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Contractor Fuel Cost for Travel and Field Safety Supplies


MAC

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I am new to this particular DoD branch. My previous experience in pricing was with OEM remanufacture, repair and overhaul. So pricing these environmental service contracts bring up questions. Questions that the “regulars’ around here say “it is under the IGE and technical (SME) says the cost/price is adequate for the work so move on”.  The SME performs the price analysis in their technical evaluation I really want to ensure that things are not being missed. The SMEs have never taken a pricing class and they say they are uncomfortable performing cost and price analysis.

The basic contract is a SATOC 8(a) set aside. My questions are in regards to a FFP task order modification proposal I received. The contract action is under SAT therefore I am doing a price analysis (against the grain). The contract contains a statement saying the contractor will perform travel IAW the JTR.

Reviewing this proposal I noticed a fuel fee included with the subcontractor’s travel costs. I cannot find anywhere if this is allowable or not. It is not in the list of unallowable which tells me that there is some latitude with this cost. But how is one to quantify how much fuel is used? Do I request they propose with estimated mileage?

They also have $4k in field, safety and health supplies. I requested what supplies would be specifically purchased for this contract that was not required outside of common items that they utilize on all their contracts. My thinking here was the 18.47% G&A.

All I want to know is if I am headed in the right direction or do I need a refresher in cost and price analysis?

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Did the SME prepare the government estimate?  If so,  how does someone who can’t evaluate either cost or price of a proposal qualify for that?  If so, what good is a price analysis comparison with such an estimate ?  

You probably realize that you are performing at least a partial cost analysis here. Perhaps because you question the reliability of the estimate? Does the SME know what the fuel and other supplies would be used for? 

Without any knowledge of the scope of work or an order of magnitude here, it would be difficult to specifically answer your questions. It also makes a difference whether or not the proposal is forward priced or after the changed work was performed. 

Fuel in itself is a direct cost and might or might not be reasonable, as proposed. Depends upon whether or not fuel cost is already included in other pricing and if the amount would seem reasonable for its proposed use. What is the fuel for and how is the thing priced that it is being proposed to be used for?  If it is for rented or owned equipment or vehicles, then it depends upon the basis used for pricing the equipment or vehicles. 

These are reasonable questions. You certainly may ask the contractor to explain them so that you (or a negotiator if you aren’t the negotiator) may opine that they are reasonable.  

These could be questions to include in the pre-negotiations objectives or in fact finding prior to negotiations.

I don’t know the context of the situation.  You don’t have to answer my questions. They are simply for your consideration. 

 

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Guest Vern Edwards
7 hours ago, MAC said:

Reviewing this proposal I noticed a fuel fee included with the subcontractor’s travel costs. I cannot find anywhere if this is allowable or not. It is not in the list of unallowable which tells me that there is some latitude with this cost. But how is one to quantify how much fuel is used? Do I request they propose with estimated mileage?

What are you talking about? When you write of "allowable" and "unallowable," in what sense are you using those words? Are you referring to the concept of allowability as used in FAR Part 31?

And didn't you say you are doing a price analysis for a firm-fixed-price task order? 

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Did the SME prepare the government estimate?  If so,  how does someone who can’t evaluate either cost or price of a proposal qualify for that?  If so, what good is a price analysis comparison with such an estimate ?  

Yes, the SME prepares the IGE. When I receive my proposal I send everything to include price to the SME for technical evaluation. They perform the technical evaluation and then I am to copy the technical evaluation into my POM/PNM. The IGE is a spreadsheet of numbers with no relevant information on how the IGE was established. Everything hinges off the technical analysis which is an IGE comparison to the proposal. It is all rubbish.

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You probably realize that you are performing at least a partial cost analysis here. Perhaps because you question the reliability of the estimate? Does the SME know what the fuel and other supplies would be used for? 

Yes, I am performing a partial cost analysis based on being new to this DoD department and the lack of initiative on the entire program's part they play in providing a proper proposal analysis. I asked the SME what they fuel was utilized for and they were not sure if it was for the fuel for the rental vehicles or to be used out in the field however the fuel is stated in the proposal with the truck rental at $145 a day for 32 days. The SME said the supplies were for standard safety items which tells me that this could be in the G&A. The prime is requesting the safety items and is doing 51% of the work.

Under these circumstances I want to request the Prime to breakout the truck rental from the gas to see if I need to review any further in regards to the fuel charges. I have sent an email to the Prime regarding the supplies and asked if this was not already something they may have already accounted for under the G&A.

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Without any knowledge of the scope of work or an order of magnitude here, it would be difficult to specifically answer your questions. It also makes a difference whether or not the proposal is forward priced or after the changed work was performed. 

This is the last modification to the task order. The environmental team is trying to locate the source of the vapor that is around an old silo site and test it for possible contamination levels. So the contractor is not new to this site or conditions. They are estimating the job to last about 30 days. I am working with fully burdened labor rates that were negotiated at the time of the basic's (non competitive SATOC) award.

I am not accustomed to such an lackadaisical attitude towards the review and pricing of a proposal. This being one of the first proposals that I am reviewing in this office I want to set a precedence with the contractors that someone is providing a thorough review and is going to ask questions and not just accept their proposal price because it is under the IGE. I don't normally spend hours contemplating and asking questions on under TINA over SAT. (This is over the new SAT limits by about $10k. This is a correction to my original post.)  I don't question my formal education and past professional experience UNTIL I arrived at this location.

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I will wait until you have reviewed my reply to Mr. Hoffman to see if that may stimulate a different response. I understand what you are saying completely. Low dollar, FFP, price analysis...move on.

Yes sir, I am using allowable vs unallowable based on FAR 31. It says nothing about fuel costs being unallowable which means to me I have latitude to either accept the proposal price with them in or negotiate a lower price based on taking them out. But they are lumped in with vehicle rental so I am not sure of the exact fuel charges to move on with the travel price.

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Mac, this is a mod, so I’m  i’m guessing here that the contractor may already be renting the vehicle or vehicles that would be use for this additional work. If so, the daily cost for the vehicle should be verifiable. I have never seen vehicles rented with fuel cost included. Therefore, I would assume that The cost for fuel is necessary, however I don’t know whether the amount is reasonable or not.

I am assuming here that Davis-Bacon act applies to this contract or task order. If so, I would not necessarily rely on originally negotiated labor rates. Contractor is required to submit weekly payrolls that should be useful. 

I am also going to assume here,  from what you said, that the independent government estimate is not independent and furthermore is probably worthless or of a little worth. Therefore a simple price analysis is probably impossible by itself. Have you considered sitting down with the technical expert or subject matter experts and just simply go through the proposal together? The subject matter expert should be able to at least tell you whether the contractors approach and resources appear to be reasonable (a technical analysis). They should also be able to tell you whether they are using the same persons, vehicles, equipment and techniques as they have been using for the other work or what would be different. If this work is concurrent with other work, there may be no extra rental costs for the equipment however there could be additional fuel costs.

Mac, does the Davis-Bacon Act apply here or the Service Contract Act?

Good luck to you Mac!

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Guest Vern Edwards

The reason I asked you about FAR Part 31 is that you originally said you were doing a price analysis, and FAR Part 31 applies only when doing a cost analysis or when a contract clause requires determination, negotiation, or allowance of costs. See FAR 31.000 and FAR 31.102. But you have since said that you are doing "a partial cost analysis based on being new to this DoD department and the lack of initiative on the entire program's part they play in providing a proper proposal analysis."

Although... surely you know that being new and noticing a lack of initiative are not policy reasons for doing a cost analysis. See FAR 15.404-1(a)(3) and (4). I wouldn't point those things out to you if it weren't for the fact that you've made it clear that you are a stickler about doing things properly.

By the way, in your two posts you don't sound like someone who should be posting in a forum that is "For Beginners Only." But that's just a technicality. As for your question:

8 hours ago, MAC said:

All I want to know is if I am headed in the right direction or do I need a refresher in cost and price analysis?

It strikes me that you might be making a mountain out of a molehill and making yourself unpopular in the process. You are clearly frustrated with your new office, but it's generally not considered smart to let on that you think your co-workers on a new job are doing things all wrong, unless you were hired to be a reformer. But I'm not in your shoes, so I don't know. The rightness of your direction probably depends on the dollar amount of the "fuel fee" you mentioned.

As for whether you need a refresher in cost or price analysis, well, everybody could use that from time to time. How could it hurt?

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There does not seem to be a strong basis to perform a price analysis based upon a government estimate prepared by somebody who does not know how to estimate costs.

I would use your subject matter expert for purposes of technical analysis. Then perhaps work together with the subject matter expert to evaluate the details of the pricing or costs.

You may have to incorporate the “government estimate” in your pre-negotiation objective memorandum as  a formality but you do not have to rely on it to develop your objectives it if it isn’t realistic  or if it is incorrect. You simply note how you did or did not rely on it. 

The negotiation objectives certainly may and should, in my opinion, consider the technical analysis. 

 

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Mr. Hoffman, this is a services contract under Environmental Engineering as a professional service.

I have told the Environmental technical team that I will be more than happy to assist them in their price analysis. However it does not take care of the underlying problem; contracting needs to be doing the pricing. The team doesn't question anything they just assume that since it is under their IGE it is an acceptable price. Technical and the SME are all the same here. The technical analysis consists of exactly this:

The CP for Labor is $6,844.00 which exceeds the IGE Labor of $6,444.32 by $399.68 or 5.8%. The CP’s proposed prime labor hours of 52 is below the IGE 62 hours by 10 hours or a percent difference of 16%.  The IGE and the CP use different labor categories and different distributions of labor.  The labor hours and categories proposed by Auxilio are lower than the IGE and are fair and reasonable.  

 

Its not idea for sure. Soooo this is why I am looking at costs in order to bring some things to the surface for the technical team performing the IGE, TA and price analysis. I want to identify what latitude I have regarding fuel charges vs mileage estimates and supplies in the field. I don't want to go in with incorrect information.

Vern, Its not just the fuel or the supplies; its the removal of the FAR in the processes that is my main concern. If fuel and supplies are going to be done like this I want to know what latitude I have, be clear on the regulations,  and be confident in my decisions that will permit me to work more efficiently down the road. When I ask questions the SME just states they assume the proposal price is good because it is under the IGE. My hopes for this slower approach will initiate some forethought with the SMEs who are being required to perform the price analysis. Yes, I am not a beginner in contracting however with such a radical change from my previous department I am a beginner. At least the questions are beginner questions.

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This seems like one of those posts where, if a contractor posts it, everybody says "ask the contracting officer." Well, to me the answer here is "ask the contractor." These all seem to be reasonable questions that the contractor should be able to answer quickly, perhaps even immediately.

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Guest Vern Edwards
55 minutes ago, MAC said:

Vern, Its not just the fuel or the supplies; its the removal of the FAR in the processes that is my main concern. If fuel and supplies are going to be done like this I want to know what latitude I have, be clear on the regulations,  and be confident in my decisions that will permit me to work more efficiently down the road. When I ask questions the SME just states they assume the proposal price is good because it is under the IGE. My hopes for this slower approach will initiate some forethought with the SMEs who are being required to perform the price analysis. Yes, I am not a beginner in contracting however with such a radical change from my previous department I am a beginner. At least the questions are beginner questions.

MAC:

It strikes me that your question is not really about pricing, but about organizational policy and performance. You are critical of the way that your organization does things. I presume that you are looking for confirmation that your criticisms are sound and that you "are on the right track" in making those criticisms.

We get those kinds of posts every now and then, and my reaction to yours is that if that's the way you feel, then that's the way you feel, and I presume that you are posting to vent.

9 hours ago, MAC said:

All I want to know is if I am headed in the right direction or do I need a refresher in cost and price analysis?

In other words, are you right or are you ignorant? I don't know, because I've seen only your description and assessment and I don't know the facts.

I wish you luck, but my reaction to your posts is that you aren't happy in your new job assignment and should either persuade your co-workers to come around to your way of thinking about how things should be done or find another place to work before you ruin your reputation as an employee.. 

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Ok, thanks, Mac.  

You aren’t boxed in regarding a fuel vs. mileage pricing approach. You can suggest or compare pricing both ways.

However, if the vehicles and equipment are rented, not owned,  do you have a source or some basis to estimate a “cost per mile”? The JTR and many other sources are based upon both ownership and operating cost considerations. In addition, I don’t know whether vehicles sit with engines running, etc. on a job site. I know that they often do on construction sites. So mileage rates might not be representative of the type of useage. 

I agree with H2H. Ask the contractor how supplies are accounted, for example.  - direct or G&A. Ask how they estimated fuel costs? 

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Mr. Hoffman I appreciate you reading through my "organizational" struggles and helping me in determining a way forward for mileage and supplies; in order to set a precedence to technical and the contractor on future contract actions. I had to "get in the weeds" with my current organization's process because the scenario did not merit a cost analysis without the further explanation.

Thank you all for your time. I have decided I do have latitude to take out the fuel costs and supplies and form a government objective without them. If the contractor wants to discuss our objective I will bring it up at that time. I didn't want to have an incompetent assessment at the negotiation table first go here in my new organization since I have no confidence in core documents being provided to me.

Vern I left the AF to broaden my acquisition career. I am trying to make a go of it. When I get back to the AF I will move within the AF. Lesson learned.

H2H I think it wonderful that you are on board with providing a contractor's view! Thank you for caring enough to provide your time and expertise!

 

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Retreadfed- The relationship is in the contractor's proposal they added fuel costs under travel. They also provide a cost for mileage under travel as well. The task order states that all travel will be in accordance with the Joint Travel Regulations (JTR). The JTR utilizes mileage rates to account for auto incidentals.

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So are they asking for rental cost, mileage and fuel? Mileage and fuel are duplicative, it would seem. Mileage and rental costs are duplicative it would seem. I may have misunderstood you.

 When I go TDY, if I ask for POV authorization using my vehicle (or a rental car on my own dime instead but paying for it and the gas out of mileage reimbursement ) , the sponsor compares mileage cost with rental/fuel  to see if a vehicle rental on the orders would less expensive. Depends on the nature of trip, distance, etc. it’s negotiable in my opinion. But you should question duplicative costs.  Hope that makes sense.  

When we had our own civil works contract auditors, once my auditor questioned a charge for the company  president to fly his corporate plane to the site . He made the contractor develop an hourly ownership and operating cost from the USACE equipment manual, which saved several thousand dollars at the time. 

Id be surprised if job safety costs would be a G&A expense. I d think that it  would be a direct cost to the project.  It might be a job overhead cost depending upon how they calculate and charge for job overhead. Job overhead is always an interesting topic to explore. But I don’t have the space or time to discuss it in depth here.

But you can ask. 

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Guest Vern Edwards
4 hours ago, joel hoffman said:

Mileage and fuel are duplicative, it would seem.

No. Mileage pays for wear on the vehicle. Fuel is fuel.

4 hours ago, joel hoffman said:

Mileage and rental costs are duplicative it would seem.

No. You pay first for use of the vehicle, by the day or week. If there is a mileage charge, there is usually an allowance, above which you pay extra per mile. The mileage charge is for wear and tear. I think most, but not all, car rentals these days come with unlimited mileage.

You pay the rental company for use of the vehicle and additional wear on the vehicle above a certain limit. Fuel is usually not part of the rental charge unless you choose a refill option. You get the car with a full tank, pay gas stations for the fuel you use, and return the car with a full tank, the way you got it.

Fuel is peanuts. LDW insurance is the big ticket item.

The JTR specifies how reimbursement will be made, not how rental companies can and will charge.

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9 hours ago, Vern Edwards said:

No. Mileage pays for wear on the vehicle. Fuel is fuel.

The JTR specifies how reimbursement will be made, not how rental companies can and will charge.

Unless there is a separate rate, if the contractor is claiming JTR "mileage",  the JTR mileage rate for P.O.V.  (e.g., $0.54/mile) includes all reimbursable vehicle costs. There is no separate fuel allowance under "travel", if I drive my car or truck to a TDY destination. If I rent a vehicle on my own and claim "mileage" reimbursement, that's all I can claim, including the cost for rental and fuel. That's how DoD reimburses employee travel for authorizeed POV use. I must separately keep track of local mileage at the TDY site, which covers fuel, too.

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No. You pay first for use of the vehicle, by the day or week. If there is a mileage charge, there is usually an allowance, above which you pay extra per mile. The mileage charge is for wear and tear. I think most, but not all, car rentals these days come with unlimited mileage.

Correct. This depends upon how the vehicle is rented, either daily or weekly or monthly, including unlimited mileage, not including mileage or a set number of miles included with separate, extra fee for miles over a limit.  That rate is not the JTR rate. My point is that one can't claim reimbursement cost for both the rental cost and the JTR mileage rate. You can claim fuel for a rental car but not if you are simply claiming JTR mileage, as if it were a POV.

I don't know how a leased vehicle is treated.  I'm not familiar with any special treatment for leased vehicles. But one can't claim both "mileage" and separate costs for maintenance, fuel, etc. The "mileage rate" is supposed to represent the total cost per mile that is reimbursable, when using that method for reimbursement.

The OP probably knows how the JTR treats travel costs. But, you are correct that it explains how It works. Whether or not certain costs are "peanuts", the JTR dictates how it will be reimbursed. 

DoD Employee TDY travel costs have always been scrutinized down to the gnat level for compliance with the JTR, while seldom are contract costs or the amounts reimbursed on contracts scrutinized to that level.  Even DCAA auditors usually sample costs, not look at every penny.

I'm venturing a guess that few government negotiators are adept cost analysts, relying on "price analysis" and comparisons with "independent" government estimates (laugh) or previous prices paid, without full regard of the relevance of those to the instant purchase.

Early in my civil service career, the travel examiner called me "long distance" from Mobile, Al to inform me that he was denying a one hour, fifty cent parking fee at the Columbus, MS regional airport on the day that I left for a TDY.  My wife and small children always waited with me at the departure gate. Since we only had one car, she had to take me to the airport. The examiner said that she should drop me off and leave. This was in the days of $2.00/day per diem for TDY. I always ate at a cafeteria or a fast food restaurant to try to stay within the per diem rate.  We were as poor as church mice then.

Inasmuch as the phone call and his time probably cost more than the $0.50 he saved the government, I laughed. However, I was irked at the nickel and diming for the level of scrutiny of government employees, while they trusted me implicitly to negotiate contract mods and claims, some of which were in the millions of dollars. Nobody and I mean NOBODY checked my math or added up the redlined revised proposal for the settled amounts. The internal auditors were too busy checking every travel or other employee claims and the USACE contract auditors were busy auditing civil works proposals. And DCAA audits of military construction contract proposals were a joke.

From that point on, I requested a dollar reimbursement for the hour that the wife was charged to park at the airport on the return day, when she picked me up, instead of fifty cents each time she parked on drop off and pick up days. No questions asked.  

 

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Guest Vern Edwards
1 hour ago, joel hoffman said:

My point is that one can't claim reimbursement cost for both the rental cost and the JTR mileage rate. You can claim fuel for a rental car but not if you are simply claiming JTR mileage, as if it were a POV.

Agreed.

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Mac, I'm still not clear on what the facts are here.  You first stated that the fuel charge is in a subcontractor's proposal.  Then you said that the SME (whoever that might be) thought the fuel charges related to rented trucks.  However, you have not said whether it is the prime or sub who is renting the trucks.  Then you said that the fuel is associated with travel indicating it is not related to truck rental.  Also, I am not sure what is meant by travel in your posts.  I see three possibilities.  First, the contractor or subcontractor must travel to some place different from its normal place of business for some period of time.  Think electric utility repair following the hurricanes last summer.

Next, contractor personnel report to the contractor's facility then travel to the job site.  Third, the contractor personnel report directly to the job site.  In this case, the travel by the personnel would be considered commuting the cost of which is not reimbursable under the JTR.

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