COUNCIL OF DEFENSE AND SPACE INDUSTRY ASSOCIATIONS 4401 Wilson Boulevard, Suite 1110 Arlington, Virginia

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1 COUNCIL OF DEFENSE AND SPACE INDUSTRY ASSOCIATIONS 4401 Wilson Boulevard, Suite 1110 Arlington, Virginia February 3, 2012 Defense Acquisition Regulations Systems ATTN: Dustin Pitsch Room 3B Defense Pentagon Washington DC Re: DFARS Case 2011-D042 Proposal Adequacy Checklist" CODSIA Case Dear Mr. Pitsch: On behalf of the Council of Defense and Space Industry Associations (CODSIA) 1, we are pleased to provide comments on the proposed rule, Proposal Adequacy Checklist (DFARS Case 2011-D042). The stated purpose of the proposed rule is to ensure offerors take responsibility for submitting thorough, accurate and complete proposals for solicitations that require certified cost and pricing data. The proposed rule provides for the inclusion of a solicitation provision and a new clause that requires the offeror to complete a checklist validating the adequacy of their proposals. CODSIA provides a forum for industry-wide consideration of the many policies, regulations, and procedures that affect government contractors. At the urging of the Department of Defense (DoD), it was formed in 1964 by industry associations having common interests in the defense and space fields and continues to provide broad industry responses to new or revised procurement regulations, policies, and procedures. CODSIA functions as a voluntary, coordinating, non-profit, consultative body. A checklist as a tool for both the government and contractors to work toward more complete and compliant proposals is not a new idea. In fact, the Air Force Materiel Command's Contracting Innovation Group - a group of senior contracts leaders from the Air Force, other defense agencies and industry - have been working with the Air Force on such a checklist for some years and the USAF issued their checklist in USAF Policy Memorandum 10-C-14, dated October 13, It is our understanding that the product of that initiative served as a draft for this proposed rule. It is worth noting that the Air Force s checklist is mandatory only for sole source and undefinitized contractual actions. 1 CODSIA currently consists of six industry trade associations and thus represents the comments of thousands of federal government contractors nationwide on acquisition policy issues. A CODSIA comment letter is not a letter from a single organizational entity but from thousands of affected stakeholders. This unique status as the conveyor of regulatory comments for some of the largest trade associations working on acquisition policy also represents the collective expertise of these associations and the companies they represent.

2 CODSIA Comments DFARS Case 2011-D042 The proposed rule differs from the current FAR and it imposes a clause which equates to a mandatory requirement. It adds another layer of regulatory requirements on top of the existing requirement of FAR Table 15-2 and is unnecessary. If the table is unclear then it should be revised and clarified. If the proposed checklist is intended to be a guideline for what DoD would like to see in a TINA proposal, then it should be incorporated in the PGI or some other widely available guidance document. We believe the checklist needs considerable modification in order to be aligned with the FAR and to minimize the burden placed on contractors. We also believe that the rule will result in increased costs for proposal preparation both in non-recurring costs (to set up the process) and in the recurring cost for each proposal. Those costs will ultimately be borne by the US Government. Additionally, the new rule will cause companies to expend precious B&P dollars possibly at a rate faster than planned. This may prohibit companies from pursuing other business because their current budgets did not plan for this additional, new requirement. The idea of a checklist is to highlight the minimum requirements that result in an adequate proposal. This checklist is 47 items long for proposals above the TINA threshold ($700K). Incidentally, the proposed rule stated that there were approximately 905 actions per year that met this threshold, almost half of which were for small business concerns. A four page document that requires cross-referencing and expanded comments will add burden to big and small contractors. The notion of self-validating the adequacy of a proposal will not relieve the government of their responsibility to review the proposal for adequacy. This new requirement may actually increase the burden on government because they ll have to also verify the accuracy of the checklist against the submitted proposal. In fact we could argue that the imposition of the 47 item checklist accomplishes the exact opposite of what the BPP was intended to do instead of supporting its goals as the Federal Register notice states. We do understand that the contracting officer has the discretion to use the provision or not. However, the proposed clause states that the CO should include the clause when the solicitation requires submission of certified cost and pricing data. The clause seems to remove the discretion of the CO. General Comments 1. The discussion in the section titled Supplementary Information, III. Regulatory Flexibility Act of the rule states that it imposes no new reporting requirements. It then indicates that the adequacy checklist was created directly from requirements already in the Federal Regulation [and that] the checklist does not add burden Neither statement is accurate. As can be seen in the attachment to this letter, there are over a dozen items that appear to add new or unnecessary burdensome requirements that do not currently exist in the FAR, notwithstanding the fact that they add no value to the contracting process. 2 P a g e

3 CODSIA Comments DFARS Case 2011-D The Background discussion of the new rule asserts that it supports one of DoD s Better Buying Power (BBP) initiatives yet in our view it is actually contrary to Secretary Carter s goal to improve efficiency (see Better Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending of September 14, 2010). For example, one of the 23 BBP actions is to reduce non-value-added overhead imposed on industry. As part of this objective he has directed a survey of the industrial base to unwind duplicative and overly rigorous requirements that add to costs, but do not add to quality of product or timeliness of delivery. It is clear from our detailed review of the proposed checklist that it imposes significant duplication of requirements already in the FAR and represents a major step back from achieving greater efficiency and productivity. Also, it adds costly and time consuming requirements that heretofore did not exist in the FAR. Instead of unwinding duplicative and overly rigorous requirements, this new rule adds more duplication as well as more requirements. 3. Executive Order (E.O.) implemented a program to reform and make more efficient the regulatory process. Paragraph (b) (1), Section 1 of the E.O. requires that each agency first identify the problem that [a proposed new regulation] intends to address as well as an assessment of the significance of that problem. Although the new rule indicates it was subjected to review under section 6(b) of the E.O., it fails to either identify the problem being addressed, let alone evaluate its significance. Further, paragraph (b)(10) of the E.O. directs each agency to avoid regulations that are inconsistent, incompatible or duplicative, all of which are characteristic of this proposed regulation. 4. Under the heading Flexible Approaches, E.O , which the Background section of the proposed rule indicates emphasizes quantifying benefits, reducing costs, harmonizing rules and promoting flexibility, directs each agency to consider regulatory approaches that reduce burdens such as disclosure requirements. The current version of the FAR already enumerates significant disclosure requirements. By being unnecessarily duplicative, and imposing more requirements, the proposed checklist accomplishes the direct opposite of the E.O. by taking an approach that adds burdens to the already complex, costly and drawn out defense acquisition process. 5. The statement in xx needs to be modified: Completion of this checklist in no way reduces the responsibility to fully comply with all of the requirements of 41 U.S.C. chapter 35, Truthful Cost or Pricing Data, and any other special requirements of the solicitation. Since the intent of the checklist is to support cost or pricing data only, the verbiage and any other special requirements of the solicitation should be deleted. Leaving that phrase would imply that the contracting officer could look to the checklist to find compliance with other solicitation requirements that are not addressed by this form. Furthermore, the checklist content does not represent a fact or a judgment under the definitions of cost or pricing data, which calls into question the legitimacy of the proposed checklist. Furthermore, the proposed checklist should not be part of the page 3 P a g e

4 CODSIA Comments DFARS Case 2011-D042 count for the proposal. By the time all of the page numbers, cross references and comments are completed, the checklist input will be very long. 6. This checklist is not appropriate for IDIQ solicitations and awards. IDIQs often provide a placeholder value or a predetermined bill of material that the offeror must use. This checklist implies that the offeror is responsible for all of the TINA requirements for a value in the proposal that has been directed by the government 7. With regard to the Regulatory Flexibility Act, the proposed rule is clearly a new reporting requirement that duplicates, overlaps and conflicts with other federal rules. There is nothing the proposed rule requires that is not available to the government within the current regulatory structure. 8. With regard to the Paperwork Reduction Act, the proposed rule clearly imposes additional information collection requirements and a paperwork burden. Many of the proposed DFARS Checklist Items are already called out in the Section L provisions that Industry receives from DoD customers. Instead a new checklist requirement, Section L could be modified to reflect pertinent items in the proposed checklist. 9. The flow down of the proposed checklist requirements to subcontractors will add significant cycle time to the proposal preparation process. 10. The proposed checklist represents an additional complexity and barrier to entry into the government marketplace for small business. 11. We strongly recommend that the language in Sections 17 and 18 of the proposed checklist, under Cost Elements, Materials and Services, be modified to be consistent with and adhere to the language in Items 11.1 and 11.2, with associated notes, in the Air Force Policy Memo 10-C-14 Checklist. Specifically, the Air Force guidance addresses and clarifies the treatment of a Consolidated Bill of Material (CBOM). Attachment B to this letter provides the referenced language excerpted from the Air Force Memo. To not adopt this language resurfaces confusion and questions that have been settled in at least one major procurement forum. Some of those questions include: (a) Whether a proposal can be inadequate if interdivisional transfer items (items not procured by the prime) were not included in the prime CBOM) (which in many cases would result in many manual inputs to get an acceptable proposal). Also, requiring aggregation at a total contract level may be inconsistent with disclosed and approved accounting practices. (b) Whether a proposal can be inadequate if a CBOM is not provided in an electronic format so that the contracting officer or auditor could sort the data. 4 P a g e

5 CODSIA Comments DFARS Case 2011-D042 (c)whether a proposal including more than one CBOM under otherwise rationale reasons could be considered inadequate (e.g., one CBOM for the items needed and a second CBOM for a piece of special test equipment procured by a unique engineering division). The Government s requirement for a CBOM was not always consistently interpreted or applied which at times has resulted in unnecessary costs to the Government in the name of compliance. One of the primary reasons for the inclusion of the language in the Air Force Policy Memo Checklist was that the existing FAR descriptions were not sufficient to drive consistency (and cost savings) into the proposal preparation process for a bill of materials. At a minimum, the checklist should encourage contractors to discuss BOM requirements with the contracting officer prior to preparing the proposal where a single CBOM (in an electronic format) is not consistent with the contractor s current (and approved) practices. Further, the contracting officer should be allowed the reasonable discretion to decide what information or format is truly necessary for determining a price fair and reasonable. Simply put, the proposed checklist will add significant cost and cycle time to the proposal preparation process at a time when the Executive Branch of government is ordering agencies to seek ways to ease the regulatory burden imposed on industry. Attachment A to this letter provides additional detailed comments that correlate to each item on the proposed checklist. There are several themes that are apparent throughout the document: (i) there are many new requirements that do not comport with Table 15-2 or other areas of FAR; (ii) there are many inconsistencies with the FAR; and (iii) there is considerable duplication with the FAR. We are certainly concerned that a contractor s proposal can be determined to be non-responsive based on a failure to prepare, or prepare to the reviewer s satisfaction, the Proposal Adequacy Checklist. If the clause is to be retained, is must be modified to provide that full and proper completion of the checklist, and full and complete adherence to any other special requirements of the solicitation, will ensure that the offeror s proposal, submitted in response to this solicitation, is deemed adequate for purposes of negotiation and awarding any resultant contract. Thank you for your attention to these comments. If you have any questions regarding our comments or would like clarification, please contact the CODSIA project officer Susan Tonner with AIA or Susan.Tonner@aia-aerospace.org or Bettie McCarthy, 5 P a g e

6 CODSIA Comments DFARS Case 2011-D042 CODSIA s Administrative Officer, who can be reached at or at codsia@pscouncil.org. Sincerely, Susan Tonner Assistant Vice President Acquisition Policy Aerospace Industries Association Alan Chvotkin Executive Vice President Professional Services Council A.R. Trey Hodgkins, III Senior Vice President, National Security and Peter Steffes Vice President, Government Policy Richard L. Corrigan Policy Committee Representative American Council of Engineering Companies R. Bruce Josten Executive Vice President, Government Affairs U.S. Chamber of Commerce Attachment A: TINA comparison Attachment B: AF Checklist Excerpt 6 P a g e

7 B - SPECIFIC COMMENTS Attachment Comments Part B Page 1 of 6 PROPOSAL ADEQUACY CHECKLIST - ATTACHMENT A CODSIA COMMENTS References Submission item Proposal page No. If not provided EXPLAIN (may use continuation pages) Comments 1. Paragraph A(1) FAR Is there a properly completed first page of the I proposal per FAR Table 15-2 I.A or as specified in the solicitation? 2. Paragraph A(7) FAR Does the proposal identify the need for Governmentfurnished material/tooling/test equipment? Include I the lending contract number and Contracting Officer contact information if known GENERAL INSTRUCTIONS 1. Inconsistency: This Submission item uses terminology "...Government-furnished material/tooling/test equipment..." that's different than the term used in the FAR reference: " Government property ". Both should be the same if the checklist "was created directly from requirements already in the Federal Acquisition Regulation"? 2. Duplication: This item, which references Paragraph A(7) duplicates Item 1, above which addresses all of paragraph A including subparagraph A(7). 3. Inconsistency: This item requests more specific information ("...lending contract number and Contracting Officer contact information if known") than Paragraph A(7) which simply asks "...what property". Both should be identical in keeping with the statement that the checklist " was created directly from requirements already in the Federal Acquisition Regulation." 3. Paragraph A(8) FAR Does the proposal include identification of any CAS I non-compliances, or other estimating deficiencies that may impact the proposed price? 1. Duplicates Item 1, above, which addresses all of paragraph A including subparagraph A(8). 2. New Requirement: Neither the referenced paragraph (nor any other clause in the FAR or DFAR) requires the contractor to identify "estimating deficiencies" in its proposal. In fact, paragraph (g) of DFAR gives the contracting officer the responsibility of communicating significant estimating system deficiencies to "..affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities." This is another example where the checklist was not "created directly from requirements already in the Federal Acquisition Regulation." 4. Paragraph A(8) FAR I Does the proposal disclose any other known activity that could materially impact the costs; such as, existing excess material, changes in production methods, make-or-buy decisions, company reorganizations, new business, or new technology? Inconsistency: 1. The wording of this item " disclose any other known activity that could materially impact costs; such as existing excess material, changes in production methods, " is unrelated to the referenced Paragraph A(8) FAR I checklist reference regarding cost accounting standards and cost principles. 2. The wording of this item contradicts the claim that the checklist " was created directly from requirements already in the Federal Acquisition Regulation" Although some of the terms used in this item ("changes in production methods", "make-or-buy decisions") are in the Subpart definition for "Cost or Pricing Data" the others: "excess material", "company re-organizations, new business, or new technology" have either been created by the new checklist or are located elsewhere in the FAR and, if so, should be referenced accordingly. 3. Although it is understood the factors listed in the FAR definition are simply examples ("Cost or pricing data are...facts...[that] include, but [are] not limited to..") and not a definitive list, thereby inventing new examples for the checklist that add no value and could introduce confusion by having the checklist language differ from the FAR examples. Accordingly, Item 4. should be changed to a Yes or No response: "Does the proposal identify the types of factors described in the FAR definition of "Cost or pricing data" that begins with "They also include, but are not limited to, such factors as- (1) Vendor quotations; (2) Nonrecurring costs..."? 5. Paragraph B Table 15-2, Section I Is an Index of all certified cost or pricing data and information accompanying or identified in the proposal provided and appropriately referenced? 6. FAR (b) Are there any exceptions to submission of certified cost or pricing data pursuant to FAR (b)? If so, is supporting documentation included in the proposal? Revision 1/19/12

8 B - SPECIFIC COMMENTS Attachment Comments Part B Page 2 of 6 PROPOSAL ADEQUACY CHECKLIST - ATTACHMENT A CODSIA COMMENTS References Submission item 7. Paragraph C(2)(i) FAR Does the proposal disclose the judgmental factors I applied and the mathematical or other methods used in the estimate, including those used in projecting from known data? Proposal page No. If not provided Comments EXPLAIN (may use continuation pages) 1. No value added effort: Nearly every page of the estimate and pricing includes this type of information; it can be interspersed amongst hundreds of pages of a major proposal. The administrative effort to make a list of every single page of the proposal containing a judgmental factor, mathematical method, or other method is a wasteful time consuming task. 2. A Yes or No response would make more sense although it too is unnecessary given the referenced Table 15-2 instruction is already a fundamental, unambiguous requirement that will, in nearly (if not) all cases, elicit a positive response. 8. Paragraph C(2)(ii) FAR Does the proposal disclose the nature and amount of I any contingencies included in the proposed price? 9. Paragraph D Table 15-2, Section I Does the proposal explain the basis of all cost estimating relationships (CERs) (labor hours or material) proposed on other than a discrete basis? 10. Paragraphs D and E FAR Is there a summary of total cost by element of cost I and are the elements of cost cross-referenced to the supporting cost or pricing data? (Breakdowns for each cost element must be consistent with your cost accounting system.) 11. Paragraph D FAR Is total price by cost element provided by year? I Identify if by Calendar Year (CY) or Government Fiscal Year (GFY) or both, as required 12. Paragraphs D and E FAR If more than one Contract Line Item Number (CLIN) I or sub Contract Line Item Number (sub-clin) is proposed as required by the RFP, are there summary total amounts covering all line items for each element of cost and is it cross-referenced to the supporting cost or pricing data? New requirement. Checklist references Para. D of Table 15-2 Section I which does not require a yearly breakdown by either total price or cost element. Again this is in conflict with the assertion that the checklist " was created directly from requirements already in the Federal Acquisition Regulation." 13. Paragraph E FAR Are CLIN prices by cost element provided by year? I Identify if by CY or GFY or both, as required 14. Paragraph E FAR Are recurring and non-recurring costs segregated at I both the CLIN/sub-CLIN and total cost levels? 15. Paragraph F FAR Does the proposal identify any incurred costs for I work performed before the submission of the proposal? 16. Paragraph G FAR Is there a Government forward pricing rate I agreement (FPRA)? If so, identify and include New requirement: Similar to Item 11, above, the Government has added to the requirements. Referenced Para. E of Table 15-2 does not address a yearly breakdown. New requirement. Similar to Items 11 and 13, above, the Government has expanded the requirements in the FAR. The FAR definition of cost or pricing data states that cost or pricing data "include, but are not limited to (1) Vendor quotations; (2) Nonrecurring costs; (3)...". However, there does not appear to be a requirement to segregate recurring from non-recurring costs. Therefore this also contradicts the Government's assertion that the checklist was created directly from requirements already in the Federal Acquisition Regulation. Revision 1/19/12

9 B - SPECIFIC COMMENTS Attachment Comments Part B Page 3 of 6 PROPOSAL ADEQUACY CHECKLIST - ATTACHMENT A CODSIA COMMENTS References Submission item Proposal page No. If not provided EXPLAIN (may use continuation pages) Comments COST ELEMENTS MATERIALS AND SERVICES 17. Paragraph A FAR II Does the proposal include a description of supplies or services and the basis on which the supply or service meets the Government's requirements? Inconsistent and New Requirement: The wording of this submission item " include a description of supplies or services and the basis on which [they meet] the Government's requirements " seems unrelated to the referenced Table 15-2 Section II Para A which addresses material quantities, subcontractor Cost or Pricing data, etc.. Further, requiring a "..basis on which the supplies or services meet the Government's requirements" is an additional requirement not found in the FAR. 18. Paragraph A FAR II Does the proposal include a consolidated summary of individual material and services to include the basis for pricing? The offeror's consolidated summary shall include raw materials, parts, components, assemblies, subcontracts and services to be produced or performed by others, identifying as a minimum the item, source, quantity, and price SUBCONTRACTS (Purchased materials or services) 19 Does the proposal identify those actions for which assist audits have been requested by the contractor or a subcontractor and identify the request date and scheduled receipt date? 20. FAR (c) Per the thresholds of FAR (c), Subcontract Pricing Considerations, does the proposal include a copy of the applicable subcontractor's proposal(s)? 21. Paragraph A FAR II Is the subcontractor Price/Cost Analysis establishing the reasonableness of each proposed subcontract included with the proposal? 22 If the offeror's Price/Cost Analyses are not provided with the proposal, does the proposal include a matrix identifying dates for receipt of subcontractor proposal, completion of fact finding for purposes of Price/Cost Analysis, and submission of the Price/Cost Analysis? 23. FAR FAR (b)(3) or (b)(5) Are commercial items being proposed either at the prime or subcontractor level that would be exempt from certified cost or pricing data requirements? 24. FAR Has the contractor specifically identified the type of commercial item claim (FAR commercial item definition, paragraphs (1) through (8)), and the basis on which the item meets the definition? New requirement: Given no reference is provided in the checklist to the FAR, the checklist again appears to be adding another new reporting requirement which contradicts the assertion that it was "created directly from requirements already in the Federal Acquisition Regulation." Revise reference: The FAR requirement to provide subcontractor proposals (Para A, FAR II) should be the reference used in the checklist instead of FAR (c) which only defines the thresholds for Cost or Pricing data that are already duplicated in subparagraph (2) to the Table 15-2 paragraph cited above that actually invokes the requirement to provide the data. New requirement. No reference provided to the FAR and thus the checklist is adding a new reporting requirement, again violating the Government's statement that the checklist was "created directly from requirements already in the Federal Acquisition Regulation." COMMERCIAL ITEM DETERMINATIONS New requirement: Paragraph (b) of FAR Prohibition on obtaining cost or pricing data does state that the contracting officer "...may require data other than certified cost or pricing data...when a commercial item is being acquired..."[emphasis added] However, there does not appear to be any Table 15-2 or other FAR instruction requiring that the contractor indicate in its proposal those, if any "commercial items at either the prime or subcontract level that would be exempt from certified cost or pricing data requirements". New requirement: The reference provided in the checklist is simply the definition of a commercial item. Paragraph (b) of FAR Prohibition on obtaining cost or pricing data, which is not referenced, does state that the contracting officer "...may require data other than certified cost or pricing data...when a commercial item is being acquired..."[emphasis added] However, there does not appear to be any Table 15-2 or other instruction for submitting proposals that requires the contractor provide "the type of commercial item claim...and the basis on which the item meets the definition". Revision 1/19/12

10 B - SPECIFIC COMMENTS Attachment Comments Part B Page 4 of 6 PROPOSAL ADEQUACY CHECKLIST - ATTACHMENT A CODSIA COMMENTS References 25. FAR FAR Submission item For modified commercial items (FAR commercial item definition paragraph (3)); did the contractor classify the modification(s) as either A modification of a type customarily available in the commercial marketplace (paragraph (3)(i)); or Proposal page No. If not provided Comments EXPLAIN (may use continuation pages) New requirement: Paragraph (b) of FAR Prohibition on obtaining cost or pricing data does state that the contracting officer "...may require data other than certified cost or pricing data...when a commercial item is being acquired..."[emphasis added] However, there does not appear to be any Table 15-2 or other FAR instruction requiring that the contractor classify the modification(s) to modified commercial items. A minor modification (paragraph (3)(ii)) of a type not customarily available in the commercial marketplace made to meet Federal Government requirements not exceeding the thresholds in FAR (c)(3)(iii)(B)? (see note below) 26. FAR For proposed commercial items of a type, or evolved or modified (FAR commercial item definition paragraphs (1) through (3)), did the contractor provide a technical description of the differences between the proposed item and the comparison item(s)? 27. FAR (a)(2) FAR Does the proposal include a determination of price (c)(3)(ii) FAR reasonableness for all commercial items offered? (c) FAR (b) FAR (c) FAR Paragraph A(1) FAR II 29. Paragraph A.(2) FAR II Does the proposal support the degree of competition and the basis for establishing the source and reasonableness of price for each subcontract or purchase order priced on a competitive basis exceeding the threshold for certified cost or pricing data? For inter-organizational transfers proposed at cost, does the proposal include a complete cost proposal in compliance with Table 15-2? New requirement: The reference provided in the checklist is simply the definition of a commercial item. Paragraph (b) of FAR Prohibition on obtaining cost or pricing data does state that the contracting officer "...may require data other than certified cost or pricing data...when a commercial item is being acquired..."[emphasis added] However, there does not appear to be any Table 15-2 or other instruction for submitting proposals requiring that the "contractor provide a technical description of the differences between the proposed item and the comparison item(s)." 1. New requirement: There does not appear to be any specific requirement in the FAR for the contractor to include as part of its proposal a "determination of price reasonableness for...commercial items..." 2. Inconsistent: Reference is made to FAR (Current Cost or Pricing Data) when this item addresses commercial items where cost or pricing data are not required. ADEQUATE PRICE COMPETITION INTERORGANIZATIONAL TRANSFERS 30. FAR (e) FAR For inter-organizational transfers proposed at price in accordance with FAR (e), does the proposal provide an analysis by the prime that supports the exception from certified cost or pricing data in accordance with FAR ? Amend reference: The requirement to provide analysis for inter-organization transfers is in paragraph A(2) of Table 15-2, FAR Section II. Reference block should be amended to include the this reference. Revision 1/19/12

11 B - SPECIFIC COMMENTS Attachment Comments Part B Page 5 of 6 PROPOSAL ADEQUACY CHECKLIST - ATTACHMENT A CODSIA COMMENTS References Submission item Proposal page No. If not provided EXPLAIN (may use continuation pages) Comments 31. Paragraph B FAR II 32. Paragraph B FAR II 33. Paragraphs B and C, Table 15-2, Section II Does the proposal include a time phased (i.e.; monthly, quarterly) breakdown of labor hours, rates and costs by category or skill level? If labor is the allocation base for indirect costs, the labor cost must be summarized in order that the applicable overhead rate can be applied For labor Basis of Estimates (BOEs), does the proposal include labor categories, labor hours, task descriptions, Statement of Work reference, applicable CLIN, Work Breakdown Structure, rationale for estimate, applicable history, and timephasing? Does the proposal include all rates and factors by year that are utilized in the development of the proposal and the basis of those rates and factors (FPRA/FPRP)? The Offeror shall identify the official submittal of such rate and factor data 34. FAR subpart If covered by the Service Contract Labor Standards statute (41 U.S.C. chapter 67), are the rates in the proposal in compliance with the minimum rates specified in the statute? 35. Paragraph C FAR II 36. Paragraph D FAR II Does the proposal indicate the basis of estimate for proposed indirect costs? (Support for the indirect rates could consist of cost breakdowns, trends, and budgetary data.) Does the proposal include other direct costs and the basis for pricing? If travel is included does the proposal include number of trips, number of people, number of days per trip, locations, and rates (e.g. airfare, per diem, hotel, car rental, etc)? DIRECT LABOR New requirement: Referenced paragraph B FAR II states: "Provide a time-phased (e.g., monthly, quarterly, etc.) breakdown of labor hours, rates, and cost by appropriate category, and furnish bases for estimates". There is no requirement for "task descriptions, Statement of Work reference, applicable CLIN, Work Breakdown Structure, rationale for estimate, applicable history, and time phasing" as they relate to "labor Bases of Estimates". Checklist statement should instead use the paragraph B FAR II language. 1. Partial duplication of Item 31, above: " rates and factors by year ". Question and reference should be limited to only Paragraph C, addressing "basis of those rates and factors (FPRA/FPRP)? [and identifying] the official submittal of such rate and factor data". 2. Inconsistent: Remove "...factors...[and] factor" as these terms are not used in the FAR reference. INDIRECT COSTS OTHER COSTS Added requirement: There does not appear to be any requirement in the FAR for "number of trips, number of people, number of days per trip, locations, and rates (e.g. airfare, per diem, hotel, car rental, etc)." 37. Paragraph E FAR II 38. Paragraph F FAR II If royalties exceed $1,500 does the proposal provide the information/data identified by Table 15-2? When facilities capital cost of money is proposed, does the proposal include submission of Form CASB- CMF or reference to an FPRP/FPRA and show the calculation of the proposed amount? Revision 1/19/12

12 B - SPECIFIC COMMENTS Attachment Comments Part B Page 6 of 6 PROPOSAL ADEQUACY CHECKLIST - ATTACHMENT A CODSIA COMMENTS References Submission item Proposal page No. If not provided EXPLAIN (may use continuation pages) Comments FORMATS FOR SUBMISSION OF LINE ITEM SUMMARIES 39. Table 15-2, Section III Are all cost element breakdowns provided using the applicable format prescribed in Table 15-2 III? (or alternative format if specified in the RFP) 40. Paragraph B FAR III If the proposal is for a modification or change order, have cost of work deleted (credits) and cost of work added (debits) been provided in the format described in Table 15-2.III.B? Needless duplication of Item 39 which addresses all types of proposals 41. Paragraph C FAR III For price revisions/redeterminations, does the proposal follow the format in Table 15-2.III.C? Needless duplication of Item 39 which addresses all types of proposals OTHER 42. FAR 16.4 If an incentive contract type, does the proposal include offeror proposed target cost, target profit or fee, share ratio, and, when applicable, minimum/maximum fee, ceiling price? 43. FAR (c)(4)(i) Is proposed fee in accordance with statutory guidance? 44. FAR (a)(1) If Economic Price Adjustments are being proposed, does the proposal show the rationale and application for the proposed indices? New requirement: There does not appear to be any specific requirement in the FAR for the contractor to state in its proposal that the fee is in accordance with statutory requirements. Instead the reference [FAR (c)(4)(i)] places the responsibility for not exceeding statutory requirements on the contracting officer. 45. FAR If the offeror is proposing Performance-Based Payments have they provided an expenditure profile, proposed events and their projected dates, proposed values for each event, completion criteria, and identification of which events are severable or cumulative? New or Duplicated Requirement: Checklist requires an "expenditure profile" which is not specified in the FAR reference. (a) How would the "expenditure profile" differ from the "proposed events and their projected dates [and the] proposed values for each event" that is also part of this requirement? and (b) if it is different and if there is a FAR requirement to include it, then the FAR clause that requires an "expenditure profile" should be part of the reference. 46. FAR (n) Excessive Pass-through Charges Identification of Subcontract Effort: If the offeror intends to subcontract more than 70% of the total cost of work to be performed, does the proposal identify: (i) The amount of the offeror's indirect costs and profit applicable to the work to be performed by the proposed subcontractor(s); and (ii) a description of the added value provided by the offeror as related to the work to be performed by the proposed subcontractor(s)? Amend reference: Include, as the primary reference, the FAR clause that requires identification of this information in the proposal (FAR Limitation of Pass-Through Charges- Identification of Subcontract Effort.) 47 Does the proposal identify the location and point of contact for any certified cost or pricing data referenced in, but not provided with, the proposal? New requirement. No reference is made to the FAR and thus the checklist seems to be adding a new reporting requirement to "identify the point of contact for any certified cost or pricing data...". Again this conflicts with the Government's statement that the checklist was "created directly from requirements already in the Federal Acquisition Regulation". Revision 1/19/12

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15 AIR FORCE PROPOSAL ADEQUACY CHECKLIST (AFPAC) PREPARATION GUIDELINES FAR sets forth those circumstances in which contractors are required to submit certified cost or pricing data. The responsibility for providing well-prepared and fully supportable cost proposals for sole source acquisitions that exceed the TINA threshold lies solely with the contractor. The basis and rationale for all proposed costs shall be provided as part of the proposal so that the contracting officer (CO) may rely on the information as sufficiently current to permit negotiation of a fair and reasonable price. The attached AFPAC must be completed and submitted as part of your proposal. Items within the AFPAC that do not contain specific FAR references are needed for Government review and negotiation, as applicable. Contact the CO as soon as possible prior to proposal submittal if there is uncertainty as to whether a checklist item is a requirement, or how to adequately comply with a proposal item. Non-compliances with the enclosed checklist will require immediate correction in order to proceed with proposal evaluation and negotiation, however, completion of the checklist does not relieve you from your responsibility to comply with regulations and any special requirements of the solicitation. In addition, it is highly recommended that you flow this (or a similar) checklist to your subcontractors/affiliates where certified cost and pricing data is required and that you use the elements of the AFPAC (or elements of a similar checklist) to evaluate the adequacy of a subcontractor/affiliate proposal. You are advised that the contracting officer may determine costs associated with revising/reworking inadequate cost proposals as unreasonable, and must consider the nature and extent of any proposal inadequacies when assessing/negotiating profit. SPECIAL NOTE: In order to preclude delays in negotiations and contract award, you should discuss the basis for all No or N/A responses that may have a material impact, and particularly any claim to not submit cost or pricing data because of any of the five exceptions found at FAR (b) in the explanation column for each item. Attachment: AFPAC

16 Air Force Proposal Adequacy Checklist for Sole Source Actions above TINA Threshold ITEM # ITEM DESCRIPTION FAR REFERENCE Y N or N/A PROVIDE EXPLANATION IF EITHER NO or N/A (use continuation page if necessary) PROP REF PG 1 Is there a properly completed first page of the proposal in accordance with Table 15-2 I.A or as specified by the Contracting Officer (CO) in the solicitation? 2 Is an Index, appropriately referenced, of all certified cost or pricing data and information accompanying or identified in the proposal, provided? 3 Are there any exceptions to submission of certified cost or pricing data pursuant to FAR (b)? If so, is supporting documentation included in the proposal? Refer to checklist items 15, 16 and 17. Table 15-2 I.A Table 15-2 I.B FAR (b) Note If the total price of the proposal is > threshold for certified cost or pricing data, the checklist is required even if a portion of that value qualifies as an exception. Address exception(s) with the CO and proceed with checklist. 4 Is there a summary of total cost by element of cost and are the elements of cost cross-referenced to the supporting cost or pricing data? (Breakdowns for each cost element must be consistent with your cost accounting system.) 5 If more than one CLIN (Contract Line Item Number) or sub-clin (Sub Line Item is proposed as required by the RFP, are there summary total amounts covering all line items for each element of cost and is it crossreferenced to the supporting cost or pricing data? Table 15-2 I.D & E Table 15-2, I. D & E 6 Is total price by cost element provided by year? Identify if by Calendar Year (CY) or Government Fiscal Year (GFY) or both, as required. 7 Are CLIN prices by cost element provided by year? Identify if by CY or GFY or both, as required. 8 Are recurring and non-recurring costs segregated at both the CLIN/SubCLIN and total cost levels? 9.1 Are all cost element breakdowns provided using the applicable format prescribed in Table 15-2 III? (or alternative format if specified in the RFP) Table Does the proposal reflect all specific requirements established by the CO? Version: 24 Sept 10 Page 1 of 8

17 ITEM # ITEM DESCRIPTION FAR REFERENCE Y N or N/A PROVIDE EXPLANATION IF EITHER NO or N/A (use continuation page if necessary) PROP REF PG 10 If an incentive contract type, is contract geometry included (e.g. contractor proposed target cost, target profit or fee, min/max, ceiling, share ratio)? MATERIAL Note Consolidated Bill of Material (CBOM). A CBOM is a consolidated priced summary of individual material quantities and subcontract items included in the various tasks, orders, or contract line items being proposed and the basis for pricing (negotiated/invoice prices, vendor quotes, average unit pricing, prior purchase history, long term agreements, etc). The offeror s CBOM shall include estimated raw materials, parts, components, assemblies, subcontracts and services to be produced or performed by others, identifying as a minimum; the item, source, quantity and cost Is a CBOM included at the total contract level? Table 15-2 II A If the CBOM is being provided at other than a total contract level as described in Notes 1 and 2 below, did the contractor address how the CBOM is provided? Note 1 Note 2 Note 3 Note 4 Note 5 In the event the contractor intends to propose the CBOM at other than a total contract level, the contractor is encouraged to contact the CO and/or the cognizant DCAA auditor prior to proposal submittal. The CO and auditor are allowed to exercise judgment in making the determination as to what elements/clins are included in the CBOM(s) depending on the contractor s estimating techniques used and whether those techniques are appropriate in the circumstances. Depending on your system, inter-organizational transfers may be included as part of a total CBOM or be a separate CBOM. The CBOMs must be in an electronic format that is able to be sorted by supplier, and category (e.g., raw material, purchased parts, subcontracts, extended dollar of part numbers, etc.). Additional CBOMs may be required or desired for separate CLIN end item deliverables (e.g., Alternate Mission Equipment, Special Test Equipment, Spares, etc.). SUBCONTRACTS (Purchased material or services) 12.1 If the subcontract or purchase order exceeds the threshold for certified FAR , Version: 24 Sept 10 Page 2 of 8

18 ITEM # ITEM DESCRIPTION FAR REFERENCE Y N or N/A PROVIDE EXPLANATION IF EITHER NO or N/A (use continuation page if necessary) PROP REF PG cost or pricing data and none of the exceptions to TINA apply, does the proposal include the prime contractor s Price/Cost Analysis establishing the reasonableness of each subcontract price? Table 15-2 II.A 12.2 If the prime contractor s Price/Cost Analysis are not provided with the proposal, does the proposal include a matrix identifying dates for receipt of subcontractor proposal, completion of fact finding for purposes of Price/Cost Analysis, and submission of the Price/Cost Analysis? As later information/data comes into your possession, it should be submitted promptly to the CO in a manner that clearly shows how the information/data relates to the offeror s price proposal. The requirement for submission of certified cost or pricing data continues up to the time of agreement on price, or an earlier date agreed upon between the parties if applicable. Table 15-2, Note 1 Note Analyses not provided with the proposal may result in a delay to audit, fact-finding and negotiations. Analyses not included with the proposal shall be provided as soon as possible after the proposal submission date and shall be accomplished in sufficient time to support the definitization/contract award schedule Does the proposal identify those actions where assist audits have been requested by the prime or sub-tier contractors and identify the request date and scheduled receipt date? Note The need for assist audits resulting from proprietary data rights assertions at any tier must be identified to the CO as soon as possible in the proposal build cycle. Notwithstanding assist audits performed by the government, contractors must still perform and provide Price/Cost Analysis In accordance with the thresholds of FAR (c), Subcontract Pricing Considerations, does the proposal include a copy of the applicable subcontractor s proposal(s)? FAR (c) INTERORGANIZATIONAL TRANSFERS 13 For inter-organizational transfers proposed at cost, does the proposal include a complete cost proposal in compliance with Table 15-2 and this checklist? Table 15-2 II.A.(2) Note Inter-organizational work is considered to be part of the certified cost or pricing data submission of the prime. As such, the prime contractor s responsibility for conducting subcontractor Cost/Price Analysis does not apply to inter-organizational transfers. However, prior to the submission Version: 24 Sept 10 Page 3 of 8

19 ITEM # ITEM DESCRIPTION FAR REFERENCE Y N or N/A PROVIDE EXPLANATION IF EITHER NO or N/A (use continuation page if necessary) PROP REF PG of the proposal, the prime contractor shall (a) ensure that all statement of work tasks are addressed without duplication and are consistent with the overall program performance schedule and, (b) ensure ground rules and assumptions are consistent with the prime proposals. 14 For inter-organizational transfers proposed at price in accordance with FAR (e), does the proposal provide an analysis by the prime that supports the exception from certified cost or pricing data in accordance with FAR (reference checklist items 15, 16, and 17 below)? FAR (e), FAR ADEQUATE PRICE COMPETITION 15 Does the proposal support the degree of competition and the basis for establishing the source and reasonableness of price for each subcontract or purchase order priced on a competitive basis exceeding the threshold for certified cost or pricing data? Table 15-2 II.A.(1) COMMERCIAL ITEM DETERMINATIONS 16 Is the contractor proposing commercial items either at the prime or subcontractor level that would be exempt from certified cost or pricing data requirements? FAR 2.101, FAR (b)(3) or (b)(5) Note If you are modifying a commercial item or are providing a modified commercial item, there may be circumstances that require the submission of certified cost or pricing data (see Note to checklist item 17.3 below). 17 Has the contractor provided support for prime contractor assertions of commerciality and any subcontractor Commercial Item Determinations (CIDs) addressing, at a minimum, the following: Note A subcontractor CID includes the following information/data in addition to the prime contractor s independent price analysis and conclusion of the subcontractor s commerciality assertion. (checklist item 17.5.D) 17.1 Has the contractor provided a description of supplies or services and the basis for which the supply or service meets the Government s requirements? 17.2 Has the contractor specifically identified the type of commercial item claim (FAR commercial item sub-definitions (1) through (8)), and the basis on which the item meets the definition? FAR Version: 24 Sept 10 Page 4 of 8

20 ITEM # ITEM DESCRIPTION FAR REFERENCE Y N or N/A PROVIDE EXPLANATION IF EITHER NO or N/A (use continuation page if necessary) PROP REF PG 17.3 For modified commercial items (commercial item sub definition) (3); did the contractor classify the modification(s) as either: FAR FAR A. Of a type customarily available in the commercial marketplace (FAR commercial item sub-definition (3)(i)) or B. A minor modification (FAR commercial item sub-definition (3)(ii)) of a type not customarily available in the commercial marketplace made to meet Federal Government requirements not exceeding the thresholds in FAR (c)(3)(iii)(B)? (see note below) Note Modifications that do not qualify as minor under FAR subdefinition (3) or modifications that qualify as minor where the total price of all such modifications exceeds the greater of the threshold for certified cost or pricing data (FAR ) or 5% of the total price of the contract at the time of contract award are NOT exempt from the submission of certified cost or pricing data. Where the contractor is proposing a modified commercial item, the CO should, in every case, be consulted as soon as possible before the proposal is submitted Technical Assessment: For proposed commercial items of a type, or evolved or modified (FAR commercial item sub-definitions (1) through (3)), did the contractor provide a technical description of the differences between the proposed item and the comparison item(s)? 17.5 Price Reasonableness: Has the contractor provided, or made available, data other than certified cost or pricing data to establish price reasonableness of the proposed commercial item (to include any modifications not subject to certified cost or pricing data (ref. Note under checklist item 17.3 above) by supplying: A. Information/data related to competition (refer to checklist item 15), B. Information/data related to prices (sales data, market price assessments, etc.), C. cost data (cost elemental breakdown and supporting documentation not subject to certification in accordance with FAR ), and D. for subcontractor assertions, the prime contractor s price analysis/price reasonableness determination? Note The preferred method to establish the price reasonableness of FAR FAR (a)(2), FAR (c)(3)(ii), FAR (c), FAR (b) FAR (c) FAR Version: 24 Sept 10 Page 5 of 8