Recommendations on structuring contract/task orders

[diverdave]

I'm putting together an RFP that will procure commercial services such as lab assistance, scientific data analysis, and other general laboratory work. The contract will be IDIQ and we will issue task orders as the ordering instrument. We will be able to establish the fixed hourly rate for the individuals but we will not know exactly how many hours these individuals will be needed in any given year, other than to say they cannot exceed 1,928. We intend to issue one task order per individual and each task order will have option periods for a maximum POP of 5 years.

Essentially the task orders will be NTE T&M/labor hour in nature. However, these are commercial services and the use of cost reimbursement contracts are prohibited for commercial items. I see 16.207 FFP LOE Term Contracts, but the contract price is limited to $150,000 unless approved by the chief of the contracting office and these task orders will be over $150,000. I guess I could obtain approval from the CCO for each TO but I'm not sure how practical that is going to be.

I don't have a lot of experience with fixed price contracts other than firm-fixed price and I was hoping to get suggestions how I might structure these task orders. Is there a FP contract type where you can establish a FP ceiling amount and work on a per hour basis up to that ceiling? I thought perhaps of establishing a base quantity of hours and then including optional incremental quantities of hours. However, administratively it would be much easier to establish the ceiling and pay on a per hour basis up to or below the ceiling. Obviously I don't want to do anything improper.

Any suggestions would be appreciated.

[Don Mansfield]

diverdave,

You said that the task orders would be T&M/LH. Did you read FAR 12.207 ( b )?

[Retreadfed]

Following on Don's post, T&M/LH contracts are not cost reimbursement contracts. While they have characteristics that are similar to fixed price and cost reimbursement contracts, T&M/LH contracts are a separate category of contract type.

[diverdave]

Following on Don's post, T&M/LH contracts are not cost reimbursement contracts. While they have characteristics that are similar to fixed price and cost reimbursement contracts, T&M/LH contracts are a separate category of contract type.

Thanks for the replies, I was under the impression that T&M contracts were considered cost reimbursement because of 16.101( B )

"The contract types are grouped into two broad categories: fixed-price contracts (see Subpart 16.2) and cost-reimbursement contracts (see Subpart 16.3)" and by 16.600 "Time and materials contracts and labor hours contracts are not fixed-price contracts." I have never seen anything in writing stating that T&M contracts were their own contract type.

I had not considered 12.207( B ). It looks like I could structure it as an IDIQ contract with fixed prices for commercial services at the contract level. Then issue T&M/LH task orders with a not to exceed amount in each period. I would be required to execute a one-time D&F at the contract level (12.207( c )(3).

[Todd Davis]

Thanks for the replies, I was under the impression that T&M contracts were considered cost reimbursement because of 16.101(

"The contract types are grouped into two broad categories: fixed-price contracts (see Subpart 16.2) and cost-reimbursement contracts (see Subpart 16.3)" and by 16.600 "Time and materials contracts and labor hours contracts are not fixed-price contracts." I have never seen anything in writing stating that T&M contracts were their own contract type.

I had not considered 12.207( . It looks like I could issue structure it as an IDIQ contract with fixed prices for commercial services at the contract level. Then issue T&M/LH task orders with a not to exceed amount in each period. I would be required to execute a one-time D&F at the contract level (12.207©(3).

Adding to what Retreadfed said in a cost reimbursement contract, the government generally pays for all reasonable and allowable costs allocable to the project as prescribed in the contract. However, under a labor hour contract, the government pays only for all labor hours performed (efficient or not) at a fixed rate (which includes fixed estimated costs). The similarity between the two arises from the risk to the government for the overall price of the project. The risk for a cost reimbursement contract is tied to total costs. The risk for labor hour contracts is tied to total hours. The reason a labor hour contract is not a fixed-price contract is because a single firm fixed-priced is not set at award, only a ceiling price (limitation). While being more specific would be helpful, it is probably not necessary since labor hour contracts are in a subpart separate from fixed-price and cost-reimbursement contracts.

[BikeJAG]

You wouldn't do fixed prices at the "contract level", drill down further in FAR 12.207. The IDIQ is the master vehicle under which you would execute task orders that would allow you to use the exception in FAR 12.207( B )(1)(i)© to use T&M/LH pricing types which are cost reimbursement mechanisms. Remember that the exception applies to a "multiple award delivery order contract" so it implies that you would have to have more than one awardee. In addition, you also have contract documentation and other special requirements applicable to IDIQ contracts for commerical item procurements such as ceiling prices et cetera as seet forth in that section to consider.

HOWEVER, if you are DoD, the DFARS limits what T&M/LH services you can acquire for support of commerical items. See DFARS 212.207

Out of curiosity, you mention you're acquiring "lab assistance, scientific data analysis, and other general laboratory work", are you funding this with O&M or are you RDT&E funded? Have you looked at whether this is Part 12 at all or should you be looking at Part 35?

Bill

[bob7947]

Unfortunately, the software for this discussion board adds smiley faces for certain letters that are in parentheses. To defeat this annoyance, when writing ( make it ( B ). If it is a © make it a ( c ). Just add a space after the "(" and before the ")". Each of you can do it with your edit function.

[diverdave]

Out of curiosity, you mention you're acquiring "lab assistance, scientific data analysis, and other general laboratory work", are you funding this with O&M or are you RDT&E funded? Have you looked at whether this is Part 12 at all or should you be looking at Part 35?

Bill

These are Science and Technology funds. I have looked at part 35 but I am not sure how that impacts the contract type. Depending on the nature of the work you can use a FFP or CR type contract for R&D work.