Summary:
The Naval Air System Command at Patuxent River, Maryland is soliciting bids for a follow-on requirement to provide technical data and logistic analysis Contractor Support Services (CSS) to augment the mission of the Logistics Product Data Division. This solicitation is a Total Small Business Set-Aside reserved for competition among eligible 8(a) small businesses. The NAICS code is 541330 and the small business size standard is $38.5 million annual revenue. The resultant award will be a Single Award Indefinite Delivery/Indefinite Quantity contract. This contract allows for an ordering period of years with both CPFF and FFP task orders.
Scope of Work:
The scope of this contracts includes lifecycle support of weapons systems logistics product data. Preparation and publishing products may be ordered in either of two methods: fixed price CLINs or non-fixed price CLINs.
Required tasks will include:
- Technical publication support
- Logistic Configuration management/technical directive support
- Technical Libraries,
- Repositories, and Data Control Center (DCC) support
- Logistics Information Technology support
- Technical Data Package (TDP) - Acquisition and sustainment support, and technical data Conversion/ digitization support.
Contract Types:
Contract line item numbers (CLINs) for logistics support services will result in a Cost-Plus-Fixed-Fee (CPFF) contract. Technical manual/publication updates CLINS will be Firm-Fixed Price (FFP). ODC CLINs for travel and material will be cost reimbursable (no fee).
Place of Performance:
Potential customers requiring support include the following sites: The Fleet Readiness Centers at Cherry Point, Jacksonville, and North Island and their respective In-Service Support Centers (ISSCs), NATEC San Diego, NAWCAD Lakehurst, NAWCAD Patuxent River, NAWC TSD Orlando, NAWCWD China Lake, Point Mugu and Tinker Air Force Base.
Price/Cost Volume Requirements for CPFF CLINS:
The Government provides 34 labor categories with a designated level of effort for each applicable place of performance. For each labor category, Offerors are required to provide their Fully Burdened Rates (FBR) detailing labor rates for all prime contractors and their subcontractors. Fully burdened labor rates are defined as direct labor rates plus all applicable indirect burdens (i.e. Fringe, Overhead and G&A) and Fee.
When proposing a Fully Burdened Rate from a subcontractor, the Prime must include its subcontractor pass-through costs where applicable. This usually takes to form of a subcontractor handling percentage or G&A and the Prime’s Fee percentage.
Navy Trip Wire Policy:
The Navy designated a procurement “Tripwire” for proposed fully burdened labor cost exceeding $300K. Tripwires are applied in a procurement when the Navy determines costs of a product or service “require greater visibility and conscious decisions by higher levels of management.” The explained in more detail in the Commander, Naval Sea Systems Command Instruction 4200.19A of 1 July 2016. Offerors that propose a fully burdened per employee labor cost exceeding the labor tripwire of $300K per year will have to provide rationale in their cost proposal narrative section that justifies the reasonableness of the tripwire cost for the applicable employees. If your company’s proposal exceeds a tripwire threshold in this or any other solicitation, remember that the cost involved will receive additional scrutiny from the Government Evaluators. Make cost justifications like salary surveys, payroll records or historical cost comparisons, easy to find easy to reference. Follow the FAR proposal analysis techniques described FAR.404.1; document and explain why the proposed costs in question is fair and reasonable.
Total Professional Compensation Plan
The Navy requires each offeror to include a Total Professional Compensation Plan and will evaluate the plan in accordance with FAR 52.222-46. This requirement is usually an indication the Government is concerned with the quality and stability of the work force to be employed on this contract. Unrealistically low Salaries and Fringe benefits for proposed job categories can impede an Offeror’s ability to hire and retain qualified employees. Both can impair a contractor’s performance. Therefore, Offerors are required to provide a plan enunciating salaries and fringe benefits proposed for the professional employees who will work under the contract. The plan will be evaluated to assess the Offeror’s ability to hire and retain qualified employees with the proposed costs. Offeror should expect to provide (at minimum):
- Salaries, for each professional employee proposed, supported by payroll records. If the proposed rates are based on contingent hires, then offer letters with terms of employment, signed by the recipient should be included. If a current or future employee is not slated for the position, national and regionally recognized survey compensation surveys can be used by the Offeror.
- The plan should include summary of the benefits that make up the fringe package (e.g. vacation time, sick leave, stock, incentive plans, family leave, life insurance, severance pay, bonus plans, health insurance, holidays, location allowance, retirement benefits). If employees contribute to their benefits, then offeror should include an itemized list of benefits that require employee contributions, and the amount of that contribution as a percentage of the cost of the benefit.
Service Contract Act (SCA) and Collective Bargaining (CB) Agreements:
In addition to professional compensation, Offerors must demonstrate applicable employees are proposed in accordance with to the Service Contract Act and Collective Bargaining Agreements. Of the 39 named labor categories provided in Section L of the RFP, the Government designates 7 positions to where the SCA is applicable.
Offerors are required to set forth salaries and fringe benefits proposed for employees (including temporary and part time employees) who will work under the contract and are subject to the SCA.
Offerors must propose employee’s wages in accordance with the Wage Determination schedule established by the SCA and included in the RFP. A cross reference mapping should be included with the names of the proposed labor categories and the corresponding labor categories from the attached Wage Determination, as well as documentation of compliance with the minimum monetary wages and fringe benefits for service employees as specified in the Wage Determination provided in the solicitation.
Likewise, the same type of cross referenced mapping is recommended for Collective Bargaining Agreements as they apply to proposed employee who are union members.
Indirect Rates:
Offerors are required to provide either a Forward Pricing Rate Agreement (FPRAs), Forward Pricing Rate Proposal (FPRPs), DCAA Provisional Billing Rate Approval Letter, DCAA Final Billing Rate Approval Letter, or DCAA Forward Pricing Rate Agreement recommendation. If these items can’t be furnished, then the offeror can provide three (3) years of actual indirect information consisting of the actual costs used to determine the cost pool and allocation base, and the resulting indirect rate.
Price/Cost Volume Requirements for Firm Fixed Price (FFP) CLINS
In addition to the CPFF portion of the effort, offerors are required to provide a price for 26 separate Technical Manuals (TM) as specified in the RFP. These TM efforts shall be prepared to cover operation and maintenance of aircraft, missiles, bombs, targets, and other equipment, and support equipment in support of naval weapons system. The TMs shall be prepared in accordance with cited specifications and the Technical Manels Contract Requirements (TMCR). The contractor’s pricing may be page/unit based or other FFP rationale to complete the task. For each technical manual, the Government provides the number of pages for each year of the contract.
Subcontractor and Workshare Reporting
Prime offerors are required to list each subcontractor and JV team members of their Team along with the teammates expected place of performance and percentage of workshare. In addition, subcontractors have the same Cost Volume requirements as primes. This includes completing the spreadsheet attachments provided in the solicitation.
Evaluated Contract Price vs Proposed Price
The Government will base award on Best Value among the offerors using the offeror’s Total Evaluated Price/Cost. This means the government will conduct a realism analysis on the CPFF portion of the proposal to determine the most probable cost (MPC). Cost realism analysis is the process of independently reviewing and evaluating specific elements of each Offeror’s proposed cost to determine whether the proposed cost is realistic for the work to be performed and are consistent with the unique methods of performance and materials described in the Offeror’s technical proposal.
If the Government finds certain costs are unrealistically low, then the proposed price will be adjusted upward accordingly, thus creating an Evaluated Price that is higher than the proposed price. The new Evaluated Price will be used when comparing each Offeror Value/Cost trade off. This issue is particularly important when you believe your company has a cost advantage over your competitors and therefore plan to submit a lower price than most other bidders. In this case it’s essential your company provides adequate cost substantiation to demonstrate you can execute the contract at the proposed cost. Cost substantiation can include labor surveys, payroll records, historical pricing for similar items, and indirect rate verification such as provisional rate agreements.
Unrealistically low costs or inconsistencies between the Technical and Price/Cost Volumes may be assessed as risk to the Government and could be considered weaknesses under the technical factor. Therefore, quality controls should be in place throughout the proposal process to prevent inconsistency, whether real or apparent, between the Technical Volume and Price/Cost Proposal. For this solicitation, this includes ensuring the key personnel and labor categories cited in the Technical Solution have adequate cost justifications in the Price/Cost Volume.
FFP CLINS will be evaluated as proposed since the contractor carries the risk of offering FFP that is too low. However, each offeror’s price proposal will be evaluated to determine whether it is complete, reasonable, and whether it contains balanced unit pricing. In its evaluation, the Government will perform a price analysis to assess if the Offeror’s proposed price is fair and reasonable. The Government may use various price analysis techniques, detailed in FAR 15.404-1, such a comparison of the Offeror’s proposed price to competing Offerors’ prices in response to this solicitation, comparison to historical pricing for same or similar DoD contracts, comparison to the Government’s independent price estimate, comparison to commercial and/or industry standards, among other techniques to perform the price analysis.
About the author: Al Pearce 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/.
