SciTech T M Pricing Using Contractor Mark up Rates Dec 2009.doc

NOAA PROFESSIONAL, SCIENTIFIC, AND TECHNICAL NEXT GENERATION (SCI-TECH NG)

CONTRACT SUPPORT

INDEFINITE DELIVERY INDEFINITE QUANTITY

(IDIQ)

CONTRACT

Time & Material and Labor Hour Pricing Using Contractor Mark up Rates

Because it is impractical and an administrative burden to list every labor category with its corresponding labor rate anticipated under this IDIQ contract, it is expected that contracted labor rates will be best determined by using standard mark-up factors that are applied to proposed base labor rates in resultant task orders. Contractor’s proposed mark-up factors must include all overhead, fringe benefits, profit, and any other allowable indirect costs, so that resultant labor rates are “fully burdened.” These mark-up factors will be used to evaluate contractors for the base contracts and will be used in the price evaluation of task order proposals. Mark-up factors will be proposed as percentages and the following formula will be used to establish contract billing rates under task orders:

Proposed labor rate times (1 plus the mark-up percentage) Plus Health & Welfare (H&W) Rate (if subject to SCA) For example, a proposed contract rate of $63.24 per hour for a non-exempt (SCA) contractor support person whose company had proposed a 20% mark-up factor would be as follows:

$50.00 (base rate) times (1+ .20) = $60.00

$60.00 plus $3.24(H &W) = $63.24 An example of a proposed contract rate $84.00 per hour for an exempt contractor support person whose company proposed a 20% mark-up would be computed as follows:

$70.00 (base rate) times (1+ .20) = $84.00

A contractor’s proposed mark-up factor will be made part of the indefinite delivery, indefinite quantity (IDIQ) contract and will be used by the contractor to cost its proposals for the requests that will be sent in processing and awarding task orders under this IDIQ contract.

Contractor Progressive Rates:

For the pricing of task orders or work assignments, a contractor may provide the Government with a mark-up factor that is lower than the contract mark-up rate if the contractor can find efficiencies and cost savings in its processes to establish such “progressive rates.” Progressive rates provide an incentive for contractors to identify and apply efficiencies and innovations in their firms that reduce internal costs thereby reducing their mark up rates to make their proposals leaner and more competitive for NOAA users of their services. However, under no circumstances will a contractor be permitted to submit labor costs that exceed the contract mark-up rates.

Mark up rates are to be applied to actual labor rates paid by the contractor to its employee; i.e., composite or average labor rates will not be used under this contract.

Mark-ups for Other Direct Costs:

It is understood that resultant task orders will have requirements beyond just labor hours; therefore, contractor mark-ups must be provided for the following anticipated ODC categories:

ODC Category

Mark-up %

Travel

Subcontracts

Material Handling

Because work under planned orders and work assignments will provide flexibility in work locations, contractors will be required to provide both On-Site and Off-Site mark up rates.