Cost Analysis and Price Analysis

[KMY]

Hypothetical situation. We are evaluating a sole source CPFF/LOE contract for 40 labor categories and the prime is proposing to use 25 subcontractors (also CPFF/LOE contracts) to fulfill the LOE requirements. The prime and subcontractor teammates have all been determined to technically meet all of the labor category requirements. The subcontractors loaded rates vary for some of the same labor categories by as much as 100%. For example, say they vary for an Engineer 1 from $80 to $160. The prime has provided price analysis of the subcontactor labor and determined all of the subcontractor rates to be fair and reasonable, while the government considers the analysis inadequate. However, many of the subcontractors have FPRAs in place for their direct and indirect rates. Suppose that both the Sub that can provide the labor resource for $80, as well as the sub that can provide the labor resource for $160 have FPRAs in place. Can the government find that the price to provide specific labor is unreasonable even when the subcontractors have established FPRAs in place?

[joel hoffman]

Hypothetical situation. We are evaluating a sole source CPFF/LOE contract for 40 labor categories and the prime is proposing to use 25 subcontractors (also CPFF/LOE contracts) to fulfill the LOE requirements. The prime and subcontractor teammates have all been determined to technically meet all of the labor category requirements. The subcontractors loaded rates vary for some of the same labor categories by as much as 100%. For example, say they vary for an Engineer 1 from $80 to $160. The prime has provided price analysis of the subcontactor labor and determined all of the subcontractor rates to be fair and reasonable, while the government considers the analysis inadequate. However, many of the subcontractors have FPRAs in place for their direct and indirect rates. Suppose that both the Sub that can provide the labor resource for $80, as well as the sub that can provide the labor resource for $160 have FPRAs in place. Can the government find that the price to provide specific labor is unreasonable even when the subcontractors have established FPRAs in place?

If you feel that a firm can perform the same work for 1/2 the price, why not negotiate with the prime to not use the higher proced firm(s)? You are in the pre-award phase. Who they use would seem to be negotiable. So...negotiate.

[KMY]

If you feel that a firm can perform the same work for 1/2 the price, why not negotiate with the prime to not use the higher proced firm(s)? You are in the pre-award phase. Who they use would seem to be negotiable. So...negotiate.

Due to the significant number of hours being requested, the lower priced firms do not have sufficient resources to provide the necessary hours, thus the reason that they are using 25 subcontractors.

[Guest Vern Edwards]

Hypothetical situation. We are evaluating a sole source CPFF/LOE contract for 40 labor categories and the prime is proposing to use 25 subcontractors (also CPFF/LOE contracts) to fulfill the LOE requirements. The prime and subcontractor teammates have all been determined to technically meet all of the labor category requirements. The subcontractors loaded rates vary for some of the same labor categories by as much as 100%. For example, say they vary for an Engineer 1 from $80 to $160. The prime has provided price analysis of the subcontactor labor and determined all of the subcontractor rates to be fair and reasonable, while the government considers the analysis inadequate. However, many of the subcontractors have FPRAs in place for their direct and indirect rates. Suppose that both the Sub that can provide the labor resource for $80, as well as the sub that can provide the labor resource for $160 have FPRAs in place. Can the government find that the price to provide specific labor is unreasonable even when the subcontractors have established FPRAs in place?

Yes.