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    We are interested in knowing some of the pros' and cons' of contract type selection when considering a fixed price or a labor hour type contract using a GSA Schedule Contract Example: We have mail room contractors working to service our buildings mail distribution, postage processing, delivery (within building), and mail pickup. We created a Statement of Work that includes all the required duties and responsibility. The mail clerks know what is expected and do not need to be supervised. We estimated the amount of hours each contractor must work. We have used a GSA Schedule Contract and the associate fixed price hourly rate. We know how much each contractor will cost on a weekly, monthly, and annual bases. Since we have an accurate cost estimate we created a multiple year (5), fixed price contract. We are now wondering if we should have used a labor hour contract type as a better fit. Thank you for any information, ideas, or suggestions.;


    Answer

    By the FAR, I would say you used the appropriate contract type. The scope of work and job cost is clearly known by the Buyer making this a perfect case for FFP. FFP is low risk to the Buyer and Seller in this case since both parties know exactly what should be done and how much to pay/charge. I assume the SOW included the hours of operation that must be covered. Additionally, I assume this contract has been ongoing. Meaning... they didn't just recently decide to buy mail service. FFP works well when there is documented contractual history. If it's the first time they are buying the mail service, maybe Labor Hour would be appropriate so they can establish a basis of estimate. If it has already been purchased in the past, this is even more reason to go FFP.
     
     
     
    Labor Hour would be appropriate if the Buyer intended to by "hours" instead of a comprehensive mail "service."  In other words, is the deliverable on this contract the hours or the service? If it's a certain expert clerk for a period of time, then perhaps hours is the deliverable. However, the scenario sounds like the Buyer really wants a mail service during normal hours of operation.


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