T&M Structure and Surveillance/Admin

[Freyr]

My CO tasked me with working with our customer to set up a CLIN structure for a commercial T&M requirement. I feel I followed all the requirements of the FAR in doing so but they're not saying that we have to structure it based around labor categories and hours vs tasks (which is how I had it set up). They expected it to be structured as CLIN 0001 LCAT #1 1,000 hours at our IGCE rate to create a ceiling for that CLIN while I have it set up as CLIN 0001 Task #1 and expect the contractor to propose LCATs, a rate, and a ceiling for that CLIN (I suppose the CLIN itself doesn't need a ceiling, or does it?). Their concern is "how are we going to administer this without a ceiling on hours?" which I don't understand. My answer was that the COR would follow the QA Surv Plan, contractor would invoice and explain the tasks accomplished per the PWS and break out the hours, LCATs, and rates. Apparently this approach is "too risky" and will "complicate invoicing." What am I missing here? My CO doesn't seem willing to discuss any further and just wants me to change it.

[ji20874]

TASK:  Repair the broken cuckoo clock.

CONTRACT TYPE:  T&M

A single CLIN--

• 001, Repair Cuckoo Clock, T&M Ceiling Price $100

Two CLINs--

• 001, Break-Down and Quote, FFP $25
• 002 [option or upon direction] Repair Cuckoo Clock, T&M Ceiling Price $75 

 

[C Culham]

18 minutes ago, Freyr said:

My CO tasked me with working with our customer to set up a CLIN structure for a commercial T&M requirement. I feel I followed all the requirements of the FAR in doing so but they're not saying that we have to structure it based around labor categories and hours vs tasks (which is how I had it set up). They expected it to be structured as CLIN 0001 LCAT #1 1,000 hours at our IGCE rate to create a ceiling for that CLIN while I have it set up as CLIN 0001 Task #1 and expect the contractor to propose LCATs, a rate, and a ceiling for that CLIN (I suppose the CLIN itself doesn't need a ceiling, or does it?). Their concern is "how are we going to administer this without a ceiling on hours?" which I don't understand. My answer was that the COR would follow the QA Surv Plan, contractor would invoice and explain the tasks accomplished per the PWS and break out the hours, LCATs, and rates. Apparently this approach is "too risky" and will "complicate invoicing." What am I missing here? My CO doesn't seem willing to discuss any further and just wants me to change it.

By question - where in FAR 16.601 does it provide that a T&M contract can exclude fixed hourly rates for each labor category?  As a follow-on what is your read of FAR 52.216-31?  And 52.212-4 Alt 1.  And another reference FAR subpart 4.10.

All said payment by the task could be accomplished but I agree with the CO's concern, by the task I could see where you could have sub-line items.

TASK:  Hang and provide O&M for cuckoo clock.

CONTRACT TYPE:  T&M

CLIN with sub CLINS--

• 001 Hang and provide O&M for cuckoo clock (Ceiling Price for all work $XXX)
  • 001aa Laborer - Hang clock -  10 Hours @ $XX per hour 
  • 001ab General Maintenance Worker - 500 hours @ $XX per hour 
  • 001ac Materials - At cost + XX%

 

 

[Freyr]

40 minutes ago, C Culham said:

By question - where in FAR 16.601 does it provide that a T&M contract can exclude fixed hourly rates for each labor category?  As a follow-on what is your read of FAR 52.216-31?  And 52.212-4 Alt 1.  And another reference FAR subpart 4.10.

All said payment by the task could be accomplished but I agree with the CO's concern, by the task I could see where you could have sub-line items.

TASK:  Hang and provide O&M for cuckoo clock.

CONTRACT TYPE:  T&M

CLIN with sub CLINS--

• 001 Hang and provide O&M for cuckoo clock (Ceiling Price for all work $XXX)
  • 001aa Laborer - Hang clock -  10 Hours @ $XX per hour 
  • 001ab General Maintenance Worker - 500 hours @ $XX per hour 
  • 001ac Materials - At cost + XX%

 

 

I think those references require us to have a fixed hourly rate which is what we'd have but it doesn't require a set number of hours, we just wouldn't break it down by how many hours each task would take in the task order. I think not restricting the hours for each tasks gives the contractor some flexibility to perform the task in however many hours it takes to perform each task. If we stick with the cuckoo clock example, what if we have :

001 Clean Wall, Hang and provide O&M for cuckoo clock (Ceiling Price for all work $XXX)

• 001aa Laborer - Clean Wall - 5 hours @ $XX per hour
• 001ab Laborer - Hang clock -  10 Hours @ $XX per hour 
• 001ac General Maintenance Worker - 500 hours @ $XX per hour 
• 001ad Materials - At cost + XX%

What if Clean Wall takes only 3 hours, but Hang Clock hits 10 hours and the work isn't done? Wouldn't they need to stop working, then Government would need to inspect and not accept the work as incomplete? Or am I reading FAR 52.212-4 Alt I wrong? I would say that putting the number of hours doesn't really provide any value in this example but may hinder the contractor's ability to get the work done within the ceiling price. It might be useful for some other situation, though I'm not sure what that'd be. I guess I'm just having a hard time seeing what the point is of including hours in the contract. 

[Vern Edwards]

@FreyrIs the contract for just one job or for various work to be performed from time to time within a period of performance?

[ji20874]

33 minutes ago, Freyr said:

I guess I'm just having a hard time seeing what the point is of including hours in the contract.

Me, too.

The FAR tells us that the contract needs to include some labor categories, hourly rates for those labor categories, and a ceiling price.  It does not require that the contract fix or cap a number of hours for any labor category.

If I did include hours in a contract, I would show them as estimates.  If I thought the contractor might be reckless, I would require regular status reports and meaningful/rigorous oversight.

Freyr, No matter how "right" you might be, you still need to be able to work with your contracting officer.

Part of our problem with T&M contracts is that we use them to buy employees (Bob for 40 hours and Mary for 80 hours) rather than to achieve deliverables or outcomes (such as repairing a cuckoo clock).  

[Freyr]

21 minutes ago, Vern Edwards said:

@FreyrIs the contract for just one job or for various work to be performed from time to time within a period of performance?

This contract is for one job to support a migration from one system to another. Some of the tasks include creating a migration plan, draft necessary waivers, and assist in development of other specific documents. Like @ji20874 mentioned part of the issue, and I think this is where my CO has the most concerns which I do understand, is that it seems we're buying employees to work on tasks which may or may not have firm deliverables or outcomes. In this case, our one deliverable is a weekly status report (though I'm trying to see if we can't change that to something more tangible). 

[ji20874]

A weekly status report is not a deliverable or outcome.  Well, it might be delivered, but when we talk about purchasing supplies or services, we aren't talking about status reports.

Successful migration from one system to the other is a deliverable or outcome.

This should be a simple question:  Who is responsible for the migration from one system to another?

[select one]

• Contractor
• Government (with contractor providing support to Government employees)

[Retreadfed]

Freyr, have you been told how your approach would complicate invoicing?  It seems to me that every thing you identified as being included in an invoice is already required by FAR 52.232-7.

[Vern Edwards]

4 hours ago, Freyr said:

My CO tasked me with working with our customer to set up a CLIN structure for a commercial T&M requirement... Their concern is "how are we going to administer this without a ceiling on hours?" which I don't understand.

They are the ones who don't understand.

I'm not sure that T&M is the right kind of contract for your purposes, but here is a suggested T&M line item structure. One possibility among several.

1 hour ago, Freyr said:

This contract is for one job to support a migration from one system to another. Some of the tasks include creating a migration plan, draft necessary waivers, and assist in development of other specific documents. Like @ji20874 mentioned part of the issue, and I think this is where my CO has the most concerns which I do understand, is that it seems we're buying employees to work on tasks which may or may not have firm deliverables or outcomes. In this case, our one deliverable is a weekly status report (though I'm trying to see if we can't change that to something more tangible). 

0001 - Migration Support IAW the Statement of Work - 1 - Job - Ceiling Price $...

000101 Labor Category A - (Est. Qty. ____, Unit: HR, Hourly Rate $___, Est. Cost $____)

000102 Labor Category B - (Est. Qty. ____, Unit: HR, Hourly Rate $___, Est. Cost $____)

000103 Materials (Est. Cost. $ _____) 

Or something like that.

I presume that you are familiar with FAR Subpart 4.10 and, ideally, with DFARS 204.71 and DFARS PGI 204.71.

All the estimates should add up to the ceiling price. You could use two contract line items with exhibits for labor and materials instead of informational subline items.