From a recent issue audit report from the GSA Office of the Inspector General the following statements were made:
"The OIG recognizes that it is the contracting officer's responsibility to negotiate and award a reasonable profit rate in accordance with the guidance provided under Federal Acquisition Regulation (FAR) 15.404-4-Profit. For presentation purposes, the OIG used a 10 percent profit rate to calculate the per audit labor rate for ABC's employees. We applied this factor because the vast majority of the sales analyzed were under T&M task orders, a contract type that typically carries a lower risk to the contractor."
"FAR 15.404-4 provides guidance on profit and states that T&M contracts should be treated in the same manner as cost-plus-fixed-fee contracts, which limits profit to 10 percent. In addition, our position is that subcontractor labor should be treated as a pass-through cost, and profit should not be applied to this labor type. This was then used to request a 32% reduction in rate for the labor category rates for the company. The OIG performed a cost build for the labor rates that were charged on task order contracts and independently reviewed base rates, indirect rates, & profit to determine what the actual target rate should have been."
The purpose of this webinar is to look at Fair & Reasonable pricing based upon the above stated approach and cover the following questions:
- Is FAR 15.404-4 an appropriate measure of the percentage of profit?
- Do you add a fee to manage subcontractor labor or is it straight pass through?
- GSA Schedule pricing structures (CPL vs Market Rates) : what is the impact of true historical rates usage?
- What are in your indirect rates? (Do you know)
- What is defective pricing?
- What are the legal ramifications of defective pricing?
Dismas Locaria, Partner, Government Contracts Practice, Venable LLP
Scott Davidson, CEO and Managing Principal, GCO Consulting Group
Michael Phipps, Principal, GCO Consulting Group
Gunjan Talati, Partner, Kilpatrick Townsend & Stockton LLP