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Are rates billed to the government public?

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Hello all, Are the rates the government pays a contractor as part of an awarded contract public?
E.g. If a top consulting firm wins an IDIQ million dollar contract with a federal agency, would the rates the consulting firm bills the agency be public? Regardless of whether or not they use a gsa schedule?
Thanks

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17 hours ago, GovContract said:
Are the rates the government pays a contractor as part of an awarded contract public?

The question is too imprecise to answer.

  • Direct labor rates and indirect rates used to establish firm, fixed-price contract values?
  • T&M Hourly Billing Rates?
  • Indirect rates used to establish estimated costs/target costs?
  • Provisional billing rates used for monthly vouchers?
  • Final billing rates established after audit?

Yes, no, maybe so. What is the question?

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Agencies have treated T&M labor rates as exempt from disclosure under FOIA on the basis of exception (b)(4):

Quote

Information excised is commercial or financial information received from outside the Government and is likely to cause substantial harm to the competitive position of the source providing the information.

See http://www.navair.navy.mil/nawcwd/command/counsel/ReadingRoom/N68936-05-D-0040.pdf

See also https://www.justice.gov/oip/blog/foia-update-foia-counselor-unit-prices-under-exemption-4

I would not release any T&M labor rates without consultation with my superiors and advice of counsel.

 

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Note that the test is whether release of the rates would be likely to cause substantial competitive harm to the contractor.  Therefore, there is not a flat prohibition against the release of such data.  For example, if the data is stale or the company is no longer in existence, the data probably is releasable.

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One thing that has always baffled me is the ambiguity in FAR Section 15.503(a)(1) vis-à-vis FOIA Exemption 4 (Trade Secrets):

Quote

(1) Within 3 days after the date of contract award, the contracting officer shall provide written notification to each offeror whose proposal was in the competitive range but was not selected for award (10 U.S.C. 2305(b)(5) and 41 U.S.C. 3704) or had not been previously notified under paragraph (a) of this section. The notice shall include—
...
(iv) The items, quantities, and any stated unit prices of each award.  If the number of items or other factors makes listing any stated unit prices impracticable at that time, only the total contract price need be furnished in the notice.  The items, quantities, and any stated unit prices of each award shall be made publicly available, upon request;

The courts have consistently applied the "National Parks" test under Exemption 4 of the FOIA to determine if information is releasable to the public:

Quote

[C]ommercial or financial matter is “confidential” for purposes of the exemption if disclosure of the information is likely to have - either of the following effects: (1) to impair the Government’s  ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.  National Parts & Conservation Assn. v. Morton, 498 F.2d 765 (D.C. Cir. 1974).

Most Contractors claim Exemption 4 to prohibit releasing their unit prices, including labor rates.  There have been a few cases regarding this conflict, namely McDonnell Douglas Corp. v. NASA, 180 F.3d 303 (D.C. Cir. 1999), then later Essex Electro Eng'rs, Inc. v. U.S. Secretary of the Army, No. 09-372 (D.D.C. Feb. 26, 2010).  In McDonnell Douglas, a public interest group requested labor rates on McDonnell Douglas' contract for satellites.  They successfully convinced the D.C. Court of Appeals that release of their labor rates would cause competitive harm, but there was no analysis in that opinion to quantify the harm.  The Court accepted the argument on its face.  Similarly, the U.S. District court in Essex held "[a]ctual harm need not be demonstrated" to prevent the release of unit prices under Exemption 4.

Reading FAR Section 15.503 further, paragraph (e) does limit release of some information during debriefings, including anything "exempt from release under the Freedom of Information Act (5 U.S.C. 552)."  However, when reading the regulations as a whole makes me question why  unit prices were included within paragraph (a)(1).  Based upon the two cases I mentioned and paragraph (e), the only time it would be allowable to release unit prices would be if the Contractor agreed to it, and I think we will be hard-pressed to find many occurrences of a Contractor willing to release their pricing.   

As an interesting side note, going back to the original 1983 version of the FAR, the section in question used to be FAR Section 15.1002.  In this version, there was no requirement to make public available items, quantities, and any stated unit prices after award.  The change did not come until the 1997 Rewrite, though I could not find the CAAC discussion related to the change.

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I think there is inconsistent use of the term "unit prices".  I simply don't see labor or overhead rates as unit prices, so there is no confusion in my own mind.  To me, a unit price is a figure in column 23 of the SF-1449 (or other column on other forms).  

EXAMPLES:

FFP contract for 12 months at $1,000/month.  The $1,000 figure is releasable in a debriefing, and may be released under FOIA if already released in a debriefing.  The labor or overhead rates the contractor used to develop the unit price (if included in the contract) might or might not be releasable under FOIA, depending on whether the contractor makes that case.

T&M contract for 6 repair jobs at $1,000/each.  The $1,000 figure is releasable in a debriefing, as is the contract's ceiling price, and may be released under FOIA if already released in a debriefing.  The fully-burdened labor rates might or might not be releasable, and the labor and overhead rates the contractor used to develop the fully-burdened rates (if included in the contract) might or might not be releasable under FOIA, depending on whether the contractor makes that case.

CPFF contract for six satellites at $1,000,000/each estimated cost plus $100,000/each fixed fee.  The $1,000,000 and $100,000 figures are releasable in a debriefing, and may be released under FOIA if already released in a debriefing.  The contractor's rates (if included in the contract) might or might not be releasable under FOIA, depending on whether the contractor makes that case.

The contractor has an affirmative duty to protect its privileged information -- that means when the contractor learns that the Government proposes or intends to release something that the contractor doesn't want released, it needs to make a case to stop the release, either to the agency or a U. S. District Court.

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27 minutes ago, ji20874 said:

FFP contract for 12 months at $1,000/month.  The $1,000 figure is releasable in a debriefing, and may be released under FOIA if already released in a debriefing.  The labor or overhead rates the contractor used to develop the unit price (if included in the contract) might or might not be releasable under FOIA, depending on whether the contractor makes that case.

What if this figure is a trade secret? Is it still "releasable"?

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Don,

In my example of a FFP contract for 12 months at $1,000/month, where the $1,000 unit price figure is in column 23 of the SF-1449, the figure is not a trade secret.  A company's selling price can only be a trade secret if the evidence shows a number of things, including that the company made consistent efforts to hide its prices from the public (such as through confidentiality agreements with buyers and appropriate markings on documents) and that the prices cannot be easily discerned by others.  If it is public knowledge* that the requirement was for 12 MO and if it is public knowledge** that the bottom-line price was $12,000, then the $1,000 unit price is easily discernible and cannot be protected as a trade secret.

* such as through synopses or postings of solicitations, oral solicitations to a number of potential offerors, or debriefings to unsuccessful offerors.

** such as through synopses of contract awards, FPDS-NG postings, or debriefings to unsuccessful offerors.

 

Here's a counter question that I am hopeful someone can answer:  Why do the debriefing instructions in FAR 15.506(d)(2) call for release of "[t]he overall evaluated cost or price (including unit prices)" while the text in the solicitation provision at FAR 52.215-1(f)(11)(ii) only calls for release of "[t]he overall evaluated cost or price" (with no mention of unit prices)?  The provision for commercial item acquisitions at FAR 52.212-1(l) also calls only for release of "[t]he overall evaluated cost or price" with no mention of unit prices. Maybe we shouldn't release unit prices at all, because surely the contract clause trumps the general FAR text?

 

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2 hours ago, ji20874 said:

If it is public knowledge* that the requirement was for 12 MO and if it is public knowledge** that the bottom-line price was $12,000, then the $1,000 unit price is easily discernible and cannot be protected as a trade secret.

* such as through synopses or postings of solicitations, oral solicitations to a number of potential offerors, or debriefings to unsuccessful offerors.

** such as through synopses of contract awards, FPDS-NG postings, or debriefings to unsuccessful offerors.

I agree that when the unit price can be calculated by simply dividing a known unit quantity by the total contract price, then the unit price should not be treated as confidential or a trade secret. 

But, I don't agree with this example:

17 hours ago, ji20874 said:

CPFF contract for six satellites at $1,000,000/each estimated cost plus $100,000/each fixed fee.  The $1,000,000 and $100,000 figures are releasable in a debriefing, and may be released under FOIA if already released in a debriefing.

In that case, (if I'm reading the example right) the total contract price is $6.6M.  However, is not immediately clear to an outside party how much of that total is attributable to the "cost" portion and how much to the "fee" portion.  The amount of fee a contractor negotiates/charges for any given work could be a trade secret and could certainly cause economic harm should it be divulged to a competitor.

The FAR states that the debriefing shall include "the overall evaluated cost or price (including unit prices)..." FAR 15.506 (d)(2). But, that section also states, the debriefing shall not reveal any information exempt from release under FOIA, including "Trade secrets" and "Commercial and financial information that is privileged or confidential, including cost breakdowns, profit, indirect cost rates, and similar information..."  FAR 15.506(e).

Read in context with each other, I conclude that unit pricing should be included in a debriefing unless it would be considered a trade secret or confidential commercial or financial information. Unless the unit pricing is immediately apparent (the first example here) or otherwise publicly available (on the contractor's website or marketing materials for example) a contracting officer should presume that unit pricing is confidential commercial or financial information and should not include it in a debriefing.  (Of course, if you really want to include such info in the debriefing, you could contact the contractor and ask them whether they object to the disclosure of the unit pricing.  But, I don't think that is necessary, and the contractor is unlikely to consent anyway.)

Finally, whether or not unit pricing has been released in a debriefing is not controlling when determining whether it should be released in response to a FOIA request. An accidental or improper release of unit pricing to one party in a debriefing does not absolve the Government of its responsibility to guard against future public release of confidential contractor information.

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I don't think it's safe to assume that a unit price is or is not exempt from release under FOIA. According to the Department of Justice FOIA Guide:

Quote

...agencies are best advised both to notify all submitters of unit price information in order to obtain any objections to disclosure and to then conduct a thorough competitive harm analysis on a case-by-case basis, thereby ensuring that they always have a sufficient administrative record on which to base and support their decisions.

My advice would be to put a notice in the solicitation that the Government intends to disclose the successful offeror's unit prices in the postaward debriefing. If the offeror objects to the intended disclosure, please notify us and provide rationale. This way, we can get the FOIA issue out of the way prior to the postaward debriefing.

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16 minutes ago, Don Mansfield said:

I don't think it's safe to assume that a unit price is or is not exempt from release under FOIA. According to the Department of Justice FOIA Guide:

My advice would be to put a notice in the solicitation that the Government intends to disclose the successful offeror's unit prices in the postaward debriefing. If the offeror objects to the intended disclosure, please notify us and provide rationale. This way, we can get the FOIA issue out of the way prior to the postaward debriefing.

I agree that in the context of a FOIA request you should not assume a unit price is, or is not, exempt.  Redacting otherwise releasable information can lead to a FOIA law suit.  That is why the FOIA regs provide for the submitter notice process where the third party gets to assert whether or not the info is trade secret/confidential business information. 

But in the context of a debriefing, there is no required submitter notice process.  Nor do I think such a requirement should be added to the debriefing process.

I've seen the "notice of intent to disclose unit pricing" in some solicitations.  However, I would not want to be in the position of having to argue, without any affirmative statement by the contractor, that the contractor waived its statutory rights under the Trade Secrets Act.  I'm not saying it wouldn't work, but until I see a see a federal court decision upholding such an implied waiver, you are risking potential financial liability.

If you release unit pricing that is protect by the TSA, you have violated a statute with injuntive and monetary remedies (however unlikely it may be that they would be assessed).

If you withhold unit pricing that turns out not to be confidential/trade secret, there is a much less risk/dowside.  The adequacy of a debriefing is not a protestable issue.

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Lionel,

So are you saying that, absent an affirmative statement by the contractor, the Government should not release unit pricing in a debriefing? 

What if the solicitation contained more than just a notice? For example, "By submission of its offer, the offeror hereby consents to the release of its unit prices in a postaward debriefing. If the offeror objects to granting such consent, they shall notify the contracting officer..." or something like that. Would that scratch your "affirmative statement by the contractor" itch?

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Bid openings (Part 14 and almost everywhere else in state and local governments) for unclassified acquisitions are conducted in public and provide for oral reading of the line item prices, recording the unit and line item prices and public inspection of the Abstracts. Where there is too much detail to go through in a reasonable amount of time, the FAR allows just the line item prices and totals to be read but I believe that the unit prices are still recorded, if memory serves me.

However, in unclassified negotiated acquisitions, it seems like y'all make such a big deal out of going to great lengths to conjure up classifying line item prices as trade secrets, protect and not release line item prices.  I know that you are discussing "unit prices" here but its simply a matter of dividing the line item prices by the estimated quantity to determine the unit price.  Are estimated quantities trade secrets?  No.

Those prices are actually  part of the unclssified contract, itself, whether awarded under Parts 12, 13, 14, 15, etc. aren't they?. 

So what's the real difference between revealing bid prices and revealing proposal prices? 

(See FAR 14.403 Recording of Bids.) 

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13 hours ago, Don Mansfield said:

Lionel,

So are you saying that, absent an affirmative statement by the contractor, the Government should not release unit pricing in a debriefing? 

What if the solicitation contained more than just a notice? For example, "By submission of its offer, the offeror hereby consents to the release of its unit prices in a postaward debriefing. If the offeror objects to granting such consent, they shall notify the contracting officer..." or something like that. Would that scratch your "affirmative statement by the contractor" itch?

I'm not saying its prohibited, and I do not know what a court would decide.  But, that would not be my practice.  I just don't see the benefit and only potential downside.  What if the contractor does object and the contracting specialist misfiles the letter, or the contracting officer forgets, or someone else does the debriefing?  What if the contracting officer usually uses such a statement in the solicitation but the statement mistakenly gets deleted without his/her knowledge?  If you really want to include line item/unit pricing in the debriefing, why try to rely on some type of an implied waiver that a court may or may not recognize?  Simply and directly ask the awardee whether its pricing is confidential and/or a trade secret?

12 hours ago, joel hoffman said:

Bid openings (Part 14 and almost everywhere else in state and local governments) for unclassified acquisitions are conducted in public and provide for oral reading of the line item prices, recording the unit and line item prices and public inspection of the Abstracts.

...

 

So what's the real difference between revealing bid prices and revealing proposal prices?

The difference in treatment is in the language of the regulations.  Part 14 requires the public reading of items and prices.  Conversely, Part 15 debriefing procedures prohibit release of information exempt from disclosure under FOIA, including at times line item pricing.  Whether that makes sense from a policy perspective, is a different question.

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But if the same procurement could be conducted as an IFB (although likely not), the prices would be publicly available. I think that it is mainly based upon ones perspective.  If you've never been involved in anything other than methods conducted under the cloak of secrecy, you might think everything was a "trade secret". 

Why can't the identities of all proposers and their prices be revealed in a debriefing and better yet - to the public - after the award? That is routinely reported in trade publications for public construction contracts.

Those that participate in open processes, including the low bidder,  have long accepted the fact that their line item prices will be available for review..

I wonder, how services and supplies were procured years ago before negotiated acquisition.

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We can thank the FAR Councils for this confusion.  Post-award debriefings are required by statute.  For DoD, the applicable statute is 10 U.S.C. 2305.  Here is what it says about the content of post-award debriefings:

 The debriefing shall include, at a minimum—

(i)
the agency’s evaluation of the significant weak or deficient factors in the offeror’s offer;
(ii)
the overall evaluated cost and technical rating of the offer of the contractor awarded the contract and the overall evaluated cost and technical rating of the offer of the debriefed offeror;
(iii)
the overall ranking of all offers;
(iv)
a summary of the rationale for the award;
(v)
in the case of a proposal that includes a commercial item that is an end item under the contract, the make and model of the item being provided in accordance with the offer of the contractor awarded the contract; and
(vi)
reasonable responses to relevant questions posed by the debriefed offeror as to whether source selection procedures set forth in the solicitation, applicable regulations, and other applicable authorities were followed by the agency.
(C)
The debriefing may not include point-by-point comparisons of the debriefed offeror’s offer with other offers and may not disclose any information that is exempt from disclosure under section 552(b) of title 5.
 
Note that the statute does not contain any discussion of unit prices.  Apparently, that is something the Council's came up with to needlessly confuse what is to be included in the debriefing and to create a potential internal inconsistency in the regulation.  Because exemption 4 to FOIA is a statutory requirement and is coextensive with 18 U.S.C. 1905, it seems like the best course of action in regard to unit prices is not to disclose them in a debriefing unless there is a clear understanding that they do not constitute information protected from release by exemption 4.

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5 hours ago, Retreadfed said:

We can thank the FAR Councils for this confusion.  Post-award debriefings are required by statute.  For DoD, the applicable statute is 10 U.S.C. 2305.  Here is what it says about the content of post-award debriefings:

 The debriefing shall include, at a minimum—

(i)
the agency’s evaluation of the significant weak or deficient factors in the offeror’s offer;
(ii)
the overall evaluated cost and technical rating of the offer of the contractor awarded the contract and the overall evaluated cost and technical rating of the offer of the debriefed offeror;
(iii)
the overall ranking of all offers;
(iv)
a summary of the rationale for the award;
(v)
in the case of a proposal that includes a commercial item that is an end item under the contract, the make and model of the item being provided in accordance with the offer of the contractor awarded the contract; and
(vi)
reasonable responses to relevant questions posed by the debriefed offeror as to whether source selection procedures set forth in the solicitation, applicable regulations, and other applicable authorities were followed by the agency.
(C)
The debriefing may not include point-by-point comparisons of the debriefed offeror’s offer with other offers and may not disclose any information that is exempt from disclosure under section 552(b) of title 5.
 
Note that the statute does not contain any discussion of unit prices.  Apparently, that is something the Council's came up with to needlessly confuse what is to be included in the debriefing and to create a potential internal inconsistency in the regulation.  Because exemption 4 to FOIA is a statutory requirement and is coextensive with 18 U.S.C. 1905, it seems like the best course of action in regard to unit prices is not to disclose them in a debriefing unless there is a clear understanding that they do not constitute information protected from release by exemption 4.

But why cant the information I discussed above be revealed to the public?

For that matter, why is the debriefing more restrictive than what would be in a bid abstract? The statute discusses the MINIMUM  items for inclusion in a debriefing.   

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