Understanding the Contractor’s Job Order Contract Coefficient

By peter.cholakis@verizon.netJOB ORDER CONTRACT COEFFICIENT, Job Order Contracting, Job Order Contracting - Education & Training, unit price book, upb

UNDERSTANDING THE CONTRACTOR’S JOB ORDER CONTRACT COEFFICIENT

JOB ORDER CONTRACTING COEFFICIENT

A Job Order Contract Coefficient is a numerical factor that represents costs (generally indirect costs) not included in the unit price line items within the Unit Price Book, UPB, associated with the Job Order Contract.   Example include, general and administrative and other overhead costs, insurance costs, bonding and alternative payment protection costs, protective clothing, equipment rental, and contractor’s profit.

Contingent costs, such as labor rate changes and inflation in option years, may also be covered in the coefficient when an Economic Price Adjustment or annually updated UPB are not used.

A Job Order Contract, JOC request for proposal, RFP, should explain the unit price book, and specify what types of costs, as a minimum, must be covered by the coefficient(s). Offerors should be asked to specify in their proposal what additional types of costs are included in their coefficient(s). The coefficient(s) proposed by the offeror and accepted by the owner are incorporated in the JOC contract. Pricing of option periods, to include consideration of any wage adjustments when Economic Price Adjustment is not used, are covered by the contractor’s coefficient(s) proposed for those periods.

The contractor’s price coefficient may include, but is not limited to the following, as specified within the Job Order Contract:

  • Contractor’s overhead and profit
  • Subcontractors’ overhead and profit
  • Insurance
  • All costs associated with bonding (specifically including bond premiums)
  • Employee payroll taxes, insurance and fringe benefits
  • Business taxes, contributions, memberships, corporate headquarters support (legal, financial, etc.)
  • All waste and excess material
  • Sales tax on material and equipment costs
  • Clean up
  • Mobilization and close out for the total contract and each task order
  • Compliance with environmental laws (overhead {indirect} costs associated with performing work in compliance with EPA/OSHA regulations, including obtaining any necessary licenses and permits, reporting requirements, etc.)
  • Compliance with protection and safety laws (i.e., safety rails, face and clothing protection, etc.)
  • Traffic and work site signs and barriers
  • Project management and supervision
  • Protection of and/or moving of owner property
  • Quality control
  • Office management and equipment
  • Depreciation of mobile office(s)
  • Interest associated with funding of equipment and payroll
  • Submittal preparation
  • As built drawings
  • Permits, licenses and fees
  • Other risks of doing business (i.e., risk of a lower than expected contract dollar value; risk of a high inflation cost if factors are bid for option years; risk of poor subcontractor performance and re-performance)