WPC 3Z5.ҳ. `q[ʼn?j-uq{ڰϸyn6^hRuEogѦÍ!1*!k$GhYqVD;}I-]CKMx%UoJ{ZQ[A+Ngh ƀi]%} q6qsǾ#ʝ7^?,A>XPͤ~1NA0mtk,vS-m7(^D3:'(NDQITtBh *m]t]-#F"H\mi+CQR(;eTf\ѰC/&͎Fe5 &B7`:W A/ʾtcoy`*,H_F5|__B*cmqS@W ?,hI0]TšgaT#(c)Profit󀄀Granteeswillnegotiateprofitasaseparateelementofthepricefor ,*#* eachcontractinwhichthereisnopricecompetitionandinallcaseswherecost +#+ analysisisperformed. ,$,  ( X  X!?(?+ 4 <DL!X? ?% XX!.A%B.4 <DL!XB .'/  ?+ X4X!A+<( <DL!X<,K! ,XX-X-X ,,K!(d)FederalCostPrinciples󀄀Costsorpricesbasedonestimatedcostsfor  contractsundergrantswillbeallowableonlytotheextentthatcostsincurredor n costestimatesincludedinnegotiatedpricesareconsistentwithFederalcost  Z principles.Granteesmayreferencetheirowncostprinciplesthatcomplywith n F applicableFederalcostprinciples. Z 2 ,K! ,XX-3)'F    1111 3 ( X  X!2B(?+ 4 <DL!X? X-X ,,K!DEFINITIONS        E  EE݌̌   CostAnalysis󀄀Acostanalysisentailsthereviewandevaluationoftheseparatecostelements d  andtheproposedprofitofanofferor'scostorpricingdataandthejudgmentalfactorsappliedin xP  estimatingthecosts.Acostanalysisisgenerallyconductedtoformanopiniononthedegreeto d<  whichtheproposedcost,includingprofit,representswhattheperformanceofthecontractshould P(  cost,assumingreasonableeconomyandefficiency. <      H  HFH݌̌   PriceAnalysis-Apriceanalysisinvolvesexaminingandevaluatingaproposedpricewithout   evaluatingitsseparatecostandprofitelements.Priceanalysisisbasedessentiallyondatathatis    verifiableindependentlyfromtheofferor'sdata.      I  II݌̌    l<` FederalCostPrinciples󀄀Itisimportanttounderstandthatgrantfundsmayonlybeusedbythe  granteetopayforallowablecostswhenthecontractisacostplusfixedfeecontractorwhena  fixedpricecontractisbeingnegotiatedonthebasisofcostestimatessubmittedbythe t contractor.Thetermallowablecostisdefinedin48CFR31.2012.(48CFR31isPart31ofthe ` FederalAcquisitionRegulation(FAR)).Thecommongrantrule,foundin49CFR18.22 tL AllowableCosts,requiresthatthecostprinciplesfoundintheFAR(48CFR31)beusedto `8 determineallowablecostsforcommercial("forprofit")organizations.TheFARmaybeaccessed L$ ontheInternet.i0XX-00      iMepe    X-X0X-XXX-  a CX-XXX-  4      Granteesmayusetheirowncostprinciplesiftheyareconsistentwiththe 8 Federalcostprinciples.ThisrequirementtousetheFARcostprinciplesaffectstheallowability $  ofcostsnotonlyoncostreimbursementcontractsbutalsowhenevaluatingandnegotiatingcost ! elementsinordertoestablishapriceonafixedpricecontract.Thus,wheneveryoudoacost ! analysisofanofferor'scost/priceproposalyouwillneedtousetheFederalcostprinciples(or " principlesconsistentwiththem)todeterminewhatcostsareacceptable. #      Q  QQ݌̌    DISCUSSION %" Ingeneral,thepurposeofcostorpriceanalysisistoensurethatyoudonotpay '\ $ unreasonablyhighprices.However,priceswhichareunreasonablylowcanalsobe p(H!% detrimentaltoyouragency'sprogramiftheyprovetobeanindicationthattheofferorhas \)4"& madeamistakeordoesn'tunderstandtheworktobeperformed.Itisimportanttodoa H* #' costrealismanalysisofcostproposalssubmittedforcostreimbursementcontractsthatare_  4+ $( tobecompetitivelyawardedinordertodeterminetherealismofthevariousproposalsand ( notpermita buyin(anunrealisticallylowestimatedcontractcostandfee)thatwill  eventuallyresultinasubstantialcostoverrun.   Beforeissuingasolicitation,developanindependentestimateoftheproperpricelevelfor   thesuppliesorservicestobepurchased.Theestimatecanrangefromasimplebudgetary   estimatetoacomplexestimatebasedoninspectionoftheproductitselfandreviewofsuch   itemsasdrawings,specifications,andpriordata(suchascostdatafromprior  t _procurements_).Theestimatecanthenassistinadeterminationofreasonablenessor ` unreasonablenessofpriceand/ortheestimatedcoststodothejob.Ifyouwillbe tL  requestingaproposalwithabreakdownofestimatedcosts,besuretorequireaformatfor `8  thecostproposalthatwillallowyoutocomparethecostelementsproposedwiththosethat L$  weredevelopedforyourinhouseestimate. 8  BestPractices     TheFederalAcquisitionRegulation(FAR),Subpart15.4041(a)(7)!ProposalAnalysis  Techniques,referencesafivevolumesetofContractPricingReferenceGuidestoguidepricing  andnegotiationpersonnel.Theseguidesareinformationalandnotdirective.Theyareavailable  viatheInternet.i0XX-00      i[echn    X-X0X-XXX-  e CX-XXX-  5        TheNationalTransitInstitute(_NTI_)atRutgersUniversityoffersacourseforFTAgranteestitled \  CostandPriceAnalysisandContractNegotiation.Itisafourdaycourseofferedfreeof pH chargetoFTAgranteesbutitisalsoopentothepublicforafee.i0XX-00      i]echn    X-X0X-XXX-  _it CX-XXX-  6      _ԀPartofthe_NTI_Ԁcoursemanual \4 materialincludesaPricingGuideforFTAGranteesthatisbasedinpartontheDefenseContract H  AuditAgencys(_DCAA_)PricingManual.ThePricingGuideforFTAGranteesisnowavailable 4  onlineat4f5    S`        6`O   7f` S:4rtO  5  www.fta.dot.gov/ftahelpline/Price_Guide.doc6aObnth  7rtBw2l3  04(#(#  Establishedcatalogpricesexist.3>ww݌ 4(#4(# Ќ  "3"    0  35x2l3  04(#(#  Theitemsarecommercialinnature.35xzx݌!4(#4(# Ќ  "3"    0  3.y2l3  04(#(#  Theyaresoldinsubstantialquantities.3.ysy݌"4(#4(# Ќ  "3"    0  3,z2l3  04(#(#  Theyaresoldtothegeneralpublic.3,zqz݌#4(#4(# Ќ  44XL, XLs444Xz4XL444XL4XZ{40, X4XL0Theideabehindcatalogpricesisthatacommercialdemandexistsandsuppliershavebeen %l! developedtomeetthatdemand.Youaretryingtoensurethatyouaregettingatleastthesame &X" priceasotherbuyersinthemarketfortheseitems.Youneedtobesurethatthecatalogisnot l'D # simplyaninternalpricingdocument.Requestacopyofthedocumentoratleastthepageon X(0!$ whichthepriceappears. D)"% H+ 4 <DL!, XH., XX!}.0,` X , X0Establishedmarketpricesarebasedonthesameprincipleascatalogpricesexceptthereisno +#' catalog.Amarketpriceisacurrentpriceestablishedintheusualorordinarycourseofbusiness ,$( betweenbuyersandsellersfreetobargain.Thesepricesmustbeverifiedbybuyers ,%)   -&* _andsellerswhoareindependentoftheofferor.Ifyoudonotknowthenamesofother ( commercialbuyersandsellers,youmayobtainthisinformationfromtheofferor.  H+ 4 <DL!,` X H(4)Comparisontopreviouspurchases!    ,.,` X X!.K.4 <DL!,` X KChangesinquantity,quality,deliveryschedules,theeconomy,andinclusionofnonrecurring   costssuchasdesign,capitalequipment,etc.cancausepricevariations.Eachdiffering   situationmustbeanalyzed.Alsoensurethatthepreviouspricewasfairandreasonable.This  t determinationmustbebaseduponaphysicalreviewofthedocumentationcontainedinthe ` previousfiles.  tL   ,4,` X 4X!4H+ 4 <DL!,` X H(5)Comparisontoavalidgranteeindependentestimate! L$      E.,` X X!6.K.!!!4 <DL!,` X Kӄ  Verifythefacts,assumptions,andjudgmentsusedbyyourestimator.Havetheestimator $  giveyouthemethodanddatausedindevelopingtheestimate.Forexample,didpricescome   fromcurrentcatalogsorindustrystandards?Besurethatyoufeelcomfortablewiththe   estimatebeforerelyingonitasabasisfordeterminingapricetobefairandreasonable.ӄ݌  Ќ        EӇ  Ӈ+݌̌     ,4,` X !!!4X!Y4K.4 <DL!,` X K(6)Valueanalysisrequiresyoutolookattheitemandthefunctionitperformssoyoucan  determineitsworth.Thedecisionofpricereasonablenessremainswiththecontracting  officer;however,therequiringactivityshouldalwaysbeconsultedfortheirexpertise,and p theyshouldparticipateinmakingthedecision. \      ,ي  ي?݌̌          CostAnalysis!݌ X0 Ќ          ݌̌        _  Costanalysisisthereviewandevaluationoftheseparatecostelementsandprofitinanofferors 0 orcontractorsproposalandtheapplicationofjudgmenttodeterminehowwelltheproposed  costsrepresentwhatthecostofthecontractshouldbe,assumingreasonableeconomyand   efficiency._݌   Ќ          ݌̌        X  Costrealismanalysisistheprocessofindependentlyreviewingandevaluatingspecificelements " ofeachofferorsproposedcostestimatetodeterminewhethertheproposedcostelementsare # realisticfortheworktobeperformed;reflectaclearunderstandingoftherequirements;andare $|  consistentwiththeuniquemethodsofperformanceandmaterialsdescribedintheofferors %h! technicalproposal.Costrealismanalysesshouldbeperformedoncompetitivelyawardedcost |&T" reimbursementcontractstodeterminetheprobablecostofperformanceforeachofferor.The h'@ # probablecostmaydifferfromtheproposedcostandshouldreflectthegranteesbestestimateof T(,!$ thecostofanycontractthatismostlikelytoresultfromtheofferorsproposal.Theprobable @)"% costisdeterminedbyadjustingeachofferorsproposedcosttoreflectanyadditionsorreductions ,*#& incostelementstorealisticlevelsbasedontheresultsofthecostrealismanalysis.Theprobable +#' costshouldbeusedforpurposesofevaluationtodeterminethebestvalue.X݌ ,$( Ќ          \݌̌      -&*       Costproposalsandcostanalysisaretypicallyassociatedwithnegotiatedprocurements,including ( modificationsandchangeorderstoexistingcontracts.Inordertofacilitatetheevaluationof  contractorcostproposals,itisusuallyhelpfultoprescribetheformatofthecostproposalsin   yoursolicitation.Thiswillensurethatallofferorssubmitproposalsthatcanbeeasilycompared   tooneanotheronacostelementbasis(iftheprocurementiscompetitive),anditwillfacilitate   yourevaluationofproposalsagainsttheinhouseestimateandforpurposesofacostrealism   analysis..݌   Ќ          ͚݌̌        =  Atechnicalanalysisoftheproposedtypesandquantitiesofmaterials,labor,specialtooling, ` equipment,travelrequirements,andotherdirectcostswillusuallybenecessary.Theseanalyses tL  willhavetobeperformedbypersonnelspecializedinengineering,scienceorotherdisciplines. `8  Ataminimum,thetechnicalanalysisshouldexaminethetypesandquantitiesofmaterial L$  proposedandtheneedforthetypesandquantitiesoflaborhoursandthelabormix.=݌ 8  Ќ        2  2|݌̌          Advisoryauditassistanceisstronglyrecommendedwheneverthevalueofanofferorsproposal   issignificantandthecostsofobtainingtheauditassistancedonotoutweighthepotential   benefits.IftheofferorhasperformedworkforFederalagencies,theremayverywellbea  Federalauditagency,suchasDCAA,thatcanbecontactedbyphoneforthelatestavailableaudit  informationregardingdirectlaborrates,indirectcostrates,andotherpertinentcosts.Ifthereare  noFederalauditors,youshouldconsidercontactingtheindependentCPAfirmthatauditsand  certifiedthecontractorslatestannualfinancialstatements.OftentimestheseCPAfirmscan p provideauditassistance.Ifyoudorequestanadvisorypricingauditforthepurposeof \ conductingnegotiations,besuretoinformtheauditorthattheFARPart31costprinciplesmust pH beusedtodetermineallowablecosts.i0XX-00      iayd    X-X0X-XXX-  m CX-XXX-  7      Andalsobesuretoevaluatetheproposedcostsofany \4 subcontractorthathassubmittedcostdatatotheprimecontractor.6݌ H  Ќ          9݌̌    $   E( <DL!4X!E   1,` X   X!1H+ 4 <DL!,` X H$  Profit/FeeTonegotiateafairandreasonableprofit,considerationshouldbegivento:$ɧ݌   Ќ  *4X!X!*   $   E( <DL!4X!E   1,` X   X!1H+ 4 <DL!,` X H$̨  $̨݌̌  *4X!X!*   4,` X 4X!4! ! (lxx"3"  3,4X,` X 30  3U2l3  04(#(#  Thecomplexityoftheworktobeperformed,3U݌ 4(#4(# Ќ  "3"  0  3~2l3  04(#(#  Theriskbornebythecontractor,3~݌!4(#4(# Ќ  "3"  0  3j2l3  04(#(#  Thecontractor'sinvestment,3j݌"4(#4(# Ќ  "3"  0  3Q2l3  04(#(#  Theamountofsubcontracting,3Q݌#4(#4(# Ќ  "3"  0  392l3  04(#(#  Thequalityofitsrecordofpastperformance,and39r݌$ 4(#4(# Ќ  "3"  0  362l3  04(#(#  Industryprofitratesinthesurroundinggeographicalareaforsimilarwork.36o݌%l!4(#4(# Ќ  $   H( <DL!,4XH  $L  $Lױ݌ &X" Ќ  0,4X  X!0   $   H( <DL!,4XH  XE+4 44 <DL!  X!E$  NegotiationandDocumentation !$e݌ l'D # Ќ  X0,4X444X!0   $   H( <DL!,4XH  X.  X!  X! .E+4 44 <DL!  X!E$D  $DP݌ \(4!$ Ќ  X0,4X444X!0   $   H( <DL!,4XH   .  X!  X! .E+ 4 <DL!  X!E$   PrenegotiationMemorandum󀄀Someformofprenegotiationdocumentshouldbepreparedfor D)"% allnegotiations.Theextentofdetailandthecontentwilldependonthemagnitudeand$ #݌ 0*#& Ќ  -,4XX!-    +#' $   H( <DL!,4XH   .  X!  X!޶.E+ 4 <DL!  X!E$  complexityofthenegotiation.Thereareanumberofimportantreasonsforgranteestomake ( useofaprenegotiationmemorandum:$ɹ݌  Ќ  -,4XX!-   $   H( <DL!,4XH   .  X!  X!.E+ 4 <DL!  X!E$    $+݌̌  -,4XX!-    #########(8x! !"#"  ,N.4 <DL!,4XN  ,1  X!4X!1E+` ,` <DL!  X!E#r2  1  .3   4   Itwillfacilitateeffectivecostand/orpriceanalysis.Alackofeffectivecostorprice   analysishasbeenoneofthemostcommonproblemareasuncoveredbyFTA   ProcurementSystemReviews(PSRs).i0XX-00      iܿ$    X-X0X-XXX-  p CX-XXX-  8      #r݌   Ќ 3,4X` ,` X!3   $   H( <DL!,4XH   X.  X!  X!H.E+4 44 <DL!  X!E$  $݌̌  X0,4X444X!0   "#"  ,N.4 <DL!,4XN  ,1  X!4X!1E+` ,` <DL!  X!E#|2  2  .3   4   Itwillencouragenegotiationswiththeofferorbyrevealingthoseareaswherethe  t costsorpriceneedstobequestionedanddiscussedwiththeofferor.Hereagainthe ` PSRshaveshownthatmanygranteessimplyacceptcontractorproposalswithout tL  negotiations.#|݌ `8  Ќ 3,4X` ,` X!3   $   H( <DL!,4XH   .  X!  X!R.E+ 4 <DL!  X!E$  $݌̌  -,4XX!-   "#"  ,N.4 <DL!,4XN  ,1  X!4X!1E+` ,` <DL!  X!E#r2  3  .3   4   Itwilldocumentthefilewithanexplanationofthebasisforthecontractpriceandit 8  canbeusedtoprovideahistoryoftheprocurement.Thisfailuretodocumenthow $  thecontractpricewasdeterminedandtoprovideahistoryoftheprocurementisyet   anotherproblemareadisclosedbyPSRs.i0XX-00      i\$    X-X0X-XXX-  st CX-XXX-  9      #r݌   Ќ 3,4X` ,` X!3   $   H( <DL!,4XH   .  X!  X!H.E+ 4 <DL!  X!E$I  $Ic݌̌  -,4XX!-   $   H( <DL!,4XH   .  X!  X!.E+` ` ` <DL!  X!E$  4.Itwillaffordthegranteeanexcellentmethodofsupervisory/managementreviewand  approvalofthecontractnegotiatorsstrategyforthenegotiations.Thiswould  includetheconcurrenceofthetechnicalpersonnel(useroffice)inthatstrategy,which  isanimportantpointifthenegotiationsaretobesuccessfulandalloftheagencys p goalsaretobemet.$݌ \ Ќ  3,4X` ` ` X!3   $   H( <DL!,4XH   X.  X!  X!.E+4 44 <DL!  X!E$  $݌̌  X0,4X444X!0   $   H( <DL!,4XH   .  X!  X!h.E+ 4 <DL!  X!E$I  AsamplePMisincludedinthePricingGuideforFTAGranteesandisreproducedbelow.i0XX-00      i$    X-X0X-XXX-  u CX-XXX-  10      ׀ \4 ThisPMcanbetailoredtomeetanynegotiationscenariothatyoumighthave,fromlarge H  competitiveprocurementstothenegotiationofcontractchangeordersormodifications. $Ic݌ 4  Ќ  -,4XX!-   $   H( <DL!,4XH  X.  X!  X!.E+4 44 <DL!  X!E$  $݌   Ќ  X0,4X444X!0      PRENEGOTIATIONMEMORANDUM(PM)FORMAT     ,   4  X!,4X4' X   X!'1.  GranteeContractingActivity_____________________  2.  Date_____________ `"8 3.  RFP/IFBorContractNumber_____________________________________________ L#$ 4.  ModificationNumber___________________________________________________ 8$  5.  Thisacquisitionisbeingaccomplishedby(checkone) $%!  d+  X!X D+B(  <DL!  X!B   ` FullandOpenCompetition_____________ &"    ` OtherthanFullandOpenCompetition_____  `'8 #   .  X! X!Z.H.4 <DL!  X!H    Statereasonsforotherthanfullandopencompetition. (     ________________________________________________________________________ xP   X,1  X!4X!1*X   X!*________________________________________________________________________   ________________________________________________________________________    d  ,X.  X!X .H.4 <DL!  X!H6.  0  ContractType____________________________________________________________h @(#(#  d  X,1  X!4X!31E+4 44 <DL!  X!E7.  Offeror's(Name,Address) T , ________________________________________________________________________ @ ________________________________________________________________________ , ________________________________________________________________________   d  ,X.  X!444X!a.H.4 <DL!  X!H8.  0  BusinessSizeandType(Small,Large,DBE,WOB)_____________________________h@ (#(# 9.  0  Offeror'sProposedAmount_________________________________________________T, (#(#  d10.  0  ProcurementDescription(brieflydescribetheprocurement)@ (#(#   X,1  X!4X!Y1E+4 44 <DL!  X!E________________________________________________________________________ h  ________________________________________________________________________ |T  _______________________________________________________________ h@  .  X!444X!.6445DL!  X!611.PricingStructure  PrenegotiationObjective    ,X1  X!445DX!16CDL!  X!6    Cost  $__________________  1  X!CDX!164DL!  X!6    Fee/Profit(______%)  $__________________ X0  d    TotalPrice  $__________________  1  X!4DX!13DL!  X!3 l ! !"# "  ,,H.4 <DL!DX!H  1  X!4X!16DL!  X!6#H2  12  .3      DeliveryorPerformancePeriod___________________________________________#H@݌ X Ќ ,,-DX!DX!-   .  X!DX! .6DL!  X!613.  PointsofContactforthisDocument(nameandphonenumber) lD 1  X!DX!1E+ ` <DL!  X!E   4 a. Contracts________________________________________________ X0    4 b. Technical________________________________________________ D   d 0!  d PARTA 4  INTRODUCTION "X  l#D 1  X!X X![1E+  <DL!  X!E 1.  Inthisparagraph,describetheacquisition,includingabriefhistoryoftherequirement,the X$0 placeofperformance,andanyotherpertinentinformation.Questionstobeanswered D% include:Whatisit?Whyisitneeded?Whatisitfor?Quantity?Ifthisisacontract 0& modification,whateventsorcircumstancescontributedtotheneededchange?Statethe ' Grantee'sestimatedamountoftheproposedacquisition. (  4  X! X!T4E+ ` <DL!  X!E (!  1  X!X X!12.  Inthisparagraph,addresstheextentofcompetitionundertheacquisition.Istheacquisition )"! beingaccomplishedunderfullandopencompetition?Ifotherthanfullandopen,includea *#" statementregardingsolesourceapproval.Additionally,wastherequirementpublicizedin +$# accordancewithGrantee'sprocedures?(Ifnot,citetheexception.)Howmanyrequestsfor ,|%$ solicitationswerereceived?Howmanyofferswerereceived? -h&% 0` X  X!0  |.T'& 3.0  Inthisparagraph,includeyourplannednegotiationschedule,andidentificationofthe ( Grantee'snegotiatingteammembersbynameandposition.(#(# 4  X!` X4E+ ` <DL!  X!E        | ,1  X!X X!1E+` ` ` <DL!  X!EPARTB 4  SPECIALFEATURES,REQUIREMENTSAND   x  F     PRENEGOTIATIONCOMPLIANCE    | ,4  X!` ` ` X!4E+ ` <DL!  X!E    Thefollowingitemsshouldbeaddressedforallnegotiatedacquisitions:  l  d X 1  X!X X!1E+  <DL!  X!E1.  Theuseofsealedbidproceduresisnotappropriateforthisacquisitionbecause F    ___________________________________________________________________________   __________________________________________________________________________    d4  X! X! 4H.4 <DL!  X!H   1  X!4X!1E+  <DL!  X!E2.  Theprospectivecontractor(s)has/havebeendeterminedtoberesponsibletechnicallyandare   financiallystable. Yes_______ h   No_______     Majorsubcontractors(listtheirnames)havebeenreviewedandfoundtobetechnically  responsibleandarefinanciallystable.   l 3.  Theprospectivecontractor(s)is/arenotonthelistof"PartiesExcludedfromProcurement X andNonprocurementPrograms." lD  X0 hH(  <DL! X!H   ,.  X! X!n.H. <DL!  X!Hh    (Thefollowingitemsshouldbeincludedwhenapplicable:)h݌ D Ќ6 X! X!6   ,4  X! X!4E+  <DL!  X!E 0 4.  Precontractcostintheamountof$___________fortheperiod__________________were  approvedby(nameofindividual).    5.  Authoritytoenterintoalettercontractwasapprovedby(nameofindividual).     ! !"#"  ,,N.4 <DL! X!N  1  X!4X!51E+  <DL!  X!E#2  6  .3      Areoptionalquantitiesbeingproposedandaretheybeingevaluatedaspartoftheaward ! decision?i0XX-00      iL    X-X0X-XXX-  x CX-XXX-  11      #݌ "| Ќ ,,6 X! X!6   4  X! X!4E+  <DL!  X!E 4  X! X!4E+  <DL!  X!E7.  Theofferorhassubmitted"CostorPricingData." p Yes________No_________ |$T  h%@  8.  "CostorPricingData"formajorsubcontract(s)hasbeensubmitted.   T&,! Yes__________No__________ @' "  ,(!# 9.  Writtenwaiveroftheauditwasgrantedby(nameofindividual). )!$  *"%   *#& 4  X! X!4 , >-rr" N Xf!  X!-10. r Theofferor(s)has/haveanadequateaccountingsystemasdeterminedby(nameof ( individual).(Costreimbursementcontracts,fixedpricewithpriceredetermination,  incentivetypesandcontractscontainingprogresspaymentprovisions.)      11. r EEOcompliancehasbeenrequestedorobtained.  Yes________  No_________      12. r IntheeventGranteepropertyistobefurnishedtotheofferor,hastheContractingOfficer   determinedthatthecontractorhasanacceptablepropertycontrolsystem?Grantee  t furnishedequipmentestimatedvalue$________________consistingmainlyof ` _________________________________________________________________.Grantee tL  furnishedmaterialestimatedvalue$_______________consistingmainlyof____________ `8  ___________________________________________________________________. L$   8  13. r Addressanydeviations,specialclausesorconditionsanticipated. $     ! !"# " > ,K.4 <DL!rr" N Xf!K  0rr" N Xf!4X!0 > ,#2  14  .3   r   Theofferorhas_____hasnot______submittedasubcontractingplan.Brieflydiscussthe   subcontractingplanifapplicable.#݌  Ќ 0rr" N Xf!rr" N Xf!0 >>  > H+ ` <DL!rr" N Xf!H  ,7rr" N Xf!` X!7?"  DL!rr" N Xf!?   PARTC ` COSTANDPROFIT/FEEANALYSIS    ,4rr" N Xf! X!"4?"  DL!rr" N Xf!? InthisPartC,compare,insummary,theofferor'sproposal,theauditand/orother X recommendations,andtheGrantee'sPrenegotiationobjective.Forexample: lD  d4rr" N Xf! X!49N h%L!rr" N Xf!9 " Offeror's < Audit/Technical  Prenegotiation  Numbered  CostElement " Proposal < Recommendation*  Objective  Notes** l  dDirectLabor " $ < $  $  (1)  LaborOverhead " $ < $  $  (2)   DirectMaterial " $ < $  $  (3) ! Mat'lOverhead " $ < $  $  (2) " OtherDirectCosts " $ < $  $  (4) #l Subtotal " $ < $  $   $X G&A " $ < $  $  (2) l%D  Subtotal " $ < $  $   X&0! Profit/Fee " $ < $  $  (5) D' " Total " $ < $  $  (6) 0(!# =rr" N Xf!N h%L!f=9 hDL!rr" N Xf!9Theaboveisanexampleofthevariouscostelementsthatshouldbereviewedwhenanalyzinga *"% proposal.Theseelementsarenottobeinterpretedasallencompassingbecausethecostelements *#& ofeachofferormaybedifferent. +$' =rr" N Xf! hDL!R=<  DL!rr" N Xf!< *Audit/TechnicalRecommended: -&)  .|'*  X@rr" N Xf!  DL!@<4 4 DL!rr" N Xf!< Ingeneral,anauditreportwillnotincluderecommendationsondirectlaborhoursorthe ( validityofmaterialandotherdirectcosts.Thetechnicalevaluation/analysisgenerally  willnotincluderaterecommendations.Therefore,thiscolumnshouldbeacombination   ofyourtworeports(auditandtechnical).Incaseswhereyouhavenotobtainedanaudit,   youneedonlyreflectthe"Offeror'sProposal"and"PrenegotiationObjective"columns.   Thetechnicalevaluationresultscanbeaddressedinyourdiscussions,andwould   normallybeusedintheestablishmentofyourobjective.   @rr" N Xf!4 4 DL!@<4 44 DL!rr" N Xf!<Foryourinformation,"TechnicalAnalysis"isdefinedastheexaminationandevaluation ` bypersonnelhavingspecializedknowledge,skills,experience,orcapabilityin tL  engineering,science,ormanagementofproposedquantitiesandkindsofmaterials,labor, `8  processes,specialtooling,facilities,andassociatedfactorswhichhavebeensetforthina L$  proposal.Inordertodetermineandreportontheneedforthereasonablenessofthe 8  proposedresourcesassumingreasonableeconomyandefficiency,specialknowledgeis $  required.Therefore,atechnicalevaluationthatdoesn'taddressindividualelementsof   cost(i.e.,laborcategories,laborhours,material,otherdirectcosts,etc.),butmerelystates   thattheproposalisacceptable,isnotconsideredadequate.   X=rr" N Xf!444 DX!=< S DL!rr" N Xf!<** NumberedNotes:   d=rr" N Xf!S DX!M#=< 4 DL!rr" N Xf!<(1)  DirectLabor   =rr" N Xf!4 DX!$=<4 44 DL!rr" N Xf!<Compare,indetaileddiscussion,theproposal,theauditand/ortechnicalrecommendations,and P( theprenegotiationobjectivedirectlaborcategories,hoursandrates. < =rr" N Xf!444 DX!$=< 4 DL!rr" N Xf!<Forexample: d  d=rr" N Xf!4 DX!&=3" X rr" N Xf!3 " Offeror's  Audit/Technical  Prenegotiation  LaborCategory " Proposal  Recommendation  Objective  7rr" N Xf!" X &7B% " z <X rr" N Xf!B " Hours z Rate < Amt.  HoursRateAmt.  0  Hours󀀀Rate󀀀Amt. (#(# Engineer " xx z $ < $  xx  $  $  0  xx  $ x $!x(#(# Programmer " xx z $ < $  xx  $  $  0  xx  $ x $"d(#(# Clerical " xx z $ < $  xx  $  $  0  xx  $ x $x#P(#(#  Total "  z  < $       $       0 x $d$<x(#x(# Offeror'sProposal @&  Firstsubparagraph.Summarizetheofferor'srationalefortheproposedlaborcategories,hours ( " andrates.Questionsyoucanconsiderare:Aretheproposedlaborratestheresultofanegotiated )!# forwardpricingrateagreement(FPRA)?Aretheyunauditedbiddingratesthathavebeen )"$ approvedatacorporatelevel?Aretheycurrentactualratesforspecificemployeesora *#% compositerateforpersonnelundereachlaborcategory?Ifthelaborratesaredevelopedona +$& specificbaserate,whatescalationfactor(ifany),hastheofferorappliedtothebaserate?Isthat ,%' areasonablefactor?Aretheproposedlaborcategoriesandhoursbasedupontheofferor's  -x&( previousexperience?Whatevidenceofhistoricallyincurredhourshastheofferorprovided?Or, ( istheproposalanengineeringestimateoftheprojectedlaborandexpertisetoaccomplishthe  requirementsoftheacquisition?Dotheproposedhourscorrespondtotheperformanceperiod?   Audit/TechnicalRecommendation   Secondsubparagraph.Summarizethebasisoftheauditorotherrecommendations.Howhave   therecommendedlaborratesbeendeveloped?Forinstance,auditreportsgenerallyusetheData  t ResourcesIndicesindevelopinglaborraterecommendations.Thishasbeenproventobea ` reliableescalationpredictorforlaborratesandmaterialitems.Ifyouhaveanauditreport,the tL  informationforthissubparagraphwillbewithintheauditreport.Intheeventyouhavenot `8  obtainedanaudit,itisadvisabletocontactyourstateauditofficeandrequestcurrent L$  rate/escalationrecommendations.Therecommendationsofthetechnicalevaluationshouldalso 8  beaddressedunderthissubparagraph.Itisimportantthattheevaluationincludescompleteand $  factualsupportforanyexceptionstakentoproposeddirectlaborcategoriesandhours.   PrenegotiationObjective  Thirdsubparagraph.DiscusstheGrantee'snegotiationobjective.Whatisitbasedupon?Did  yourelyontheauditrecommendations?Didyourelyonthetechnicalevaluationin  developmentofyourobjectivelaborcategoriesandhours?Anexcellentresourceforadditional p considerationsduringanalysisofaproposalistheArmedServicesPricingManual,ASPM. \ Additionally,theevaluationconsiderationsinevaluatingmanufacturinglaborversusengineering pH labordiffergreatly.Inamanufacturingenvironment,otherconsiderationsmayinclude \4 applicationoflearningcurvetheory,efficiencyfactors,recurringversusnonrecurringlabor,etc. H  Itisyourresponsibilitytoestablishareasonableobjectiveafterconsideringandanalyzingallof   theavailabledata.Statementstotheeffect,"THEOFFERORHASPROPOSEDTHESAME   RATESONOTHERCONTRACTS,"arenotadequatewithoutdiscussionofhowprice   reasonablenesswasdeterminedundertheothercontracts. ! Frr" N Xf! " z <X 'FH+ 4N hL!rr" N Xf!H (2)  LaborOverhead,MaterialOverhead,andG&A #  Compare,indetaileddiscussion,theofferor'sproposal,theauditand/orotherrecommendations, %l! andtheGrantee'sobjectiveforlaboroverhead,materialoverhead,andG&A.Forexample:Frr" N Xf! 4N hXX!9FE( N hL!rr" N Xf!E &X" Crr" N Xf! N hXX!;C?" N z <XX rr" N Xf!? N Offeror's    Technical/Audit    Prenegotiation X(0!$ Category N Proposal <   0  Recommendation    ObjectiveD)"%(#(# Crr" N Xf! N z <XX #<C?" N  - rr" N Xf!? N Rate  Amt.  0  Rate  Amt.    Rate - Amt.0*#&(#(# LaborOverhead N x%  $  0  x%  $    x% - $+#'(#(# MaterialOverhead N x%  $  0  x%  $    x% - $,$((#(# G&A N x%  $  0  x%  $    x% - $,%)(#(#   .'+ Offeror'sProposal ( Firstsubparagraph.Describehowtheofferordevelopedtheproposedindirectrates.Doesa   forwardpricingrateagreementexist?Ifso,whatistheperiodcoveredbytheagreement?This   informationshouldbeprovidedbytheofferor.   Audit/OtherRecommendation   Secondsubparagraph.Explainwhattheaudit'srecommendationsarebasedupon.Thismay ` includeexceptiontakentosomecostelementswithintheoverheadpool,suchasfringebenefits, tL  unemploymenttaxes,rent,depreciation,etc.Thisinformationshouldbereflectedintheaudit `8  report.Ifyoudonotobtainanauditreport,youcanrequestcurrentraterecommendationsand/or L$  historicalactualratesfromyourstateauditoffice.Comparingtheofferor'sproposedratestothe 8  actualratescanprovideagoodmeasureonhowaccuratetheofferor'sproposedrateshavebeen. $  PrenegotiationObjective   Thirdparagraph.AddresshowyoudevelopedtheGrantee'sprenegotiationobjective,andupon  whatinformationyourelied.Areyourobjectiveratesbaseduponrecommendations?  Occasionally,youmayexperienceasituationwhereyouhaven'tobtainedanauditreport,and  yourstateauditofficehasnoinformationonaspecificofferor.Insuchcases,itmaybetoyour p advantagetorequestanauditoftheofferor'srates.Absentthisinformation,youwillneedto \ evaluatetheofferor'sproposedratesindetail(i.e.,costelementsincludedintheindirectpools) pH forallowabilityandallocability.Comparingoneofferor'srateswiththoseofanotherofferor'sis \4 notanacceptablemethodinanycase.Also,comparingthisyear'sproposedratestolastyear's H  ratesisnotabasisforestablishingreasonablenessofthecurrentlyproposedrate. 4   Crr" N Xf! N  - =CB% 4N <!rr" N Xf!B(3)  DirectMaterial    XFrr" N Xf! 4N <!XIFB%4 44N <!rr" N Xf!B  XFrr" N Xf!4 44N <!$JF?" N <!rr" N Xf!?Provideadetailedbreakdownandcompare,indetaileddiscussions,theofferor'smaterial ! quantitiesandunitprices. "  " Offeror's  Technical/Audit    Prenegotiation $  Material " Proposal  0  Recommendation    Objective%l!(#(# Crr" N Xf! N <!JCE( N Dx!rr" N Xf!E " Qty UP  Amt  Qty V UP  Amt  Qty  UP L Amt &X" PwrSup " xx $  $  xx V $  $  xx  $ L $ l'D # CMChips " xx $  $  xx V $  $  xx  $ L $ X(0!$ Wire " xx $  $  xx V $  $  xx  $ L $ D)"% Other " xx $  $  xx V $  $  xx  $ L $ 0*#&  Total  "    $   V   $     L $ +#'   ,%) Offeror'sProposal ( Firstsubparagraph.Addressthebasisoftheofferor'sproposeddirectmaterial(engineering   estimate?baseduponhistory?etc.)andcostsassociatedwiththematerial(catalogprices?oral   quotes?writtenquotes?historicalpricesescalatedby$?competitive?,etc.)Willtherebeany   scrap,attritionorvariancefactorstoconsider?Ifapplicable,hastheofferorincludedananalysis   forlargedollaritems?Istheanalysismeaningful?   Audit/TechnicalRecommendation ` Secondsubparagraph.Addresstheaudit/technicalrecommendations.Hastheauditor/originator `8  takenexceptiontoanyoftheproposedmaterialitems,quantitiesorassociatedprices?Have L$  exceptionsbeenadequatelysupported? 8  PrenegotiationObjective   Thirdsubparagraph.SupporttheGrantee'sprenegotiationobjective.Ifyouhavetakenexception  toanymaterialitemsand/orquantities,whatinformationhaveyoureliedupontoreachyour  conclusions?Ifyouhavetakenexceptiontoanypricingaspectsoftheofferor'sproposal,explain  fullyhowyouarrivedatyourobjective.Incaseswhereyouhavenoauditreport,theimportance  ofathoroughtechnicalevaluationisincreased.Youmustmakeadeterminationofprice p reasonablenessforthedirectmaterialitems.Whenchallengingacost,explainthebasisforyour \ position."Appearstoohigh,"withoutrationale,is