Jump to content
The Wifcon Forums and Blogs

Recommended Posts

Under a CPFF term type contract, can the labor mix may vary during actual performance since FAR Subpart 16.306(d)(4) states that the contractor is obligated by the contract to provide a specific LOE within a definite time period? If so, what is the difference between the terms "Level of Effort" and "Labor Mix"?

Link to comment
Share on other sites

You need to read FAR 16.306(d) closely. It says:

d) Completion and term forms. A cost-plus-fixed-fee contract may take one of two basic forms?completion or term.

(1) The completion form describes the scope of work by stating a definite goal or target and specifying an end product. This form of contract normally requires the contractor to complete and deliver the specified end product (e.g., a final report of research accomplishing the goal or target) within the estimated cost, if possible, as a condition for payment of the entire fixed fee. However, in the event the work cannot be completed within the estimated cost, the Government may require more effort without increase in fee, provided the Government increases the estimated cost.

(2) The term form describes the scope of work in general terms and obligates the contractor to devote a specified level of effort for a stated time period. Under this form, if the performance is considered satisfactory by the Government, the fixed fee is payable at the expiration of the agreed-upon period, upon contractor statement that the level of effort specified in the contract has been expended in performing the contract work. Renewal for further periods of performance is a new acquisition that involves new cost and fee arrangements.

(3) Because of the differences in obligation assumed by the contractor, the completion form is preferred over the term form whenever the work, or specific milestones for the work, can be defined well enough to permit development of estimates within which the contractor can be expected to complete the work.

(4) The term form shall not be used unless the contractor is obligated by the contract to provide a specific level of effort within a definite time period

With the completion form, the contractor is expected to produce an end producted within the estimated cost. The actual costs can vary from the estimate. In fact, the contractor could complete the work using only a portion of the orginal estimate.

However the term form requires the contractor to devote the specified level of effort for a stated time period. The contractor is required to utilize the agreed upon level of effort.

So to answer your question, it depends on the form of CPFF. If it's a completion form, yes, the labor mix can very from the estimate during contract performance. If it's a term type, the answer is no. The contractor must provide the agreed upon level of effort.

Link to comment
Share on other sites

If it's a completion form, yes, the labor mix can very from the estimate during contract performance. If it's a term type, the answer is no. The contractor must provide the agreed upon level of effort.

formerfed,

Some term type contarcts allow for the labor mix to vary and some don't. For example, a contract may require 20,000 staff-hours as the required level of effort, and may have an estimated labor mix (e.g. 4000 staff-hrs Sr Eng; 4000 staff-hrs Jr Eng; etc) but allow for the number of hours to vary among the specified labor categories as the demands of the work require. Other term type contracts may have a specified level of effort and labor mix under which the labor mix is not allowed to vary.

One must read the contract to see if variations in the labor mix are allowed. You can't determine the answer just be seeing it's a term-type.

Link to comment
Share on other sites

Guest Vern Edwards

Question: "Under a CPFF term type contract, can the labor mix may vary during actual performance... ?"

Yes.

FAR does not say how to stipulate a level of effort. It is ordinarily expressed as a number of labor hours, but it can be expressed in terms of labor days, labor weeks, labor months, labor years, or full time equivalents.

However the parties stipulate the level of effort, the unit of measure must be defined in the contract. If the level of effort is expressed in terms of labor hours, then the parties should specify the type of labor, the proper measure of an hour and fractions thereof, and which hours count and which do not.

If the work will employ more than one labor category, then the parties should either stipulate a level of effort for each or otherwise specify a method of counting hours that takes the differences into account. In so doing, the parties will express their agreement on a "labor mix."

It is likely that the contractor will not spend the precise number of hours stipulated in the contract. The parties should decide how to handle that possibility. They might decide to make no adjustment in fee (or price) if the actual number of labor hours comes to within +/- 5 percent of the stipulated level of effort, or they might make some other arrangement.

Link to comment
Share on other sites

Guest Vern Edwards
Vern,

You mentioned "full time equivalents" in your Post no. 28. Please elaborate.

Thanks

Ed

Hi Ed,

It is a measure which converts hours worked by all employees--part time and full time--into a number of full time "equivalents." GAO defines it thusly in its Glossary of Terms Used in the Federal Budget Process (September 2005), GAO-05-734SP:

Reflects the total number of regular straight-time hours (i.e., not including overtime or holiday hours) worked by employees divided by the number of compensable hours applicable to each fiscal year. Annual leave, sick leave, and compensatory time off and other approved leave categories are considered to be "hours worked" for purposes of defining FTE employment.

This measure would be used when the contractor must maintain a certain workforce during a period. If the level of effort is stated in terms of a number of full time equivalents within a time period, then the contractor can count both full time and part time employees toward its obligation. So you could say that the contractor must carry out certain work during a one-year period delivering 30 FTEs. The obligation is met if total straight-time hours worked by all employees, full time and part time, divided by the agreed upon number of compensable hours in the period (say, 2,080) equal 30. OMB uses full time equivalents to limit federal employment.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...