Most Common Cost Proposal Problems

SPAWAR SYSTEMS CENTER ATLANTIC, CHARLESTON, SC

TIPS FOR A BETTER COST PROPOSAL

1. Follow RFP and Pricing Model instructions carefully. 2. Provide clear, complete supporting information for the proposal and compensation plan. 3. Check e-commerce website frequently for any changes to the RFP. 4. Coordinate closely with subcontractors. Give them a list of WD minimum rates, provide instructions for proposal submission, etc. 5. Update rates on file with DCAA if using rates other than those approved. Provide DCAA/DCMA approval letters for Forward Pricing Rate Agreements if they exist. 6. Notify the Contracting Officer of any questions or problems relating to the pricing model or RFP. 7. Check and double check for errors.

MOST COMMON COST PROPOSAL PROBLEMS

1. Labor Rates. a. Not proposing at least the Wage Determination (WD) minimum for categories covered by the Service Contract Act (SCA). b. Proposing professional base rates that are too low or too high. c. For Computer Systems Analysts and Computer Programmers, when the WD no longer provides a minimum rate, proposing a rate lower than the previous minimum rate of $27.63 per hour.

2. Subcontractors: Not following instructions for proposal submission to the Government. The Government requires a complete pricing model in excel format with base rates, indirect rates and active formulas, along with a brief narrative describing the basis for the labor and indirect rates and their application. If desired, this narrative can be provided in the pricing model proposal as a separate page or at the bottom of the Summary page.

3. Additional ODCs: Failure to report and provide a cost estimate for items of cost the contractor charges direct to contracts that are not included in the Government’s ODC estimates because they are typically indirect costs. This includes such costs as Computer Usage, Duplication, and Special Support costs (contract administration, purchasing, security, etc.).

4. Indirect Rates: Not changing Overhead formulas when the allocation base is direct labor without fringe benefit. Note: If your firm does not have a separate fringe rate, there is no need to make any formula change, and no need to report a portion of the overhead as fringe.

5. Overriding Pricing Model total formulas with totals from other worksheets not provided. Especially, do not override formulas on the Labor Cost page. There are no yellow highlighted areas on this page and there should be no reason to make changes.

6. Professional Employee Compensation Plan: a. Not submitting a Plan when required (currently only prime contractors are required to submit plans). b. Submitting an incomplete plan. (See guide furnished with the RFP). c. Not using the format provided in the Pricing Model. d. Using the proper format but providing insufficient information. We need more than just a yes or no answer.

7. Failure to identify uncompensated overtime (hours worked in excess of 40 hours per week for no additional pay), and to provide the company policy on uncompensated OT.

8. Not using the latest DCAA/DCMA accepted rates; if deviating from current rates, provide rationale, budgets, etc.

Prepared by: Jean Duncan Updated 10-21-2013 Senior Cost & Price Analyst e-mail: [email protected], Phone: 843-218-5929 SPAWAR SYSTEMS CENTER ATLANTIC, CHARLESTON, SC

SPECIAL CONSIDERATIONS FOR TASK ORDER PRICING MODELS

SPAWAR Atlantic has been using pricing models for basic contract proposals for over 13 years, and is now expanding the use of pricing models to task orders. They are already in use for Seaport-e orders, but the format is different. The pricing models used for the newly awarded Pillar contracts, and possibly for some of the older contracts will look very similar to those used for the basic contract proposal. However, there are some things to be aware of regarding these pricing models:

1. This is a new process for SPAWAR Atlantic and therefore there may still be some problems to iron out. It is so new that I haven’t even gotten much feedback on how it is working.

2. The pricing model you receive probably was not developed specifically for your contract, and probably has not received the level of review of the models used for basic contracts. It may contain errors.

3. The pricing model you receive may have labor categories on it that are not on your contract. That does not give you permission to propose those categories on your task order.

4. We recently learned that we can use our pricing model format for Seaport-e orders as well. The format will look similar, however Fee will be handled differently; SPAWAR contracts use the FEE POOL where the prime pays subs from the total fee pool, and under Seaport-e, both the prime and sub propose fee. There will be a pass-through evaluation as well. This makes it all the more important to ensure you and your subcontractors are using the correct format.

5. Different ordering officers may do things differently. Some may furnish the pricing models with each RFP under their contract. Others may issue master copies to the companies receiving awards under the contract instructing them to use the format on all future orders.

6. The pricing model you receive will probably have all the categories under your contract. The Government’s estimate for labor categories, hours, and ODCs will probably be furnished with the RFPs for individual task orders. Since these are performance based contracts, these estimates are supposed to be advisory. You can vary from the estimate provided. If you do choose to make changes in the estimate, you will need to provide supporting rationale.

7. One difference in the Task Order (TO) pricing models is the addition of a page called Tripwires. This page was recently updated to incorporate the recent change to $150 per hour fully loaded rate (including fee). You should receive a new updated model and/or instructions for making the change to the old one. This page serves 2 purposes: (a) alert the prime contractor that the rate is over the Tripwire and justification/additional approval will be required, and (b) assist the ordering officer in their Tripwire evaluation. For the subcontractor pricing model it will alert the subcontractor to rates that MAY be over the Tripwire; since the sub does not know the prime’s exact burden factors, this is merely an estimate.

8. Suggestions for saving proposal preparation time: (a) Primes: Prepare a master pricing model for each contract—should include all information that will not change, such as contract number, contractor name, available labor categories, and changes required by your accounting system, and rationale for those changes, etc. If labor rates, indirect rates and escalation do not change, they should be entered as well. (b) Primes: Prepare a master subcontractor pricing model that includes all information that will not change such as contract number, prime and subcontractor names, and available labor categories. Provide to each of your subcontractors under the contract. (c) Subcontractors: Prepare a master template for each contract that includes any changes required by your accounting system, and rationale for those changes as well as things that won’t change—indirect rates, etc. (d) Primes and Subs: Develop a brief, clear proposal narrative that applies to most, if not all proposals. Some primes develop a format and provide it to their subs. This is great as long as it contains all necessary information and the users make modifications when necessary. Quantity in this case is not necessarily quality.

Prepared by: Jean Duncan Updated 10-21-2013 Senior Cost & Price Analyst e-mail: [email protected], Phone: 843-218-5929