Section H.docx

H.1 Mandatory Minimum Staffing Baseline and Diminished Value Deductions H.1.1 General Requirement The Contractor shall provide and maintain the Mandatory Minimum Staffing Baseline (MMSB) as defined in Performance Work Statement (PWS) Section [Insert Section Number] at 100% capacity at all times. The Government and the Contractor agree that the MMSB represents the absolute minimum level of effort required to successfully perform critical services. There is no grace period for vacancies under this contract. Any failure to provide the mandated number of fully qualified personnel immediately degrades the Contractor’s ability to perform, resulting in a diminished value of services rendered to the Government.

H.1.2 Immediate Vacancy Notification The Contractor shall notify the Contracting Officer (KO) and the Contracting Officer’s Representative (COR) in writing within one (1) business day of any personnel departure, termination, or absence (excluding standard approved PTO if covered by cross-trained personnel as permitted in the PWS) that causes the actual staffing level to fall below the MMSB.

H.1.3 Qualification of Replacements The Government reserves the right to review the qualifications (e.g., resumes, certifications, qualification levels) of all proposed replacement personnel prior to their assumption of duties. If the Government determines a proposed replacement does not meet the minimum labor category requirements, the individual will not be recognized as fulfilling the MMSB requirement. The position shall remain classified as "Vacant," and deductions shall continue to accrue until a fully qualified candidate begins performance.

H.1.4 Price Reduction for Diminished Value In accordance with FAR 52.246-4, Inspection of Services—Fixed-Price, if a position required by the MMSB becomes vacant, the Government shall reduce the fixed monthly invoice price to reflect the reduced value of the services starting on Day 1 of the vacancy. This reduction is not a penalty, but a commensurate reduction for services not received.

The monthly deduction shall be calculated starting on the first day of the vacancy and will continue for every business day the position remains unfilled. The deduction shall be calculated using the following formula:

(Fully Burdened Hourly Rate of the Vacant Position) x (8 hours per day) x (Number of Business Days Vacant) The Fully Burdened Hourly Rates utilized for this calculation shall be strictly derived from the Informational Pricing Matrix (Attachment 0003) incorporated into this contract.

H.1.5 Monthly Staffing Report (MSR) and Invoicing The Contractor shall submit a Monthly Staffing Report (MSR) in accordance with CDRL A001 DI-MGMT-81928 Contractor’s Progress, Status and Management Report (CPSMR) concurrently with their monthly invoice in Wide Area Workflow (WAWF). The MSR shall track the status of all MMSB positions, note any vacancies, and calculate any required deductions.

If a deduction is required pursuant to paragraph H.1.4, the Contractor shall self-apply the deduction by reducing the total billed amount on their WAWF invoice. Failure to submit an accurate MSR, or failure to apply the required deduction credit, shall result in the rejection of the invoice. The Contracting Officer retains the authority to issue a unilateral modification to decrement the contract value if the Contractor fails to properly apply the deduction.

H.2 Binding Labor Rate Bands (Base and Ceiling Rates) H.2.1 Establishment of Rate Bands The Contractor’s Minimum (Base) and proposed Maximum (Ceiling) Fully Burdened Labor Rates for all required labor categories are formally incorporated into this contract as Attachment [TBD], Informational Pricing Matrix. The Contractor is bound by these rate bands for the duration of the contract, including all option periods.

H.2.2 Application for Contract Modifications In the event the Government requires an equitable adjustment, a bilateral modification to alter the MMSB, or the execution of optional surge support, the Contractor’s pricing proposal for the modification shall utilize a rate that falls within the established Base and Ceiling band. The Government shall not pay a rate higher than the established Ceiling Rate for any labor category.

H.2.3 Subcontractor Flow-Down The Base and Ceiling rates established in the Informational Pricing Matrix are binding at the prime contract level. The Government shall not adjust the Ceiling Rates or increase the FFP monthly price to accommodate subcontractor rates that exceed the prime Contractor’s established rate bands.

H.2.4 Overtime and Additional Hours This is a Firm-Fixed-Price contract. The Government shall not pay for hours worked in excess of the standard monthly fixed price to compensate for vacant positions. The Fully Burdened Hourly Rates provided in the Informational Pricing Matrix are utilized strictly for the calculation of diminished value deductions, modifications, and surge pricing, and do not constitute an agreement to pay for excess hours worked.