Salary Data & Contract Pricing
Methods
16 October 2013
2800 S. Shirlington Rd. Suite 350, Arlington, VA 22206  703.379.9311  AFSC.com
The information contained in this document is confidential and proprietary. © AFSC 2013
Agenda
• Armed Forces Service Corporation
• Federal contracting 101
• Role of salaries in contract prices
• Salary data
• Determining the “right” salary
• Simple average model
• Pros & Cons
• Example
• Weighted average model
• Pros & Cons
• Example
• Availability optimized/weighted model
• Pros & Cons
• Impacts on proposal evaluation
The information contained in this document is confidential and proprietary. © AFSC 2013
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Armed Forces Services Corporation
(AFSC)
• AFSC was founded in 1879 as a nonprofit organization to care for
surviving spouses from The Battle of Little Big Horn.
• AFSC supports military quality-of-life services and programs including:
• Recovery Care Coordination
• New Parent Support
• Psychological Resiliency
• Suicide Prevention
• Substance Abuse Identification & Treatment
• Domestic & Sexual Assault Prevention
• Family Outreach & Advocacy
• Transition Support & Veteran Employment
• AFSC is headquartered in Arlington, VA with personnel located in 40
States, and eight (8) countries. Our workforce is approximately 1/3
veterans, 1/3 military families, and 1/3 civilians.
The information contained in this document is confidential and proprietary. © AFSC 2013
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Federal Contracting 101
• Product vs. Service Contracts
•
Product contracts are for items, such as tanks, airplanes, seatbelts or paper.
•
Service contracts are for services, such as medical services, consulting,
dining hall services or printing.
• IDIQ vs. Purchase Orders
•
Indefinite Delivery/Indefinite Quantity (IDIQ) contracts are an agreement
between the government and some limited set of commercial companies (from
a single company to hundreds of companies) for a class of product or service.
•
Purchase Order contracts are stand-alone contracts with a single prime
contractor for a specific product or service.
• Evaluation Methods
•
Lowest-Priced Technically-Acceptable (LPTA) method awards a contract to the
lowest-priced company that meets some minimal level of technical capability.
•
Trade-Offs method allows the government to make trade-offs between
capabilities and price in order to select the best company for the job.
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Role of Salaries in Contract Pricing
•
•
•
•
For Service Contracts labor is the primary factor in
price.
Salaries alone account for 40% to 60% of the total
price.
Salaries can influence the evaluation of your
company’s proposal (particularly under a tradeoff
evaluation method).
The government usually wants companies to
explain:
• How they plan to ensure hiring qualified
personnel;
• How they plan to retain qualified personnel;
and
• When hiring professional personnel, to justify
the compensation levels.
Other
Overhead
Salaries
Benefits
• It is essential to AFSC’s business that we set the correct salary levels so
that we can:
1. Win the contract; and
2. Perform the work with quality personnel.
The information contained in this document is confidential and proprietary. © AFSC 2013
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Salary Data
•
•
•
•
•
Salary data can be found from many sources which do not always agree.
Different sources reflect different:
• Levels of qualification (i.e., education and/or experience);
• Geographic regions or boundaries; and/or
• Underlying reporting (i.e., self-reported vs. company reported).
Salary data must be legally “defendable”.
AFSC uses as many sources as we can when establishing our salary levels
We use a of couple different models of combining this data into a single salary
point
Government Data
• Bureau of Labor Statistics
• Department of Labor
• USAJobs.com
Purchased Data
• Economic Modeling Specialists, Inc.
• Careerbuilder Compensation Tool
• Careerbuilder Supply & Demand Data
Salary Point
Corporate Data
• Current AFSC Salaries
• Competitor Company Job Listings
Public Data
• Salary.com
• Indeed.com
• Payscale.com
The information contained in this document is confidential and proprietary. © AFSC 2013
5
Determining the “Right” Salary
•
AFSC concentrates on five (5) aspects of salary data:
1. Occupations with the required skill sets
2. Minimum education levels
3. Minimum experience requirements
4. Labor availability
5. Location
•
Modeling the available salary data sometimes requires assumptions such as:
• Equivalencies between salary percentiles and levels of experience
• 10th percentile  0-1 years experience
• 90th percentile  10+ years of experience
• Skill sets required by a contract may not match a particular occupation
Contractor personnel shall possess, at a minimum, the following: knowledge of U.S.
postsecondary education, Soldier development programs, and career guidance and planning
techniques. Contractor personnel performing education counseling services shall possess a
bachelor’s degree from a college or university that is accredited by a national or regional
accrediting agency recognized by the U.S. Department of Education. The degree shall include or be
supplemented by at least 24 semester hours in one or a combination of the following: Tests and
Measurement, Adult Education, Guidance and Counseling, Career Planning, and Occupational
Information and minimum of one year of relevant experience.
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Simple Average Model
• Applies best when the government asks for a common occupation.
• Under a simple average model, we research the occupation across the
various data sources, adjust for experience levels and location, and then
average the results of the various data sources.
PROS
• Easily researched
• Easily explained
• Quick!
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CONS
• Not very good for non-standard
skill sets (i.e., not a common
occupation)
• Does not address the availability
of the occupation or skill set in
each location
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Simple Average Example
• Contract Requirement:
“The Contractor’s Certified Strength & Conditioning Trainers shall have obtained
certification as athletic trainers by the Board of Certification for Athletic Trainers, and
shall be licensed to practice in the applicable State.”
Data Source
Occupation
Title
EMSI
Athletic Trainer
CB Talent
Compensation
Athletic Trainer
Salary.com
Athletic Trainer
BLS
Athletic Trainer
Minimum
Education
Bachelor’s
Minimum
Experience
Median Salary
None Specified
$46,384
None Specified
$45,500
Bachelor’s +
Certification
None Specified
$36,691
None Specified
None Specified
$42,090
Bachelor’s
Average Median Salary
The information contained in this document is confidential and proprietary. © AFSC 2013
$42,666
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Weighted Average Model
• Applies best when the government asks for a skill set (as opposed to an
occupation) under an LPTA evaluation methodology.
• Under a weighted average model, we research the occupations that have
skills required across the various data sources, adjust for experience
levels and location, and then weight each occupation based on the
requirement for each occupations skills.
PROS
• Easily researched
• Not too difficult to explain
• Allows the “construction” of an
occupation
• Allows some flexibility in hiring
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CONS
• Requires some large assumptions
about the weighting of each “skill
set”
• Does not address the availability
of the occupation or skill set in
each location
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Weighted Average Example
•
Contract Requirement:
“Personnel supporting tasks in PWS shall have a degree in behavioral health or social services;
have extended knowledge about substance abuse program, suicide prevention programs, and the
risk reduction programs; have experience at the <headquarters> level; understand military
command structure; and have project management, data and program analysis experience.”
Required Skill or
Background
Median
Occupation
Salary
Data Source
Source Occupation Title
Management/
Program Analyst
CB Talent
Comp
Management/Program
Analyst
Nurse
EMSI
Registered Nurse
$82,686
Nurse
Salary.com
Clinical Nurse Specialist
$98,511
Nurse
Salary.com
Staff Nurse - RN
$86,062
ORSA/Data Analyst
CB Talent
Comp
ORSA/Data Analyst
EMSI
Operations Research
Analyst
Operations Research
Analyst
Medical & Health
Service Managers
Chemical Dependency
Director
Sub. Abuse Center
Director (Hosp.)
Program
Management
Program
Management
Program
Management
Program
Management
EMSI
Salary.com
Salary.com
Salary.com
Program Manager
The information contained in this document is confidential and proprietary. © AFSC 2013
$108,115
$99,667
$156,104
Mean Skill
Salary
Skill %
$108,115
40%
$89,086
30%
$127,886
20%
$110,762
10%
Proposed Salary
$106,625
$103,189
$104,334
$125,185
$110,338
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Availability Optimized / Weighted Model
•
Applies best when the government asks for a skill set (as opposed to an occupation)
under a trade-off evaluation method.
•
These are actually a class of models – with different factors used depending on what
types of skills are required, the locations involved, and the availability of those skills
in each location.
•
Can be a simple average where we optimize for lowest total contract price depending
on the prevalence of each qualified occupation in each location (i.e. hire a Nurse in
one place and a Social worker in another).
•
Can included a weighted average were the weights are optimized for availability
PROS
• Allows the “construction” of an
occupation
CONS
• Very difficult to explain
• Incorporates the availability of
skill sets into the development –
has impacts on feasibility of
delivery
• Allows “ghosting” of competitor
methodologies
The information contained in this document is confidential and proprietary. © AFSC 2013
11
Impacts on Proposal Evaluation
• AFSC has been developing and using these salary determination methods
over the last two years, and we believe it has had an impact on how some of
the government contracting agencies we work with evaluate proposals.
• Examples:
• A suite of IDIQs (~$100 Million) that we deal with frequently have started
including the following language in solicitations:
“Offeror shall address its approach to attract, recruit, and retain a highly
qualified workforce including details with regard to compensation plans
(salary and benefits).”
• Another contracting office we work with regularly has begun to include
FAR clause 52.222-46.
•
This clause is required by the FAR in certain cases, but it is not normally
included.
•
It requires proposals to include a plan detailing compensation (i.e., salaries)
for professional employees.
• We have had our compensation plans identified as a strength in several
proposals over the past year.
The information contained in this document is confidential and proprietary. © AFSC 2013
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Questions
The information contained in this document is confidential and proprietary. © AFSC 2013
13
2800 S. Shirlington Rd. Suite 350, Arlington, VA 22206  703.379.9311  AFSC.com
The information contained in this document is confidential and proprietary. © AFSC 2013