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We are: Prime Defense Contractor. Customer: Government Agency Prime Contract: Labor Hour w/ negotiated rates on contract (Labor Cats and Rates) Subcontractor: Run of the mill Defense Contractor Subcontract: T&M w/ negotiated rates on subcontract (Labor Cats and rates) Q: Can a vendor have different rates for each slot/person on the subcontract even if they are the same LCAT/Level billed to the customer on the prime contract? This is execution, not proposal. Q: Can we give the vendor a rate on their subcontract that is only to be used for one person that drops to a lower pre negotiated rate if that "special" person leaves? Context below We are a prime defense contractor with a Labor Hour Contract with our government customer. The contract has been operating for months with a mix of our employees and subcontractors working for various companies in the same industry. Recently a position has been vacated on our prime contract that we are filling with a subcontractor. The sub employee in consideration is significantly preferred by our customer. As such, we have agreed to pay the vendor a slightly higher rate for this person than others with the same Labor category and level on the same subcontract. We also added a stipulation that if this vendor employee leaves the contract, the backfill rate drops to the pre-negotiated rate for that LCAT and level. None of our negotiations with the sub impact our cost to the customer. Seems reasonable to me, but I want to check my logic.

Hello Wifcon Forum Members, I've recently began reviewing a physically completed T&M/LH for closeout purposes. This particular T&M/LH contract has the following specifications under the heading "Maximum Hours and Cost" for the following two labor categories: Sr. Software Engineer - 656 hours at $/hour Program Manager - 18 Hours at $/hour A review of the contract invoices shows the following amount of Labor Hours billed/charged during the course of the contract: Sr. Software Engineer - 381 hours Program Manager - 38 hours As you can see, the SSE was well under the allotted hours and the PM was slightly over. My main questions concerning this situation are : Given that the PM charged more than the 18 allotted hours, would our company need to issue a refund of the 20 hours paid in excess of the PM allotted hours? Would the fact that we were well under the total amount of allotted hours (SSE & PM allotted total hours) and came in well under the funded amount (DE obligated the excess funding) to finish the job make any difference? I read through FAR 52.232-7 - Payments under Time and Materials and Labor Hour Contracts, specifically the section concerning "Hourly Rates" and more specifically part 3 (see bold below). Would hour allotments fit into the "labor qualification" mentioned below in part 3? "(a) Hourly rate. (1) Hourly rate means the rate(s) prescribed in the contract for payment for labor that meets the labor category qualifications of a labor category specified in the contract that are— (2) The amounts shall be computed by multiplying the appropriate hourly rates prescribed in the Schedule by the number of direct labor hours performed. (3) The hourly rates shall be paid for all labor performed on the contract that meets the labor qualifications specified in the contract. Labor hours incurred to perform tasks for which labor qualifications were specified in the contract will not be paid to the extent the work is performed by employees that do not meet the qualifications specified in the contract, unless specifically authorized by the Contracting Officer. (4) The hourly rates shall include wages, indirect costs, general and administrative expense, and profit. Fractional parts of an hour shall be payable on a prorated basis. (5) Vouchers may be submitted not more than once every two weeks, to the Contracting Officer or authorized representative. A small business concern may receive more frequent payments than every two weeks. The Contractor shall substantiate vouchers (including any subcontractor hours reimbursed at the hourly rate in the schedule) by evidence of actual payment and by— (6) Promptly after receipt of each substantiated voucher, the Government shall, except as otherwise provided in this contract, and subject to the terms of paragraph (e) of this clause, pay the voucher as approved by the Contracting Officer or authorized representative. (7) Unless otherwise prescribed in the Schedule, the Contracting Officer may unilaterally issue a contract modification requiring the Contractor to withhold amounts from its billings until a reserve is set aside in an amount that the Contracting Officer considers necessary to protect the Government’s interests. The Contracting Officer may require a withhold of 5 percent of the amounts due under paragraph (a), but the total amount withheld for the contract shall not exceed $50,000. The amounts withheld shall be retained until the Contractor executes and delivers the release required by paragraph (g) of this clause. (8) Unless the Schedule prescribes otherwise, the hourly rates in the Schedule shall not be varied by virtue of the Contractor having performed work on an overtime basis. If no overtime rates are provided in the Schedule and overtime work is approved in advance by the Contracting Officer, overtime rates shall be negotiated. Failure to agree upon these overtime rates shall be treated as a dispute under the Disputes clause of this contract. If the Schedule provides rates for overtime, the premium portion of those rates will be reimbursable only to the extent the overtime is approved by the Contracting Officer. (i) Performed by the Contractor; (ii) Performed by the Subcontractors; or (iii) Transferred between divisions, subsidiaries, or affiliated of the Contractor under a common control. (i) Individual daily job timekeeping records; (ii) Records that verify the employees meet the qualifications for the labor categories specified in the contract; or (iii) Other substantiation approved by the Contracting Officer." Any guidance/advice would be appreciated. V/r, KR_2016