Q: What constitutes a Qualified Federal Contract?
A:  Any contact issued by the Federal Government to a Qualified Prime Contractor (with the exception of a FEMA contract issued as a direct result of a natural disaster, fulfilling a disaster relief role) is qualifying for the Quality Jobs Program.  FEMA contracts let for the purpose of hazard mitigation or other reasons are qualifying as well.  

Q:  What work resulting from a Qualified Federal Contract is qualifying?
A:  Work performed in fulfillment of a Qualified Federal Contract, done through a Work Order or similar instrument on or after July 1, 2009 is qualifying for this program.  The contract may have been awarded to the Prime Contractor before this date, but the work must actually be "new" on or after this date.  

Q:  Is this program only for defense contracts?
A:  No.  Any contract issued by the Federal Government, other than a FEMA contract in response to a natural disaster, is qualifying.   The work in fulfillment of the contract must be "new" on or after July 1, 2009 to be eligible.  

Q:  How will a Subcontractor know that a given Prime Contractor, awarding work to a Subcontractor(s) is participating in this program?
A:  There will be a couple of ways that a subcontractor will know.  Currently, it is dependent on the Primes and UML as the verifier/subcontracting office to notify the subcontractors. UML will host a web-based subcontracting portal on-line that may be accessed by subcontractors to view open solicitations for subcontract work. UML will also maintain an active listing on the site for Primes that have qualified under the OK100/Prime Contractor Quality Jobs Program.

Q:  What is the benefit to the Subcontractor for participating in this program?
A:  The Subcontractor does not receive cash benefit from the Quality Jobs Program.  The primary benefit to the subcontractor is that the program will attract more work into Oklahoma making it easier for the subcontractor to increase their production.  This program also gives Subcontractors a significant added marketing advantage and tool to attract more work but at no real cost to them.  They also have the ability to negotiate with the primes somewhat on the fee structure.  

Q:  If a Subcontractor further subcontracts work to another company, are the Qualified Labor Hours still eligible for benefits to the Prime Contractor?
A:  Yes, work done by the "Sub of a Sub" is considered Qualified Labor Hours, as long as the work is done in fulfillment of the Qualified Federal Contract and the Qualified Labor Hours are performed within the state.  

Q:  Do the option years on an existing Qualified Federal Contract qualify for participation?
A:  Yes.  Contracts renewed for another period of time qualify for participation as the work continues to be "new" to the state.     

Q:  How are the Qualified Labor Hours tracked/recorded for benefit payment?
A:  Both the Prime and Sub Contractor must be willing to track the exact Qualified Labor Hours performed in fulfillment of the Qualified Federal Contract work to participate in the program.  Assistance and oversight is provided by the Federal Contract Verifier (University Multispectral Laboratories) in this effort.   

Q:  How is the actual benefit to the Prime Contractor calculated?
A:   Qualified Labor Hours worked in fulfillment of the Qualified Federal Contract are tracked and reported by both the Prime/Subcontractors and Federal Contract Verifier (UML).  Those Qualified Labor Hours are multiplied by the Qualified Labor Rate (reached in agreement within the Qualified Federal Contract); the resulting labor dollars are multiplied by the Net Benefit Rate to determine the actual cash benefit payable to the Prime Contractor.  

Q:  How is the Net Benefit Rate determined?
A:  The Net Benefit Rate is determined by the ratio of hours performed by Subcontractors against the total amount of hours performed in fulfillment of the Qualified Federal Contract by both the Prime and Subcontractors within the state over a specific time frame.  The Net Benefit Rate ranges from .25% to 2% of the Qualified Labor Hours.  Subcontracting hours of more than $4 million dollars, with that amount being at least 20% of the total hours performed, earns the maximum Net Benefit Rate of 2%.   

Q:  How do the Prime and Subcontractors involved know upfront what work will be done by what companies?
A:  At the time the Prime Contractor enters the program, the Prime and UML will work to develop a "spend plan".  This spend plan will outline the budgeted Qualified Labor Hours to be performed by both Prime and the Subcontractors over a specific time frame (usually an annual basis).   Actual Qualified Labor Hours performed throughout the specific time frame may very from the spend plan; the Prime contractor will be paid on the actual labor hours performed and not the budgeted Qualified Labor Hours.  

Q:  What is University Multispectral Laboratory?
A:  University Multispectral Laboratories (known as UML) is a national center for research, development, evaluation, training, and certification established as a government-owned, contractor-operated (GOCO) facility and organized as a non-profit (501(c)(3) limited liability company.  This organization will serve as the Federal Contract Verifier in the program for the Prime contractor, subcontractors, the Department of Commerce, and the Oklahoma Tax Commission.  This group also fulfills responsibilities to the Federal Government in reporting requirements.  

Q:  Must the Prime contractor create "new direct jobs" to receive benefits in this program?
A:  The Prime Contractor, nor the Subcontractors being awarded work under a Qualified Federal Contract, are not required to create specific "new direct jobs" to receive benefits in the program.  The work, or Qualified Labor Hours performed must be "new" and in fulfillment of a Qualified Federal Contract, but the work may be performed by an existing job.  This is in difference to the regular Quality Jobs Program, where all work must be performed by "new direct jobs".   

Q:  Must the Prime Contractor create a new annual taxable payroll of $2.5 million dollars to qualify for the program, much like the requirement for the regular Quality Jobs Program?  
A:  No.  There is not a specific requirement for creation of new payroll to participate in this program.  

Q:  Will the Prime Contractor need to sign a contract with the State of Oklahoma to participate in the program?
A:  Yes.  Participants in the program, just as in the regular Quality Jobs Program, must sign a contract with the state to be eligible for benefits.  The contract will be issued by the Oklahoma Department of Commerce upon submission of a complete application packet and approval of the Director of the Oklahoma Department of Commerce.    

Q:  How does a Prime Contractor indicate their interest in participating in the program?
A:  Upon receipt or award of a Qualified Federal Contract, the Prime must notify the Oklahoma Department of Commerce (ODOC) of the award.  ODOC will then issue a letter to the company requesting specific information in fulfillment of legislative requirement to "qualify" the Prime.  The Prime then provides all required information to ODOC and upon qualification, will then be interfaced with the Federal Contract Verifier, UML.

Q:  Must the Prime Contractor qualify for the Quality Jobs Program after contracting goals (spend plans) are made with UML?
A:  Yes.  The Prime Contractor must apply for the Quality Jobs Program in much the same way as the regular Quality Jobs Program.  The Department of Commerce will supply the application forms and other documents needed to approve the Prime Contractor for participation.  UML has pledged assistance to the Prime Contractor in completing the application packet.     

Q:  Does the Prime Contractor, if already a participant in any of the Quality Jobs Programs with the state, have to withdraw from the program before applying to participate as a Prime Contractor?
A:  No, the Prime does not need to withdraw from the Quality Jobs Program to participate in the Prime Contractor QJP.  They may participate simultaneously in both programs, so long as they meet all programmatic requirements and track jobs and wages separately.  Also, any Subcontractors participating in the program are not required to withdraw from the QJP program to perform Qualified Labor Hours for a Prime Contractor.   

Q:  What is the cost to a Prime Contractor to participate in the program?
A:  As a participant in the Quality Jobs Program, the Prime Contractor will be assessed a $1000 Origination Fee.  This Origination Fee is deducted from the first benefit payment that the company receives.  This Origination Fee is a one-time fee and is charged in all Quality Jobs Program contracts, Prime Contractor or otherwise.  There are no other recurring costs to participate.  

Q:  What is the cost to a Subcontractor to participate in the program?
A:  As a subcontractor, there is not a direct participation in the program.  Qualified Labor Hours performed are paid to the Prime Contractor.   Therefore there is not a cost to the Subcontractor.  

Q:  How does UML cover the costs of their services in the program?
A:  As the Federal Contract Verifier, UML is allowed to recover a percentage of their costs through the Federal Contract in providing value-added services.  This cost recovery is allowable in the Qualified Federal Contract and therefore does not charge either the Prime or Subcontractor for their services.  

Q:  What is the definition of Qualified Labor Rate?
A:   The Qualified Labor Rate is the hourly labor rate agreed to by the Prime and the Federal Agency issuing the Qualified Federal Contract; it is the fixed amount per hour agreed upon to fulfill the mission outlined in the Qualified Federal Contract.   This Qualified Labor Rate includes more than just the taxable wages of the persons doing the work; it can also include several forms of overhead and other necessary expenses to fulfill the contract.   

Q:  What is the definition of Qualified Labor Hours?
A:  Qualified Labor Hours is defined as the reimbursed payment for hours of work performed in the state on work performed by either a Prime Contractor or Subcontractors.   This is broken down into Qualified Prime Contractor Labor Hours, Qualified Subcontractor Labor Hours, and Total Qualified Labor Hours (total hours worked by the prime and all subcontractors).  

Q:  How are benefits paid to the Prime Contractor?
A:  At the end of each calendar quarter, the Prime Contractor and UML determine the Qualified Subcontractor Labor Hours, the Qualified Prime Contractor Labor Hours, and the Total Qualified Labor Hours.  They then determine the ratio of Qualified Subcontractor Labor Hours against the Total Qualified Labor Hours worked to determine the Net Benefit Rate (if any).   The Total Qualified Labor Hours are then multiplied by the Qualified Labor Rate; this total is multiplied by the Net Benefit Rate to determine the payment due.  The Prime Contractor will complete claim forms issued by the Oklahoma Tax Commission, and submit them for processing and payment.

This process is repeated during the first 3 quarters of the calendar year; in the 4th quarter a reconciliation is done of all 4 quarters in the year to determine the correct annual payment.  The claim and resulting payment of benefit is then adjusted accordingly to match actual performance in the calendar year.  

The Prime Contractor must meet minimum subcontracting requirements on a quarterly basis to be paid.    

Q:  How will this new program be marketed?
A:  UML has selected a Public Relations firm to develop an advertising campaign regarding the program.  Target markets include major Prime Contractors In the nations' Capitol, and in other locations in the US.    The Oklahoma Department of Commerce works to share programmatic information in the same ways done for the regular Quality Jobs Program, and in conjunction with efforts of UML. 

Q:  Does the Prime Contractor have to be located in the State of Oklahoma to participate?
A:  No.  The Prime Contractor may be located anywhere and still participate by subcontracting substantial amounts of work under a given Qualified Federal Contract to Oklahoma companies.   The Prime Contractor may not include in their benefit claim however any work not performed in Oklahoma.  

Q:  Does the Subcontractor have to be located in the State of Oklahoma for Qualified Labor Hours to be eligible?
A:  Yes, Qualified Labor Hours performed by the subcontractor must be done within the State of Oklahoma to be eligible for the Prime Contractor to claim benefit on them.   

Q:  Does the Prime Contractor need to go through the application process each time they receive a new Qualified Federal Contract?
A:  Not necessarily.  If a Prime Contractor is aware of multiple contracts that they will be receiving (or new Work Orders on existing contracts) they may choose to "bundle" them into one contract with the state.  The Prime Contractor must notify the Department of Commerce at the time they receive any new piece of business that they wish to qualify with, but may delay the actual application for them in order to bundle the package.

Q:  As a subcontractor, what is the minimum Qualified Labor Rate that is expected to be paid by the Prime Contractor?
A:  By Quality Jobs Program statute, the Prime Contractor must pay a minimum Qualified Labor Rate of $26 per hour to any Subcontractor enlisted to do work under that Qualified Federal Contract.

Disclaimer
The materials contained on this website have been prepared by the Oklahoma Department of Commerce for informational purposes only and do not constitute legal or tax advice. This information is subject to change based on judicial interpretation and legislative action. The application of the information is subject to your unique facts and circumstances. YOU SHOULD NOT ACT UPON ANY INFORMATION CONTAINED IN THESE MATERIALS WITHOUT SEEKING YOUR OWN PROFESSIONAL LEGAL AND TAX ADVICE.