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CSMP77

Unburdened Labor Rate

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Does a prime have the ability to set a labor rate much, much lower than what the government accepted for the labor category, without burden? We are a small business of two getting a chance at subcontracting for the government. The prime never asked us for a ROM and instead, gave us a not-to-exceed rate. The rate is unburdened - or actually it's the salary the prime was paying to the person that was in that position previously. So in essence, I am supposed to pay for all of my fringe benefits, G&A, OH and profit out of an unburdened labor rate. The prime does not want to negotiate, so what recourse do I have other than saying no?

Edit to answer vagueness: The rate difference is $28 per hour. To the very best of my knowledge and with help of another prime, I am 100% certain that I am within the current rate already funded by the government for the billet.

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If you are looking to subcontract, and the prime Isn’t willing to negotiate, you can either  accept or reject it.  I don’t know what you mean by the term “recourse”, here. 

We don’t know whether there are any DOL minimums associated with the position or if the prime’s offer would cause you to violate any such minimum with respect to your ability to have any leverage in negotiating a higher rate.

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You could file a complaint with the SBA and/or get in touch with your Congressional Representative as to fairness. However, you apparently agreed to the rate as your proposed rate, so what is your complaint??? Also, you have not indicated what the dollar difference per hour is between your fully burdened rate and the NTE rate. Anyone you discuss this with would want to know. Not sure either of these supports actually winding up being a subcontractor in a timely manner. 

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5 minutes ago, Neil Roberts said:

You could file a complaint with the SBA and/or get in touch with your Congressional Representative as to fairness. However, you apparently agreed to the rate as your proposed rate, so what is your complaint??? Also, you have not indicated what the dollar difference per hour is between your fully burdened rate and the NTE rate. Anyone you discuss this with would want to know. Not sure either of these supports actually winding up being a subcontractor in a timely manner. 

Neil, I have not accepted the rate as I do not believe that it would be beneficial to accept such a low rate at this moment with no way to afford any fringe and G&A expenses since I can't burden (at the very least) the prime's rate. Of course, I want to do what's best for my company and get a few sub agreements, but let's face it, it's a business and I would like to make a small profit, just like the prime does. The difference between the burdened rate and the NTE is $28 almost all of that is to cover fringe benefits, as I do not really have OH costs. Also, I am confident that my rate does not exceed what the government already funds for the labor category. If it does (and it wouldn't be by much), I am willing to negotiate, but the prime is not interested. Anyway, I don't see any solution for me, I just wanted to know if what they are doing is standard. As a PM I never set a rate for the subs my employer primed for. We always asked and worked with them if they exceeded the mark.

 

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1 hour ago, joel hoffman said:

If you are looking to subcontract, and the prime Isn’t willing to negotiate, you can either  accept or reject it.  I don’t know what you mean by the term “recourse”, here. 

We don’t know whether there are any DOL minimums associated with the position or if the prime’s offer would cause you to violate any such minimum with respect to your ability to have any leverage in negotiating a higher rate.

Yeah, I get I can take it or leave it, that's exactly where I am at.

By recourse I meant, is there anything in the FAR that indicates/points/signals it - the FAR - protects the sub from a prime that won't allow it to charge fringe/G&A/OH/profit? Or is it pretty much, c'est la vie?

There are no DOL minimums (that I'm aware of) and I've actually made sure that I do not exceed what the prime bid for the labor category and has been funded by the government already. If I did cross the threshold, it was by $2-3K and I would really expect the prime to tell, "me lower it."

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Standard practice is to compete all subcontract work. In doing so, the proposed subcontractor responds to the RFP/ITQ with its rates. Supplier Management (Procurement) is generally the function that performs this work.  

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6 minutes ago, Neil Roberts said:

Standard practice is to compete all subcontract work. In doing so, the proposed subcontractor responds to the RFP/ITQ with its rates. Supplier Management (Procurement) is generally the function that performs this work.  

It's a little too late for me for that. I am being added more than halfway through the contract.

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The question I would ask myself is what recourse the prime has, if I do not accept the prime's offer? If the prime can go elsewhere I might make a counter-offer closer to what my break-even rate is. If the prime cannot go elsewhere then I might simply reject the offer and ask to speak to the prime's small business liaison officer about the unreasonable offer.

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21 minutes ago, here_2_help said:

The question I would ask myself is what recourse the prime has, if I do not accept the prime's offer? If the prime can go elsewhere I might make a counter-offer closer to what my break-even rate is. If the prime cannot go elsewhere then I might simply reject the offer and ask to speak to the prime's small business liaison officer about the unreasonable offer.

Fair enough. Thanks for the advice!

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