Uncle Sam's Holiday Gift: Uncompensated Overtime For All (12-16-14)

Once the exclusive domain of high-priced government contractors seeking to competitively vie for mid-level work, uncompensated overtime (UOT) is becoming part of just about every contractor's future reality.

Simply stated, UOT has traditionally been the means that high-priced contractors have used to develop a competitive labor rates. For example let's say a contractor's exempt employee typically works and bills over 160 hours per month. The competitive rate is developed by dividing such an exempt employee's monthly cost, plus fee, by 160 + "n" hours, where "n" is the number of hours over 160 that that employee generally works during the course of a month. For example, if an employee costs $10,000 per month and customarily works 10-hour days, the price per hour could be as low $50 per hour (for a 200-hour month) or as high as $62.50 (for a 160-hour month). The 20% reduction is directly attributable to the 40 hours of UOT per month.

That, however, is largely yesterday's news. Today's news is how UOT is creeping into contemporary acquisitions. Think about this. Just as high-priced contractors used UOT to become price-competitive, mid-level contractors that were pressured by this tactic were forced to sharpen their own pricing pencils. Today, judging by the number of acquisitions we are seeing that all but invite bidders to use UOT, it is apparent that savvy government acquisition folk have decided that if UOT is being used by some to reduce their bid prices, then why not invite all contractors to engage in UOTish behavior. After all, if LPTA has merit, then why not lead all bidders to the final frontier of Best Value: more work for less money.

Just add Total Time Accounting, stir for a while, and soon we will have invented the 45-, 50-, 55-, 60-hour week for all. Where does all of this take us? That depends on the politics of the present and future, and whether or not the Department of Labor can be prevailed upon by overworked contractor employees to enforce existing rules or promulgate new ones.

CAI/SISCo now offers coaching services designed to improve the efficacy of internal within pursuit teams and the overall BD organization. This coaching strives to focus capture teams and capture management on what they need to learn from PTWers and how PTW products should be developed. Please call Tony Constable at (301) 807 8171 to discuss how CAI/SISCo can coach your organization to PTW and strategic pricing success on your next "must win" capture.

Good luck and happy hunting!