• Throughout a competitive major weapon system acquisition, numerous draft RFP’s ranked the Government’s evaluation criteria in desending order as:
             Technical Solution
             Price
             Management Plan
• During various formal & informal briefings & discussions, the SPO Director repeatedly opined that the “best solution” would be to ” find, hire & retain” the best & brightest people to do the job
• The Government’s final RFP unexpectedly included a 4th ranked evaluation criteria entitled, “Human Capital”

PACFED’s Solution

• PACFED consultants were engaged by one competitor to address the Human Capital evaluation criteria
• With little time remaining before proposal submission, PACFED assessed the bidder’s key personnel qualifications, company wide compensation plan, employee motivational tools & project retention rates
• Senior company executives representing all relevant functional & staff management were recruited to assist in developing the company’s proposal response & concurrently achieve internal “buy-in”
• PACFED developed & presented a comprehensive Human Capital Plan and suggested that the company propose to have it included in the terms of the awarded contract thus contractually ensuring the Government that it would get company compliance & that the company would get recovery of employee financial incentives & other costs after contract award
• Upon evaluation by the Government, the company’s “Human Capital Plan” was rated “Blue” – the highest rating available
• The contractor was awarded the contract at an evaluated price of $X.X Billion
• At the Government’s post award de-briefing, the Source Selection Authority (SSA) stated that the tie-breaker was the winning contractor’s “obvious understanding that the best solution for a successful program was to find, hire & retain the best people for the job at hand”

• A commercial contractor accepted a $XXXK subcontract for standard commercial construction work under a U.S. Government prime contract for a new information technology facility
• Inadequate Government RFP & subcontract review failed to recognize the Government’s application/prime contractor flow-down of a site specific Davis-Bacon Act (DBA) Wage Determination
• Post subcontract award, a contractor non-exempt employee (previously employed by an experienced Government contractor) filed a complaint with DoL, Wage & Hours Division
• Complaint resulted in 6 mos. investigation by DoL consuming significant non-recoverable contractor resources ($’s) for response
• Contractor required to retroactively pay DBA wages/fringe benefits to all covered employees ($XXK loss to company due to failure of initial pricing to consider impact of DBA Wage Determinination)
• In addition, the contractor was penalized $XXK for failure to comply w/DBA

PACFED’s Solution

• Proper RFP review & proposal development would have identified DBA requirement & facilitated adequate pricing to cover costs
• Competent post-award subcontract review also would have identified DBA requirement & would have avoided non-compliance penalty

Case Scenario 2

• A commercial equipment manufacturer accepted a prime contract for its hardware that necessitated construction work to meet installation requirements
• After award, the contractor received faulty contract review & was advised that a Davis-Bacon Act (DBA) Wage Determination applied to the installation work
• Faulty review also resulted in use of a DoL/DBA Wage Determination for a high-wage urban area that was not incorporated into the prime contract nor applicable to the contractor’s rural work site
• Contractor needlessly paid employees & subcontractors $XXXK in excessive wages & fringe benefits resulting from erroneous contract review
• Although the Government recognized that the contractor’s diligent but erroneous application of the contract clauses resulted in significant & avoidable losses, the customer rightfully declined to recognize contractor’s claim for the increased costs

PACFED’s Solution

• Proper proposal & contract review would have recognized the incidental nature of construction work as part of the installation process & that no DBA Wage Determination applied to the contract
• Advance planning & proper price construction would have allowed the contractor to make use of rules permitting it to “bundle” installation cost within the price of its products and thus avoid paying excessive wages & fringe benefits
• No cost would have been incurred for attempting to gain recovery of the unnecessary, excess cost from the Government, all of which was a direct hit to the company’s earned profit on the contract

• A commercial products contractor believed it did not need to implement a job cost accounting system since all products sold to the Government were commercial in character & all pricing was based on commercial catalogue prices
• Upon award of $XX.XM subcontract under a major Government prime contract, the contractor increased its production capacity & purchased large quantities of materials to take advantage of economies of scale consistent with the prime contractor’s funding & delivery schedule
• One year after award, funding cuts forced the Government agency to partially terminate the prime contract with consequent termination of the subcontract
• Although the contractor had properly capitalized its plant improvements & paid for its materials in advance of production & with the prime contractor’s concurrence,
  co-mingling of the cost with commercial work & lack of job cost accounting prohibited the contractor from recovering idle capcity, excess material & other termination costs from the Government
• The contractor eventually sold the excess material at a loss & absorbed the idle capacity costs

PACFED’s Solution

• Proper implementation of job cost accounting systems to hedge against pre-mature termination, other customer caused changes & various cost increases in Government contracting is a MUST
• Commercially available, simple but highly effective job cost accounting systems can be implemented a minimal cost
• Employee & vendor training need not be barriers to proper implementation of Government cost accounting principals

• Small, highly successful commercial products manufacturer was awarded a moderate complexity $X.XM, firm-fixed price subcontract under a major U.S. Government prime contract
• Company owner relied on his long-standing relationship with a trustworthy outside general counsel for subcontract review
• Although honest & diligent, outside counsel lacked any Federal contracting/subcontracting experience & required detailed research & analysis of each of 100+ FAR/DFARS clauses incorporated into the subcontract
• Counsel’s subcontract review & subsequent negotiation with the prime contractor required > 6 mos. & consumed > $125K legal fees
• Since price was already agreed during the proposal phase, the legal fees were an unexpected direct hit to the company’s profit

PACFED’s Solution:

• Competent Federal Contracts Manager with in-depth knowledge of FAR/DFARS & prime contract requirements would be assigned to furnish proposal development, subcontract review & negotiation assistance
• PACFED’s Contract Manager would have provided the company with a reliable estimate of the time & resources required for post award subcontract review, negotiation & definitization/execution for inclusion in the price offer
• Approximate timeline:

1 week for proposal consultation
1 week for subcontract review & comment to prime
1 week for negotiation w/prime
3 days final writing/review
2 days final execution
Total timeline: 4 weeks

• Approximate cost to client: < $40K cost to the company
• All contracts management expenses recovered via adequate pricing - zero unexpected profit reduction