National Contract Management Association of Boston 57th Annual March Workshop

Transcription

1 National Contract Management Association of Boston 57th Annual March Workshop Pricing and estimating March 7, 2018

2 Agenda Introductions Overview and background of the pricing and estimating process Certified cost or pricing data Basis of estimates Cost elements Direct costs (e.g., labor, material, other direct costs (ODCs)) Indirect rates Additional requirements related to subcontract costs Industry practices and trends Audience participation Page 1

3 Overview and background of the pricing and estimating process Page 2

4 Government pricing policy Government shall purchase supplies and services from responsible sources at fair and reasonable prices. Government should only obtain the type and quantity of data necessary to establish a fair and reasonable price, but not more data than is necessary. Certified cost or pricing data (CCoPD) or other than CCoPD as appropriate. CCoPD includes current, accurate and complete support for each cost element (e.g., material, labor, overhead) of a proposal. Contracting officers will utilize factors such as competition, cost analysis, price analysis and commercial item determinations to determine fair and reasonable prices. Page 3

5 DFARS requirements on contractors Just as the government will perform cost and price analyses on proposals submitted by contractors, contractors must perform cost and price analyses on costs submitted by vendors and subcontractors. Defense Federal Acquisition Regulation Supplement (DFARS) estimating system requirements (See Appendix 1): 17 individual criteria that require contractors achieve, including, but not limited to, adequate training for estimating individual, appropriate policies and procedures, adequate documentation to support proposals, management review and oversight of process, and internal reviews and audits Criteria related to cost/price analysis: #16: Provide estimating and budgeting practices that consistently generate sound proposals that are compliant with the provisions of the solicitation and are adequate to serve as a basis to reach a fair and reasonable price #11: Integrate information available from other management systems Purchasing system for vendor/supplier support of fair and reasonable price paid by the contractor Accounting system for historical prices and rates Page 4

6 Certified cost or pricing data Page 5

7 Requirements for certified cost or pricing data Certified cost or pricing data means cost or pricing data that is required to be submitted in accordance with Truthful Cost or Pricing Data (TCoPD) Formerly the Truth in Negotiations Act (TINA) Applicable to a negotiated contract or subcontract exceeding $750,000 (October 1, 2015) The 2018 National Defense Authorization Act increased the threshold to $2m for contracts awarded after June 30, Applicable to negotiated modification of a contract where aggregate pricing action is above the threshold even if the original contract was competed When certified cost or pricing data is required, offeror must submit a certificate of current cost or pricing data Reminder: Applies to both contracts submitted to United States Government (USG) and subcontractors submissions to prime contractors Page 6

8 Exceptions to the requirement for certified cost or pricing data Adequate price competition Prices set by law or regulation Commercial item acquisition per definition at Federal Acquisition Regulations (FAR) Written waiver has been granted by Head of Contracting Activity When modifying a contract for a commercial item Other circumstances not requiring certified cost or pricing data: The exercise of an option at the price established at contract award or initial negotiation does not require submission of certified cost or pricing data. Proposals used solely for overrun funding or interim billing price adjustments. Page 7

9 Data other than certified cost or pricing data Data other than certified cost or pricing data means pricing or cost data and judgmental information necessary for the contracting officer to determine a fair and reasonable price or to determine cost realism. It can be data that is identical types of data as certified cost or pricing data but without the certification. May include the following: Sales data Information required to explain estimating process Judgmental factors applied and mathematical or other methods employed to make price estimates Or Nature and amount of any contingencies included in a proposal Page 8

10 Proposal process vulnerability Contractor submitting proposals to USG Request for proposal received Proposal submitted Fact finding Agreement On pricing Contract signed Work begins Risk is a function of the estimating process High risk area Low risk area Page 9

11 Submitting a proposal to the government On March 28, 2013, the Department of Defense (DoD) updated the DFARS at to incorporate a requirement for the Contracting Officer to include a new solicitation provision, , Proposal Adequacy Checklist, in certain situations. The Contracting Officer has the discretion of whether to include the DFARS Proposal Adequacy Checklist clause in Section L of the solicitation when proposals require certified cost or pricing data (i.e., proposals subject to TCoPD). The checklist only applies to the cost proposal, not the entire proposal submission. This is a tool to help offerors provide adequate, compliant proposals. Page 10

12 Proposal adequacy checklist categories Checklist categories: General instructions (Items 1 13) Cost elements (Items 14 29) Materials and services Subcontracts (purchased materials or services) Exceptions to certified cost or price data Interorganizational transfers Direct labor Indirect costs Other costs Formats for submission of line item summaries (Items 30 32) Other (Items 33 36) Page 11

13 Basis of estimates Page 12

14 Basis of estimates Judgment-based estimating methods are least preferred while fact-based estimating methods are the most preferred. Follow-on projections based on actuals from prior contracts/lots have the highest credibility. Common elements of a basis of estimate (BOE): Header identifying the Task Identification and Work Breakdown Structure and period of performance Description of tasks being performed and services/products delivered Estimating methods and rationale used for each element of cost proposed Identification of historical data used, including source and nature Explanation and detail of labor resources estimated and evidence of labor time phasing Details of any adjustments made (i.e., technical complexity) At a minimum, a reviewer should be able to understand how the estimate was reached. Standard BOE templates and required identification of who prepared the estimate and who reviewed/approved the estimate are common industry practices. Page 13

15 Cost elements Page 14

16 Direct labor Page 15

17 Estimating labor (hours and rates) Common categories include the following: Common methods Manufacturing or shop labor Engineering labor Support or indirect labor Trade or craft labor (construction contracts) Actual costs of known personnel Labor rates for homogeneous categories of labor (Engineer I, II, III or Design Engineer, Mechanical Engineer) Labor standards with efficiency adjustments Parametric (e.g., hours as a factor of production) Judgmental or engineering estimates (least favored) Page 16

18 Estimating labor (hours and rates) Considerations Learning curves Actual individuals versus estimated categories Trends in labor rates Salary increase dates Union wage agreements Based on the proven theory that a task is performed more efficiently after it is learned Assumes continual performance by the same personnel Personnel actions hiring and firing Changes in labor force mix Multi-shift, holiday and overtime premiums Efficiencies Page 17

19 Labor estimating methods Analogy Complexity factor Cost estimating relationship (CER) Direct estimate/judgment History Hours/task Learning curve Level of effort Parametric Page 18

20 Direct material Page 19

21 Estimating material costs Sources of information Cost records for similar contracts Priced bill of material updated for current supplier quotes Cost data from a prototype Prior cost estimates New firm supplier quotes Experience factors and ratios (parametric factors) Operations data Engineering drawings and associated estimates Page 20

22 Estimating material costs Need to consider the following: Are supplier quotes and PO prices stale? Anticipated material quantities, minimum buy quantities Profit and cost pyramiding (i.e., intercompany sales) Supplier refunds, volume rebates or discounts Order consolidation (volume pricing) Make-or-buy decisions Subcontractor estimates Government furnished material Residual inventory Scrap, spoilage, rework Page 21

23 Material estimating methods Catalog Competition CER Cost/price analysis Direct estimate/judgment Interdivision work authorization Long-term agreement Parametric Price negotiation memorandum/negotiation summary Purchase order (PO) history Similar-to part number history Subcontractor/supplier proposal Page 22

24 Other direct costs Page 23

25 Other direct costs ODCs include travel, tooling, nonrecurring engineering (NRE), other ODCs, etc. Actual analysis techniques used may be a function of risk and materiality. Example: Travel Travel should have a BOE that states the requirement/necessity for the travel, which may be assessed by technical evaluator. Costs need to be supported by logistical information such as number of days multiplied by government per diem rates for lodging/meal in the location of travel. Page 24

26 Indirect rates Page 25

27 Indirect rates Rates might include labor overhead, manufacturing overhead, engineering overhead, material burden, general and administrative, fringe rate, cost of money, etc. Consider the following when including indirect rates in proposal: Comparison to Forward Pricing Rate Agreement (FPRA) Use of rate trends and final indirect rates agreed to with the government Detailed analysis of indirect pool accounts, data and calculations, including comparison to prior years Industry trends and experience Budgetary data for current year and out years Sales forecasts for future and correlation to estimated/budgeted labor bases for those years Page 26

28 Additional requirements related to subcontract costs Page 27

29 Additional requirements related to subcontract costs Does the proposal identify all subcontractors? Cost analysis Price analysis Commercial item determinations Page 28

30 Regulatory definition FAR Part 15 Cost analysis FAR (c)(1) Cost analysis is the review and evaluation of any separate cost elements and profit or fee in an offeror s or contractor s proposal, as needed to determine a fair and reasonable price or to determine cost realism, and the application of judgment to determine how well the proposed costs represent what the cost of the contract should be, assuming reasonable economy and efficiency. Price analysis FAR Price means cost plus any fee or profit applicable to the contract type. FAR (b)(1) Price analysis is the process of examining and evaluating a proposed price without evaluating its separate cost elements and proposed profit. Page 29

31 Certified cost or pricing data Certified Cost or Pricing Data means any cost or pricing data that are required to be certified pursuant to the Truthful Cost or Pricing Data statute. Certification states that to the best of certifier s knowledge and belief, the cost or pricing data is accurate, complete and current as of the date of certification. Cost analysis When certified cost or pricing data is required Price analysis A price analysis is always done Required when certified cost or pricing data is not required Should be performed when doing a cost analysis Page 30

32 Cost analysis techniques When evaluating certified cost or pricing data: Reasonableness of proposed costs Projection of trends Reasonableness of parametric models Application of audited or negotiated rates Includes all cost elements: Labor Material ODCs Indirect rates Evaluate profit using weighted guidelines method (DFARS ) Page 31

33 Cost analysis Assist audits Situations where a subcontractor refuses to provide cost information to prime, citing proprietary information Similar to a contracting officer being able to request assistance in the event the cost or pricing data is not sufficient, a prime contractor may also request assistance: FAR Data to support proposal analysis (a) Field pricing assistance (1) The contracting officer should request field pricing assistance when the information available at the buying activity is inadequate to determine a fair and reasonable price. The contracting officer shall tailor requests to reflect the minimum essential supplementary information needed to conduct a technical or cost or pricing analysis. (2) The contracting officer shall tailor the type of information and level of detail requested in accordance with the specialized resources available at the buying activity and the magnitude and complexity of the required analysis. Field pricing assistance is generally available to provide: (i) (ii) (iii) Technical, audit, and special reports associated with the cost elements of a proposal, including subcontracts Information on related pricing practices and history Information to help contracting officers determine commerciality and a fair and reasonable price Page 32

34 Challenges of cost analysis Denial of access by supplier Government assist audits denied or slow Inadequate or unavailable supplier data Not analyzing or addressing all cost elements Relying on high level analysis (comparable to price analysis) Cost elements percentage of total cost Lack of technical resources Technical resources lack of documentation Procurement file organization Ongoing monitoring and training not producing improvements Options and quantity differences Page 33

35 Price analysis Price analysis is the process of examining and evaluating a prospective price without evaluating the separate cost elements and profit. Price analysis is used to determine the reasonableness of price, but the process is subjective: for a given set of information, different buyers might reach different conclusions about price reasonableness. Price analysis sometimes cannot be performed prior to awarding the contract. Page 34

36 Price analysis techniques Compare proposed prices for each offer received Competition determines reasonableness Compare with previous proposed prices and contract prices with current proposed price for the same or similar items Compute parametric estimating methods For example cost/lb. or dollars/horsepower Comparison with competitive published price lists, published market prices of commodities, similar indexes, and discount or rebate commitments Compare with independent government cost estimate Review analysis of pricing information provided by the offeror Page 35

37 Price analysis Published data Manufacturer and dealer catalogs Product brochures and promotional material Trade journals Government or independent testing Source identification publications Federal supply schedules Government economic data Non-government economic data Page 36

38 Price analysis Other data sources Other buyers and industry or commodity experts Prospective offerors: pre-solicitation conferences, draft request for proposal, one-on-ones Trade and professional associations Chamber of Commerce/Better Business Bureau State and local watchdog agencies Internet sources Page 37

39 Challenges of price analysis Item or service is not listed in a catalog, federal supply schedule, online, etc. Item or service has not been previously sold in comparable quantity, variant, locations, etc. Seller did not identify price impact of selling item or service across multiple contracts or programs. Page 38

40 Commercial item determinations Update on final ruling Page 39

41 Commercial items Commercial items are an exception to Cost or Pricing Data requirements On January 31, 2018, DoD issued a final rule amending the DFARS to implement sections of the National Defense Authorization Acts for 2018 relating to commercial item acquisitions. This rule provides guidance to contracting officers for making price reasonableness determinations, promotes consistency in making commercial item determinations and expands opportunities for nontraditional defense contractors to do business with DoD. Page 40

42 DFARS case 2016-D006 Procurement of commercial items The final ruling promotes consistency in making commercial item determinations DoD has establish a cadre of experts within the Defense Contract Management Agency (DCMA) to provide advice to Contracting Officers (COs) DCMA is also facilitating collaboration with contractors through commercial item memorandums of agreement Page 41

43 DFARS case 2016-D006 Procurement of commercial items The language at DFARS (a)(ii) has been revised to state that a contracting officer may presume that a prior commercial item determination, or a determination that overturned a prior commercial item determination, made by a military department, a defense agency or another component of DoD shall serve as a determination for subsequent procurements of such item. The language at DFARS (b) and (b)(ii) was amended to add the word and to allow contracting officers to consider recent purchase prices paid by both the Government and commercial customers for the same or similar commercial items Page 42

44 Industry practices and trends Page 43

45 Industry practices Maximizing competition Proposal cost structure in line with actual structure Contemplating your counterpart s perspective Can a user pick up the proposal and understand how it was compiled? Are you prepared to provide supporting documentation for the rates, material and labor estimates? Creating an effective and competitive organizational and rate structure Effective sweep process Page 44

46 Industry trends Increased focus on commerciality Use of specialists or third parties for cost analyses Organization of procurement departments Interactive training and workshops Procurement quality metrics Self-assessments Use of templates and guides Page 45

47 Additional resources Page 46

48 Additional resources Contract Pricing Proposal Adequacy Checklist Defense Contract Audit Agency (DCAA) Information for Contractors %20on%20the%20government%20auditing%20process%20and%20specific%20inf ormation%20for%20small%20business%20contractors DCAA Estimating System Audit Program pdf DoD Guidebooks for Acquiring Commercial items Page 47

49 Questions? Page 48

50 Presenters From EY s Government Contract Services practice Jack Gay Executive Contractor jack.gay@ey.com Mobile: Kristen Berquist Senior kristen.berquist1@ey.com Mobile: Page 49

51 Appendix 1 Page 50

52 DFARS background Final rule DoD issued a final rule effective February 24, 2012, which mandated withholding a percentage of payments when a contractor s business system has one or more significant deficiencies. Business system clause Contractor Business Systems Applicability per DFARS Use in solicitations and contracts (other than in contracts with educational institutions, federally funded research and development centers or university associated research centers operated by educational institutions) when: The resulting contract will be a covered contract as defined in (a) Covered by cost accounting standards (CAS) The solicitation or contract includes any of the following clauses: (1) , Cost Estimating System Requirements (2) , Earned Value Management System (3) , Material Management and Accounting System (4) , Accounting System Administration (5) , Contractor Purchasing System Administration (6) , Contractor Property Management System Administration Page 51

53 DFARS business system rule Estimating system Six business systems under the rule 1. Estimating system 4. Accounting system 2. Earned value management system 5. Material management and accounting system 3. Purchasing system 6. Property management system Estimating system is a term used to describe a contractor s policies, procedures and practices for generating cost estimates, which forecast costs based on information available at the time. Allows a contractor to estimate costs for bids and proposals Allows contractors to better estimate ETC or estimate to complete Page 52

54 Regulations, guidance and applicability Business system Cost estimating system Implementing guidance DFARS (PGI) FAR/DFARS contract clause guidance DFARS Threshold level and attributes Large businesses who in preceding fiscal year received DoD prime contracts and subcontracts of at least $50m for which cost and pricing data were required or contractors having awards of at least $10m (but less than $50m) where procuring contracting officer and administrative contracting officer determine audit to be in Government s best interest (e.g., significant estimating problems believed to exist) Exemptions Cognizant audit/review authority Frequency Sales of commercial items; competitively awarded fixed-price contracts; small businesses, educational institutions, or other nonprofit organizations Defense Contract Management Agency/DCAA/Contracting Office Every three years Page 53

55 DFARS cost estimating system criteria (DFARS ) 1. Establish clear responsibility for preparation, review, and approval of cost estimates and budgets. 2. Provide a written description of the organization and duties of the personnel responsible for preparing, reviewing, and approving cost estimates and budgets. 3. Ensure that relevant personnel have sufficient training, experience, and guidance to perform estimating and budgeting tasks in accordance with the Contractor s established procedures. 4. Identify and document the sources of data and the estimating methods and rationale used in developing cost estimates and budgets. 5. Provide for adequate supervision throughout the estimating and budgeting process. 6. Provide for consistent application of estimating and budgeting techniques. 7. Provide for detection and timely correction of errors. 8. Protect against cost duplication and omissions. 9. Provide for the use of historical experience, including historical vendor pricing information, where appropriate. 10. Require use of appropriate analytical methods. Page 54

56 DFARS cost estimating system criteria (DFARS ) 11. Integrate information available from other management systems. 12. Require management review, including verification of compliance with the company s estimating and budgeting policies, procedures, and practices. 13. Provide for internal review of, and accountability for, the acceptability of the estimating system, including the budgetary data supporting indirect cost estimates and comparisons of projected results to actual results, and an analysis of any differences. 14. Provide procedures to update cost estimates and notify the Contracting Officer in a timely manner throughout the negotiation process. 15. Provide procedures that ensure subcontract prices are reasonable based on a documented review and analysis provided with the prime proposal, when practicable. 16. Provide estimating and budgeting practices that consistently generate sound proposals that are compliant with the provisions of the solicitation and are adequate to serve as a basis to reach a fair and reasonable price. 17. Have an adequate system description, including policies, procedures, and estimating and budgeting practices, that comply with the Federal Acquisition Regulation and Defense Federal Acquisition Regulation Supplement. Page 55

57 Appendix 2 Proposal adequacy checklist Page 56

58 Purpose of the proposal adequacy checklist On March 28, 2013, the DoD updated the DFARS at to incorporate a requirement for the Contracting Officer to include a new solicitation provision, , Proposal Adequacy Checklist, in certain situations. Purpose is to facilitate submission by offerors of thorough, accurate and complete proposals. The Contracting Officer has the discretion of whether to include the DFARS Proposal Adequacy Checklist clause in Section L of the solicitation when proposals require certified cost or pricing data (i.e., proposals subject to TCoPD). If included, contractors are required to prepare and submit the checklist, although use of the checklist is not mandatory when the clause is not included in the solicitations. Page 57

59 Purpose of the proposal adequacy checklist The checklist only applies to the cost proposal, not the entire proposal submission. Based on historical data from FY2008 FY2010, there were an average of 905 proposal actions per year where the proposal adequacy checklist could be utilized. On average, 421 of those were with small business concerns. The checklist will be used by contracting officials when reviewing proposals. Contractors complete this checklist along with their proposals, ultimately streamlining the DoD evaluation process by providing references, details and location of specific information to facilitate the proposal review by agency personnel. Page 58

60 DoD intentions of proposal adequacy checklist Does not add new requirements; compiles and organizes existing requirements Not intended to be punitive, but rather a tool to help offerors provide adequate, compliant proposals Increase the efficiency and standardization of the proposal evaluation process for agency personnel Streamline proposal preparation process for offerors Result in cost and time savings by improving initial proposal submissions Page 59

61 Checklist steps for contractors The offeror is to provide the location of each of the 36 items in the proposal. If an item in the checklist is not included in the proposal, the offeror is required to provide an explanation for why it is not included. Offerors are not required but may choose to have their prospective subcontractors use the same or similar checklist, if appropriate. Page 60

62 Proposal adequacy checklist categories Checklist categories: General instructions (Items 1 13) Cost elements (Items 14 29) Materials and services Subcontracts (purchased materials or services) Exceptions to certified cost or price data Interorganizational transfers Direct labor Indirect costs Other costs Formats for submission of line item summaries (Items 30 32) Other (Items 33 36) Page 61

63 Proposal adequacy checklist General instructions Compliance with FAR , Table 15-2 Requirements Item 1 Is Table 15-2 presented? Item 2 Does proposal include Government furnished materials? Item 3 Does proposal identify and explain noncompliances with CAS? Any proposal inconsistencies with Cost Accounting Standards Board Disclosure Statement or established accounting and pricing practices? Item 4 Does proposal disclose known activities that could materially impact the cost? Page 62

64 Proposal adequacy checklist General instructions Item 4 (continued) Compliance with FAR Cost or pricing data identify Vendor quotations Nonrecurring costs Information on changes in production methods and in production or purchasing volume Data supporting projections of business prospects and objectives and related operations costs Unit-cost trends such as those associated with labor efficiency Make-or-buy decisions Estimated resources to attain business goals Information on management decisions that could have a significant bearing on costs Item 5 Is index of all certified cost or pricing data provided included and appropriately referenced? Page 63

65 Proposal adequacy checklist General instructions Item 6 Compliance with FAR Exceptions to cost or pricing data requirements Identification of whether there are any exceptions to submission of certified cost or pricing data. If exceptions identified, supporting documentation included in proposal should be referenced. Item 7 FAR , Table 15-2 Does proposal disclose the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data? Item 8 FAR , Table 15-2 Does the proposal disclose the nature and amount of any contingencies included in the proposed price? Item 9 FAR , Table 15-2 Does the proposal explain the basis of all cost estimating relationships (labor hours or materials) proposed on other than a discrete basis? Page 64

66 Proposal adequacy checklist General instructions Item 10 FAR Table 15-2 Summary of total cost by element of cost cross-referenced to supporting cost or pricing data Breakdown for each cost element consistent with your own cost accounting system, by year Item 11 FAR Table 15-2 Summary of total cost by line item (when necessary) With summary total covering all items for each element of cost cross referenced to supporting cost or pricing data Item 12 FAR Table 15-2 Does proposal identify any incurred costs for work performed prior to submission of proposal Page 65

67 Proposal adequacy checklist General instructions Item 13 FAR Table 15-2 If there is a Government FPRA, offeror shall identify submittal. If no FPRA, does proposal include all indirect rates and factors by year that are utilized in development of the proposal and basis for those rates and factors? Page 66

68 Proposal adequacy checklist Cost elements materials and services Item 14 FAR Table 15-2 Instructions for Submitting Cost/Price Proposals when Cost or Pricing Data are Required Does proposal include a consolidated summary of individual material and services, otherwise known as a Consolidated Bill of Material (CBOM) with the basis for pricing, including: Raw materials Parts Components Assemblies Subcontracts and services CBOM must identify at a minimum the item, source, quantity and price. Page 67

69 Proposal adequacy checklist Subcontracts Items 15, 16 and 17 FAR Subcontract pricing considerations Is the subcontractor s certified cost or pricing data included? Has offeror identified subcontract proposals for which CO will need to request field pricing analysis? (DFARS ) Is there a price/cost analysis establishing the reasonableness of each of the proposed subcontracts included with the proposal? If price/cost analysis not provided, is there a matrix identifying dates for receipt of: Subcontractor proposal Completion of fact finding for purposes of price/cost analysis Submission of the price/cost analysis FAR Table 15-2 Instructions for Submitting Cost/Price Proposals when Cost or Pricing Data are Required Price/cost analysis of proposed subcontracts Page 68

70 Proposal adequacy checklist Exceptions to cost or pricing data Item 18 FAR and FAR Requirements for cost or pricing data or information other than cost or pricing data or commercial items Is there a prime or subcontract commercial item exemption from C or P data, including basis for the claim Modified commercial item exemption And/or Technical description for commercial items Of a Type or Evolved or Modified Differences between the proposed item and comparison item(s) Items 19 and 20 FAR Instructions for Submitting Cost/Price Proposals when Cost or Pricing Data are Required Does proposal support the degree of competition for subcontract/purchase order Source and basis for price reasonableness for subcontracts/purchase orders priced competitively in excess of the certified cost or pricing data threshold Page 69

71 Proposal adequacy checklist Interorganizational transfers Items 21 and 22 FAR Table 15-2 Instructions for Submitting Cost/Price Proposals when Cost or Pricing Data are Required Does proposal include a complete cost proposal for interorganizational transfers proposed at cost? If interorganizational transfers are proposed at a price, is analysis included that supports the exemption from certified cost or pricing data? Item 22 (continued) FAR (e) Material costs Interorganizational transfers are required to be proposed at cost except when the price is: Established catalog or market price of commercial items sold to the general public Result of adequate price competition Price is not in excess of current sale price to most favored customer Not determined to be unreasonable by the Contracting Officer Page 70

72 Proposal adequacy checklist Direct labor Items 23 and 24 FAR Table 15-2 Instructions for Submitting Cost/Price Proposals when Cost or Pricing Data are Required Time-phased (i.e., monthly, quarterly) breakdown of labor hours, rates and costs by category If labor is the allocation base for indirect costs, summarized so that the applicable overhead rate can be applied For labor BOEs: labor categories, labor hours and task descriptions Item 25 FAR Service Contract Act (the Act) Compliance with Service Contract Labor Standards. Reference where rates in proposal comply with minimum rates specified in the Act Page 71

73 Proposal adequacy checklist Indirect and other costs Items 26 and 27 FAR Table 15-2 Instructions for Submitting Cost/Price Proposals when Cost or Pricing Data are Required Indirect costs: Basis of estimate for indirect costs Other direct costs: Travel cost details Royalties greater than $1,500 Facilities capital cost of money Page 72

74 Proposal adequacy checklist Submission of line item summaries Items 30 and 31 FAR Table 15-2 Instructions for Submitting Cost/Price Proposals when Cost or Pricing Data are Required Applicable format for cost element breakdowns per FAR 15-2 For modifications or change orders, cost of work deleted (credits) and added (debits) Price revisions/redeterminations must comply with FAR 15-2.III.C Page 73

75 Proposal adequacy checklist Other Item 33 FAR 16.4 Incentive Contracts Proposed target cost, profit or fee, share ratio, min/max fee, ceiling price Item 34 FAR Fixed Price Contracts Rationale and application of economic price adjustment Item 35 FAR Invitation to Propose Performance-Based Payment Compliance with terms and conditions included in FAR Item 36 FAR /23 Limitations on Pass-Through Charges Excessive pass-through charges identification of subcontract effort greater than 70% of total cost Page 74

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