Adding a Person under CPFF (Term / LOE)

[Vern Edwards]

34 minutes ago, Guest108830 said:

PoP Jan 1 - Dec 31 (Base)

Labor Cat1 1920 (hours)

Labor Cat2 1920 (hours)

etc.

Labor Cat10 1920 (hours)

Total Hours 19,200 (hours)

@Guest108830 When I see that, my question is: Is there anything else in the contract which stipulates that the hours of each labor category must be delivered at a rate that will provide continuous service from Jan 1 through Dec 31? It might be stipulated in the statement of work or some special clause. Must the contractor deliver hours at the same rate in each month? Can it provide 1,500 hours in one labor category in one month and 2,340 in that category the next?

On 5/4/2023 at 9:39 AM, Guest108830 said:

[W]hat happens when the Contractor runs out of hours before reaching the end of its PoP - then what?

Good question. Why would the parties allow that to happen if the contract clearly specified otherwise?

[Retreadfed]

Guest, is there a CLIN for each labor category?  If not what is the CLIN structure of the contract?

[Vern Edwards]

This is a waste of time.

[formerfed]

@here_2_help  I’m not saying it’s the same situation here but twice in my career, contractors proposed something similar because they had an employee without a place to bill.  So they came up with adding them to an existing contract.  In both cases the employees were good and would add value to the program.  It just happened they came off other projects and were available.

@Guest108830 you haven’t mentioned anything about discussions with the CO.  Don’t you think that’s a good place to be right now?  Explain the need and justification for the added staff and that the program office is agreeable and mutually map out a plan.

[Guest108830]

No CLIN specific for the labor cats. Applicable Labor CLIN(s) specifies the unit of measure along with a dollar value. And yes, discussions have been had with the Contracting Officer and COR and no objections to bringing on the 11th person.

Perhaps it might be easier to re-state the inquiry to its very basics. 

• What happens when a Contractor provides more hours than contracted for under a CPFF (Term)? 

I can find no regulation, rule or law that prohibits a Contractor from performing more than the contracted hours and if so, what result?

[Don Mansfield]

8 minutes ago, Guest108830 said:

• What happens when a Contractor provides more hours than contracted for under a CPFF (Term)? 

I can find no regulation, rule or law that prohibits a Contractor from performing more than the contracted hours and if so, what result?

Let's say you do that and want to get paid for the extra hours. What contractual right do you have to payment? The burden is on you to prove you have the right to payment--not that you worked extra hours.

[Vern Edwards]

2 hours ago, Guest108830 said:

I can find no regulation, rule or law that prohibits a Contractor from performing more than the contracted hours and if so, what result?

You should have posted in the Beginners Forum.

1. Knowingly allowing a contractor to perform services on a voluntary basis is a potential violation of the Anti-Deficiency Act.

2. Allowing a contractor to perform work (a) in the expectation of being paid or (b) in a manner that might entitle them to be paid without an administrative commitment of funds is a potential violation of the Anti-Deficiency Act.

With what result? See:

https://www.gao.gov/legal/appropriations-law/resources

Quote

Federal employees who violate the Antideficiency Act are subject to two types of sanctions: administrative and penal. Employees may be subject to appropriate administrative discipline including, when circumstances warrant, suspension from duty without pay or removal from office. In addition, employees may also be subject to fines, imprisonment, or both.

3. Buying additional quantities of supplies or services on a noncompetitive basis without a justification and approval is a violation of the Competition in Contracting Act. See FAR Part 6.

A contracting officer who accepts voluntary services from a contractor could be in trouble.

A contracting officer who lets a contractor do extra work in expectation of getting paid without an administrative commitment of funds could be in trouble.

A contracting officer who buys additional services from you without complying with CICA could be in trouble.

A contractor who does work above and beyond without an appropriate contract modification might not get paid.

[Guest108830]

Vern - there's also 32.704(c). Assume for arguments sake there are enough funds on contract to cover the hourly overage. Otherwise, we'll get bogged down on tangents concerning the dollar side the CPFF (Term) brings. Focus is singularly on the level of effort (hours).

Don - what contractual right to payment? I'm thinking the moment the updated software becomes used by the Government is the moment compensation to the Contractor attaches under cost reimbursement principles. Otherwise, Government must reject that work.

[Don Mansfield]

32 minutes ago, Guest108830 said:

Don - what contractual right to payment? I'm thinking the moment the updated software becomes used by the Government is the moment compensation to the Contractor attaches under cost reimbursement principles. Otherwise, Government must reject that work.

Have you read the Limitation of Cost clause at FAR 52.232-20 (which should be in your contract)? Paragraphs (d) & (e) in particular?

Quote

(d) Except as required by other provisions of this contract, specifically citing and stated to be an exception to this clause-

(1) The Government is not obligated to reimburse the Contractor for costs incurred in excess of (i) the estimated cost specified in the Schedule or, (ii)if this is a cost-sharing contract, the estimated cost to the Government specified in the Schedule; and

(2) The Contractor is not obligated to continue performance under this contract (including actions under the Termination clause of this contract) or otherwise incur costs in excess of the estimated cost specified in the Schedule, until the Contracting Officer (i) notifies the Contractor in writing that the estimated cost has been increased and (ii) provides a revised estimated total cost of performing this contract. If this is a cost-sharing contract, the increase shall be allocated in accordance with the formula specified in the Schedule.

(e) No notice, communication, or representation in any form other than that specified in paragraph (d)(2) of this clause, or from any person other than the Contracting Officer, shall affect this contract’s estimated cost to the Government. In the absence of the specified notice, the Government is not obligated to reimburse the Contractor for any costs in excess of the estimated cost or, if this is a cost-sharing contract, for any costs in excess of the estimated cost to the Government specified in the Schedule, whether those excess costs were incurred during the course of the contract or as a result of termination.

 

[Guest108830]

Don, understood. There are enough funds on contract to cover the added cost of bringing on the 11th person (for 960 hours). Aware of the notice requirements which deals with the dollars. Contractor won't exceed the estimated cost, but it will exceed the level of effort (hours).

There's enough money on contract to absorb the increase of level of effort (hours) for the 11th person. It's the level of effort (hours) that are at issue.

[Retreadfed]

2 hours ago, Guest108830 said:

I'm thinking the moment the updated software becomes used by the Government is the moment compensation to the Contractor attaches under cost reimbursement principles.

I'm a little confused.  You say the contract is an LOE contract, but you refer to updated software.  Is the contract for services to update software or is it a contract for software where the software is a deliverable under the contract?

[Vern Edwards]

It is impossible to discuss this matter intelligently without being able to read and interpret the contract itself as a whole.

[Guest108830]

RetreadFed - Contract is for on-going programming services with the Govt's existing software. There is no delivery of software itself (as a canned product). 

Vern - there's been a plethora of information provided that coincides nicely with the monetary side of things. As I've said before, that's the easy side of things. There doesn't seem to be a great deal of information available as to the level of effort (hourly) portion. Looking to the contract for words that address performance of the level of effort is to no avail as previously indicated. Unfortunately stuck with what's been provided. 

If you are saying, don't look to a regulation or a contractual clause as this situation is not addressed in either - instead, look to the contract words and how the Government contracted with the Contractor to perform its level of effort (hours) -- then OK, then that's the answer. In my situation, the contract is silent in that arena, apart from the denoted labor cats and hours per labor category as previously mentioned. So looking to a regulation or contract clause is for not. And if this is the case, then there's no prohibition against the Contractor overproviding a level of effort (hours) provided there's existing monies on contract. In which case, bring on the 11th person. 

[Don Mansfield]

28 minutes ago, Guest108830 said:

And if this is the case, then there's no prohibition against the Contractor overproviding a level of effort (hours) provided there's existing monies on contract. In which case, bring on the 11th person. 

I think that you are assuming that a contract would be created if the Government accepted out-of-scope work (i.e., hours above the stated LOE). Is that correct?

[Guest108830]

Don - no. No new contract.

Do you believe the overage on hours pushes those extra hours into an out of scope situation as it deviates from the contracted level of effort (hours) and specific time period that the parties originally bargained for? If so, that was my original thinking -- that overproviding hours runs afoul of what the contracting parties bargained for even though there's existing monies on contract.  

[Guest108830]

Found the following clause on the internet. It does not apply in my situation but it reinforces some thoughts. I'm working with a DoD contract and the following is from the EPA supplement.

It clearly delineates the level of effort (hours) the Contractor must provide and also states can go 10% above the hours. But apart from that, such will not be compensated. Clear and concise.

I believe I have my answer - the LOE is a hard ceiling absent a surge CLIN or other similar mechanism that allows more hours to be provided above the standard LOE / hours. Thank you.

====================================================

1552.211-73 Level of effort - cost-reimbursement contract.

As prescribed in 1511.011-73, the contracting officer shall insert the following contract clause in cost-reimbursement contracts including cost contracts without fee, cost-sharing contracts, cost-plus-fixed-fee (CPFF) contracts, cost-plus-incentive-fee contracts (CPIF), and cost-plus-award-fee contracts (CPAF).

Level of Effort - Cost-Reimbursement Contract (MAY 2016)

(a) The Contractor shall perform all work and provide all required reports within the level of effort specified below. The Contractor shall provide up to ________ direct labor hours for the base period. The Government's best estimate of the level of effort to fulfill these requirements is provided for advisory and estimating purposes. The Government is only obligated to pay for direct labor hours ordered and corresponding fixed fee for labor hours completed.

(b) Direct labor includes personnel such as engineers, scientists, draftsmen, technicians, statisticians, and programmers, and not support personnel such as company management or data entry/word processing/accounting personnel even though such support personnel are normally treated as direct labor by the Contractor. The level of effort specified in paragraph (a) of this section includes Contractor, subcontractor, and consultant non-support labor hours.

(c) If the Contractor provides less than 90 percent of the level of effort specified for the base period or any optional period exercised, an equitable downward adjustment of the fixed fee, if any, for that period will be made. The downward adjustment will reduce the fixed fee by the percentage by which the total expended level of effort is less than 100% of that specified in paragraph (a). (For instance, if a hypothetical base-period LOE of 100,000 hours is being reduced to 70,000, the fixed fee shall also be reduced by the same 30%. Using a corresponding hypothetical base-period fixed fee pool of $300,000, the reduced fixed-fee amount is calculated as: $300,000 × (70,000 hours/100,000 hours) = $210,000.)

(d) The Government may require the Contractor to provide additional effort up to 110 percent of the level of effort for any period until the estimated cost for that period has been reached. However, this additional effort shall not result in any increase in the fixed fee, if any.

(e) If this is a cost-plus-incentive-fee (CPIF) contract, the term “fee” in paragraphs (c) and (d) of this section means “base fee and incentive fee.” If this is a cost-plus-award-fee (CPAF) contract, the term “fee” in paragraphs (c) and (d) means “base fee and award fee.”

(f) If the level of effort specified to be ordered during a given base or option period is not ordered during that period, that level of effort may not be accumulated and ordered during a subsequent period.

(g) These terms and conditions do not supersede the requirements of either the “Limitation of Cost” or “Limitation of Funds” clauses.

(End of clause)

[Don Mansfield]

45 minutes ago, Guest108830 said:

Do you believe the overage on hours pushes those extra hours into an out of scope situation as it deviates from the contracted level of effort (hours) and specific time period that the parties originally bargained for? If so, that was my original thinking -- that overproviding hours runs afoul of what the contracting parties bargained for even though there's existing monies on contract.

Yes, unless the contract says something about working in excess of the specified LOE.

[Guest108830]

Agreed.