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    The clause states that the concern will perform at least 15% of the cost of the contract, not including the cost of materials, with its own employees. My question is what kind of employees are we talking about? Are Project Managers, Quality Control managers, superintendents, and supervision part of the employees we are talking about; or is it just for laborers and people that directly perform work on the contract?


    Answer

    FAR clause 52.219-14(c)(3) does say that for General construction, the concern will perform at least 15% of the cost of the contract, not including the cost of materials, with its own employees.  Review 13 CFR 125.6(e) https://www.gpo.gov/fdsys/pkg/CFR-2012-title13-vol1/pdf/CFR-2012-title13-vol1-sec125-6.pdf.  It states the cost of the contract is all allowable direct and indirect costs allocable to the contract, excluding profit or fees. It also states, the cost of contract performance incurred for personnel is the direct labor costs and any overhead which has only direct labor as its base, plus the concern's G&A rate multiplied by the labor cost.  The 15% of the cost is for those employees that directly perform work on the contract. 

    As for the costs of the other labor categories you mention, if it is not part of the overhead on direct labor or within the firms G&A rate or they can't directly allocate it to the contract, then I would conclude that it can't be included in the calculation.  If you have a cost and pricing specialist at your disposal, you may want to run this question by them as well.

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