any comment.

In his first post, Post No. 11 in the thread, Joel said this:

If your counsel is telling you that you must contract for travel on a lump sum or some unit cost basis for indeterminate amount or places of travel, that is dumb! If you are an 1102, you are supposed to be the business expert, right?

Emphasis added. Well, the lawyer was not dumb. And the answer to Joel's question is: Right---supposed to be, but wasn't.

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Vern,

As one of the lead whiners, I feel compelled to reply.

I think that your proposal is fine. However, let's assume that Contracting123, for whatever reason, cannot price travel on a FFP basis for his proposed task order. Before saying that he is out of luck, I think we need to know what payment clauses are in the specific GSA contract that he wants to place an order against, which is why I asked him/her.

However, he/she probably stopped reading a long time ago.

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Guest Vern Edwards
Vern,

As one of the lead whiners, I feel compelled to reply.

I think that your proposal is fine. However, let's assume that Contracting123, for whatever reason, cannot price travel on a FFP basis for his proposed task order. Before saying that he is out of luck, I think we need to know what payment clauses are in the specific GSA contract that he wants to place an order against, which is why I asked him/her.

He may have stopped reading. Whether he has or not, I'm not interested in his answer. In his place, I wouldn't have wasted five minutes arguing with the lawyer over the issue. The issue wouldn't even have come up. I would have figured out a way to fix-price travel, and I wouldn't have accepted any We can't estimate it crap from the technical folks. It probably would not have occurred to me to cost-reimburse it.

A good CO is never out of luck, unless he's out of know-how.

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I always thought of everyone in this forum as a jailhouse lawyer, including Vern. There is nothing finer then when a jailhouse lawyer beats the real lawyer. Not much satisfaction though in one jailhouse lawyer taking on another jailhouse lawyer ? the real lawyers will only laugh at us. We need to stick together, and above all no whining and never apologize.

Lawyers need to fear WIFCON.

For the forum rules I propose we should add no whining, no apologies and no real lawyers allowed.

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Aw, quit whining, y'all. For the time being, the First. Amendment allows folks to speak their mind. Even though this is a private forum, I would hope that it wouldn't be THAT restrictive.

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Aw, y'all quit whining about whining.

A person's opinion is often based upon their perspective. The progream that I retired from a couple of years ago required management and advisory services at many locations over a period of years. There was no way to reasonably estimate number of trips or even when or where travel would be required. In addition, we sometimes travelled from one TDY location to another. We even ended up traveling to various contractor home or division offices.

The original post indicated that travel seemed to be indeterminent in nature. That was my perspective. Vern makes a good point that what seems to be indeterminent may just be laziness on the part of the customer...

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Guest Vern Edwards

I am a businessman who operates on a strictly fixed-price basis. I and my colleagues must travel all over the world. I set my prices at the beginning of each year with no specific idea of how often I will have to travel or where I'll have to go, yet I can predict within reason. If an agency or company offered to reimburse me for travel, as many have, I would refuse. Why? Because I don't want to be bothered with making copies of receipts and sending them off to someone for judgment. If someone were to question what I paid for a hotel room, or that I hired a limo instead of taking a taxi, I would become homicidal. As for my prices--they are very competitive. I haven't raised my prices in five years.

Airline travel prices do not vary all that much and are pretty predictable, despite headlines to the contrary. Hotel rates vary within a predictable range. I know what I'll have to pay for the kind of room that I want in New York, San Francisco, Singapore, Bahrain, and Paris. Daily expense are very predictable. I have long found that by the end of a year I come out pretty much even. I don't make money on travel and I don't lose any. Many large corporations have written agreements with airlines and hotel chains about ticket prices and room rates. Their expenses are very predictable. (A relative of mine used to negotiate the agreements for IBM.) Even if a program is going to run for years and travel will be to many locations, it's not hard to fix-price it. You negotiate a travel rate schedule and update it as needed.

I tell the people who travel for me not to stay in cheap places. To hell with government per diem rates. I don't even know what they are. That doesn't mean that i want them to stay at the Ritz in Paris, but I don't want them to stay in some dive where the air conditioning doesn't work and traffic noise keeps them awake all night. I don't worry about what they pay for meals. I'm not concerned with what movies they watch. I ask for an itemization of travel costs, which they send by email, but I never ask for receipts. I find that they appreciate this and are frugal.

In the overwhelming number of cases, it simply is not necessary to pay for travel on a cost-reimbursement basis. You can always estimate travel. ALWAYS. Will it turn out as estimated? Maybe not. Probably not? Adjust!

The problem with government people is that most of them have never been business people. They have no idea how to cost or price in the commercial world. Business advisors? Please.

As a CO, unless travel were expected to run to at least $1 million, there is no way I'd cost-reimburse it. I doubt I'd cost-reimburse it then.

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