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FFP contracts required to bill as T&M type

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10 hours ago, tj2015 said:

I just awarded a FFP contract for our Accounting service (large business, GSA OASIS Program)... My CLIN Unit was Monthly, the CLIN was included that says "hours are estimated and listed detailed labor categories and hours as below...."  If the contractor proposed 10 personnel monthly for certain hours, but they only provide 9 people and less hours than they proposed, Are we (government) still pay the proposed monthly price?  

The contractor is bound by the terms of the contract. Two questions for tj2015:

1. You say that the CLIN description said hours are "estimated," but does the contract say that the "estimated" hours must be provided?

2. You say that the contractor proposed 10 persons per month, but does the contract say that the contractor must provide 10 persons per month?

If the contract does require 10 persons per month, does it say how many hours each person must perform?

10 hours ago, tj2015 said:

Since the CLIN has detailed all estimated labor categories; hours; and price, the contractor should bill the government with a detailed breakdown invoice based on the actual hours worked. Am I correct? 

Does the contract say that the contractor's invoice shall (not should) include a detailed breakdown of the actual hours worked? 

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tj2015    0

Thank you ji20874.  firm-fixed-price is fixed unit price.  If the contractor did not provide the estimated hours and personnel, Government is still obligate to pay the estimated monthly fixed price?  So how shall we monitor this FFP service contract?

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tj2015    0
37 minutes ago, Vern Edwards said:

The contractor is bound by the terms of the contract. Two questions for tj2015:

1. You say that the CLIN description said hours are "estimated," but does the contract say that the "estimated" hours must be provided?

2. You say that the contractor proposed 10 persons per month, but does the contract say that the contractor must provide 10 persons per month?

If the contract does require 10 persons per month, does it say how many hours each person must perform?

Does the contract say that the contractor's invoice shall (not should) include a detailed breakdown of the actual hours worked? 

1. Based on our Performance Work Statement (PWS), the contractor proposed the estimated labors and hours and the CLIN description was built based on contractor's proposal.

2. No.  The contract does not say that the contract must provide 10 persons per month.

3.  In PWS, it required invoice shall include: Labor Categories / Hours Billed/ Rate

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ji20874    0

So, is your contract line item set up something like this?

(a) 0001 - (b) Accounting Services IAW PWS – (c) 12 – (d) MO - (e) $10,000 - (f) $120,000

(a) = Item

(b) = Supplies/Services

(c) = Quantity

(d) = Unit

(e) = Unit Price

(f) = Amount

 

 

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tj:

Your answer to my Question 1 does not tell me whether the contract states that the contractor must deliver the estimated hours. The CLIN description says "estimated," right? Not required? If it's only an estimate, then I would think the hours are not required. But a sound response to your inquiry would require a legal analysis of the entire contract, not just the CLIN descriptions.

Your answer to my Question 2 suggests that you cannot deny payment of the monthly rate because the contractor did not provide 10 persons per month, because you said the contract does not say that the contractor must provide 10 persons per month.

Your answer to my last question indicates that the contractor must provide the information that the PWS says it must provide. But, again, a sound response to your inquiry would have to be based on a legal analysis of the entire contract, not just the PWS.

 

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tj2015    0
20 minutes ago, ji20874 said:

So, is your contract line item set up something like this?

(a) 0001 - (b) Accounting Services IAW PWS – (c) 12 – (d) MO - (e) $10,000 - (f) $120,000

(a) = Item

(b) = Supplies/Services

(c) = Quantity

(d) = Unit

(e) = Unit Price

(f) = Amount

 

 

Yes.

in Supplies/Services, the description as follows:

 

0001 Accounting & Financial Operations Support Services

One (1) Base Year (Award Effective Date to 12 months), included Transit In (6 days). Detailed Personnel Position Titles; Hourly Rate; and Estimated

Labor hours are Included the following:

Base Year

SME Accountant II: $145.74/hrs. 90 hrs per mon. sub-total: $13,116.60

Sr. Accountant II: $121.13/hrs. 1,760 hrs per mon. sub-total: $213,188.80

Sr. Accountant I: $118.03/hrs. 1,760 per mon. Sub-total: $207,732.80

Accountant III: $109.62/hrs. 1,760 per mon. Sub-total: $192,931.20

Accountant II: $104.77/hrs. 1,760 per mon. Sub-total: $184,395.20

Accountant I: $93.29/hrs. 1,760 per mon. Sub-total: $164,190.40

Jr. Accountant II: $89.61/hrs. 1,760 per mon. Sub-total: $157,713.60

Total: $1,133,268.60

Any additional hours have to be approved by COR prior to work.

So I divided this total price by 12 (mon) as Unit Price (e) and amount (f) = $1,133.268.60.  Can I ask contractor to invoice government with a detailed breakdown as PWS required?

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here_2_help    0

I'm struggling to understand why a FFP contract with a  PWS would require a detailed invoice breakout as suggested by tj.

Either the contractor accomplishes the PWS objectives, or it does not. If it does accomplish the objectives, it should get paid whatever price the parties agreed upon--which appears to be a fixed price per month. If it does not, a cure notice should be sent. I'm struggling to understand why the quantity of hours the contractor incurred would matter.

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50 minutes ago, here_2_help said:

I'm struggling to understand why a FFP contract with a  PWS would require a detailed invoice breakout as suggested by tj.

@H2H:

The PWS concept is defunct. People call work statements "performance work statements" because they're told they must. Maybe some people think their SOWs  really are performance work statements. But in the entire history of government contracting there have been very few "real" performance work statements. PWS is a meaningless label.

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1 hour ago, tj2015 said:

Can I ask contractor to invoice government with a detailed breakdown as PWS required?

If the PWS in fact requires it, then yes. You can demand it.

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ji20874    0

tj,

So, using my format, is this what your order provides?

(a) 0001 - (b) Accounting & Financial Operations Support Services – (c) 12 – (d) MO - (e) $1,133,268.60 - (f) $13,599,223.00

(a) = Item

(b) = Supplies/Services

(c) = Quantity

(d) = Unit

(e) = Unit Price

(f) = Amount

 

Regarding the invoice, I agree with Vern -- if the order requires the data, the contractor has to provide it.  However, the actual hours data will be for your information only, and will not serve as a basis for payment -- the basis for payment is the FFP of $1,133,268.60 per month (provided the contractor rendered promised services and the Government accepted them).  It will not be necessary for the hours data to add up to $1,133,268.60 for any month.

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here_2_help    0
1 hour ago, Vern Edwards said:

@H2H:

The PWS concept is defunct. People call work statements "performance work statements" because they're told they must. Maybe some people think their SOWs  really are performance work statements. But in the entire history of government contracting there have been very few "real" performance work statements. PWS is a meaningless label.

Can we say that the Performance-Based Logistics (PBL) concept is similarly defunct? Please?

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tj2015    0
3 hours ago, Vern Edwards said:

tj:

Your answer to my Question 1 does not tell me whether the contract states that the contractor must deliver the estimated hours. The CLIN description says "estimated," right? Not required? If it's only an estimate, then I would think the hours are not required. But a sound response to your inquiry would require a legal analysis of the entire contract, not just the CLIN descriptions.

Your answer to my Question 2 suggests that you cannot deny payment of the monthly rate because the contractor did not provide 10 persons per month, because you said the contract does not say that the contractor must provide 10 persons per month.

Your answer to my last question indicates that the contractor must provide the information that the PWS says it must provide. But, again, a sound response to your inquiry would have to be based on a legal analysis of the entire contract, not just the PWS.

 

Vern,  Sorry I did not clearly answer your Q1.  No, this contract does not states that the contractor must deliver the estimated hours. =(

Thank you for all.  Bottom line... how can government really monitor contractor's work performance? Based on an honest system?

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Retreadfed    0

tj, instead of worrying how you are going to monitor the contractor's performance, I would be more concerned with whether you have someone who is capable of monitoring that performance.

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ji20874    0
16 minutes ago, tj2015 said:

how can government really monitor contractor's work performance?

Which do you want to monitor:  the outputs (outcomes, results, deliverables) or the inputs (labor hours)?

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tj2015    0
11 minutes ago, ji20874 said:

Which do you want to monitor:  the outputs (outcomes, results, deliverables) or the inputs (labor hours)?

We will monitor the outputs as long as they reach the objective per PWS.

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tj2015    0
18 minutes ago, Retreadfed said:

tj, instead of worrying how you are going to monitor the contractor's performance, I would be more concerned with whether you have someone who is capable of monitoring that performance.

Thx. I doubt we will have....

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kevlar51    0

For a FFP contract, the output should be your primary concern (I can't comment on whether your contract allows for others).

If you are satisfied with the end result, even when the contractor put forth measurably less effort, then consider that fact for any follow-on solicitations.

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4 hours ago, here_2_help said:

Can we say that the Performance-Based Logistics (PBL) concept is similarly defunct? Please?

I can't say that. Sorry. 

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tj2015    0
2 hours ago, kevlar51 said:

For a FFP contract, the output should be your primary concern (I can't comment on whether your contract allows for others).

If you are satisfied with the end result, even when the contractor put forth measurably less effort, then consider that fact for any follow-on solicitations.

Thank you. 

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2 hours ago, kevlar51 said:

For a FFP contract, the output should be your primary concern (I can't comment on whether your contract allows for others).

Not necessarily. The contract could be FFP-LOE.

Look, what you "monitor" (i.e. contract quality assurance)  depends on what the contract requires from the contractor. There is no general principle that you "monitor" output vs input. You might well "monitor" input. You might "monitor" output. You might "monitor" both. It depends on what the contract says. The objective is to make sure you got what you were promised. as described by the contract, whatever it was.

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kevlar51    0
On 5/16/2017 at 0:31 PM, REA'n Maker said:

Occam's Razor: the contracting agency doesn't know what they are doing.  

I've seen this more times than I can count:

  1. CO determines that FFP is appropriate
  2. IGCE uses labor hours and rates as the BOE
  3. CO issues FFP RFQ
  4. Award is made at an FFP, yet Section B retains the hours/rates pricing used in the IGCE and evaluation
  5. Micromanaging COR who only knows how to count butts in seats takes over administration of contract
  6. 1 FTE goes to Disneyland for a week
  7. COR decrements invoice for "40 hours not worked"
  8. Repeat until PoP expires

Lesson: it's much easier to award a LH contract when you call it FFP.  

(But the real fun comes when you try to close a physically complete FFP vehicle and there's a bunch of unexpended funds still on it, which, of course, should be impossible.)

This is a BS argument, but it's worked for me in the past: Explain to the government that the contract labor price was based on an 1880 hour year, which is 5 weeks short of the total number of workdays in a typical year; therefore, until the government can show that each FTE has  taken more than 5 weeks off , you can't decrement the  invoice. (one other tactic I have used is to price the deliverables individually.  At least that keeps the attention where it should be, which is on DELIVERIES) . :o

You post describes incredibly well an issue that recently fell into my lap (at least up to item 6), in my case the COR is rejecting invoices for "incorrect labor rates"--a discrepancy that has arisen due to rate differences between the schedule, BPA, and orders. The BPA and orders are unambiguous--services are to be performed on a firm fixed price basis, with no mention of LOE. But it's being administered as a T&M contract, and I'm told "that's just how it's always been done."  Multiple CORs, COs, and Contractor PMs have been involved in this and I can't determine who initiated the process.

I'm hoping I can sit everyone down and explain how much easier, less time consuming, and contractually correct managing a FFP contract like a FFP contract will be.

But the Government recently sent the contractor a bilateral mod for a completed order to decrease the price by the unbilled value (the contractor has not signed it), so I'm not confident the discussion will go well.

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The underlying problem is that too many government contracting personnel simply do not understand the concept of CONTRACT and the principles and fundamentals of contract law, and yet they are or want to be CONTRACTING officers. It appears that the concept, principles, and simply is not taught anymore, at least not in sufficient depth. Read enough questions at Wifcon and your experience will verify the truth of what I'm saying. The proper response to at least a third of all questions posted at Wifcon Forum is: Read your contract. What does it say?

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