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We recently responded to a solicitation that included FFP labor CLINs with the following caveat:

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The Contractor shall fill all vacancies without lapses except U.S. recruited personnel to be replaced have thirty (30) calendar days grace period after a vacancy occurs. The Contractor is expected to maintain the required level of performance if vacancies occur during the task order period of performance.  The Contractor is required to maintain 98% fill rate at all times.  The Government reserves right to take deduction for less than 98% fill rate from the payment.

During Q&A we asked how this deduction would be calculated and we received the following response:

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The deduction will be calculated by taking the number of vacancy days multiplied by the full burdened per day/hour wage rate for the position.

Is it common practice to impose "fill rate" requirements on a performance based FFP labor contract?  Is that even allowable under the FAR?  It seems as though the CO is attempting to benefit from an FFP pricing structure and at the same time, penalize offerors as though it was T&M.  If the contractor adequately performs IAW the the terms of the contract, can they still be penalized for not filling FFP-based positions within a certain time-frame?

 

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A price reduction should be the least of your worries.  The contracting officer could terminate the contract for default or cause for your failure to provide the required staffing.

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7 hours ago, Tim B. said:

Is it common practice to impose "fill rate" requirements on a performance based FFP labor contract?  Is that even allowable under the FAR?

That's a new one for me. It's allowable unless it's expressly prohibited. I know of no express prohibition.

7 hours ago, Tim B. said:

If the contractor adequately performs IAW the the terms of the contract, can they still be penalized for not filling FFP-based positions within a certain time-frame?

That would be impossible in your scenario. A 98% fill rate is a term of the contract. If you're not meeting that, then you're not adequately performing IAW the terms of the contract.

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1 hour ago, Tim B. said:

Thanks Don - similarly, "It's allowable unless it's expressly prohibited." is a new one for me as well!  I see you point then, that the fill rate is a term and must be met.

My comment is based on FAR 1.102(d):

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The role of each member of the Acquisition Team is to exercise personal initiative and sound business judgment in providing the best value product or service to meet the customer’s needs. In exercising initiative, Government members of the Acquisition Team may assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority.

 

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@Tim B.  The responses have you headed down the right track so these comments are just for what it is worth.

In the subject you used included the terminology "Task Order".   While the ideal proposed by the government is not prohibited in a general sense by the FAR if truly a Task Order on which the competition is taking place then the IDIQ contract terms and conditions is what prevails.  You may consider doing a deep dive of the  IDIQ to see what it provided with regard to what would occur with Task Orders.  Probably open ended but if the parent IDIQ required a labor pricing with no caveat on the "fill rate" and the IDIQ makes no mention that a fill rate will be required on tasks you might have an in.   As you imply the requirement for a fill rate at such a demanding degree does effect price and I would propose one could raise to the government that new standard applied to the TO that was not in the IDIQ could be reason to increase the fully burdened labor price stated for the IDIQ.

If not for a TO but for the parent IDIQ contract the previous responses apply but remember prior to contract award everything is negotiable.  In my read of the requirement I keyed in on two things "reserve the right" and the 98%.  To the former I would be concerned about how open ended it is.  By example if in the parent IDIQ and there is probability of multiple CO/COR's and  the reserved right will very likely be applied inconsistently.   Negotiation (by this I mean raise the matter during solicitation) might be able to fix it where what the line in the sand is really going to be...98%,  something less than 98% or just on the reserved whim of the government?   To the latter I simply just shake my head as by my experience with 5 agencies I worked for there is not a one that could accomplish such a fill rate.   The government does have a standard within case law about impossibility to perform.  A negotiation stance on such a standard might help get something more realistic.   And most specifically if a commercial item the government has an obligation to not impose standards that are not found within the commercial sector.   So what if commercial services then what is the standard for fill rate found within the industry?

 

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I think Carl has pointed out some valid issues.  I have seen the government use clauses like this before, but without having fully thought out the ramifications of what is in the clause.  For example, what if the vacancies are caused by the  actions of the government?  A prime example from a client of mine, the contract called for the contractor personnel to have security clearances.  As soon as a contractor employee would receive a clearance, the government would offer the employee a job at higher pay than was the contract rate.  Because clearances are given by the government and an replacement employee could not be used on the contract until (s)he received a clearance.  Over the period of contract performance, the government hired over 120 employees away from this small business.

Another issue is the clause gives the government discretion it impose a price reduction.  Such discretion must be exercised in a rational manner and cannot be an arbitrary or unreasonable manner.  Thus, this seems to open up an automatic basis for appeal if a reduction is imposed.  Finally, it appears that a price reduction is tied to a failure to perform the task.  This is different from complying with the terms and conditions of the contract as a whole.

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Unfortunately this type arrangement is showing up too often.  Contractors are slow to fill vacancies.  Many companies often pull good employees off one to fill positions on new jobs.  It’s a common occurrence with small businesses that are excellent performers and in demand.  It also occurs at mid to large companies with cumbersome and lengthy HR processes In recruiting and filling jobs.

One way to address this is maintain a pool of employees that either can be pulled from other projects or maintain a bench.  Build that into your labor rates.

None of this should happen for many reasons - goes against PBA principles, smacks of personal services, government being involved in contractor internal processes when they shouldn’t, and on and on.  But it’s a reality to deal with after award.  Many companies do a great job in the preproposal processes identifying risks and seeking clarifications on ambiguities.  If things aren’t resolved adequately they often make assumptions in their proposal being sure to avoid non responsive issues.

Baring the agency negotiating something different, your only safe bet is adjust so you comply when vacancies occur.

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6 hours ago, formerfed said:

Baring the agency negotiating something different, your only safe bet is adjust so you comply when vacancies occur.

Oh but I dare say if the parent IDIQ not play at all or if a task order seek the ombudsman or protest as the case may be!  I say this noting Don's post on "team:!

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Thanks everyone for the thoughtful replies!  There is no language in the IDIQ that addresses fill rate; I think that's a great place to start negotiating - addressing the issue that the IDIQ ceiling rates were developed absent such a requirement.  I also like the idea of asking for clarity on "reserves the right" - will you or won't you impose these penalties, it can't just be left up the whim of the day by whomever is currently administering the contract.

It just seems so "conceptually wrong" to impose such a thing on an FFP contract - if you want T&M or Cost Plus Fixed Fee (bodies in seats) then solicit that way.  Perhaps I'm wrong, but my (basic) understanding of an FFP-type solicitation is that it should be used when the requirements are generally well defined and the offerors bid a price to provide the required SERVICES at the required PERFORMANCE levels; the how isn't or shouldn't be part of the equation.  If you're soliciting to mow a 1 acre lawn to 3 and 1/4 inch length twice a month - I can propose a cost for that.  Whether or not I use one or five people/mowers is up to me.

I do appreciate though, the latitude given by FAR 1.102(d) - that was really helpful for me to get my head around this.

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I am okay with buying fixed staffing with a FFP contract.  The contractor agrees to provide the staffing and the Government agrees to pay the fixed price.  Everyone should be happy.

Tim, your agency wants 100% staffing on a FFP contract, but will still pay the FFP if you only deliver 98%.  Your agency is being very generous.  And if you deliver less than 98%, the agency "reserves the right" to reduce the price accordingly.  That's fair.

If these terms seem risky to you, you should bid your FFP accordingly.  The price you propose should reflect the risk you are being asked to take.

But it seems unreasonable to insist on receiving the entire FFP when you haven't kept your end of the bargain.

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Quote

The Contractor shall fill all vacancies without lapses except U.S. recruited personnel to be replaced have thirty (30) calendar days grace period after a vacancy occurs. The Contractor is expected to maintain the required level of performance if vacancies occur during the task order period of performance.  The Contractor is required to maintain 98% fill rate at all times.  The Government reserves right to take deduction for less than 98% fill rate from the payment.

If the contract provides for a 30 calendar day grace period to fill a vacancy, should the vacancy occur because the individual was recruited away by the United States [government], then how is the 98% fill rate to be calculated? With or without the exception? If the contractor fills the vacancy in 15 days, can it still use the 30 day grace period when calculating the fill rate, which would be an offset value against other vacancies?

The language is patently ambiguous.

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11 minutes ago, here_2_help said:

The language is patently ambiguous.

Yep.  And for patent ambiguities, the burden is on the offeror to seek resolution before submitting its proposal.

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3 hours ago, ji20874 said:

Yep.  And for patent ambiguities, the burden is on the offeror to seek resolution before submitting its proposal.

Yep

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8 hours ago, here_2_help said:

If the contract provides for a 30 calendar day grace period to fill a vacancy, should the vacancy occur because the individual was recruited away by the United States [government], then how is the 98% fill rate to be calculated? With or without the exception? If the contractor fills the vacancy in 15 days, can it still use the 30 day grace period when calculating the fill rate, which would be an offset value against other vacancies?

The language is patently ambiguous.

Actually I don’t see it as all that unclear.  The 98% gets calculated with the exception for that position during the grace period.  If I took less than 30 days, there’s no offset.  Since Mike already responded, there’s not much that can be done at this point.  If he wins the award, getting clarification and agreement on the specific language at the out set is a good idea.

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Who decides if a position is filled?  Can one person fill two positions simultaneously?  If you are the decision maker on this matter, you should have little problem filling the positions.

Is a fully burdened daily or hourly rate stated as part of the contract or solicitation response?  State it as $1 per hour or $1 per day in the proposal.  Hours times fully burdened rate per hour may be less than the firm fixed price.

 

 

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On 8/17/2020 at 4:44 PM, Tim B. said:

We recently responded to a solicitation that included FFP labor CLINs

1.  So, are units of measure for labor CLINs expressed as hourly or some other rate (e.g., daily, weekly, monthly)? 

On 8/17/2020 at 4:44 PM, Tim B. said:

The deduction will be calculated by taking the number of vacancy days multiplied by the full burdened per day/hour wage rate for the position.

2.  What does “per day/hour” mean?

3.  You said that the “solicitation” has FFP labor CLINs. are you referring to a solicitation for the base ID/IQ or for a task order on an existing ID/IQ that has FFP labor CLINs?  From one of your posts, it appears that there is a Base ID/IQ in place, probably with Some unit of labor with ceiling rates.

4.  If this is a FFP task order proposal solicitation,  how are FFP task order prices proposed? In other words, how is one supposed to price this solicitation? Does the task order proposal request identify specific numbers of hours for specific positions? Is it lump sum priced or does it include CLINs for each position? You said it “included FFP labor CLINs”?

Please clarify.  Thanks.  

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Hi Joel!

I'll go down your list in order:

1. The base ID/IQ specifies hourly ceiling rates for each labor category.  In the TO I'm referring to, the instructions were to provide FFP labor CLIN level pricing, inclusive of any ODCs.  As an example:

CLIN 0001 FFP Service Support QTY (9.5) Unit (Month); no requirement to bid hourly rates. 

2. In subsequent discussions, the contracting office explained that they would calculate the per hour cost based on the number of staff assigned to each CLIN to extrapolate an hourly rate. 

3. See response to item 1.

4. See response to item 1.

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  • 1 month later...
On 8/20/2020 at 8:50 AM, Tim B. said:

Hi Joel!

I'll go down your list in order:

1. The base ID/IQ specifies hourly ceiling rates for each labor category.  In the TO I'm referring to, the instructions were to provide FFP labor CLIN level pricing, inclusive of any ODCs.  As an example:

CLIN 0001 FFP Service Support QTY (9.5) Unit (Month); no requirement to bid hourly rates. 

2. In subsequent discussions, the contracting office explained that they would calculate the per hour cost based on the number of staff assigned to each CLIN to extrapolate an hourly rate. 

3. See response to item 1.

4. See response to item 1.

Tim, so sorry that I just saw this and it is probably overcome by events. Since the CLIN unit is “month” for “service support” for 9.5 months, you would likely be identifying at least the numbers of personnel to be provided.

You said they will extrapolate an hourly rate. Apparently, the type and mix of employees for this CLIN is either all the same or they don’t care and won’t differentiate if there is a vacancy or other labor shortage. However, earlier, you said they would calculate the deduction by using the fully burdened rate for the position. 

At any rate, it looks like there is enough info for a  proposer to price the CLIN and understand the government’s fill requirements. 

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I have no idea how the above post occurred. 

I “copied” a single sentence from the original post and then “pasted” it into my last post but instead, the program created a new post complete with all programming code. I tried to delete it but could not edit it. The program said that it could not be edited.

I did not “quote” it. 

Edited by joel hoffman
Bob removed the strange post. Thanks, Bob
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There have been 2 major upgrades to the software within the past 10 days.  

I saw Joel's post and could not figure out what happened.  I deleted it.  I also note that in TimB's last post, there is the word author in the right hand top which should not be there.

Below that and Joel's post there is something that says 1 month later...  I cannot access those words nor the word author as the administrator.

After Joel's post with the gibberish there was the second upgrade that I installed last night.  I don't know if that upgrade did anything that matters or what.

I could not replicate the gibberish that was posted in Joel's post. 

Please let me know of any other odd things you see in future posts so I can collect them and send them to the developers to fix.

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40 minutes ago, bob7947 said:

...I also note that in TimB's last post, there is the word author in the right hand top which should not be there.

Below that and Joel's post there is something that says 1 month later...  I cannot access those words nor the word author as the administrator.

Bob, I don’t see the word “author” in Tim’s post.

The new software does use a line separator and a note indicating “unread posts” when I access a thread. I like that feature. I never understood what the “stars” and “circular, bold bullets were for on the topic area pages or the distinction between them. I still don’t know what the distinction is but the bold bullet disappears after I have opened the thread, although I must refresh the topic areas page rather than just “go back”  to see that the bullet disappeared. 

And it is true that my post yesterday was one month after Tim’s last post, wherein he answered my questions to him. Yesterday morning I noticed his last post. He took the time and effort to answer my questions, so I owed him a response. I apologize to him for the delay.

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