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Sunstrider

"Un-priced" IDIQ Contract

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Assume the following:

  • You serve in DoD and must form an IDIQ contract, on a sole source basis, valued at up to $40M.
  • Contract will provide non-commercial, non-severable services in support of a weapon system.
  • To streamline ordering, the IDIQ contract will incorporate pre-negotiated labor categories and respective FFP/CPFF fully burdened labor rates via exhibit in Section J.
  • None of the IDIQ CLINs will be priced, as hours and labor rates' pricing arrangement (FFP or CPFF) will be negotiated at the order level
  • Your RFP explicitly states that the proposed IDIQ contract value will have a total value of up to $40M.

 

Questions:

1) The Contractor proposes labor categories/labor rates by cost elements. Is such a proposal certified cost and pricing data pursuant to FAR 15.403-4?

2) Is it necessary to standardize profit/fee rates for the entire IDIQ? Or can one negotiate hours, pricing arrangement, and also profit/fee rate(s) per task order?    **EDIT: If the proposal is deemed subject to TINA, then yes, per FAR 15.401, profit/fee must be determined in the IDIQ**

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I will take a stab at this…..

By your description you have hourly rates for probable tasks but you do not have “price” for particular tasks.

So then the answers to your questions are –

  1. This question is little confusing.

    1. First nothing is “certified” by simple submission rather cost or pricing data must be certified by the act of providing the certification at the appropriate point in time as required.

    2. If you are asking if the rates in Section J are to be certified when agreed to for the parent IDIQ my view is no because you have not priced anything you have simply placed rates in Section J that will be used to price upcoming task orders.   At proposal for a specific task is when the certificate would be required because from your description that is when you are in fact pricing something you are going to be paying for (the specific task).  I would note here that for the tasks the certification would be required if an exception to cost or pricing data does not apply to that task.

    3. Consider as well that in your described scenario it could be concluded that you shall be following the Uniform Contract Format required by FAR Part 15 and as such the order of precedence for the contract following the UCF places Section J below the Schedule which is further support to my conclusion that you have not established prices/costs for the IDIQ you have simply included a proposed list of labor prices that may or may not be used in pricing specific tasks.

PS -As an aside if my reasoning is correct as remember I am taking a stab at your question then I would if in your shoes inform the contractor in the parent IDIQ that certified cost or pricing data will be required when appropriate for the individual tasks.

  1. The latter based on the fact that you have some labor rates stated in Section J but you do not have, until receipt of a proposal for a specific task, the other elements of cost necessary to price the task order.

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I’ll also take a stab at it. 

If you are contractually locking in negotiated labor rates to be used in task orders, then I feel that those may constitute cost or pricing data or the underlying basis for those rates may constitute cost or pricing data. There may also be judgemental data involved. 

Once the rates are established,  there is no basis to challenge the data in each task order. It’s too late to certify the labor rates other than certifying that the labor rates  in the task are the ones in the contract and that the labor categories are the appropriate categories intended for use in the task.

Otherwise, there is no reason to establish unit rates in the base contract. 

Profit for FFP tasks and fee for CP tasks should reflect the complexity, Risk, and other factors that are r typically analyzed when using the weighted guidelines for profit or fee.  I would suggest requiring in the contract that the negotiated profit or fee will be based upon the DoD’s weighted guidelines method . 

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C Culham, must the order of precedence be applied? I do not see that Sections B and J of the IDIQ would conflict, unless I am missing something. There would be no prices in the IDIQ Section B, so no conflicting requirements that would take precedence over the IDIQ Section J.

As for task orders, their Sections B would include the priced CLINs necessary for the work to be performed.

Are there conflicts I am not seeing? How does your order of precedence concern change, if one depicts the negotiated fully burdened labor rates in a table within the IDIQ Section B?

As for additional context/thoughts on the proposed labor:

  • The proposed fully burdened labor rates are explicitly derived by cost element--direct labor, fringe, overhead, and G&A rates.
  • The Contractor has also proposed their actual direct labor from previous contracts, so these qualify as verifiable facts/cost data.
  • To meet the definition of "price" at FAR 15.401, the profit/fee must be negotiated/incorporated in the basic IDIQ.
  • The date on which the parties agree on direct/indirect labor rates, and profit/fee, will be the date specified on the certificate of COPD pursuant to FAR 15.406-2.

To my read, the Contractor's s proposal of labor, for an IDIQ contract that is defined at up to $40M in value, is subject to 10 U.S.C. 2306(a).

Is this wrong?

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Sunstrider - Application of order of precedence will apply if the clause is in the contract.  As to your thought that nothing is in B I get it and might agree with your further thoughts.  However I am still left as to why J carries prices (labor rates) that you will apply to task orders.  Is labor, and by that I mean every labor rate you have in J, the only cost you anticipate in any order?  No other costs beyond labor and no other labor than what would be specifically listed in J?  If yes the possible the thoughts of Joel might apply but if no then by my view your certified cost or pricing data is not fully accounted for if you do at the IDIQ level for the rates.

( really hate to say this at the hazard of raising a whole other line of discussion but if all yes to the above why is an IDIQ why not a straight labor hour contract?)

Left wondering, you now bring up 15.401 but by title of your post you have admitted that you have an "unpriced" IDIQ???????????

10 USC 2306(a).   So what has the IDIQ parent contract bought?  Nothing except the minimum, correct?   As such I am left with the thought that if the minimum is below the requirement for certified cost or pricing data you would not need nor get any.  Gone 360 I know but the TO is what is going to buy something so that is where the certification applies.

Now I know I am providing a FAR reference that is only applicable to a multiple award IDIQ  with this next comment but for it seems that while it does not apply the concept does for your "unpriced" IDIQ.   Multiple award ones are unpriced from the view that pricing occurs after fair opportunity.   In your example pricing occurs sort of in the same way, you got labor rates but you do not know everything until you have a proposal.  The reference is 16.505(b)(3).  And yes I find no other such reference for a single award IDIQ but I conclude there is no reference because facts of the need for certified cost or pricing data will depend on how you set up the IDIQ.

 

 

 

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