Use GSA's New Website to Search for Hourly Labor Rates

GSA (General Services Administration) has set up a new website called CALC (Contract Awarded Labor Category). Its really for the Government acquisition corps but it is interesting for contractors as well. One thing it provides is an easy way for contractors to check their competition.

CALC was set up to allow acquisition folks the ability to conduct market research on professional service labor categories more quickly and easily. It is also intended to take the guesswork out of cost estimations. All results shown are actual awarded hourly rates from GSA services schedules. The idea behind CALC is to provide another tool to help government acquisition make more informed decisions.

The first thing you do is type in a labor category. If you enter too broad of a term, you will be prompted with all of the labor categories that contain that particular term. After identifying the category (or sub-category), you can filter for (i) minimum education lever, (ii) years of experience, (iii) worksite (e.g. at the contractor facility or in a Government facility), and (iv) business size.

For example, if you type in the term "senior accountant", you will find 9 companies offering services ranging from $55 per hour to $134 per hour with an average of $84 per hour. The results also allow the user to download the specific GSA contract showing the rates.

One thing that CALC does not do (at least not yet) is to show labor costs for future years. Many of the GSA contracts are for five years with rates increasing each year. CALC returns only current year rates and will not return rates for any future years. You could download the contract and find future rates but that defeats the purpose of the website.

One thing that contractors on a GSA schedule should try is to enter their own contracted labor categories and see if the company shows up in the listing. If not, you should contact your GSA contracting officer and troubleshoot the problem.

Try it; CALC.gsa.gov.

Contractors that Grow Out of the NAICS Size Standard

Many small business contractors have, over the years, been unaware that contract(s) they have been awarded, can cause them to eventually exceed the applicable small business size standard for the NAICS code (North American Industry Classification System) identified in the solicitation and/or contract. Indeed, some contractors don't even have a clue that they've exceeded the size standard until a potential competitor pulls a size challenge on them.

Now there is a new DFARS (DoD FAR Supplement) provision that warns small business contractors that entering into a covered contract is an acknowledgement that doing so may cause it to eventually exceed the small business size standard identified in the solicitation and contract.

A covered contract includes solicitations using FAR part 12 procedures for acquisition of commercial items, when the estimated annual value of the contract is expected to exceed the small business size standard where the size standard is expressed in dollars or $70 million where the size standard is expressed in number of employees.

The provision reads:

The offeror acknowledges by submission of its offer that by acceptance of the contact resulting from this solicitation, the offeror may exceed the applicable small business size of the NAICS code assigned to the contract and would no longer qualify as a small business concern for that NAICS code. The offieror is therefore encouraged to develop the capabilities and characteristics typically desired in contractors that are competitive as other-than-small contractors in this industry.

We guess that now, contractors won't be able to plead ignorance when they graduate from being a small business.

DCAA Still Pushing for More Access to Employees

Yesterday we discussed an item appearing in DCAA's fiscal year 2014 Report to Congress - the Agency's desire to expand its subpoena authority to include commercial pricing or pricing based on "other than certified cost or pricing data". Today we want to look at another wish list item appearing in that report - more access to contractor employees.

DCAA strongly believes that having access to contractor employees to conduct interviews and observations is critical to ensure the high level of assurance required by GAGAS (Generally Accepted Government Auditing Standards). Although access to employees for such purposes is not generally considered a significant problem, DCAA continues to find contractors arguing that the Agency's access to records does not include access to employees.

FAR 52.215-2(d) specifically gives the GAO (Government Accountability Office) rights to interview any officer or employee; however, FAR does not specifically give DCAA this right. DCAA has submitted legislative proposals to support its right of access to contractor employees and to avoid any future confusion on DCAA's ability to interview those employees. This legislative change would ensure DCAA has access to employees, which allows DCAA to conduct audits in accordance with GAGAS.

The legislative proposal was not incorporated into the FY15 NDAA (National Defense Authorization Act) because, as the House Armed Services Committee explained, the Agency already has authority to interview contractor employees during the course of an audit if such an interview is required to complete the audit. While DCAA agrees with that assessment, some contractors still argue that the US Code and FAR specifically gives the Comptroller General (i.e. GAO) the right to interview employees and because there is no corresponding reference to DCAA, that DCAA does not have such rights.

Therefore, DCAA still believes a change to the statute is still necessary to clarify its right to interview contractor employees. DCAA is now monitoring denials of access to employees in order to fortify its position on the next NDAA go round.

DCAA Still Pushing for Expanded Subpoena Authority

Every year, DCAA (Defense Contract Audit Agency) prepares a report to Congress on its activities. The fiscal year 2014 report was issued on March 25, 2013 but just recently became publicly available. (Click here to download a copy). The feature we turn to first is Section 4, Significant Deficiencies and Recommended Actions to Improve the Audit Process. This is where DCAA lays out its views of deficiencies within the acquisition process and recommends changes to the ongoing challenges.

One of the challenges DCAA faces is the lack of express authority to review "data other than certified cost or pricing data". This lack of authority, according to DCAA, hampers its ability to obtain sufficient contractor data to conduct timely, quality audits, especially audits of commercial item procurement. To resolve this problem, DCAA wants authority to review and subpoena "data other than certified cost or pricing data". In its own words:

The DCAA subpoena authority contained in 10 U.S.C. 2313 permits DCAA both access to and the authority to subpoena "certified cost or pricing data" but it does not specifically provide similar authority for "data other than certified cost or pricing data" as defined in FAR 2.101. When a contracting officer determines that historical data is insufficient to determine the reasonableness of prices in a fixed-price contract for commercial items, FAR 15.403-3 permits the government to obtain "data other than certified cost or pricing data" to assist in making a fair and reasonable price determination. Contractors have been reluctant to provide this information to DoD, including DCAA. While the FAR allows contracting officers to request data, there is currently no authority to compel production of that data. This problem is likely to get worse. Even as the Department's Better Buying Power Initiative and Industry groups continue to promote the use of commercial procurements, there has been no improvement in the Department's ability to obtain adequate supporting data from contractors to support the proposed commercial prices. 

DCAA plans to submit a legislative proposal for the next NDAA (National Defense Authorization Act). The Agency believes that with this authority, it will be able to provide contracting officers timelier audit support and better-supported negotiation positions for commercial procurements, which will, in turn, improve their effectiveness and reduce the risk of paying excessive commercial prices.

 It may well be that the Department of Defense is not in favor of granting expanded subpoena authority to DCAA. In fiscal year 2014, it took DCAA an average of 95 days to turn out a forward pricing proposal audit report. If DoD can avoid procurements based "certified cost or pricing data", it can award contracts significantly quicker. They've got a pretty good process going with commercial item procurement - why would they want DCAA to come in and muddle up the situation?

Know the Solicitation Provisions - Convict Labor

A contractor filed a $1.4 million claim against the Army Corps of Engineers due to differing site conditions. The claim was denied and has been appealed to the ASBCA.

The contract was for construction of military housing. The contractor alleged that it was unable to get qualified carpenters onto base due to a change in base access policies. The contractor asserted that when it bid, it intended to use people with felony convictions and those in a pre-release program at a nearby prison. However, the Convict Labor clause (FAR 52.222-4) was included in the contract. The contractor claimed that it incurred increased administrative costs resulting from the need to process "hundreds" of applicants and perform "hundreds" of job interviews, all because it could not employ convict labor.

The problem with the claim was not that the allegations were not true but with the difficulty by the contractor to support the charges. During the course of the Government's review, the contractor

• could not support its contention that there was a change in base access policies
• its intentions to employ carpenters with felony convictions
• increased costs due to processing and hiring new employees.

Claims are a tricky business where contractors must prove entitlement and quantum and the burden of proof rests solely upon contractors. In this case, the contractor may have been unfamiliar with the prohibition concerning convict labor. Had it included such intentions in its bid, the Government probably would have called them out - perhaps give them a chance to modify their bid. In any event, the costs related to interviewing and processing new hires would be the same regardless of the labor pool source.

Undefinitized Contract Actions (UCAs)

To meet urgent needs, federal agencies, including DoD, can authorize contractors to begin work and incur costs before reaching final agreement on contract terms, specifications, or price, using an undefinitized contract action.

Such types of contractual actions are considered risky for the Government because contractors have little incentive to control costs as the Government normally reimburses contractors for all allowable costs incurred during the undefinitized period. Further, the Government may incur unnecessary costs if requirements change before the contract is definitized.

To help minimize these risks, defense acquisition regulations generally require undefinitized contract actions (UCAs) to be definitized within 180 days of issuance or before more than 50 percent of the estimated contract price is obligated, whichever occurs first.

The GAO (Government Accountability Office) recently issued a report on the Air Force's practices with respect to UCAs. Between 2010 and 2014, the Air Force obligated $14 billion on UCAs. For UCAs reviewed by GAO, the most common reason cited for awarding them was to meet urgent needs. The GAO didn't have a problem with the rationale or justification. They did find however that the Air Force never met the definitization time frames for the UCAs under review.

As mentioned, the Government (and particularly contract auditors) consider UCAs to be high risk procurement actions. Auditors are instinctively suspicious that contractors will try to dump everything, including the kitchen sink, onto the contract. With little or no incentive to control costs, prior to definitization, contractors tend to be less concerned with expenditures.

As a result of the GAO findings, contractors with UCAs can expect heightened awareness and more oversight of UCAs. DoD, at least, will be tightening up its policies with respect to definitization time frames. And, with DCMA (Defense Contract Management Agency) buildup of pricing capabilities, the turn-around time to conclude negotiations should decrease significantly.