Here’s something that can trip you when submitting a proposal for providing professional support services for the federal government. Ever heard of a “Professional Compensation Plan?” It’s a requirement of FAR 52.222-46, Evaluation of Compensation for Professional Employees. Often buried in the list of clauses listed by title only in the general provisions of a solicitation, this clause requires all offerors submitting a proposal for that procurement to submit a written plan for compensating their proposed staff that are not covered by the Service Contract Labor Standards Act. If you don’t include the plan when this clause is in the RFP, you may be found to be noncompliant and your proposal disqualified before it even reaches the evaluators. Here’s some background on this often overlooked proposal requirement.
One of the problems the government has had to come to grips with as it pursues getting lower prices for services is the fact that winning contractors often have trouble finding and keeping qualified professional employees to perform their contracts for the low rates they bid in order to win. This happens most often when a professional services contract (for example, one for program management, engineering, IT, or other professional support services) is re-competed. The incumbent has hired and kept qualified employees by maintaining salaries and compensation packages (for example, healthcare insurance and 401k programs) that meet industry standards, including salaries commensurate with their years of experience and expertise. A new contractor bids lower based on just meeting the minimum qualifications stated in the solicitation and the incumbent has a hard time meeting these lower salaries that are proposed by their competitors. Incumbent staff, while offered positions with the new company, are offered much lower salaries for the exact same work they were performing for the past five years. But what often happens is that incumbent staff will not take the offered position and salary (or accept them, but will continue to look for better positions and leave as soon as possible), and the new contractor struggles to find individuals who meet the minimum qualifications, who can perform the work meeting the contract’s performance standards, and who will stay for any length of time. Turn-over on professional services contracts became a problem.
FAR 22.1103 requires that all professional employees be compensated fairly and properly. The Contracting Officer is required to include FAR 52.222-46, Evaluation of Compensation for Professional Employees, in solicitations for service contracts when the contract amount is expected to exceed $700,000 and the service to be provided will require “meaningful numbers” of professional employees. The determination of “meaningful numbers” of professional employees rests with the Contracting Officer. The clause requires offerors to submit as part of their written proposals a total compensation plan setting forth proposed salaries and fringe benefits for professional employees who will work on the contract. Plans indicating unrealistically low professional employees’ compensation may be rated lower as one of the factors considered in making a contract award. Or it can be evaluated by the Contracting Officer (CO) as part of the responsibility determination the CO must make before making any contract award.
In Part 2 of this blog, I’ll talk about some of the elements that the government looks for when reviewing these plans.