These are things that I find myself repeatedly looking up and language that I've drafted in the past that I'm always digging back up to reuse.
Profit versus Fee
*Profit vs. Fee - They are different
*Chapter 12 located at http://fast.faa.gov/PricingHandbook.cfm?p_title=Functions
"When used as general terms, profit and fee are often interchangeable. The purpose of both is to compensate the contractor for risks assumed during contract performance and to stimulate efficient contract performance."
"Profit represents revenue in excess of applicable costs of contract performance. Simply stated, profit equals the negotiated contract price less applicable contract costs."
"Fee, which is associated with cost reimbursable contracts, represents a flat charge paid as compensation for services or supplies provided. It may be fixed fee or it may vary based on incentive structures."
FAR Clause reference WD escalation
http://www.arnet.gov/far/current/html/52_222.html
52.222-43 excerpt:
(b) The Contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause.
Discussion on this topic can be found at:
http://www.wifcon.com/arc/forum422.htm
Excerpt from a discussion on a federal contracting message board seems to confirm our though:
No escalation following FAR 52.222-43 means Direct Labor (DL) and the stipulated Health & Welfare (H&W) cannot be escalated at all. BUT, DL & H&W do not exist alone in the pricing structure. Overhead still escalates. Fringe not covered by the H&W allowance escalates. G&A escalates. So, I don't touch DL or H&W, but all else--especially in a multi-year risky T&M bid-- must be escalated.
The reason is simple. As a contractor, the only adjustments I can expect to see when a new DoL Wage Determination is issued is a penny-for-penny increase in the DL and a penny-for-penny increase for H&W. Therefore, I MUST be allowed to escalate other expenses not covered by DL and H&W. As an evaluator, you may very well see what appears to be escalation because the burdened labor goes up from year-to-year, but it may be due to the non-DL and non-H&W factors.
WD adjustment proposal language
Your proposal should be in accordance with FAR Clause 52.222-43. Please remember that you can only apply changes "in social security and unemployment taxes and workers' compensation insurance, but shall not otherwise include any amount for general and administrative costs, overhead, or profit". In other words, only FICA (medcare & OASDI) which is a government mandated 7.65% and Workers Compensation (whatever your company's premium percentage is) and FUI/SUI (Federal Unemployment Insurance and State Unemployment Insurance). So, not full OH, G&A, or other indirects nor any Profit. Also, if you elected to pay employees higher than the original or new WD you can only claim the increase from the higher rate the employees were being paid and the rate on the new WD (see FAR 52.222-43(d)(1) for full explanation). Please reflect the amount of change separately from the originally proposed amount for each position and then reflect a new total. Let me know if this doesn't make sense and we can talk about layout.
Odd versus Even WDs
>>>From June 2008<<<<<
My understanding is rudimentary, but based on guidance from our Human Resource department, with an odd # the H&W payment is based on "hours paid to a maximum of 40 hours per week based on the benefit cost resulting from the individual employee's benefit elections" while with an even # the is payment is based on "hours worked based on the on an average of the total benefit cost for SCA employees by site by contract".
There are two key factors: 1) is the differentiation of "hours paid" versus "hours worked" and 2) that the amount of differential the employee is elegible for is base on "the company's cost of employee's individual elections" versus "the company's cost based on the average of the elections of the entire site". When considering factor 1, this means vacation and holiday hours are exempt from the H&W differential when using an even # WD. When considering factor 2, this means the amount of the differential paid is based on the average of the total benefit cost of the entire site vice the benefit cost by employee.
Typically, although not always, in a situation where employees are not working considerable over time (along with other factors based on typical benefit elections across the site) an odd # WD will most likely result in H&W payments which are more favorable to the employee.
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The DOL website http://www.wdol.gov/usrguide/sectionb.html#B5a1 lists the clarification as:
"Compliance with the H&W rate on all "odd numbered" Standard WDs (i.e., WD No. 2005-2103 or WD No. 2005-2113) requires payment of the minimum H&W rate for each hour paid for each employee, up to a maximum of 40 hours per week. [See 29 CFR 4.175(a)] Compliance with the H&W rate on all "even numbered" Standard WDs (i.e., WD No. 2005-2104 or WD No. 2005-2114) requires the contractor to contribute an average of the stated H&W rate per hour, computed on the basis of all hours worked by service employees on the contract."
It goes on to say:
"When selecting a Standard WD, the contracting officer must select the Standard WD with the appropriate health and welfare method. The guidelines for selection are as follows:
First Guideline: Were the services previously performed under a contract that incorporated an even numbered Standard WD? If so, for all following contract periods and follow-on contracts for substantially the same services that will be performed in the same locality, select the even numbered Standard WD for that same locality. [Reference -- 29 CFR 4.52(d)] When following the current WD selection menu, this is the reason for the question regarding whether the services were "performed under an SCA wage determination that ends in an even number".
Second Guideline: If the services were not previously performed under contract using an even numbered Standard WD, or if the services were not previously performed under an SCA-covered contract, then select the odd numbered Standard WD for that locality. When following the current WD selection menu, answering the menu questions correct should obtain the odd numbered WD response."
