Summary
The pricing requirements for this 5-year $247M IDIQ look like smooth sailing. However, pricing hazards may be lurking just below the surface.
Overview
The solicitation, issued by MICC-FORT EUSTIS, represents a full & open competition under solicitation number W9124L18R0016 listed under NAICS 541990, PSC U008. It replaces prior solicitation number W9124L-17-R-0022 (a small business set-aside which has since been cancelled). This is a multiple award IDIQ contract for up to (5) awardees with a combined ceiling value of $247M over the five-year ordering period (8 February 2019 – 7 February 2024).
IDIQ contract holders will compete for fixed price task orders (TOs) that will also utilize cost reimbursable travel and ODC CLINs. Individual TOs will use contractor’s proposed fixed labor rates for labor categories incorporated at IDIQ award. Importantly, the Army warns that Cost, Labor Hour (LH), and Time & Materials (T&M) type TOs are not allowed under this contract. Incidental T&M/LH CLINs are also not allowed.
Summary of Services Requested
The successful offeror will provide support to the Fires Center of Excellence (FCoE) in its mission to develop and produce training strategies, doctrine, concepts, instruction and products for the current and future force.
The IDIQ has 13 “primary task areas” consisting of: (1) Concepts and Capabilities, (2) Training and Development, (3) Doctrine Development Support, (4) Organizational Development Support, (5) Instructor and Training Development and Support, (6) Test and Evaluation Support, (7) Information Technology Support, (8) Experimentation and War-gaming, (9) Studies and Analysis Support, (10) Models and Simulations (M&S) Support, (11) Science and Technology, (12) Material Requirements Support, (13) Operational Environment Support.
Source Selection
The solicitation contains standard language regarding the evaluation of pricing. The Army will evaluate pricing for reasonableness and ensure pricing is not unbalanced. Award will be a ‘best value’ tradeoff source selection. Section M.1.3 also notes, “The Government is looking for the offerors that demonstrate superior technical expertise and offers the best possible qualified personnel in order to mitigate the risk inherent in the performance of this requirement. A proposal that demonstrates superior processes, plans, and ability to provide better qualified personnel may be worth more to the Government than a proposal that just meets the minimum needs. The Government has identified the following specific Best Value Tradeoff goals for this requirement and will consider paying more for an Offeror that clearly demonstrates its capability to recruit and retain high risk, hard to fill positions for performance in a rural, low density area (Fort Sill, OK) for (i) Joint Terminal Attack Controllers (JTAC), (ii) Electronic Warfare (EW), and (iii) Multiple Air Defense Artillery (ADA) instructors/operators.”
Pricing Requirements
The proposal consists of five (5) separate volumes/files: (I) General, (II) Mission Capability/Risk, (III) Past Performance, (IV) Small Business Participation, and (V) Price. The pricing volume (with no page limitations) consists of 1) a price narrative and 2) a completed Excel Pricing Worksheet (Attachment 5). Certified cost or pricing data are not required. The Pricing Worksheet contains “Tab A” Labor Category Pricing and “Tab B” Sample Task Order Base”.
“Tab A” is a simple matrix consisting of 33 labor categories. Offerors will provide a fully burdened ‘ceiling rate’ for each of the (5) contract years and identify whether the labor category is subject to Service Contract Act (SCA). The pricing exhibit does not request offerors to distinguish their rates between ‘Gov’t Site’ and ‘Contractor Site’ work locations. Offerors are permitted to propose additional labor categories and are required to explain how the proposed labor category relates to the Government listed categories.
“Tab B” consists of (2) Excel tabs for Base Year Pricing and (1) One-Year Option Pricing. The sample task order contains five major task requirements that address all (13) IDIQ specified task areas. The task order pricing is very streamlined. Offerors identify prime and total subcontractor labor hours, PWS paragraph, and labor category and then apply a burdened labor rate to arrive at an extended price. A 3-month “Phase-In” period is identified in the base year. There are no requirements for pricing breakouts by individual subcontractor nor any requirements for “rate buildups”.
Pricing Issues and Questions to Consider
Roll Your Own Narrative
The solicitation is mostly silent on pricing narrative requirements. The introductory statement in Section L.4.5 broadly states, “This section shall consist of all information required to support the proposed prices located in the pricing worksheets described below, and Schedule B”. Clearly, different offerors will have different interpretations for what constitutes ‘all information required to support the proposed prices”.
No Indirect Cost Information Required
The solicitation is also silent on accounting system adequacy and indirect rate information requirements. We note that since the contract contains cost reimbursement type CLINs, offerors should be permitted to burden their travel and ODC costs according to their accounting system practices. Section 1.6.23 of the IDIQ PWS contained some peculiar language which stated, “Contractor administrative fees and profit are not allowable costs that can be claimed for ODC reimbursement. (Examples include but not limited to: reproduction, and shipping expenses associated with training activities.)” We recommend offerors seek clarification and confirm formally that offerors are permitted to burden ODCs with their applicable indirect rate(s). We’re not sure why the Army hasn’t requested indirect cost information. We hypothesize that delaying the submission of this information until an apparent winner is selected may foster increased competition and reduce the Government evaluation burden.
Method for Pricing Army’s Option to Extend Services
Section M.3.6 states the Government will evaluate its FAR Clause 52.217-8 Option to Extend Services by adding six (6) months of the offeror’s final option period price of the Sample Task Order to the offeror’s total price. The pricing template does not account for this six-month extension and offerors are instructed not to propose this extension period. Regardless of how the Army has priced these extensions on past solicitations, we recommend offerors leave nothing to chance and confirm the Army will price this extension with Year 2 proposed task order rates since it could influence pricing strategy.
What is the Priced Contract?
Section B contains (4) generic CLINs: 0001 – FCOE Support Services (FFP), 0002 - FCOE Travel (Cost), 0003 – FCOE ODCs (Cost), and 0004 – FCOE Contractor Manpower Reporting (CMR) FFP. These are the basic CLINs identified at the IDIQ level that will be subsequently used for individual task orders. Section L.4.5 contains the following language, “A Section B (Supplies or Services and Prices/Costs) shall be submitted fully completed and error free in the narrative. It shall contain the offeror’s prices for the established Contract Line Items (CLINS).” We’re unsure why the Army has inserted this requirement. Section M.3.6 clearly states that the sample task order will NOT be awarded. Also, while the Army has provided historical workload data (Attachment 7), they have not requested the offeror to prepare any pricing utilizing this information. The data represents 652,360 hours (or 347 FTE) across (31) labor categories. It’s unclear whether this data is supposed to represent a historical analog to the sample task order or merely represent average annual workload across all potential task orders. We note the historical data aligns with the labor categories identified in the pricing template. However, the pricing template contains two additional labor categories not present in the historical data: Program Manager (Alt) and Instructor – THAAD. We recommend offerors request the Army clarify what the Attachment 7 data is supposed to represent.
Locale Differentials
Upon award, the proposed rates will become part of the contract and be the maximum rate allowable (ceiling rate) for that labor category when pricing task orders. The solicitation warns offerors, “The fully burdened labor rates proposed for each year cannot be adjusted except for instances where the labor categories are subject to the Service Contract Labor Standards and a revision is permitted under the provisions of FAR Clause 52.222-43 -- Fair Labor Standards Act and Service Contract Labor Standards -- Price Adjustment (Multiple Year and Option Contracts).” Offerors should carefully consider their pricing options as the U.S. is likely exiting from a relatively stable and low wage inflation environment into a potentially more volatile one. Furthermore, Section 1.6.5 of the IDIQ PWS states that while work will be performed primarily at Fort Sill, the IDIQ leaves open the possibility of temporary duty at overseas locations and for work to occur at other locations which will be specified at that Task Order level. Offerors should request further clarification on potential places of performance based on historical experience. Offerors may want to clarify with the Army whether any potential salary uplifts for OCONUS work would chargeable as an Other Direct Cost.
Conclusion
While the pricing exhibits and the pricing volume appear to be simple and straightforward to prepare, the solicitation presents some interesting complexities in pricing strategies. The proposed labor rates are ceiling rates that are used not only for establishing ceilings, but also can be used by the Army for projecting future budget requirements. All task orders issued will be firm fixed price giving offerors significant flexibilities in terms of both pricing the task orders and executing them. Finally, with (5) possible awardees and the ability to propose IDIQ additional labor categories, there’s ample pricing strategy options available.
About the author: Mike Gallo is Partner and Principal Consultant at Federal Pricing Group, a firm focused on providing expert contracts pricing to small and mid-sized federal government contractors and cost-related acquisition support services to federal agencies. Learn more at
https://www.federalpricinggroup.com/.
