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Have upcoming recompete of a five year (Base + four 1-year OPs) FFP commercial service requirement subject to Service Contract Labor Standards (SCLS) so Contractors have right of first refusal (Non-Displacement of Qualified Workers). We just need bodies to do the work as opposed to new solutions so with that being said both current and I think preceding contracts went LPTA and thinking the same for the recompete as there is nothing really to tradeoff. Issue although not really an issue for me personally but is that I'm told some of these Contractors due to the WD positions in which they occupy have not received a pay raise in five to ten years as Wage Determination (WD) rates have remained static for numerous positions. Yet this requirement supports a somewhat remote facility so while there is turnover / attrition it's not at the rate you'd expect and instead it is usually an awkward environment as these Contractors work alongside Feds in some instances. Historically and practically, all the competitive SCLS requirements I've done have been FFP & LPTA in which the Offerors just propose the current WD rate for the SCLS covered employees for all PoPs (i.e. Base and OPs). However, for non-competitive SCLS requirements I've done (i.e. 8(a) direct source), it was acceptable for the Offeror to propose modest (1% - 2%) escalation to hourly rates each PoP. Like honestly and in at least in my experience thus far, it's like you only see no salary escalations as an across the board rule of thumb in competitive procurements subject to SCLS, the Contractor employees of which usually make way less than Professional Services employees, but I digress. Anyways, I've scoured the threads here concerning permissibility of proposing increases from the WD rates in the Base and OPs, and the verdict seems like a hung jury.

However, this thread (http://www.wifcon.com/discussion/index.php?/topic/1750-service-contract-act-escalation-and-cost-reimbursement-solicitation/) brought a GAO case ( to my attention whereby GAO raised no objection to Offerors proposing COLAs for SCLS covered employees per RFP instructions "to propose realistic prices that allowed for increases for things such as cost of living" and even went so far as to say an Offeror who didn't and instead choose to rely on future WD increases resulted in a Government evaluation on an unequal / apples and oranges basis that should be resolved during discussions with that one Offeror (at least that's how I'm interpreting it --> reference p.11-12). While this GAO case was for a FP IDIQ, it was a tradeoff procurement in which the RFP stated price would be evaluated for realism and reasonableness. Interestingly enough, the protest was sustained because GAO agreed the Government evaluated it as if it was a LPTA procurement.

My initial thought was then why wouldn't it be permissible for my RFP instructions to otherwise mimic the RFP language from this GAO case i.e. state that proposed pricing for base and OPs must reflect any planned increases necessary to achieve say for example Offerors' recruitment and retention policies e.g. a COLA? But then since there is no need for me to conduct a price realism analysis and since my procurement is LPTA, the difference between the winner and losers could potentially come down to who proposed the lowest COLA, if the winning Offeror even thinks there is a need to propose one. I could see the incumbent doing this, and I don't see how I'd evaluate as technically unacceptable given the aforementioned historical turnover / attrition background.

Then I thought well while I've never seen a RFQ or RFP state a maximum escalation rate at which the Government would consider reasonable, but what if instead I had a RFQ/RFP term or cost/price evaluation instructions/process state any escalation above a certain % will not be considered fair and reasonable. I know competition usually takes care of the issue of overinflated escalation, but again this isn't a competitive Professional Services circumstances or tradeoff procurement where you'd typically still see escalation proposed. Given how competitive LPTA SCLS requirements are responded to by Offerors, I don't see this as unduly restrictive or unfair. And I am well aware this doesn't guarantee or require that the Contractor will actually pay its employees these escalated rates above the WD.

Anyone want to provide an opinion on this and how the proposing of 0% escalation in SCLS procurements is fair and reasonable to both Gov and Contractor when some positions don't see hourly rate increases for multiple years on revised WDs in combination with the historical background of the SCA that was to ensure "prevailing" wage rates and fringe benefits were paid by the Gov. to service Contractor employees. Just trying to get some insight for the resources here. Thanks in advance.

 

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I strongly recommend editing your post for brevity and clarity if you're looking for serious responses. I think you're misunderstanding SCLS, but it's really hard to tell from your post.

Edited by FrankJon
Good-faith effort.

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FAR, have you considered this language from FAR 52.222-43 "The Contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause"?  Would what you are considering be a breach of this warranty?

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Agree with FrankJon.

Wage determinations are a “floor”, not sure how you are linking that to the price reasonableness of a proposal in a competitive procurement...

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4 hours ago, Retreadfed said:

FAR, have you considered this language from FAR 52.222-43 "The Contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause"?  Would what you are considering be a breach of this warranty?

From the jist of the original post, I gleaned that FAR is concerned that the Wage Decision updates don’t provide for much, if any increase in compensation. 

Yet the organization wants to use Low Price Technically Acceptable basis of award due to the routine nature of the work.  Such an approach would not incentivize any firm to exceed the “floor” or minimum for the Base year or any outyear schedule, 

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As others have said, nothing is contractually/legally stopping vendors from proposing wages higher than what might be in a wage determination. But competition (especially in a LPTA procurement) will generally keep them from doing so. You can put language in there about allowing for escalation, but it's not necessary for the reason I just stated (i.e. it's already allowed).

A awardee later coming to you to explain why the rates they proposed under a FFP solicitation aren't sufficient is a different issue. They can certainly still pay their staff more, and they have to run their own cost/benefit analysis before deciding to submit proposed pricing. And "bid low to win and get the Gov't to increase the price later" isn't a sound plan.

All that considered, if staff turnover is enough concern, then perhaps LPTA isn't the best approach for you.

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6 hours ago, kevlar51 said:

As others have said, nothing is contractually/legally stopping vendors from proposing wages higher than what might be in a wage determination. But competition (especially in a LPTA procurement) will generally keep them from doing so. You can put language in there about allowing for escalation, but it's not necessary for the reason I just stated (i.e. it's already allowed).

A awardee later coming to you to explain why the rates they proposed under a FFP solicitation aren't sufficient is a different issue. They can certainly still pay their staff more, and they have to run their own cost/benefit analysis before deciding to submit proposed pricing. And "bid low to win and get the Gov't to increase the price later" isn't a sound plan.

All that considered, if staff turnover is enough concern, then perhaps LPTA isn't the best approach for you.

Agree.  “FAR” appears to have conflicting goals. One is to allow or encourage proposers to proposal escalation above anticipated low wage decision updates (based upon observed history) , in order to retain or somehow treat personnel fairly..

“FAR’s” other goal or approach is to use LPTA for the selection criteria due to the routine nature of the work. 

An LPTA approach doesn’t allow the government to pay any more for performance or qualifications than that which would meet the solicitation’s  minimum requirements,  in the selection of the successful offeror.  

If the Gov’t wanted to require or encourage annual pay raises, it would have to define the minimum requirements that would be both measurable and directly comparable between offerors/proposers.

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