Draft Sections L and M Cost-Price Language.pdf

L.4.3 VOLUME III – Cost/Price Factor

L.4.3.1 General Information: The cost volume preparation instructions set forth herein are applicable to the prime Offeror and any proposed subcontractors. For cost volume purposes only, Joint Venture Partners, Interdivisional, and Intra- Company effort shall be considered “subcontractor” effort.

L.4.3.1.1 Table of Contents. The Offeror shall provide a Table of Contents showing each file submitted as part of the Cost Volume with a short description of the contents of the file.

L.4.3.1.2 The Offeror shall provide all costs and prices in U.S. dollars only, including costs and prices for the Offeror and any potential subcontractors.

L.4.3.1.3 The Cost/Price Factor volume includes four parts:

Part One – Prime Offeror - Government Format Pricing Model (GFPM) Attachment XXX (Subcontractors including any Joint Venture Partners that have Cost Reimbursement Agreements with the Prime Offeror shall also submit a complete GFPM).

Part Two – Prime Offeror and Cost Reimbursable Subcontractors - Cost Narratives including Basis of Estimate for all proposed costs.

Part Three – Prime Offeror and Subcontractors – Time-Phased Offeror Format Pricing Model (OFPM) IAW the Offeror’s normal accounting practices. The Offeror shall include a roadmap tracking significant differences between the OFPM and the GFPM.

Note: A blank copy of the GFPM can be provided to each subcontractor and the "Subcontractor Labor Build" tab can be utilized for each subcontractor to fulfill or accompany its OFPM submittal requirement to show its compliance with the floor rates and compliance with providing a full labor buildup, per labor category.

Part Four – Defense Contract Audit Agency (DCAA) and Defense Contract Management Agency (DCMA) Information.

L.4.3.1.4 The cost volume preparation instructions set forth herein are applicable to the Prime Offeror and any proposed subcontractors or intercompany divisions that have subcontract agreements with the prime. The Prime Offeror shall provide its reimbursement agreement with any joint venture partners.

L.4.3.1.5 In accordance with FAR 15.404-1, the Government has established direct labor rate floor rates that by definition, are realistic and fair and reasonable. Direct labor rates proposed below these Government determined rates will be ineligible for award as those proposals below the threshold or floor shall be deemed unrealistic, will not be evaluated further, and will be rejected IAW M.4.3.7.

L.4.3.1.5.1 Direct Labor Rates are defined as unburdened labor rates proposed on this contract. The Prime is responsible for ensuring that the subcontractor provide a full and complete labor rate build that provides complete transparency for the direct labor rate component and each indirect rate applied to it along with profit or fee regardless of contract type. The labor rate build shall be provided in Microsoft Excel to include all formulas that demonstrate how the burdened rate is computed.

Direct Labor rates proposed below the floor of each respective LCAT will be deemed unrealistic. Proposals that contain Prime or Subcontractor Direct Labor Rates that are below the United States Government (USG) provided floor rates will be deemed unrealistic, will not be evaluated further, and will be rejected IAW M.4.3.7.

L.4.3.1.5.2 Offerors shall not alter the GFPM file formats except in cells reserved for the Offeror (which are highlighted in “yellow” and are typically associated with developing the Total Proposed Price).

L.4.3.1.5.3 Within the GFPM, on the “Minimum Qualifications” tab, Prime Offerors shall certify that it will provide employees (prime and subcontractor employees) that meet or exceed the minimum education/experience requirements identified by the Government for each labor category.

L.4.3.2 Proposal Structure.

L.4.3.2.1 Offerors will propose Cost Plus Fixed Fee, Term (CPFF) Fully Burdened Labor Rates (FBLR). Sufficient detail shall be included to allow the Government to evaluate the Offeror's cost/price proposal for reasonableness and realism of the CPFF FBLRs. Prime Offerors and any cost reimbursable subcontractors shall show complete development of the elements of its labor rates in the GFPM, if applicable, and the prime and all subcontractors shall provide a Time-Phased Offeror Format Pricing Model (OFPM). Offerors may submit any other additional cost/price and financial information considered to be helpful in the Government's evaluation of the cost/price proposal.

L.4.3.2.2 All formulas used in the GFPM (MS Excel spreadsheets) shall be clearly visible in the individual cells and verifiable. Whereas linking among the spreadsheets is necessary, use of external links (source data not provided) of any kind is prohibited. The GFPM and all its associated workbooks/files shall not be locked/protected or secured by passwords.

L.4.3.2.3 The Government may use other resources in the evaluation of the cost/price factor volume, including Defense Contract Audit Agency (DCAA) and Defense Contract Management Agency (DCMA). In addition to the information identified below, the Government reserves the right to request additional data or a more detailed price breakdown to support a determination of reasonableness or realism.

L.4.3.2.4 In order to be considered for award, as part of the responsibility determination, the contractor must provide Indication of the contractor’s Cost Accounting Standards (CAS) status and status of any open CAS issues.

L.4.3.3 Part One - Government Format Pricing Model (GFPM) Workbook.

L.4.3.3.1 The Offeror shall complete Attachment XXX (GFPM) IAW the “Instructions” tab in the attachment.

L.4.3.3.2 The Government requirement is for the direct labor categories necessary to complete the work required under this effort. These positions are divided between base labor and surge labor at various locations as described in the PWS and PWS Minimum Qualifications. The Government has specified a total number of hours for each labor category that is anticipated to complete the work required under this effort. Offerors shall not alter the Government-provided skill mix or hours within the GFPM. Offerors may use what it considers commonly used formulas such as VLOOKUP, IF, IFERROR, COUNT, COUNTIF, SUMIF, SUMIFS, ROUND, and Inequalities in its Time Phased OFPM Spreadsheets; however, the GFPM should be self-contained in order for the Government Evaluator to trace simple formulas and lower the risk of misinterpretation of the data provided. Simple formulas like “+, -, *, /, sum”, etc. are preferred in order to assist the Government with understanding how the proposed costs were developed. Note that offeror’s may insert OFPM Spreadsheets into the GFPM Excel Workbook, but they shall not be linked to the GFPM.

L.4.3.3.3 For cost proposal evaluation purposes, and to ensure that adequate funding is put on the contract, the Government assumes that employee paid time off is included in labor related benefits (e.g. Fringe Benefits). Offerors should use their Time Phased OFPM to demonstrate how the labor would be accounted for using normal accounting practices and leave policies. Offerors should also provide a Roadmap demonstrating how the OFPM reconciles with the GFPM.

L.4.3.3.3.1 The GFPM is locked in certain areas where cells cannot be modified. There may be instances where the GFPM is not consistent with the offeror’s accounting system in relation to application of indirect rates. In such cases, the offeror may submit additional cost data in its own format, along with its OFPM and Cost Narrative, to further justify the proposed single elements of costs. Offerors should also provide a Roadmap demonstrating how the OFPM reconciles with the GFPM.

L.4.3.3.3.2 Accounting for Facilities Cost: The contractor shall account the facilities cost either as a part of it labor overhead or G&A rate, or as part of a separate indirect cost rate (labeled facilities) within the GFPM. The offeror may submit additional cost data in its own format, along with its OFPM and Cost Narrative, to show how it accounted for its proposed facilities costs. Offerors should also provide a Roadmap demonstrating how it calculated and allocated its facilities costs.

L.4.3.3.4 Direct Labor Rates: In accordance with FAR 15.404-1, the Government has established direct labor rate floor rates that by definition, are realistic and fair and reasonable.

Proposed labor rates shall include all reportable wages, including any security clearance premiums, shift premiums, extended work hours, and any non-discretionary incentives that the Offeror determines is necessary and complies with FAR 31.205-6. Direct labor rates proposed below the USG floor rates will be ineligible for award as those proposals below the threshold or floor shall be deemed unrealistic, will not be evaluated further, and rejected

IAW M.4.3.7.

L.4.3.3.4.1 The Government requires substantiation for all labor rates whether the proposed rates are greater than or equal to the floor rates. The proposed rates shall be in line with justifying supporting data (Incurred cost data for similar contract, redacted payroll data, salary survey data, DCMA approved FPRR/FPRA, etc.) for each category. The Offeror shall provide a detailed cross-walk between all provided justifying data (redacted payroll data, salary survey, DCMA approved FPRR/FPRA, etc.) and the labor categories requested under this effort.

L.4.3.3.5 The Government is requiring contractors to propose a cost ceiling on their proposed Fully Burdened Labor Rates (less fee), where the ceiling is equal to the proposed Fully Burdened Labor Rates (less fee) plus 5% for each labor category.

L.4.3.3.5.1 Prime Offeror proposed Fully Burdened Labor Rates (FBLRs) Less Fee plus 5% shall be Ceiling Rates for each designated Period of Performance (PoP) and the successful contractor may not invoice rates that are higher than these ceiling rates in each PoP. The GFPM will auto-calculate a 5% ceiling using the Prime Offeror proposed fully burdened labor rate (less fee) and adding 5%. Offerors should ensure that the Ceiling Rates can absorb any changes in Direct and Indirect Rates over the entire PoP.

L.4.3.3.5.2 Subcontractor proposed Fully Burdened Labor Rates (FBLRs) Less Fee plus 5% shall be Ceiling Rates for each designated Period of Performance (PoP) and the successful contractor may not invoice rates that are higher than these ceiling rates in each PoP. The GFPM will auto-calculate a 5% ceiling using the subcontractor proposed fully burdened labor rate (less fee) and adding 5%. Offerors should ensure that the Ceiling Rates can absorb any changes in subcontractor rates over the entire PoP.

L.4.3.3.6 The Prime Offeror and Subcontractors shall explain in its Cost Narrative any indirect rates used in its CPFF Prime or Subcontractor labor build-up and in the Subcontractor Prime Add-Ons.

L.4.3.3.7 For evaluation purposes only, the Government has pre-populated Prime direct labor escalation in the GFPM using the following rates: Ordering Period 2 at 2.8%, Ordering Period 3 at 3.0%, Ordering Period 4 at 3.0%, Ordering Period 5 at 3.0%, Option Year 1 at 3.0%, and Option Year 2 at 3.0%. Offerors can propose alternative escalation factors;

however, any proposed escalation less than the Government pre-populated factors for each

Ordering Period is unallowable.

L.4.3.3.8 Subcontractors. If subcontractor labor is proposed, the Prime Offeror shall provide an explanation in its Cost Narrative how each proposed FBLR was determined to be reasonable and realistic. If more than one subcontractor is proposed for a labor category, the Prime Offeror shall explain in its Cost Narrative how the rate was blended together; the identity of the subcontractors; and the type of subcontract agreement with the Prime Offeror.

The Prime is responsible for ensuring that the subcontractor provide a full and complete labor rate build that provides complete transparency for the direct labor rate component and each indirect rate applied to it along with profit or fee regardless of contract type. The labor rate build shall be provided in Microsoft Excel to include all formulas that demonstrate how the burdened rate is computed. Direct Labor rates proposed below the floor of each respective LCAT will be deemed unrealistic. Proposals that contain Prime or Subcontractor Direct Labor Rates that are below the USG provided floor rates will be deemed unrealistic, will not be evaluated further, and will be rejected IAW M.7.7.

L.4.3.3.9 Subcontractors that have cost reimbursement agreements with the Prime Offeror shall submit their own completed GFPM and a Time-Phased OFPM showing the development of the FBLRs including all separate elements of cost.

L.4.3.3.10 Subcontractors that have fixed price agreements with Prime Offeror may propose Subcontractor fully burdened labor rates (FBLRs) that are “fixed rates” that are not to be exceeded regardless of actual cost.

L.4.3.3.10.1 In addition, if subcontractor “Fixed Rates” are proposed, the Prime Offeror shall provide its price analysis of all subcontractor proposals, including data showing the degree of competition and the basis for establishing the source and price reasonableness. Prime Offerors shall also provide proof that any subcontractor that has agreed not to exceed the proposed “Fixed Rate(s),” agrees, regardless of actual cost (a letter from the subcontractor may serve as proof that the subcontractor has agreed to the “Fixed Rates.”)

L.4.3.3.10.2 All proposed subcontractor FBLRs (whether “Fixed Rates” or not) shall be justified by a full labor buildup, detailing all elements of cost that comprise the proposed FBLRs in accordance with all instructions contained within this Section L. Any proposed subcontractor “Fixed Rates” and associated hours will be added to Section H, “Special Instructions,” of the resulting contract.

L.4.3.3.11 The Government has provided Government plug cost numbers for Materials/ Other Direct Costs (ODCs) and Travel.

L.4.3.3.12 The Prime Offeror may propose an indirect ceiling rate that will auto calculate the amount of proposed indirect expense to be included in the Total Evaluated Price. This indirect ceiling rate is inclusive of any Prime and Subcontractor indirect expense that may be applied and reimbursed. Indirect ceiling rates for ODCs and Travel will be included in Section H of the resulting contract. The indirect ceiling rate is the maximum indirect rate that may be applied to ODC and Travel during the entire Period of Performance. Furthermore, no Profit or Fee is allowable on ODC and Travel expenses.

L.4.3.3.12.1 For cost reimbursable subcontractors (all of which are required to submit a GFPM per Section L. 4.3.1.3), ODC and Travel plug cost numbers in its subcontractor GFPM can be ignored. The indirect rate ceiling is applicable as described in L.4.3.3.12

L.4.3.3.13 Total Compensation GFPM tab. Prime Offerors and any subcontractors with cost reimbursable subcontract agreements shall develop the Total Compensation (for the Base Period) that an employee working on this effort would be expected to receive including Taxable Compensation, Social Security Tax, Medicare Tax, Unemployment, Workers Comp, Average Health & Welfare Costs per employee, average company contribution to Retirement Savings, Vacation, Holiday, Paid Time Off, and any other noteworthy benefits that contribute to the firm's ability to recruit and retain employees. Offerors should include an explanation in its Cost Narrative for any differences between the Total Base Period Fringe Expense in the “Total Compensation” tab, column Y, and the amounts proposed in its GFPM and OFPM.

L.4.3.3.14 Reconciliation Errors. If reconciliation errors exist between the prime contractors’ GFPM and any additional Offeror format cost data (prime contractor or subcontractor), the Government will utilize the data entered into the prime contractor’s GFPM as the basis for evaluation.

L.4.3.3.15 Phase-In. A 120-Day Phase-In period has been identified for Offerors to transition. The Offeror shall submit a Firm Fixed Price (FFP) Phase-In inclusive of all costs that do not correspond to the labor categories in the GFPM and that is inclusive of Travel and ODCs associated with its Phase-in. Offerors are authorized to incur CPFF labor costs, per labor category, when the employee starts work at the contract location. Offerors are authorized to incur ODCs, and Travel costs (See G.X) associated with the CPFF base period at the end of the phase-in period (i.e. Day 121).

L.4.3.4 Part Two - Cost Narrative and Basis of Estimate.

L.4.3.4.1 Prime Offerors and Cost Reimbursable subcontractors shall provide a cost narrative explaining their Basis of Estimate for the following:

L.4.3.4.1.1 All proposed labor rates including explanations for the various elements of cost proposed in the labor buildup on the period of performance tabs of the GFPM or labor buildup on the Time Phased OFPM.

L.4.3.4.1.2 All proposed indirect costs (fringe benefits, including any paid time off, labor overhead, Facilities Costs, General and Administrative (G&A), material handling, Facilities Capital Cost of Money (FCCM), etc.)

L.4.3.4.1.3 If proposals incorporate “incumbent capture” in their Technical Factor Volumes for any of the Key Personnel, the offeror shall submit mapping information which substantiates how their labor costs are accounted for and incorporated into the offeror’s proposal as part of their Volume III: Cost/Price Factor.

L. 4.3.4.2 There is no page limitation for the cost narrative. Spreadsheets supporting the development of indirect rates can be included in the GFPM Attachment XXX workbook, or as a separate Excel Workbook.

L. 4.3.5 Part Three – Offeror Format Pricing Model (OFPM).

L.4.3.5.1 Prime Offeror shall submit a Time-Phased labor buildup in its own format, showing how the proposed Cost Plus Fixed Fee rates were developed. The labor buildup should show the elements of cost (labor, fringe, overhead, facilities, G&A) used to develop the composite rate and also explain the Basis of Estimate in the Cost Narrative. If the proposed labor includes subcontractor costs, the Prime Offeror shall explain how the subcontractor rates were determined realistic, the type of subcontract agreement, and whether the subcontractor rates are Fixed Price Hourly Rates - not be exceeded.

L.4.3.5.2 All subcontractors to the prime offeror, regardless of its subcontract contract type with the prime offeror, shall submit a time-phase labor buildup in its own format, showing how the proposed fully burdened labor rates were developed. The labor buildup should show the elements of cost (labor, fringe, overhead, G&A) used to develop the proposed fully burdened labor rates.

L.4.3.6 - Part Four – DCAA and DCMA Information.

L.4.3.6.1 Offerors (and cost reimbursable subcontractors) shall include the Points of Contact for both DCAA and DCMA. Additionally, Offerors and Subcontractors shall include copies of any Forward Pricing Rate Proposals (FPRP), Forward Pricing Rate Recommendations (FPRR), or Forward Pricing Rate Agreements (FPRA) that were used as the basis for the proposed direct and indirect rates. DCAA Provisional Billing Rates are not a substitute for the above, but in lieu of, contractors that do not have FPRP, FPRR or FPRA, may submit the current years projected rates (including all base and pools) as well as the previous two years on incurred rate data. If Provisional Billing Rates are provided as the basis for proposed indirect rates, Offerors shall also provide the detailed pool & base information for all proposed indirect rates.

L.4.3.6.2 The DCAA/DCMA point of contact information shall be included as part of the Offeror’s cost narrative submission. Forward pricing data or Provisional Billing Rate data may be submitted as part of the Offeror’s cost narrative or as a separate document directly to the Government. Pool & base or historical rate information may be submitted as part of the GFPM, OFPM or as a separate MS Excel document directly to the Government.

M.4.3 VOLUME III – COST/PRICE FACTOR The Government will evaluate the Cost/Price factor, as follows:

M.4.3.1 The Cost/Price evaluation will consider the Total Evaluated Price to the Government.

The assessment of the Total Evaluated Price will include consideration of the reasonableness, cost realism, completeness and the balance of the proposed price. The Total Evaluated Price may differ from the total proposed price. The Total Evaluated Price, rather than the total proposed price, shall be used in the trade-off evaluation to determine best value.

M.4.3.2 The Total Proposed Price shall be identified within the “Totals & USG MPC” tab of Attachment XXX - GFPM of the Offeror’s proposal. The Total Proposed Price is calculated as follows:

i. Transition-In (120 days), PLUS

ii. Ordering Period 1 Subtotal, PLUS

iii. Ordering Period 2 Subtotal, PLUS

iv. Ordering Period 3 Subtotal, PLUS

v. Ordering Period 4 Subtotal, PLUS

vi. Ordering Period 5 Subtotal, PLUS

vii. Option Year 1 Subtotal

viii. Option Year 2 Subtotal

M.4.3.3 The Total Evaluated Price equals the most probable cost to the Government. The most probable cost to the Government will consist of the Offeror’s Total Proposed Price PLUS any cost realism adjustments determined necessary in accordance with the Government’s Cost Realism analysis (detailed in Section M.4.3.6 below).

M.4.3.4 Reasonableness. The Government will evaluate the price reasonableness of the Offerors’ proposed prices to ensure that in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business. The techniques described in FAR 15.404-1(b) will be employed by the Government to determine that a price is fair and reasonable. Where applicable, the Government will also evaluate the reasonableness of the proposed single elements of cost. The Government will employ cost analysis techniques IAW FAR 15.404-1(c) to determine that a proposed price is fair and reasonable.

M.4.3.5 The Government will verify that the Offeror’s proposed fee meets the requirements of 15.404-4. If the Offeror’s proposed fee does not meet the requirements of 15.404-4, the Offeror’s proposal will be ineligible for award.

M.4.3.6 Cost Realism. The Government will conduct a cost realism analysis in accordance with FAR 15.404-1(d) to determine the realism of the proposed single elements of cost for this effort. The Government will evaluate cost realism by independently reviewing and evaluating the specific elements of the Offeror’s proposed cost estimate to determine whether the cost realistically reflects the Offeror’s proposed approach to meet program requirements and objectives. The result of the cost realism evaluation will be a determination of the most probable cost to the Government (which consists of cost and fee (if applicable)). The most probable cost will be determined by adjusting the Offeror’s proposed cost to reflect any additions or reductions to cost elements to realistic levels based on the results of the cost realism analysis.

M.4.3.7 The Government will verify that all direct labor rates proposed by the prime AND its subcontractors are at or above the Direct Labor Floor Rates as specified in paragraph L.4.3.5 of this solicitation. If any of the proposed direct labor rates by either the prime or its subcontractors are below of the Government established Direct Labor Floor Rates, the Offeror will be ineligible for award, and will be rejected IAW M.2. Offerors are reminded that they are responsible for ensuring that any and all subcontractors provide a full and complete labor rate build that provides complete transparency for the direct labor rate component, and each indirect rate applied to it, along with the profit or fee, regardless of contract type.

M.4.3.8 Completeness. Since exchanges are not intended, the Government requires complete proposals with respect to price. A complete proposal will include all information required by the RFP. Attachment XXX (GFPM), shall include pricing for the base period, each option period, Transition-In, travel/ODC, and must be consistent with the instructions contained in this RFP.

M.4.3.9 Offeror shall comply with all instructions in Section L. Failure to follow the instructions and/or provide all of the submission requirements will result in the proposal being rejected IAW M.2, determined ineligible, and no longer considered for award.

M.4.3.10 Unbalanced Pricing. The Government will evaluate the Offeror’s proposal for unbalanced pricing. Unbalanced pricing exists when, despite an acceptable total evaluated price, the price of one or more contract line items is significantly over- or understated as indicated by the application of cost and price analysis techniques. Offerors are cautioned that a proposal the Government assesses to be unbalanced as to price, may either be rejected or determined unacceptable for award. See FAR 15.404-1(g) for more information on unbalanced pricing.