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paystubs

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Can a contracting specialist request actual paystubs from a contractor to verify rates on a proposal?  I am a contractor and I see privacy issues with doing that.  I am accustomed to DCAA asking for paystubs in an in-house rate audit or a pre-award audit but I have never been asked to supply them to a CO.

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They can ask for anything, but does your contract say that you have to provide what they ask for? They aren't the IRS. They must have a contractual right to what they want.

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Construction? By "pay stubs" do you mean "payroll" records? 

If this is a construction contract, see Contract clause 52.222-8 , Payrolls and Basic Records. 

You should already be submitting the information that the specialist needs, on a weekly basis per paragraph b.

Paragraph c. of the clause requires you to provide access to all the payroll records that you must maintain under paragraph a. of the clause to the KO or its authorized representative.  

EDIT: oops I misread the original post. Are you referring to a proposal for a change or for a new contract?  

If a new contract, please clarify how payroll records would apply to the new contract. Thx 

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Vern, I'm not sure if there is an existing contract or if this is a new contract proposal. Pat should clarify that and what he/she means by "pay stubs". 

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Pat, are you being required to submit certified cost or pricing data or data other than certified cost or pricing data in regard to the proposal?

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1 hour ago, Retreadfed said:

Pat, are you being required to submit certified cost or pricing data or data other than certified cost or pricing data in regard to the proposal?

Another good question. I hope Pat will provide the full context of the situation. It is impossible to provide a definitive response based upon the scenario described in the "Original Post".  

Years ago , when I was the construction "professor" for DAU's "Ask a Professor", I almost always had to contact the questioner to fully explain the context of their question. if I could actually discuss the question with the questioner orally, I would.   As an "old fart", I have a fundamental problem with the tendency these days to communicate in "sound bites" and to carry on conversations as though they are text messages.  

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The question was:

Quote

Can a contracting specialist request actual paystubs from a contractor to verify rates on a proposal? 

We don't need more information from pat. The answer is the same no matter what the situation.

The answer is Yes. The elaboration on that answer is that a contract specialist can ask an offeror or a contractor for any information. But the contract specialist is not entitled to what he or she asked for unless (1) there is a contract and (2) the contract requires the contractor to provide it. Right?

An offeror can refuse. It might cost them a contract if there is competition. A contractor can refuse unless it contractually bound itself to provide what was asked for. If it did, then it must provide what was asked for or face termination for default.

What more is there to say?

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14 hours ago, Vern Edwards said:

The question was:

We don't need more information from pat. The answer is the same no matter what the situation.

The answer is Yes. The elaboration on that answer is that a contract specialist can ask an offeror or a contractor for any information. But the contract specialist is not entitled to what he or she asked for unless (1) there is a contract and (2) the contract requires the contractor to provide it. Right?

 

So, if there is no contract, you are saying that the KO is not entitled to information to verify what the contractor claims or states "on a proposal" that it is actually  paying.  I don't necessarily agree. 

If there is a service contract, the contract requires that the contractor allow access by the DOL to payroll information but not specifically access by the KO.  

However, if there is a proposal for a contract action under an existing service contract and the contractor is basing the proposed labor cost on what it states it is currently paying, I'd say that the KO might be entitled to information to verify the basis of the proposal.

If the proposal is for a contract action under an existing construction contract, the answer is that not only is the government entitled to the information, the contractor must submit payroll information, including employee names, anyway. 

If there is no service or construction contract and the proposer is proposing pricing on the basis of stated current hourly rates or salaries, the KO might be entitled to information to verify the  basis of the proposal. 

Pat did not say whether or not there is an existing contract - only that he/she is a contractor. 

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53 minutes ago, joel hoffman said:

So, if there is no contract, you are saying that the KO is not entitled to information to verify what the contractor claims or states "on a proposal" that it is actually  paying.

I guess it depends on what you mean by "entitled." There is a difference between being entitled to ask and entitled to get what you asked for.

The OP asked: "Can a contracting specialist request actual paystubs from a contractor to verify rates on a proposal?" That's another way of asking if the contract specialist is entitled to ask for for the pay stubbs. My answer: Sure. Yes.

But I guess the OP could have meant: If asked, do I have to give? In that case m answer would be: I don't know. What's the nature of your relationship with the asker?

If someone asks for information and you refuse to give it and don't face legal consequences, then the asker was entitled to ask, but not to receive. But if someone asks you for information and you refuse to give and face legal consequences for your refusal, say, T for D or payment withholding, then I'd say the asker was entitled to ask and to receive.

Yet another reason to ask clear questions.

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I don't think this is a black & white issue. To my way of thinking, the question is not whether the contractor can (or should) refuse the request based on privacy concerns but, instead, how the contractor might respond to the request without creating risk related to privacy concerns.

It can be done easily. Redact employee names and SSNs and addresses, and retain the employee ID number, which should track to the employee pay information on the payroll register. If you have a decently sophisticated system, the employee ID number will track to the data (including pay rate) in the employee Master File. Thus, the employee ID number is the common link that permits audit review without revealing any employee private information such as SSN, home address, etc.

Frontal assaults may work, but then tend to create casualties. Better slip around the flank by giving the Specialist what they want in the manner that protects the company (and the employee).

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Pat has apparently checked out of this discussion thread. I'm guessing that he got his answer. 

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18 hours ago, here_2_help said:

I don't think this is a black & white issue. To my way of thinking, the question is not whether the contractor can (or should) refuse the request based on privacy concerns but, instead, how the contractor might respond to the request without creating risk related to privacy concerns.

I don't think the question was "should." The question was obscure, but I think it leaned more toward "can."

help:

Let me ask you two questions: Is an actual pay stub "cost or pricing data" as defined by FAR 2.101?

If so, and presuming that the company is a "true" sole source prospective contractor and not contractually bound to furnish certified cost or pricing data, can the company refuse to submit if the CO asks for it in accordance with FAR 15.403-4? 

 

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I will modify my earlier statements regarding construction contract requirements. Contractually required payroll information doesn't cover salaried, non-hourly paid workers that aren't covered by D-B wage rates. 

However, here a contractor or proposed contractor is apparently proposing a cost for negotiations that it maintains is reasonable because that is what it is paying an employee(s).  

Pursuant to FAR 31.201-3 (a) -- Determining Reasonableness and 15.402 (a) and (b), and 15.403-3 concerning requiring data other than cost or pricing data, if the KO needs additional data to determine that this is indeed a current cost for forward pricing or a claimed cost, then I think that the contractor should have to show that it is an actual cost. 

I don't think that it has to be certified cost or pricing data. 

 

 

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I asked a hypothetical, Joel.

If the CO requests certified cost or pricing data in accordance with FAR, are the stubs cost or pricing data?

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3 hours ago, Vern Edwards said:

I don't think the question was "should." The question was obscure, but I think it leaned more toward "can."

help:

Let me ask you two questions: Is an actual pay stub "cost or pricing data" as defined by FAR 2.101?

If so, and presuming that the company is a "true" sole source prospective contractor and not contractually bound to furnish certified cost or pricing data, can the company refuse to submit if the CO asks for it in accordance with FAR 15.403-4? 

 

1. No. It is at most evidence in support of cost or pricing data. The fact is what an employee is paid. The pay stub is evidence supporting or refuting that fact. To support my position, I looked at the Instructions for submitting certified cost or pricing data at Table 15-2. With respect to direct labor, the Instructions state "Provide a time-phased (e.g., monthly, quarterly, etc.) breakdown of labor hours, rates, and cost by appropriate category, and furnish bases for estimates." Paystubs are none of those things.

2. No, not to my way of thinking. I don't see "paystubs" on the list of bona fide exceptions found at 52.215-20. But I already opined that paystubs don't meet the definition of cost or pricing data, because they are not cost data or pricing data: they are evidence in support of cost data.

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Point of order: Table 15-2 is simply telling an offeror how to package information. The fact that it does not mention pay stubs does not prove your conclusion. However, I agree that cost or pricing data consist of facts and that the stubs are merely evidence of the facts.

So... are the 

21 hours ago, here_2_help said:

names and SSNs and addresses

that are on the stubs cost or pricing data?

If so, is are CO and DCAA auditor to have access to the pay stubs when seeking to verify that certified cost or pricing data were accurate, complete, and current as of the date of price agreement?

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Vern, no. That stuff does not meet the 2.101 definition. Among other things, names and SSNs and addresses are not things that "prudent buyers and sellers would reasonably expect to affect price negotiations significantly."

Yes, the government has the right of access to verify the cost or pricing data. See 52.215-2(c):

"If the Contractor has been required to submit certified cost or pricing data in connection with any pricing action relating to this contract, the Contracting Officer, or an authorized representative of the Contracting Officer, in order to evaluate the accuracy, completeness, and currency of the cost or pricing data, shall have the right to examine and audit all of the Contractor’s records, including computations and projections, related to --

  • (1) The proposal for the contract, subcontract, or modification;

    (2) The discussions conducted on the proposal(s), including those related to negotiating;

    (3) Pricing of the contract, subcontract, or modification; or

    (4) Performance of the contract, subcontract or modification."

(Emphasis added.)

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However, if the contractor is basing the price on actual costs for specific persons, which is factual information, then the facts must be verifiable and the names should be available to match the claimed costs.  SSN and addresses are likely not necessary to verify. 

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H2H and Vern, if pay stubs are not facts, but merely evidence of a fact, i.e., what a particular employee is actually paid, how would that fact be submitted to the government in order for the contractor to satisfy its obligation under FAR 52.215-20 or 52.215-21 assuming they are in an RFP or contract respectively?

H2H, I am fairly sure you are aware of DCAA's concern with "ghost employees."  Would access to an "employees" supposed SSN and home address be relevant to an inquiry into whether an employee actually exists?

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1 hour ago, here_2_help said:

Vern, no. That stuff does not meet the 2.101 definition.

I'm not sure that I agree, but I'm not interested in arguing the point since you agree that the government can access that information via audit. I think Joel and Retread have made good points.

32 minutes ago, Retreadfed said:

H2H and Vern, if pay stubs are not facts, but merely evidence of a fact, i.e., what a particular employee is actually paid, how would that fact be submitted to the government in order for the contractor to satisfy its obligation under FAR 52.215-20 or 52.215-21 assuming they are in an RFP or contract respectively?

How about an Excel spreadsheet?

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I would want to see a redacted copy of the factual payroll record, not something newly created. I believe that is possible. 

As for (formerly known as) TINA vs non-TINA, untruthful statements or claims may have consequences (if the government cares enough to pursue) under the laws as applicable to the situation, e.g., False Statements, False Claims, fraud, "TINA", etc. 

EDIT: construction contractors routinely furnish redacted payroll info for hourly employees under their contracts and I have also seen partial info included for salaried employees. 

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An Excel spreadsheet would be a secondary source of evidence, i.e., evidence of a fact derived from a primary source of evidence of that fact.  In order to corroborate the information in the spreadsheet, I would need information from the source used to create the spreadsheet. 

I'm not sure what is meant by "paystub" in this context.  The way I usually use that term it refers to something that is provided to an employee.  In that case, what the employee receives is not a contractor record.  The government only has contract audit rights in regard to contractor records.  It does not have any contract rights to records of individual employees.  Therefore, I would like for Pat to clarify exactly what is being asked for.

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Retread, good luck with getting a clarification. I'm not interested any more, unless the Specialist or KO used that specific term. 

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4 hours ago, Retreadfed said:

H2H and Vern, if pay stubs are not facts, but merely evidence of a fact, i.e., what a particular employee is actually paid, how would that fact be submitted to the government in order for the contractor to satisfy its obligation under FAR 52.215-20 or 52.215-21 assuming they are in an RFP or contract respectively?

H2H, I am fairly sure you are aware of DCAA's concern with "ghost employees."  Would access to an "employees" supposed SSN and home address be relevant to an inquiry into whether an employee actually exists?

1. Paystubs are not facts. I think that's fairly clear. Paystubs are evidence supporting the amount an employee gets paid, or perhaps the quantity of hours that an hourly or non-exempt employee recently worked. But better evidence would be the certified payroll register, hopefully redacted to protect Personally Identifiable Information (PII), as Joel already noted.

2. From time to time DCAA performs a MAAR 6 "Labor Floorcheck" audit that I suppose has, as an ancillary benefit, a confirmation that employees actually exist. Other than that I haven't seen DCAA care about that subject in at least a decade, perhaps two decades. Companies used to have a control that required periodic issuance of paychecks via hand. Paychecks needed to be handed to physically present employees. That control went bye-bye with the advent of direct deposit.

2. If DCAA is concerned that employees on long-term telework assignments need to be confirmed, then of course home addresses are relevant. Home addresses might also be relevant in reviews of travel expense reimbursements and relocation expense reimbursements. It's hard for me to see how any of those purposes would have a nexus to an audit of a contractor's cost proposal, unless the contractor was proposing a home office expense somewhere.

For me, the bottom line here is that a contract specialist who is concerned about reviewing employee paystubs has too much time on their hands and needs to be given more work to fill up the day.

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