Attention NAVSEA Service Contractors: Beware of New Tripwires!

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NAVSEA has issued new approval requirements for numerous contracting actions associated with service contracts.  Among other ramifications, these new “tripwires” will cause longer lead times for procurements as the required reviews and approvals are obtained, and will most likely result in fewer “best value” awards.  The tripwires, summarized below, were included in a memorandum dated April 4, 2012 published by the Head of Contracting Activity, NAVSEA.

  1. Bridge Contracts: Bridge contracts are defined as sole source extensions to existing contracts that are required in order to maintain the support until the follow-on contract can be competitively awarded.  All bridge contracts will now require the approval of a Commanding Officer/Technical Director and will require additional approvals if they exceed $10 million or a second bridge contract is necessary.  Apparently, NAVSEA believes that if the process to award a bridge contract is sufficiently bureaucratic, the contracting activity will be motivated to award the follow-on contract in a timelier manner.
  2. Best Value Procurements: The contracting activity will not be allowed to award any contract valued more that 10% over the lowest, technically-acceptable offeror’s bid without the approval of the Commanding Officer/Technical Director, and procurements valued in excess of $10 million will require additional approvals.  This indicates that the winning bid will now almost always be within 10% of the lowest technically-acceptable bid.  Ironically, in time of tight money, one would normally emphasize getting the best value you can for each dollar you spend.
  3. Other Direct Costs: Contracts in which Other Direct Costs (ODCs) are estimated to exceed 10% of the contract value or $3 million dollars per year, whichever is lower, require approval of the Contracting Officer, a plan to monitor the ODC charges during contract performance and, if the ODC’s are material items, an explanation of why the materials are not being acquired as supply items.
  4. Labor Rates: Any proposed fully burdened labor rates (this presumably includes profit) bid on cost plus or T&M contracts that exceeds $260,000 per year requires the approval of the Source Selection Authority and SEA 02 HQ must be notified before award.  Assuming 2080 hours per year this equates to a labor rate of $125 an hour.  Post award the COR must notify the Commanding Officer/Technical Director if any fully burdened labor rates in excess of $260,000 per year are being charged to the contract that were not bid in the proposal.  This is relatively easy to monitor in T&M contracts but will require some math to monitor in cost contracts.  In addition, the COR must notify the Branch Head if the amount being charged to the contract exceeds the bid rates by more than 10%.  Progressively higher notifications are required if the amounts being charged exceed 15% of the bid rates.
  5. Subcontracts: Any subcontractors added after award will now require the approval of the Contracting Officer and the COR.  This will be the case regardless of whether the Subcontracts clause requires advance notification and consent.
  6. One-Bid: Any instance where only one bid was received on a competitive acquisition must be reported to the Commanding Officer/Technical Director.  If the procurement is valued over $150,000 approval for the award must be obtained from SEA 02 HQ. 

Thomas Marcinko is a Principal Consultant in Aronson’s Government Contract Services Group.  He has over 25 years of government contracts experience, including proposal development, contract and subcontract administration, FAR compliance, small business programs, and government audits.

About Thomas Marcinko


Thomas Marcinko is a Principal Consultant in Aronson’s Government Contract Services Group. He has over 25 years of government contracts experience, including proposal development, contract and subcontract administration, FAR compliance, small business programs, and government audits.

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