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Travel Pricing Structure on FSS RFQ

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My contracting shop is working on several program/project management support type RFQ's, which we procure via FAR pt. 8.405-2, FFP. For many of these solicitations the program office was not able to sufficiently gauge the exact amount of travel that would be required. However, we were able to tell potential respondents estimated travel req's, specifically, destination, and quantity of trips. We then asked contractors to give us a NTE price quote for travel, which we would reimburse after travel took place (of course we need to fund the task order appropriately, thus the NTE reimbursable CLIN).

Our legal dept. has advised us that we cannot do this, referencing FAR 16.301-3b which states that the use of cost reimbursement contracts is prohibited for the acquisition of commerical items. My argument is that having one CLIN as reimbursable should not make the entire contract cost-reimbursable. Their response is that having one cost-reimbursable CLIN would cause the entire action to be a non-commercial contract because commercial contracts can only be FFP/FFP with EPA/T&M.

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.)

Legal has advised that travel should be priced FFP. My argument is that could result in a loss to the Government if that travel does not take place at all, or not all of the estimated trips need to be taken.

Ultimately, I'm going to have to do what legal wants here because they won't deem these RFQ's legally sufficient with travel as an NTE reimbursable CLIN. I just wanted to guage what others on this forum think, and if they know of any GAO decisions or any other regulation thay may differ from our legal guidance. Thanks!

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Ask your legal genius what they make of FAR 52.212-4, Alternate 1, a required contract clause in T&M contracts for commercial items. Paragraph (i)(ii)(D)(1) states:

(1) Other Direct Costs. The Government will reimburse the Contractor on the basis of actual cost for the following, provided such costs comply with the requirements in paragraph (i)(1)(ii)( B ) of this clause: [insert each element of other direct costs (e.g., travel, computer usage charges, etc. Insert ?None? if no reimbursement for other direct costs will be provided. If this is an indefinite delivery contract, the Contracting Officer may insert ?Each order must list separately the elements of other direct charge(s) for that order or, if no reimbursement for other direct costs will be provided, insert ?None?.?]

[bold added].

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Ask your legal genius what they make of FAR 52.212-4, Alternate 1, a required contract clause in T&M contracts for commercial items. Paragraph (i)(ii)(D)(1) states:

[bold added].

Well we are procuring on a FFP basis. The contractors are quoting FFP for task and deliverables. They aren't giving firm fixed hourly rates, they are using their schedule rates to price our deliverables. So I don't think I can go back to him on 52.21204 which applies to T&M.

On the other hand, does that open a whole new can of worms on how we are asking contractors to price these task orders?

I guess my main issue is legal saying that one reimbursable CLIN renders the entire action non-commercial.

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I guess my main issue is legal saying that one reimbursable CLIN renders the entire action non-commercial.

Contracting123,

Your legal counselor is wrong. A reimbursable CLIN does not make a contract a cost-reimbursement contract nor does it make it noncommercial. The fact that FAR 52.212-4, Alt. I, provides for the reimbursement of other direct costs and indirect expenses proves this, as this clause is used in contracts that are not cost-reimbursement contracts and that are for commercial services.

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The fact that FAR 52.212-4, Alt. I, provides for the reimbursement of other direct costs and indirect expenses proves this, as this clause is used in contracts that are not cost-reimbursement contracts and that are for commercial services.

Thanks Don Acquisition. I'm hesitant to use the Alt 1 of 52.212-4 in the debate with legal on this issue because it only applies to T&M or LH contracts. I see what your saying about how this shows you can have a reimbursable CLIN on a commercial contract, but I can see legal's response now -- "only if it's T&M or LH."

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I am not yet convinced the lawyer is wrong.

It does appear to me that if travel is considered commercial then travel should be contracted for on a fixed price basis.

I think GSA treats travel as an open market item that is not on their contract.

If you have a contract that has fixed priced items and cost reimbursable items then you have a mixed contract type (FP&M?). Doesn't sound right.

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The fact that FAR 52.212-4, Alt. I, provides for the reimbursement of other direct costs and indirect expenses proves this, as this clause is used in contracts that are not cost-reimbursement contracts and that are for commercial services.

Don,

FYI: FAR 52.212-4 Alt I has not yet been modified into Federal Supply Schedule contracts. It has been in process for around 3 years now I think under FSS Mass Mod number FX48.

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It does appear to me that if travel is considered commercial then travel should be contracted for on a fixed price basis.

If you have a contract that has fixed priced items and cost reimbursable items then you have a mixed contract type (FP&M?). Doesn't sound right.

Maybe you can chalk this up to naivete from me being new to the contracting workforce (5 yrs) but why would any steward of taxpayer funds be willing to price "estimated" travel on a FFP basis? The bottom line as I see it, is that pricing the unknown and estimated travel as FFP will more often than not result in a loss to the Government.

Also - what's wrong with having a mixed contract type? If it accomplishes the necessary tasks, with minimal risk to the Gov't, and is not explicitly prohibited, then it's appropriate - isn't it? Keep in mind, the only item I want to make reimbursable is travel - nothing else.

Please note: The obvious answer of "your program office needs to more clearly and definitively define their travel requirements" (which I myself would be tempted to respond to this question with - and I'm surprised I haven't rec'd yet) won't help in this situation.

I truly appreciate the continued responses and dialogue concerning this issue.

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I posted a message to this yesterday and I messed up saving it, but this is what I pretty much said:

As your lawyers to show some evidence or case history on their position. If you look at the thousands of contracts and solicitations on FEDBIZOPPS and the other sites, nearly every professional service and technical assistance contract and/or solicitation has cost reimbursable CLIN(s). If those are wrong, then why are ONLY your legal folks up on that?

Second, if you require that contractors propose travel cost for a whole year or multiple years, you will end up with contractors quoting the highest costs, at the worst travel days and times, plus adding a contingency factor to those costs. It becomes a gamble; will the contractor win or lose? And the contractors control the odds by how much they propose. Does the Government really want to become a travel cost casino?

Ask the attorneys to submit to the same rules. Ask them to propose their travel budget for the next 1-5 years and if they are wrong on the low side, they have to pay the extra costs out of pocket. Of course if their proposals are way high, the Goverment will come after them for the excess profits. If they are not willing to play that game, then why should we expect contractors to do so?

One thing that many offices fail to remember is that attorneys are advisors, not Contracting Officers. If they provide silly and erroneous advice, then we should thank them for their time and go do the right thing anyway. That is what senior Contracting Officers, Supervisors and ultimately the HCA is for, making the decisions that attorneys never face. I would get my duckies in a row, take that evidence and findings to my supervisor and recommend that the Legal office's advice be disregarded.

Lastly, if Legal is so dead set against a fixed price contract with reimburseable CLINS, then simply set your contract up with a travel CLIN under the following terms:

FAR 16.206 Fixed-ceiling-price contracts with retroactive price redetermination.

16.206-1 Description.

A fixed-ceiling-price contract with retroactive price redetermination provides for?

(a) A fixed ceiling price; and

(B) Retroactive price redetermination within the ceiling after completion of the contract.

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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?

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Nothing really convincing has been put forward to defeat the lawyer's position - other than a lot of inertia. The reference to 16.206-1 is clearly limited to research and development contracts less than $100,000.

It is also wrong to think that proposing/negotiating travel on a fixed price basis will likely end up costing more.

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Guest carl r culham

Some thoughts -

I think Don has complicated the matter by discussing FAR 12 clauses since this is a FSS order unless the FAR Part 12 clauses are in the parent contract. C-FSS-370 is your reference.

Clearly your legal counsel is being hardnosed as including one order line item in the order that is paid on a basis of actual costs does not make the whole of the order a "Cost Reimbursement" order. So what happens if you issue the order even if legal states it is not legally sufficient? Remember you are the CO and the legal counsel is simply that, legal counsel.

How about this 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.

Stupid suggestion? Yes about as stupid as the legal counsel advice to you.

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I think you are wrong.

Travel is open market and is not covered by FAR Part 8.

The logic is stunningly simple:

Commercial items must be Fixed Price.

Travel is Commercial.

Therefore, Travel must be Fixed Price.

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I think you are wrong.

Travel is open market and is not covered by FAR Part 8.

The logic is stunningly simple:

Commercial items must be Fixed Price.

Travel is Commercial.

Therefore, Travel must be Fixed Price.

Whynot,

"It is also wrong to think that proposing/negotiating travel on a fixed price basis will likely end up costing more. "

Perhaps it is wrong to state the above as a blanket statement, I grant you that. However, in this office, historical record has shown, over several contracts, that money has been lost due to travel previously being priced FFP.

Whynot,

Can you please use your stunningly simple logic to address C-FSS-370 where it is stated that travel costs are reimbursable or can be priced as a fixed item? I see no "shall" in that clause.

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The lawyer says the clause is descriptive (nonrestrictive).

Stunning logic (part 2)

Statute (commercial acquisition) trumps regulation.

Here is another position.

Travel is ODC.

From GSA website.

Other Direct Costs

Other Direct Costs (ODCs) are charges in direct support of a service. They are commercial items. To the extent possible, all anticipated ODCs associated with performance and within the scope of the GSA Schedule contract should be offered and have an established contract price. Other Direct Costs must not be the primary purpose of the task order.

Travel is Open Market.

From GSA website.

Open Market Items

The Federal Acquisition Regulation (FAR) has been amended to incorporate policies that address the handling of open market items.

Note: Open market items are also known as incidental items, noncontract items, non-Schedule items, and items not on a GSA Schedule contract.

In accordance with FAR 8.402(f), for administrative convenience, an ordering activity contracting officer may add items not on the GSA Schedule (Multiple Award Schedule) contract?i.e., open market items?to a GSA Schedule Blanket Purchase Agreement (BPA) or an individual task or delivery order only if?

All applicable acquisition regulations pertaining to the purchase of the items not on the GSA Schedule contract have been followed (e.g., publicizing (FAR Part 5), competition requirements (FAR Part 6), acquisition of commercial items (FAR Part 12), contracting methods (FAR Parts 13, 14, and 15), and small business programs (FAR Part 19));

The ordering activity contracting officer has determined the prices for the items not on the GSA Schedule contract are fair and reasonable;

The items are clearly labeled on the order as items not on the GSA Schedule contract; and

All clauses applicable to items not on the GSA Schedule contract are included in the order.

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Whynot,

So you are in agreement with the lawyer that you cannot reimburse travel costs under a commercial contract? If so, then you are wrong, too.

Carl,

The premise of the lawyer's argument is that you cannot reimburse travel costs under a commercial contract. Part 12 is relevant because it disproves that premise. The lawyer needs to come up with a better argument to support his (or her) position.

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The logic is stunningly simple:

Commercial items must be Fixed Price.

Travel is Commercial.

Therefore, Travel must be Fixed Price.

Really? Commercial items must be fixed-price? What do you make of FAR 52.212-4, Alt. I?

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The Federal Acquisition Regulation (FAR) has been amended to incorporate policies that address the handling of open market items.

Note: Open market items are also known as incidental items, noncontract items, non-Schedule items, and items not on a GSA Schedule contract.

In accordance with FAR 8.402(f), for administrative convenience, an ordering activity contracting officer may add items not on the GSA Schedule (Multiple Award Schedule) contract?i.e., open market items?to a GSA Schedule Blanket Purchase Agreement (BPA) or an individual task or delivery order only if?

All applicable acquisition regulations pertaining to the purchase of the items not on the GSA Schedule contract have been followed (e.g., publicizing (FAR Part 5), competition requirements (FAR Part 6), acquisition of commercial items (FAR Part 12), contracting methods (FAR Parts 13, 14, and 15), and small business programs (FAR Part 19));

The ordering activity contracting officer has determined the prices for the items not on the GSA Schedule contract are fair and reasonable;

The items are clearly labeled on the order as items not on the GSA Schedule contract; and

All clauses applicable to items not on the GSA Schedule contract are included in the order.

This is exactly what you do with the order - add travel costs on a reimbursable basis on a separate open market CLIN.

The lawyer really has things messed up and doesn't understand GSA Schedules. The OP is simply following the GSA Schedule contract ordering provision. The order ends up with one of more CLINS citing items ordered under the GSA Schedule contract. It also contains an open market CLIN related to travel. To the extent that any other clauses are needed with that CLIN, they are included as well.

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DON - see FAR 12.207. I agree that T&M can now be used for commercial services under certain restrictions. We seem to be mixing and matching features of various contract types to come up with a contract variant that is not described in the regulations - (FP & M).

I would assume that if you are using 12.207 to support travel reimbursable under T&M then in our hybrid mixed contract construct that the T&M restrictions would need to come along with it - can't cherry pick.

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Whynot,

Do you have any case law regarding your position? I have authored, signed and seen literally thousands of contract actions that were fixed price with reimbursable travel CLINs. If you look at FEDBIZOPPS right now you will see solicitations with that same CLIN structure. What you are saying in effect is that you are right while thousands of others are wrong.

Your position seems to say "let's shoot ourselves in the foot with a plainly dumb interpretation of the law". The contractor AND the Government cannot accurately forecast travel costs, yet you insist that both we and the contractor do exactly that. That position also intidicates that the contractor should propose and the Government analyse with knowledge the same unknowable information. I disagree with that, and so does every office and organization I have worked with.

If other offices do not think that way, I am very, very pleased I have not worked with those organizations as they are a sign that our Government is intent on suicide by stupidity.

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Your position is unconvincing.

Find me case law that ever relied on the position - this is the way it is done because this is way it always has been done.

I am reminded of an example provided to me by a teacher in a business class.

A company manufactured white walled tires. When they shipped them to stores many of the white walls often got marked up and scratched in transit and the stores ended sending them back. The company wanted a way to reduce this costly damage. Their experts and outside consultants came up with various ways to protect the tires during shipping ? all at a cost. A newbie came up with the answer ? stop making white walled tires, nobody is buying them anymore. The company switched to manufacturing black wall tires.

Your premise that travel can not be fixed price, and if you do, it will cost you more is not a given. Competition, the enormous reduction in administration costs to industry and government might very well result in a windfall savings to everyone. At the very least it will be compliant with law.

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Carl had a very good post on this topic in another related thread here:

http://www.wifcon.com/discussion/index.php?showtopic=228

Just thought I would add info from GSA-FSS regarding MOBIS orders. Providing as I believe it is appropriate to use as reference the requirements GSA regarding ordering under FSS as well as the specific FSS contract language. Using the MOBIS as example only with the thought that 2589 should be referring to their specific GSA contract on the matter as well the appropriate ordering instructions an agency must use for whatever GSA-FSS is being used.

Specifics from MOBIS contract clause C-FSS-370

(B ) Travel: The Contractor may be required to travel in performance of orders issued under this

contract. Allowable travel and per diem charges are governed by Pub .L. 99-234 and FAR Part 31, and

are reimbursable by the ordering agency or can be priced as a fixed price item on orders placed under

the Multiple Award Schedule. Travel in performance of a task order will only be reimbursable to the

extent authorized by the ordering agency. The Industrial Funding Fee does NOT apply to travel and per

diem charges.

And

From the MOBIS Ordering FAQ found on GSA's website. http://www.gsa.gov/Portal/gsa/ep/contentVi...GSA_OVERVIEW#11

14. How do I handle Other Direct Costs (ODC) at the Task Order level?

For administrative convenience, non-contract items may be added to the BPA or the individual task order if the items are clearly labeled as such, applicable acquisition regulations have been followed, and price reasonableness has been determined for the items. The MOBIS solicitation offers specific instruction as relates to transportation and per diem costs billed by the contractor: Costs incurred for transportation and per diem (lodging, meals and incidental expenses) will be billed in accordance with the regulatory implementation of Public Law 99-234, FAR 31.205-46 Travel Costs, and the contractor's cost accounting system. These costs are directly reimbursable by the ordering agency. (a ) The contractor shall notify the ordering agency, in writing, of the requirement for reimbursement of transportation and per diem expenses, prior to acceptance of the order. This notification shall include a "not to exceed" estimate of these proposed costs. Any applicable indirect costs associated with the transportation and per diem expenses will be charged at a rate negotiated prior to the using agency's delivery order. Contractors shall be reimbursed only for incurred costs at or below the "not to exceed." (b ) Costs for transportation, lodging, meals, and incidental expenses incurred by contractor personnel on official company business are allowable subject to the limitations contained in FAR 31.205-46, Travel Costs. (c ) Reimbursements for costs that are not specified in this solicitation, or in any contract or task order resulting from this solicitation, are not allowed. It is GSA policy NOT to allow a charge of profit or fee on reimbursable items. Travel in performance of a task order will only be reimbursable to the extent authorized by the ordering agency.

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Whynot,

Unconvincing? You can lead a horse to water but you cannot make him drink. Methinks that applies in this case.

I cannot find case law for something that HAS NOT been found illegal. Proving a negative is impossible, which is why I asked for you to show a case where a reimbursable CLIN was found to be impermissible.

Here is something that I DID find:

"RFP price schedule included a contract line item number (CLIN) for each of the specified 36 labor categories required under the contract along with an estimate of the total hours of work (and overtime) for each CLIN. The offeror was to propose a fixed hourly burdened labor rate for each CLIN, which was to include direct labor cost, as well as fringe benefits, overhead, general and administrative (G&A) expenses, and "all other charges against the contract (unless otherwise [provided for])." The RFP required that the contractor furnish the necessary tools and equipment, including designated computer equipment and software, necessary to perform the contract statement of work (SOW). The RFP also contained for each contract year 3 CLINs for direct costs not included in the labor rates: (1) materials, (2) travel, and (3) per diem, and designated "[n]ot to exceed" amounts for each CLIN of (1) $200,000, (2) $75,000, and (3) $75,000, respectively.[1] In the proposal instructions, these designated amounts were reaffirmed as those to be utilized in determining the total evaluated price, except that the costs for travel and per diem were added together and set forth as $150,000 in "other direct costs." The RFP also provided the following instructions to offerors for submitting cost proposals: ..."

Trandes Corporation File: B-256975.3 Date: October 25, 1994 *REDACTED VERSION[*] http://redbook.gao.gov/11/fl0051197.php

If the GAO looked at and wrote down information about the reimbursable CLINS, do you think they might have said "Whoa, they can't do that!" if adding a reimbursable CLIN was inappropriate. If you read that case, you will see that did not happen.

A second case is exactly the same, the GAO noticed the reimbursable CLINs, wrote about them, yet did not issue a ruling that they were illegal:

"The RFP, issued on May 18, 1994, contemplated the award of a requirements contract with a 3-year base ordering period and two 1-year options. The majority of the RFP contract line item numbers (CLIN) called for fixed prices, a few items (e.g., travel) were cost reimbursable, and certain site specific requirements (e.g., installation and ancillary equipment) were to be negotiated after award. For these latter items, such as CLIN 24 (installation), and CLIN 25 (ancillary equipment), offerors were to propose pre-priced conversion factors (based upon the offeror's direct and indirect costs, such as support labor hours, rates, factors, overheads, and profit) for application to the direct material, base labor hours, and ancillary equipment required for site specific installations, to be determined and negotiated after award on an individual delivery order basis."

L.K. Comstock, Inc. and Liebert Federal Systems, Inc. File: B-261711.5; B-261711.6 Date: December 14, 1995 * REDACTED DECISION http://redbook.gao.gov/11/fl0050207.php

And on another note, I could not even begin to make sense of your last paragraph. Perhaps you say that even if we do lose a ton of money, at least we are compliant with the law. That my friend is suicide by stupidity.

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I am interested in Vbus' post. Nothing in Pub. L. 99-234 addresses contract type. Makes sense under T&M.

Is there anything in the redbook after the Federal Streamlining Act was implemented?

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