U.S. ENVIRONMENTAL PROTECTION AGENCY 

OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

Audit Report 

EPA Should Stop Providing 

Estimates of Total Labor Hours 

to Contractors 

 Report No. 09-P-0229 

 September 9, 2009 
Report Contributors: Nancy Dao 

Doug LaTessa 

Kevin Lawrence 

Michael Petscavage 

Abbreviations 

CMM Contracts Management Manual 

EPA U.S. Environmental Protection Agency 

EPAAR Environmental Protection Agency Acquisition Regulation 

FAR Federal Acquisition Regulation 

HQ Headquarters 

IGCE Independent Government Cost Estimate 

OAM Office of Acquisition Management 

OIG Office of Inspector General 

RTP Research Triangle Park 

SOW Statement of Work 
U.S. Environmental Protection Agency 09-P-0229 

Office of Inspector General September 9, 2009
 

At a Glance
 

Catalyst for Improving the Environment 

Why We Did This Review 

The Office of Inspector 

General (OIG) conducted an 

audit of how the U.S. 

Environmental Protection 

Agency (EPA) uses 

independent government cost 

estimates (IGCEs) to control 

contract costs and receive the 

best value for dollars 

expended. This report is being 

issued to address a specific 

issue regarding the sharing of 

labor hours with contractors; 

another report will follow. 

Background 

An IGCE is a detailed estimate 

of what a reasonable person 

should pay to obtain the best 

value for a product or service. 

IGCEs are an essential tool to 

ensure the best value is 

obtained for dollars expended. 

For further information, 

contact our Office of 

Congressional, Public Affairs 

and Management at 

(202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov/oig/reports/2009/ 

20090909-09-P-0229.pdf 

EPA Should Stop Providing Estimates of 

Total Labor Hours to Contractors 

What We Found 

For 6 of the 22 contracts we reviewed, EPA provided the contractor with the 

government’s estimate for total labor hours prior to receiving the contractor’s 

proposal. The Federal Acquisition Regulation provides that the government may 

use various cost analysis techniques to ensure a fair and reasonable price, 

including comparing proposed prices with IGCEs. Since EPA is providing total 

labor hours to the contractor prior to receiving the proposal, EPA may be 

diminishing its ability to obtain a fair and reasonable price. 

Contract management and program staff indicated that providing the total labor 

hours is common practice under level-of-effort-type contracts. Some informed us 

they provide contractors with estimated labor prior to receiving the proposal to 

indicate to the contractor the level of effort EPA anticipates will be associated 

with the work assignment. Office of Acquisition Management managers pointed 

out that EPA’s Acquisition Regulation (EPAAR) requires that estimated labor 

hours be provided to contractors for contracts in which work is ordered through 

work assignments. Yet, an Office of Acquisition Management guide states that 

information from the IGCE should not be provided to the contractor. 

We found that for most of the Superfund contracts reviewed, EPA did not 

routinely provide total labor hours to the contractor before receiving the proposal. 

Some EPA staff informed us they did not provide the total labor hours because 

doing so would undermine the negotiation process. When EPA provides its 

estimate of total labor hours before receiving the proposal, the contractor does not 

have an incentive to seek a more efficient or innovative approach to meet the 

government’s requirement. 

What We Recommend 

We recommend that EPA revise EPAAR to eliminate the requirement that EPA 

include total estimated labor hours in work assignments or identify specific 

circumstances in which the requirement should apply. EPA agreed with our 

recommendations to modify EPAAR and will communicate new guidance to 

contracting staff and those who prepare IGCEs. 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

OFFICE OF 

INSPECTOR GENERAL 

September 9, 2009 

MEMORANDUM 

SUBJECT:	 EPA Should Stop Providing Estimates of Total Labor Hours to Contractors 

 Report No. 09-P-0229 

FROM: Melissa M. Heist 

Assistant Inspector General for Audit 

TO:	 Craig E. Hooks, Assistant Administrator 

 Office of Administration and Resources Management 

This is our report on the U.S. Environmental Protection Agency’s (EPA’s) practice of providing 

total labor hours to contractors prior to receiving the contractor’s proposal. This report contains 

findings that describe the problems the EPA Office of Inspector General (OIG) has identified and 

corrective actions the OIG recommends. This report represents the position of the OIG and does 

not necessarily represent the final EPA position. Final determinations on matters in this report 

will be made by EPA managers in accordance with established audit resolution procedures. 

The estimated cost of this report – calculated by multiplying the project’s staff days by the 

applicable daily full cost billing rates in effect at the time – is $141,313. 

Action Required 

In responding to the draft report, the Agency provided corrective action plans for addressing all 

of the recommendations. Therefore, a response to the final report is not required. The Agency 

should track corrective actions not implemented in the Management Audit Tracking System. We 

have no objections to the further release of this report to the public. The report will be available 

at http://www.epa.gov/oig. 

If you or your staff have any questions, please contact me at 202-566-0899 or 

heist.melissa@epa.gov; or Janet Kasper, Product Line Director, at 312-886-3059 or 

kasper.janet@eap.gov. 
EPA Should Stop Providing Estimates 09-P-0229 

of Total Labor Hours to Contractors 

Table of Contents 

Purpose........................................................................................................................ 1 

Background ................................................................................................................. 1 

Scope and Methodology............................................................................................. 1 

Results of Review ....................................................................................................... 2 

Recommendations...................................................................................................... 6 

Agency Comments and OIG Evaluation ................................................................... 6 

Status of Recommendations and Potential Monetary Benefits.............................. 7 

Appendices 

A Agency Response .............................................................................................. 8 

B Distribution ......................................................................................................... 10 
09-P-0229 

Purpose 

The U.S. Environmental Protection Agency’s (EPA’s) Office of Inspector General (OIG) 

conducted an audit to determine whether EPA is effectively using independent government cost 

estimates (IGCEs) to control costs on Agency contracts. During our review, we identified an 

issue of immediate concern relating to EPA sharing labor hours with contractors. This report 

addresses that specific issue; another report will follow. 

Background 

An IGCE is a detailed estimate of what a reasonable person should pay to obtain the best value 

for a product or service and should include priorities and assumptions that exist at the time the 

estimate is made. According to EPA’s Contracts Management Manual (CMM), IGCEs are 

required for work ordered under a contract with a potential value in excess of $100,000. IGCEs 

are used by the Federal Government as an essential tool to ensure the best value is obtained for 

the dollars expended. EPA’s Office of Acquisition Management (OAM) prepared a guide that 

states IGCEs “are an integral part of any effective acquisition program.” 

At EPA, IGCEs are used in evaluating proposals for new contracts and contract modifications 

and before issuing work assignment and task or delivery orders. EPA’s program offices are 

responsible for preparing IGCEs based on the Statement of Work (SOW). EPA contracting 

officers are responsible for contractual issues such as providing the Request for Proposal to the 

contractor, which includes the SOW. Contracting officers are also responsible for assuring cost 

reasonableness. Part 15.404-1 (a)(1) of the Federal Acquisition Regulation (FAR) states: 

The contracting officer is responsible for evaluating the reasonableness of the 

offered prices. The analytical techniques and procedures described in this 

subsection may be used, singly or in combination with others, to ensure that the 

final price is fair and reasonable. The complexity and circumstances of each 

acquisition should determine the level of detail of the analysis required. 

During the early 1990s, the Government Accountability Office reported weaknesses in EPA’s 

use of IGCEs. The Government Accountability Office found that EPA had not protected itself 

against potentially wasteful spending by independently estimating how much the contracted work 

should cost. In response to these reported weaknesses, in 1992 EPA Superfund program officials 

required staff to, among other things, independently prepare cost estimates of contracted work 

and use them in negotiating the contractors’ costs. EPA subsequently provided its staff with 

training in preparing these estimates. The most current EPA document on IGCEs is the student 

guide on IGCEs published in 1998, which provides general guidance on preparing IGCEs. 

Scope and Methodology 

We performed this audit from May 2008 to June 2009 in accordance with generally accepted 

government auditing standards, issued by the Comptroller General of the United States. Those 

standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our audit objectives. We 

1 
09-P-0229 

believe that the evidence obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. 

We reviewed the latest active contracts listing and selected our sample based on factors such as 

program, contract type, geographic location, dollar value, and period of performance. During 

preliminary research, we selected a nonstatistical sample of 12 contracts from several different 

locations. During field work, we selected 10 additional contracts. A breakdown of these 

contracts is in Table 1. The findings in this report relate to the five non-Superfund contracts 

from preliminary research and one Superfund contract from field work (see contracts in Table 2). 

Headquarters issued two of the non-Superfund contracts and the Superfund contract; Research 

Triangle Park issued the other three non-Superfund contracts. 

Table 1. Contracts Selected 

Type of Contract Selected During Preliminary Research Selected During Field Work 

Non-Superfund 5 0 

Superfund 7 10 

Total 12 10 

Source: OIG analysis of data 

For each contract, we interviewed the contracting officer and program personnel involved with 

preparing IGCEs. We conducted interviews to obtain an understanding of how they go about 

preparing and using IGCEs, both at the contract level and work assignment or task order level. 

We judgmentally selected some work assignments or task orders from each contract for further 

review. We reviewed documentation from the contracting officer’s files to gain an 

understanding of cost estimates at the contract level and at the work assignment or task order 

level if available. We also reviewed files maintained by the program personnel who prepared the 

IGCEs for the work assignments and task orders we reviewed. 

Results of Review 

For 6 of the 22 contracts reviewed, EPA provided the contractor with the government’s estimate 

for total labor hours prior to receiving the contractor's proposal. FAR provides that the 

government may use various cost analysis techniques to ensure a fair and reasonable price, 

including comparing proposed prices with IGCEs. EPA staff believe providing total labor hours 

to the contractor is necessary because it is buying labor hours and doing so makes the acquisition 

process more efficient. Further, OAM managers pointed out that the EPA’s Acquisition 

Regulation (EPAAR) requires that estimated labor hours be provided to contractors for contracts 

where work is ordered through work assignments. IGCEs are one of the tools used to ensure the 

final agreed-to price is fair and reasonable. When EPA provides total labor hours to the 

contractor prior to receiving the proposal, EPA may be diminishing its value as a tool to ensure a 

fair and reasonable price. 

FAR Section 15.404-1 states that the objective of proposal analysis is to ensure that the final 

agreed-to price is fair and reasonable. The FAR identifies IGCEs as a tool for reviewing 

proposed costs or prices. The CMM also states that the IGCE is one of the tools the contracting 

officer uses to determine whether the contractor’s proposed price is fair and reasonable. EPA 

can compare the IGCE to the contractor’s proposal to assess the reasonableness of the price. The 

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09-P-0229 

CMM refers project officers to the student guide for additional guidance on preparing IGCEs. 

EPA’s guide on preparing and using IGCEs states, “Any IGE [Independent Government 

Estimate] developed for a current contract must never be disclosed to the contractor prior to the 

contractor’s submission in response to the proposed Statement of Work or modification.” The 

guide also explains that IGCEs can be compared to proposals and workplans to detect similarities 

and differences. This can help EPA determine whether proposals overstate or understate work, 

the SOW contains sufficient detail, or prices are too high or low. 

When EPA provides total labor hours to the contractor prior to receiving the proposal, it may be 

diminishing the value of the IGCE in assessing the reasonableness of the contractor’s proposal. 

Though EPA does not provide the entire IGCE to the contractor, it does provide the contractor 

with the total amount of labor hours it is willing to approve prior to receiving and reviewing the 

contractor’s estimate. Of the contracts, contract task orders, and work assignments reviewed, 

EPA provided the contractor with the total amount of labor hours it is willing to approve prior to 

receiving and reviewing that contractor’s estimate for five non-Superfund contracts and one 

Superfund work assignment, as shown in Table 2. 

Table 2: 

Contract 

Program 

Office 

Research 

and 

Development 

EP-D-05-088 Office of WA 20806002S 

WA 208RD018R 

WA 20804541S 

373 

4,485 

271 

383 

4,335 

280 

383 

4,335 

280 

3% 

-3%

3% 

EP-D-07-109 Office of 

Research 

and 

Development 

WA 0-01 

WA 0-02 

WA 0-03 

WA 0-04 

910 

1,500 

820 

400 

910 

1,496 

820 

400 

910 

1,496 

820 

400 

0% 

0% 

0% 

0% 

Comparison of Contractor’s Proposed Direct Labor Hours to EPA’s Labor Estimate 

EPA’s 

Labor

Hour

Estimate 

Final 

Approved 

Labor

Hours 

Percentage of 

Contractor’s 

Proposal to 

EPA’s Estimate 

Work 

Assignments/ 

Task Orders 

Contractor’s 

Proposed 

Labor Hours 

WA 0-05 4,700 5,212 5,212 10% 

WA 0-06 865 887 887 2% 

WA 0-07 750 750 750 0% 

WA 0-08 700 700 700 0% 

WA 0-09 1,310 1,310 1,310 0% 

WA 0-10 100 100 100 0% 

EP-D-05-002 Office of Air 

and 

Radiation 

WA 1-01 

WA 1-02 

WA 1-03 

WA 1-04 

WA 1-05 

WA 2-01 

4,500 

1,620 

465 

170 

670 

4,700 

4,500 

1,600 

350 

200 

622 

4,700 

4,500 

1,600 

350 

200 

670 

4,700 

0% 

-1% 

-33% 

15% 

-8% 

0% 

EP-W-06-001 Office of Air 

and 

Radiation 

TO 304 

TO 310 

TO 314 

7,930 

7,985 

2,005 

7,900 

9,057 

1,904 

7,900 

9,057 

1,904 

0% 

12% 

-5% 

EP-W-06-093 Office of Air 

and 

Radiation 

TO 101 

TO 105 

TO 107 

4,371 

2,200 

10,095 

4,546 

2,200 

11,995 

4,546 

2,200 

11,995 

4% 

0% 

16% 

EP-W-05-060 Superfund WA 1-08 472 471 471 0% 

WA 1-11 1,328 1,397 1,397 5% 

Source: OIG analysis of EPA data 

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09-P-0229 

For 21 of 27 work assignments or task orders under these contracts, the difference between the 

EPA labor hour estimate and the contractor’s proposal was within 5 percent. Moreover, for 13 of 

the work assignments or task orders, there was no difference between what EPA had in the IGCE 

and what the contractor proposed. Below are two examples in which the contractor’s proposed 

total hours matched exactly the government’s estimated total hours. 

•	 For contract EP-D-05-002, work assignment 2-01, EPA estimated the total labor hours at 

4,700. EPA provided this figure to the contractor, which also estimated 4,700 total hours. 

The contractor’s cost estimate was slightly lower (3.6 percent) than EPA’s estimate 

($489,553 versus $507,784). This difference was due to differences in the proposed labor 

mix. EPA automatically accepted this cost variance based on the minor difference. 

•	 For contract EP-D-07-109, work assignment 0-03, EPA estimated 820 total labor hours. 

EPA provided this figure to the contractor, which also estimated 820 hours. The 

contractor’s cost estimate was higher then the EPA IGCE ($96,259 versus $91,284), 

again due to differences in the proposed labor mix. 

Labor hours generally represent the majority of the contract costs. For example, for the 4,700 

total labor hours discussed above, labor and corresponding associated costs (fringe, overhead, 

etc.) represented about 86 percent of the total proposed amount ($422,000 of the $490,000 total) 

for this work assignment. When EPA provides the contractors with the total labor hours and the 

labor rates are either fixed or can be estimated based on historical data, the contractors can 

reasonably determine the labor and corresponding cost EPA is willing to accept before preparing 

their proposals. 

According to the FAR, a cost analysis is used to evaluate the separate cost elements of the 

contractor’s proposal. As part of this cost analysis, EPA staff would compare the hours and rates 

contained in the proposal to those estimated within the IGCE. Such an analysis would allow 

EPA staff to determine whether proposals overstate or understate work, or prices are too high or 

low, and determine the fair and reasonable price for labor hours. If EPA had received the 

contractor’s proposal without providing an estimate of total labor hours, it could have conducted 

a valid cost analysis for labor hours. However, by providing estimated labor hours, EPA 

diminished its ability to use the IGCE to assess the reasonableness of labor hours in the proposal. 

Based on the language in the CMM, the SOW should provide sufficient information for the 

contractor to develop its proposal. CMM Section 11.1.5.1 states: 

 . . . the SOW is the basis for preparation of the Independent Government Cost 

Estimate (IGCE). The IGCE is developed by the program office and is based on 

the individual elements of cost estimated for each of the components and 

sub-components of the SOW. The IGCE is one of the tools used by the CO 

[contracting officer] to determine if the contractors proposed price/cost is fair 

and reasonable. 

The contractor develops and prepares their proposal from the SOW. The 

contractor must understand the SOW requirements sufficiently to develop its 

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09-P-0229 

technical, management and price/cost proposals. The SOW must provide enough 

information without need for further explanation from the Government. 

The SOWs for the six contracts listed above contained deliverables that lessened the need for 

EPA to provide hours. While the six contracts were level-of-effort (labor hours) contracts, they 

also contained specific deliverables. For example, under EPA Contract EP-D-05-088, we 

reviewed three work assignments. The purpose of two of the three work assignments was to 

have the contractor provide to EPA historical aerial photographs of sites where EPA was 

conducting work. If needed, both work assignments required the contractor to research and 

purchase additional historical aerial photographs. Both work assignments also required the 

contractor to provide EPA with a historical photo analysis report using 8 to 10 years of 

photographic coverage. The primary purpose of these work assignments was to provide EPA 

with a specific deliverable rather than EPA simply purchasing labor hours from the contractor. 

As such, the practice of providing the contractor with EPA’s estimate of the number of hours 

required to complete these tasks is unnecessary. 

EPA contract and program staff offered several reasons for providing IGCE information to the 

contractors. Contract management and program staff indicated that it is common practice to 

provide the contractor with the government’s estimate of total labor hours. Some EPA contract 

management staff informed us they provide contractors with estimated labor prior to receiving 

the proposal because they are buying labor hours through level-of-effort contracts. OAM 

managers said they do this because they believe it makes the process more efficient. They also 

pointed out that EPAAR requires that estimated labor hours be provided to contractors for 

contracts where work is ordered through work assignments. Specifically, EPAAR states: 

Each work assignment will include (1) a numerical designation, (2) the estimate 

of required labor hours, (3) the period of performance and schedule of 

deliverables, and (4) the description of the work. 

OAM informed us this EPAAR clause is based on FAR 16.306 (d)(2) that defines one type of 

cost-plus-fixed-fee contract where the Agency describes the scope of work in general terms and 

obligates the contractor to devote a specified level of effort for a stated time period. OAM stated 

that the government provides the hours as a control mechanism to allocate the level of effort it 

has decided to devote to each specific project. While the control mechanism is beneficial and 

may be necessary for some cost-type contracts, the level-of-effort information should be added 

after EPA receives the contractor’s work proposal and as part of the negotiation of the final 

SOW. Providing the hours after negotiation provides the control mechanism for the contract 

while allowing the negotiation process to continue to be used to obtain the best value. 

The EPAAR requirement diminishes the value of the IGCE process in analyzing the contractor’s 

proposal. EPA needs to rescind the EPAAR requirement for two primary reasons. First, the 

requirement to include an estimate of required labor hours in the work assignment reduces EPA’s 

ability to determine whether it is getting a fair and reasonable price. Second, level-of-effort type 

contracts contain SOWs that should adequately describe EPA’s need and contractors can use 

them to estimate the required labor hours to complete a task. 

5 
09-P-0229 

Despite the EPAAR clause requiring that the total hours be provided, we found that contracting 

officers for most of the Superfund contracts we reviewed did not provide the hours to the 

contractor prior to receiving the proposal. We spoke with project officers and contracting 

officers, who informed us they did not provide the total labor hours because doing so would 

undermine the negotiation process. We noted instances where the contractors’ proposed hours 

and/or dollars were less than the government’s IGCE. For example, one work assignment under 

a Superfund contract contained an IGCE that estimated approximately $440,000 (4,015 total 

labor hours). The contractor proposed approximately $381,000 (3,840 total labor hours) and the 

final negotiated price was approximately $363,000 (3,532 total labor hours). 

By providing contractors with the government’s estimate for total labor hours prior to receiving 

the proposal, EPA may be jeopardizing the overall integrity of the cost estimating process. As 

shown in Table 2, when contractors are provided with an estimate of labor hours, the IGCE and 

contractor’s cost proposal are generally similar in amount. Since EPA provides its estimate of 

total labor hours before receiving the proposal, the contractor does not have an incentive to seek 

a more efficient or innovative approach to meet the government’s requirement. 

Recommendations 

We recommend that the Assistant Administrator for Administration and Resources Management: 

1. Revise EPAAR to eliminate the requirement that EPA include total estimated labor hours 

in work assignments or identify specific circumstances in which the requirement should 

apply. 

2. Communicate to contract management and program staff who prepare and use IGCEs 

when estimates of total labor hours, or any other cost-related estimates, should not be 

provided to contractors prior to receiving the contractor’s proposal. 

Agency Comments and OIG Evaluation 

EPA agreed with our recommendations and will modify the EPAAR clause on providing 

required hours for work assignments. However, EPA believes circumstances exist on certain 

contracts where a contracting officer needs to be able to provide the expected level of services 

needed to the contractor. EPA stated that contracts where the nature of the work is nonspecific 

with changing circumstances, such as clean-up services at new hazardous waste sites or research 

and development in new areas with uncertain potential results, fall into this category. EPA stated 

that in such cases, unless the contracting officer provides the contractor with the estimated level 

of effort in terms of hours, the contractor will be left guessing at this level, which might 

needlessly delay getting the program customer the required services. EPA agreed to revise 

EPAAR and provide guidance to contracting officers regarding their discretion to reveal 

estimated labor hours to contractors, depending on the circumstances of the individual 

contracting action. EPA will issue the interim guidance by November 1, 2009, and revise the 

EPAAR clause, which may take an additional 9 months. See EPA’s full response in 

Appendix A. The Agency’s proposed actions will address the recommendations. 

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09-P-0229 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed To 

Amount 

1 

2 

6 

6 

Revise EPAAR to eliminate the requirement that 

EPA include total estimated labor hours in work 

assignments or identify specific circumstances in 

which the requirement should apply. 

Communicate to contract management officials and 

program officials who prepare IGCEs when labor 

estimates, or any other cost-related estimates, 

should not be provided to contractors prior to 

receiving the contractor’s proposal. 

O 

O 

Assistant Administrator for 

Administration and 

Resources Management 

Assistant Administrator for 

Administration and 

Resources Management 

8/1/2010 

11/1/2009 

1 O = recommendation is open with agreed-to corrective actions pending.

 C = recommendation is closed with all agreed-to actions completed.

 U = recommendation is undecided with resolution efforts in progress. 

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09-P-0229 

Appendix A 

Agency Response 

August 20, 2009 

MEMORANDUM 

SUBJECT: Response to Draft Audit Report: EPA Should Stop Providing Estimates of Total 

Labor Hours to Contractors, Report Number OA-FY08-0255 

FROM: Craig E. Hooks 

 Assistant Administrator 

TO: Janet Kasper 

Director, Contracts and Assistance Agreements 

Office of the Inspector General 

We appreciate the opportunity to comment on the report entitled “EPA Should Stop 

Providing Estimates of Total Labor to Contractors,” dated July 20, 2009. Our comments on the 

report and recommendations are below: 

Recommendation 1 - We recommend that the Assistant Administrator for Administration 

and Resources Management revise the EPAAR (48 CFR, Section 1552.211-74(b) to 

eliminate the requirement that EPA include total estimated labor hours in work 

assignments. 

Response - We agree that the EPAAR clause on work assignments (WAs) should be modified, 

and that better guidance is needed for contracting officers (COs) on issuing WAs. However, we 

also believe that circumstances exist on certain contracts where a CO needs to be able to provide 

the expected level of services needed to the contractor. EPA contracts where the nature of the 

work is non-specific, with changing circumstances, such as clean-up services at new hazardous 

waste sites, or research and development in new areas with uncertain potential results, fall into 

this category. In such cases, unless the CO provides the contractor with the estimated level of 

effort in terms of hours, the contractor will be left guessing at this level, which might needlessly 

delay getting he program customer the required services. We recognize the Agency’s ability to 

more clearly specify the expected customer needs and contract work outcomes has greatly 

improved on perhaps a majority of WA contracts. Accordingly, we agree that the EPAAR clause 

on WAs should be modified, to provide better guidance to COs on issuing WAs. The new 

guidance will clarify our position regarding COs having the discretion to reveal estimated labor 

hours to the contractor, depending on the circumstances of the individual contracting situation. 

We will issue interim guidance by November 1, 2009, while the revised EPAAR clause is 

promulgated. Please note that it usually takes at least 9 months to develop and implement a new 

EPAAP clause; accordingly, we will issue interim guidance in the meantime for the COs to use. 

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09-P-0229 

Recommendation 2 - We recommend that the Assistant Administrator for Administration 

and Resources Management communicate to contract management and program staff who 

prepare and use IGCEs that estimates of total labor hours, or any other cost related 

estimates, should not be provided to contractors prior to receiving the contractor’s 

proposals. 

Response - We agree with the recommendation to communicate the new interim WA guidance, 

as described above, to all affected parties who prepare and use IGCEs by November 1, 2009. 

Should you have any questions regarding this response, please contact 

 John Oliver, Acting Director, Policy, Training & Oversight Division in the Office of Acquisition 

Management, at (202) 564-4399. 

cc: John Gherardini 

 Cris Thompson 

 Joan Wooley

 John Oliver 

Elena de Leon 

 Bernie Davis-Ray 

 Sandy Womack-Butler 

 Brandon McDowell 

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09-P-0229 

Appendix B 

Distribution 

Office of the Administrator 

Assistant Administrator for Administration and Resources Management 

Acting Director, Office of Acquisition Management, Office of Administration and 

 Resources Management 

Agency Follow-up Official (the CFO) 

Agency Follow-up Coordinator 

General Counsel 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for Public Affairs 

Audit Follow-up Coordinator, Office of Administration and Resources Management 

Acting Inspector General 

10