The following "lessons learned" were provided by the A-76 team leader for a Child Care A-76 study that resulted in a conversion to contract.
One-Time Conversion Costs
The activity chose to use the standard A-76 4% severance pay factor (i.e.4% of the
In-house Government Estimate (IHGE) Government personnel costs) in lieu of attempting to determine the potential costs. Additionally, since the first contract term was only 6 months, they only used half the "4%"
severance pay factor, $60,400 vice $120,800. The actual severance costs for the separated work force was close to $600,000. The activity also paid out approximately $125,000 for lump sum annual leave.
Award Fee
The activity chose to use an award fee with their contract. Per the A-76 cost comparison instructions, only 65% of the potential award fee is included in the Contract Price, line 7 of the
A-76 cost comparison form. To the extent bidders usually reduce their
final offered prices by the award fee amount and the Government usually pays between 66 – 100% of award fees, the actual cost of contracting will be higher than shown on the cost comparison form.
In this situation, if the contractor receives all of the potential award fee, the actual cost will be $470,721 higher than that shown on line 7 of the CCF.
Total Cost
Based on the above, the total cost of contracting as shown on the cost
comparison form was potentially understated by approximately $1.01 million.
Refer to the article on Award Fee included at the bottom of this page.
Pay attention to the potential cost of contracting at your location for your A-76 study, as that cost may be significantly higher than the standard study cost factors. Determine these potential costs as early in the study as you can and request a waiver, based on your documented findings.