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Anticipated Gov-Directed Overtime on a FFP Contract--what are the options?


schickson

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We're forming a new FP Engineering Services contract with a base and 4, 1-yr options--the contract is more for inspection services. Customer/management do not want an IDIQ contract (a FP contract with option years has "worked well" for years).

Situation: Occasionally, the customer needs the contractor to work overtime providing inspection, etc.,. I'm looking for a way to write the new contract which will allow both routine monthly services plus an avenue to authorize and pay for overtime without negotiating a modification on this FP contract. I'm thinking a L/H CLIN funded specifically for OT, with labor wrap rates in the contract used to pay against. The customer would request the OT and the CO would direct the contractor to perform against the LH CLIN a certain amount of hours within the pool of funds on the contract for this purpose.

Any better ideas or thoughts for further consideration?

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You say that "occasionally" there is some required overtime. Is there some reason that historical overtime hour data can't be provided as part of the RFP? If so, the bidders could price it into their FP bids.

Hope this helps.

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You say that "occasionally" there is some required overtime. Is there some reason that historical overtime hour data can't be provided as part of the RFP? If so, the bidders could price it into their FP bids.

Hope this helps.

That was my first thought, and still viable... but I'm looking for better options.

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If here_2_help's suggestion isn't feasible, your approach makes sense. However you could write a provision that the COTR is authorized to order OT instead of the CO just to make things administratively easier.

Thinking futher about allowing the contractor's proposal (and perhaps FFP award price) to include a certain amount covering OT based on historical use; what if the COTR (GOV) directs too much OT (in the ktr's opinion)? I suspect modification or claim would be the outcome? How could you write the contract to preclude this--thus my thought of a LH CLIN for OT.

Other thoughts?

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Thinking futher about allowing the contractor's proposal (and perhaps FFP award price) to include a certain amount covering OT based on historical use; what if the COTR (GOV) directs too much OT (in the ktr's opinion)? I suspect modification or claim would be the outcome? How could you write the contract to preclude this--thus my thought of a LH CLIN for OT.

Other thoughts?

Shickson,

Obviously this is a risk. A contractor is always looking for constructive changes to throw back at the CO. That's the nature of the FP contract type.

One control is to compare OT ordered vs. historical averages, and to include a solicitation provision that any deviations +/- x% will not trigger a contract price adjustment. Showing a relatively stable historical trend should go a long way to assuaging bidders' concerns about their ability to price the OT.

But frankly, if this is such a concern then maybe FP contract type isn't the right way to go.

H2H

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But frankly, if this is such a concern then maybe FP contract type isn't the right way to go.

H2H

Thanks H2H. The OT issue is only a small part of the overall contract. It has taken quite a leap of faith to get the customers to agree to anything but a CPAF mindset, even for our routine services. ;) They like the belly-button option of Cost type contracts and are very reluctant to go FP. I may strive for a FP IDIQ, but I'm not going back.... :P

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Who is to say the contractor needs to pay overtime? Tell them what service you want covered (24/7 or whatever). It's up to them how they schedule their people and what the shifts are, etc... You can give historical data so they can see the unusual hours that may be worked... and ask for FFP to cover the SOW. Please include ESTIMATED QUANTITIES language/clause. Negotiations for any increase/adjustment may happen only if you bust your estimated ceiling (max) by 115% or more...

-EB

We're forming a new FP Engineering Services contract with a base and 4, 1-yr options--the contract is more for inspection services. Customer/management do not want an IDIQ contract (a FP contract with option years has "worked well" for years).

Situation: Occasionally, the customer needs the contractor to work overtime providing inspection, etc.,. I'm looking for a way to write the new contract which will allow both routine monthly services plus an avenue to authorize and pay for overtime without negotiating a modification on this FP contract. I'm thinking a L/H CLIN funded specifically for OT, with labor wrap rates in the contract used to pay against. The customer would request the OT and the CO would direct the contractor to perform against the LH CLIN a certain amount of hours within the pool of funds on the contract for this purpose.

Any better ideas or thoughts for further consideration?

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Thanks H2H. The OT issue is only a small part of the overall contract. It has taken quite a leap of faith to get the customers to agree to anything but a CPAF mindset, even for our routine services. ;) They like the belly-button option of Cost type contracts and are very reluctant to go FP. I may strive for a FP IDIQ, but I'm not going back.... :P

I'm confused. You said in the first post "(a FP contract with option years has "worked well" for years)" Did you mean CP instead of FP as what you previously used?

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Who is to say the contractor needs to pay overtime? Tell them what service you want covered (24/7 or whatever). It's up to them how they schedule their people and what the shifts are, etc... You can give historical data so they can see the unusual hours that may be worked... and ask for FFP to cover the SOW. Please include ESTIMATED QUANTITIES language/clause. Negotiations for any increase/adjustment may happen only if you bust your estimated ceiling (max) by 115% or more...

-EB

Considering that option too. It's just that the OT seems to be sporadic and inconsistant. I think we'd end up either paying too much (lack of OT) or modifying the contract to adjust later. Still--a tried and true process.

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I'm confused. You said in the first post "(a FP contract with option years has "worked well" for years)" Did you mean CP instead of FP as what you previously used?

No. Worked well was in quotes because although the contract was FP, it apparently was treated like a CP--don't ask further, I'd have to lie ;) Something about having a clause in the contract (FAR 52.222-2) listing a ceiling for OT--the customer requesting the ktr to work--the contractor working and invoicing for the extra dollars--the CO approving the invoices and then getting money and modifying the contract every few months or so to increase the value by the OT hours. (no, I'm definitely not the CO; they're gone).

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You say that "occasionally" there is some required overtime. Is there some reason that historical overtime hour data can't be provided as part of the RFP? If so, the bidders could price it into their FP bids.

Hope this helps.

H2H

In this scenario, would there be a NTE Hours/Value amount of Overtime? As a contractor, I would be hesitant to bid without one.

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H2H

In this scenario, would there be a NTE Hours/Value amount of Overtime? As a contractor, I would be hesitant to bid without one.

FAR Fetched-

Would you (from the contractor stand point) rather that scenario, or a FFP contract with a basic CLIN for recurring services and an additional Labor Hour CLIN funded specifically for Gov-directed OT against wrap rates and COTR authority to direct as needed up to the amount of funding/ceiling on the OT CLIN? I think this process is better because you may have OT work under the base contract that is required because of other areas within your control that didn't get done. This will allow separation between OT that you require because of internal issues vs OT that we require based on government requirements.

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FAR Fetched-

Would you (from the contractor stand point) rather that scenario, or a FFP contract with a basic CLIN for recurring services and an additional Labor Hour CLIN funded specifically for Gov-directed OT against wrap rates and COTR authority to direct as needed up to the amount of funding/ceiling on the OT CLIN? I think this process is better because you may have OT work under the base contract that is required because of other areas within your control that didn't get done. This will allow separation between OT that you require because of internal issues vs OT that we require based on government requirements.

Without seeing the RFP, knowing the type of work and making the decision based solely on the premise, yes. I would like to see specific language that would authorize charging to the OT CLIN in addition to pre-COTR approval though ?

e.g. authority may be delegated to on-site Gov personnel, approval for OT may be granted at the discretion of the Gov after the OT service is performed or something that would not put me in the position of walking off site when there's obviously a need to provide the services OT.

Again, I'm not sure if the last part is necessary if all OT is known well in advance. I'd also need to know what "Overtime" is: 40 hours a week?, Holidays? Total hours for the year? etc.

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Example of where I think the FFP CLIN/OT CLIN would apply:

Requirement to provide Security Personnel at Gov site:

FFP CLIN - Contractor must provide X-amount of security personnel Mon-Fri 8am-5pm. I could easy price up a FFP Proposal for this coverage.

FFP OT CLIN - For events as directed by Gov on site after the hours herein, Contractor will charge the OT CLIN at a proposed rate.

This case I'd propos a Price for the entire Year + options and an OT CLIN rate.

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We're forming a new FP Engineering Services contract with a base and 4, 1-yr options--the contract is more for inspection services. Customer/management do not want an IDIQ contract (a FP contract with option years has "worked well" for years).

Situation: Occasionally, the customer needs the contractor to work overtime providing inspection, etc.,. I'm looking for a way to write the new contract which will allow both routine monthly services plus an avenue to authorize and pay for overtime without negotiating a modification on this FP contract. I'm thinking a L/H CLIN funded specifically for OT, with labor wrap rates in the contract used to pay against. The customer would request the OT and the CO would direct the contractor to perform against the LH CLIN a certain amount of hours within the pool of funds on the contract for this purpose.

Any better ideas or thoughts for further consideration?

I don't see where requiring the contractor to include a contingency for something (OT) in its standard rate,s which might or might not be necessary, would be better than simply defining what is considered to be overtime and including a unit-priced estimated quantity that would only be used as necessary.

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I don't see where requiring the contractor to include a contingency for something (OT) in its standard rate,s which might or might not be necessary, would be better than simply defining what is considered to be overtime and including a unit-priced estimated quantity that would only be used as necessary.

I would add that it is unwise to add unnecessary risk that can be fairly easily managed by pre-defining and pre-pricing overtime in a unit-priced CLIN that is only used as needed. Then, if you need more hours, you can add them at the pre-agreed rate. Be sure to say that, too in the contract.

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H2H

In this scenario, would there be a NTE Hours/Value amount of Overtime? As a contractor, I would be hesitant to bid without one.

Contractors bid FP on risky things all the time. I don't see the issue precluding bids, but I acknowledge your point. I think Joel has proposed another fine approach.

H2H

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Contractors bid FP on risky things all the time...

H2H

H2H

I agree that contractors bid FP on risky things all the time but the risk is typically on the Contractor's ability to perform, not that the Gov will "require OT at an unspecified amount". Even with a sample of past OT use in the RFP, it doesn't help if there are no parameters on the OT (e.g. only on Holidays).

Example: If Contractor A builds in a reasonable amount of OT Cost in a all-inclusive (planned time and potential OT) proposal and Contractor B decides to go much lower and only focus on bidding the planned time and decides to take a "risk" that there will be little or no overtime.

Let's say Contractor B wins - Would you have no problem during performance requiring overtime even though you awarded the contractor that showed little to no OT costs in their bid? Is it, "Shame on the Contractor for bidding so low?"

I know it's hypothetical on top of hypothetical but my point is why wouldn't you want to clearly separate the known from the unknown requirement? When I see RFPs that can't spell out the unknown from the known, I no-bid them and let someone else provide potential pro-bono work.

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One problem that often arises in contracting is the government has a need for contractual services and structures a contract strategy based upon what it thinks might work best without input from others, including industry. Here's where market reserach can really help. My suggestion is put together a high level statement of your program need, develop a list of questions you want answered including what might be the best contract type, and invite several industry sources including the incumbent in to talk. Also include some other government or commercial organizations that are buying the same or similar sources. Use their experiences and expertise to help you develop some concepts and approaches.

Take advanatge of what others have done and what industry experts do everyday to satisfy your need. Listen and pick what makes sense. It's free!

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Guest Vern Edwards
We're forming a new FP Engineering Services contract with a base and 4, 1-yr options--the contract is more for inspection services. Customer/management do not want an IDIQ contract (a FP contract with option years has "worked well" for years).

Situation: Occasionally, the customer needs the contractor to work overtime providing inspection, etc.,. I'm looking for a way to write the new contract which will allow both routine monthly services plus an avenue to authorize and pay for overtime without negotiating a modification on this FP contract. I'm thinking a L/H CLIN funded specifically for OT, with labor wrap rates in the contract used to pay against. The customer would request the OT and the CO would direct the contractor to perform against the LH CLIN a certain amount of hours within the pool of funds on the contract for this purpose.

Any better ideas or thoughts for further consideration?

What do you mean by "overtime"? According to FAR 2.101, overtime is work beyond the employer's normal workweek. It is always related to the hours worked by a particular employee. I don't understand what overtime would be in your case. Do you define it differently than it is defined in FAR? If so, how do you define it? Do you define it as any time worked outside of a particular period of time during a day or as time worked on weekends or holidays? If so, why? If you establish an overtime rate on that basis, it would enable the contractor to charge you at the overtime rate even though the employee might still be working within his or her normal workweek and the contractor does not pay the employee at the overtime rate.

If you are not departing from the FAR definition, then how would you know when overtime is necessary, since that would depend on the status of the particular employee assigned to the work? You're not managing the contractor's workforce, are you? You won't schedule its employees, will you? Who will decide when it is necessary to make a particular employee work longer than the contractor's normal workweek? Under the FAR definition, in what sense would the government ever "request" overtime? Would it request that a particular employee longer than the contractor's normal workweek?

I think that baierle made a good point:

Who is to say the contractor needs to pay overtime? Tell them what service you want covered (24/7 or whatever). It's up to them how they schedule their people and what the shifts are, etc... You can give historical data so they can see the unusual hours that may be worked... and ask for FFP to cover the SOW.

But I don't understand your situation and requirements well enough to know if baierie's approach would work for you.

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What do you mean by "overtime"?

Thanks Vern. I see your point. I guess what I'm really thinking of would be a CLIN for hours outside the normal routine work called for under the base/option year(s), (not OT per the def of FAR 2.1).

Perhaps a more appropriate explanation would be a FP contract could have two types of CLINs, one for routine inspection work M-F, 8-5; and another for work required outside the M-F, 8-5. For the "outside" work (involves only labor), I'm thinking a LH CLIN would work better than writing the contract as an IDIQ contract. The CLIN would be incrementally funded and the contract would specify the procedures for the Gov to direct the contractor to work the "outside" effort. The contract would contain wrap rates for labor and the Gov would pay for the "outside" labor directed/authorized to be performed in accordance with the contract. The contract could even have a ceiling for "outside" work and that ceiling amount would be changed to a firm amount annually at the end of the period.

I guess I'm trying to have my cake and eat it too by limiting the administrative process as much as possible while staying within the legal confines of CICA, etc. I could have a standard servie contract for M-F, 8-5, but then if work were needed above this, it would be a new requirement and modifying the contract to add the work would be subject to CICA. I could add into the RFP/contract language an expected amount of "outside" work with a variation in quantity clause--this would allow relatively smooth work unless the estimates were incorrect the now were either paying the contractor for work they are not doing, or modifying the contract to increase the value because we busted the VIQ limits. Optionally, I could write an IDIQ contract, or I could write a cost-type contract. I'm sure there are other options as well--what I'm looking for is advice on which approach would work the best for my simplistic example, and why.

Thanks to everyone for their ideas and suggestions. ;)

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We're forming a new FP Engineering Services contract with a base and 4, 1-yr options--the contract is more for inspection services. Customer/management do not want an IDIQ contract (a FP contract with option years has "worked well" for years).

Situation: Occasionally, the customer needs the contractor to work overtime providing inspection, etc.,. I'm looking for a way to write the new contract which will allow both routine monthly services plus an avenue to authorize and pay for overtime without negotiating a modification on this FP contract. I'm thinking a L/H CLIN funded specifically for OT, with labor wrap rates in the contract used to pay against. The customer would request the OT and the CO would direct the contractor to perform against the LH CLIN a certain amount of hours within the pool of funds on the contract for this purpose.

Any better ideas or thoughts for further consideration?

H2H

I agree that contractors bid FP on risky things all the time but the risk is typically on the Contractor's ability to perform, not that the Gov will "require OT at an unspecified amount". Even with a sample of past OT use in the RFP, it doesn't help if there are no parameters on the OT (e.g. only on Holidays).

Example: If Contractor A builds in a reasonable amount of OT Cost in a all-inclusive (planned time and potential OT) proposal and Contractor B decides to go much lower and only focus on bidding the planned time and decides to take a "risk" that there will be little or no overtime.

Let's say Contractor B wins - Would you have no problem during performance requiring overtime even though you awarded the contractor that showed little to no OT costs in their bid? Is it, "Shame on the Contractor for bidding so low?"

I know it's hypothetical on top of hypothetical but my point is why wouldn't you want to clearly separate the known from the unknown requirement? When I see RFPs that can't spell out the unknown from the known, I no-bid them and let someone else provide potential pro-bono work.

If this contract is for engineering services with respect to real property, then it should be procured under the Brooks Act procedures. This means that you select the firm based upon qualifications, then negotiate prices. If so, I don't understand why you cant simply negotiate prices for inspection services during normal hours and include unit priced line item(s) for overtime (after 8 hours or whatever???). You should be able to jointly develop the CLIN and the pricing for it. What am I missing here?

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If this contract is for engineering services with respect to real property, then it should be procured under the Brooks Act procedures. This means that you select the firm based upon qualifications, then negotiate prices. If so, I don't understand why you cant simply negotiate prices for inspection services during normal hours and include unit priced line item(s) for overtime (after 8 hours or whatever???). What am I missing here?

Not missing anything. I'm trying to determine the best, least administrative way to handle the extra, "outside" hours (see my previous post for more detail). For the "unit-priced line items" for extra hours, I'm considering:

CLIN 006; As-Needed Labor Hours As Directed by The CO (Other Than Included in CLINS 001-005) CEILING: $20,000/YR

In accordance with contract clause xxxx.

Clause: Something to the affect that the Gov may direct work outside the normal duty hours and payment will be made at the wrap rates included in the contract for the specific labor type and quantity directed. The ceiling price would be addressed, with a provision that it would be changed from ceiling to actual at the end of the period, etc.

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