Georgia Tech Procurement Assistance Center

GTPAC hosts cost/price proposal workshop

By

One of the most important skills government contractors must learn is how to prepare a quality cost/price proposal.  Recently, on April 24, 2019, the Georgia Tech Procurement Assistance Center (“GTPAC”), with support provided by The Contracting Education Academy at Georgia Tech, held a free cost/price proposal workshop at the Georgia Tech Global Learning Center in midtown Atlanta, GA.  Attendees at the day-long workshop were provided detailed instruction on cost estimating, cost/price proposal preparation, and how to properly analyze their direct costs, indirect costs, profit, and other factors when determining a competitive cost/price.

“I am extremely happy with the event, and I thought the contractors in attendance asked some fantastic questions about pricing,” said Andrew Smith, Program Manager of GTPAC, he continued, “There are a lot of resources available on how to put together the technical proposal, but a lot fewer resources available, that focus specifically on how to put together a great price or cost proposal.  I think this workshop provides that missing piece.”

The cost/price proposal slideshow materials from the workshop are provided below at no cost.  Permission is granted to other Procurement Technical Assistance Centers (“PTACs”) to use and modify the presentation in conjunction with the delivery of training and other services to PTAC clients.  

“I would encourage government contractors to learn from the materials, and other PTACs to use or incorporate the materials in their own presentations to the business community,” said Smith, he continued, “The slideshow is detailed and high quality and a great resource to take advantage of.”

To download the presentation, click the following links:

Cost and Price Proposal Handout (PDF)

Cost and Price Proposal Handout (PowerPoint)

To view cost/price proposal on-demand webinar training, see the video below:

Pentagon requests voluntary refund of millions of dollars from contractor TransDigm

By

The Army and Defense Logistics Agency will both seek reimbursement on millions of dollars from contractor TransDigm, following an Inspector General report into the company’s contracts with the Pentagon.

TransDigm, which produces specialized parts for aircraft such as pumps, valves and batteries,, earned “excess profit” 112 of 113 contracts reviewed by the IG’s office, per a report released last Wednesday. The IG found that the company received $16.1 million in excess profit between January 2015 and January 2017, with a cost that could go up due to spare parts in the future.

The 112 contracts, signed with the Army or DLA, had profit margins ranging from 17 to a whopping 4,451 percent; The IG’s office calls profit percentages of 15 percent or below to be “reasonable.”

Keep reading this article at: https://www.defensenews.com/industry/2019/02/27/pentagon-requests-voluntary-refund-of-millions-of-dollars-from-contractor-transdigm/

Defense contractors to face new cost accounting oversight with creation of Defense Cost Accounting Standards Board

By

Section 820 of the National Defense Authorization Act for Fiscal Year 2017 (NDAA) establishes a new Defense Cost Accounting Standards Board (D-CASB) to oversee the application of the cost accounting standards (CAS) to defense contracts.

The amendments made by Section 820 shall take effect on October 1, 2018.

Originally issued between 1970 and 1980 by the Cost Accounting Standards Board (CASB), the CAS are a series of accounting standards “designed to achieve uniformity and consistency” in the measurement of costs, the assignment of costs to cost accounting periods, and the allocation of costs to government contracts. 48 C.F.R. § 9901.302(b).

When first proposing what is now Section 820 of the NDAA, the Senate Armed Services Committee expressed its concern that the current CAS “favor incumbent defense contractors and limit competition by serving as a barrier to participation by non-traditional, small business, and commercial contractors.”

The Committee also viewed the CASB with disapproval, noting how the CASB does not currently have a quorum and has not met in over three years. Thus, the Committee doubted that “any credible reform will emanate out of [the CASB] in the future,” and opted to favor instead a new D-CASB that “will be better suited to meet national security needs.”

Keep reading this article at: https://www.governmentcontractslawblog.com/2017/04/articles/department-of-defense/cost-accounting-standards-board/

Implications of the changing cost and pricing data thresholds for prime contractors and subcontractors

By

Government contractors should explore updates to their purchasing system policies and procedures regarding subcontracts subject to Truthful Cost or Pricing Data (TCPD) and Cost Accounting Standards (CAS) requirements based on the upcoming effective date for the increased threshold for obtaining certified cost or pricing data.

Specifically, Section 811 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. No. 115-91, 131 Stat. 1283) (FY 2018 NDAA), amends 10 USC § 2306a and 41 USC § 3502, increasing the threshold for obtaining certified cost or pricing data to US$2 million. Inevitably, this increased threshold impacts subcontracting, particularly under contractor purchasing systems that are subject to the Department of Defense (DOD) Business Systems Rule.

A recent memorandum issued by Shay D. Assad, Director of Defense Pricing/Defense Procurement and Acquisition Policy (DP/DPAP), which we addressed in a prior advisory, directs DOD contracting officers that, effective July 1, 2018, they shall use US$2 million as the threshold for obtaining certified cost and pricing data “in lieu of the threshold . . . at [FAR] 15.403-4.” Notably, while this class deviation provides direction to DOD contracting officers, it does not change the “current threshold” in FAR 15.403-4. Accordingly, absent a contract specifying a different threshold, prime contractors must wait until the threshold in FAR 15.403-4 is updated to implement the US$2 million threshold before they may safely use it for subcontracts and modifications that are not otherwise exempt.

Under FAR 52.215-12 and 52.215-13, a prime contractor’s obligation is to require a subcontractor to submit certified cst or pricing data when the expected value of the pricing action will exceed the threshold in FAR 15.403-4 and an exception does not apply. FAR 15.403-4(a)(1) states that certified cost or pricing data are required before the award or modification of subcontracts “expected to exceed the current threshold or, in the case of existing contracts, the threshold specified in the contract.” The same paragraph currently provides that “[t]he threshold for obtaining certified cost or pricing data is US$750,000,” and has not yet been updated to reflect the increased threshold.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=704542

DoD wants more leeway in TINA sole-source cost and pricing requirements

By

Ellen Lord, the Defense Department’s new undersecretary for acquisition, technology and logistics, appeared before the Senate two weeks ago to give her first progress report on the department’s implementation of congressional acquisition reform.

In passing, she made a new reform request of her own: a potentially-fundamental change to the way DoD handles sole-source procurements.

Since 1962, when Congress passed the Truth in Negotiations Act (TINA), the government has generally been required to demand that contractors provide it with their cost and pricing data when that company is the only bidder that can fulfill the military’s requirements. The rationale is that without a competition between vendors, the government needs some insight into its contractor’s actual costs to make sure it’s not getting gouged.

Keep reading this article at: https://federalnewsradio.com/dod-reporters-notebook-jared-serbu/2017/12/pentagon-wants-more-leeway-on-truth-in-negotiations-act/

 

DCAA guidance clarifies cost or price analysis requirements for subcontractor proposals

By

The Defense Contract Audit Agency (DCAA) recently published a Memorandum for Regional Directors (MRD), titled “Audit Alert on Requirement for Prime Contractor Cost and Price Analyses,” that provides answers to frequently asked auditor questions regarding cost and price analyses to establish the reasonableness of proposed subcontract prices.

Importantly, the MRD states that DCAA auditors should proceed with subcontract proposal audits even if contractor cost or price analyses are not yet available. This should help mitigate what has been a continuing problem for prime contractors—long waits for DCAA audits of subcontractor proposals—and expedite contract price negotiations.

FAR 15.404-3(b) requires a prime contractor or subcontractor to establish the reasonableness of proposed subcontract prices and to provide supporting cost or price analyses in the proposal. In certain circumstances, a prime contractor may not be able to complete the cost or price analyses by the time it submits a proposal. In such cases, the prime contractor may include a matrix in the proposal identifying the dates by which it expects to receive subcontractor proposals. The MRD states that this type of matrix does not satisfy the requirement to submit supporting cost or price analyses in the proposal, and a DCAA auditor would mark the proposal as inadequate on grounds of incomplete cost or price analyses.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=640002

DoD reopens comment period on pricing data rule

By

The public comment period on a contract pricing rule which would amend the Defense Federal Acquisition Regulation Supplement (DFARS) has been extended to November 13, 2015.

DFARSThe proposed DFARS change is necessary in order to implement Section 831 of the 2013 National Defense Authorization Act (NDAA), which requires the issuance of guidance on the use of the authority to require the submission of other than cost or pricing data, 80 Fed. Reg. 61333.

The 2013 NDAA mandates that offerors submitting proposals for negotiated procurements provide certified cost or pricing data under certain circumstances if the estimated value of the procurement is above a certain dollar threshold. For other types of procurements (e.g., commercial-item acquisitions) the law requires only that an offeror provide “data other than certified cost or pricing data to the extent necessary to determine the reasonableness of the price” (10 U.S.C. 2306a(d)(1)).   Section 831 of the NDAA requires the issuance of guidance on the use of the authority to require the submission of other than cost or pricing data.

The new rule proposes to amend the DFARS as follows:

  • Add new definitions at 202.101 for “market-based pricing” and “uncertified cost data” and at 215.401 for “nongovernment sales,” “relevant sales data,” and “sufficient nongovernment sales to establish reasonableness of price”;
  • Add section 212.209 entitled “Determination of price reasonableness”;
  • Add guidelines at 215.402(a)(3), for obtaining data other than certified cost or pricing data;
  • Add instructions at 215.403-5 for the submission of certified cost or pricing data and data other than certified cost or pricing data;
  • Add guidelines at 215.404-1 concerning proposal analysis techniques;
  • Renumber the paragraph structure at 215.404-1-70;
  • Revise the clause prescription at 215.408, paragraph(3)(i), and add three new provision prescriptions at paragraph (6); and
  • Add three new provisions in part 252.

Interested parties may submit comments via the Federal eRulemaking portal by entering ‘‘DFARS Case 2013–D034’’ under the heading ‘‘Enter keyword or ID’’ and selecting ‘‘Search.’’ Select the link ‘‘Submit a Comment’’ that corresponds with ‘‘DFARS Case 2013– D034.’’ Follow the instructions provided at the ‘‘Submit a Comment’’ screen. Please include your name, company name (if any), and ‘‘DFARS Case 2013– D034’’ on your attached document.

  • Email: osd.dfars@mail.mil. Include DFARS Case 2013–D034 in the subject line of the message.
  • Fax: 571–372–6094.
  • Mail: Defense Acquisition Regulations System, Attn: Mr. Mark Gomersall, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301–3060.

More detail at: https://www.federalregister.gov/articles/2015/08/03/2015-18938/defense-federal-acquisition-regulation-supplement-evaluating-price-reasonableness-for-commercial 

Tech to offer professional coursework on government contracting in October

By

Interested in deepening your understanding of the federal government’s contracting rules?

Want to develop your professional skills in winning and managing government contracts?

If your answer to these questions is yes, you’ll want to consider attending two important courses being offered by Georgia Tech’s Contracting Education Academy next month.

The first course is CON 260B, Small Business Programs.  It provides an in-depth review of the federal government’s efforts to improve small business participation in prime contracting and subcontracting.  This 3-day course focuses particular attention on the Small Business Managers’ role as a vital member of the acquisition team.   As a part of this course, business people:

  • Discover business growth opportunities for your company in the government sector.
  • Learn how to better develop a bid proposal that will put you ahead of the competition.
  • Gain insight on ways to get your small business subcontracting plan approved.
  • Network with and learn alongside government contracting officials to gain a better understanding of the process, roles, and responsibilities of government contracting.
  • Understand how your company fits in as an important member of the government’s overall acquisition team.

The second course is CON 170, Fundamentals of Cost and Price Analysis.  This course begins with an in-depth review of the market research process, and provides instruction to help students understand and analyze contractor pricing strategies. This is a 10-day course where students learn how to:

  • Demonstrate ability to execute fundamental quantitative pricing skills.
  • Successfully distinguish various seller pricing strategies given an acquisition situation.
  • Describe the Truth in Negotiations Act, including its purpose in mitigating government cost risk.
  • Identify the policies and procedures for applying the Cost Accounting Standards Board (CASB) rules and regulations to negotiated contracts and subcontracts.
  • Identify contract cost principles and procedures.

CON 260B, Small Business Programs is offered Oct. 14-16, 2014.  Learn more about this course at: http://www.pe.gatech.edu/courses/con-260b-small-business-programs.

CON 170, Fundamentals of Cost and Price Analysis is offered October 20 – 31, 2014.  Learn more about this course at: http://www.pe.gatech.edu/courses/con-170-fundamentals-cost-and-price-analysis.

The complications of cost and pricing

By

One of the most controversial areas in government contracting surrounds cost and pricing: the means by which a contracting officer makes a “fair and reasonable” price determination. This can be expensive to bidders, especially if they are required to provide “certified cost and pricing data” and respond to Defense Contract Audit Agency or contracting officer questions. Recent inspector general reports have highlighted the problem.

Commercial companies don’t have similar requirements and aren’t structured for it. They maintain that creating such cost-accounting compliance would incur extra overhead costs, drive up prices, and hurt them competitively. Contractor concerns involve onerous government requirements, inapplicability, and potentially abandoning the government market.

Perhaps the biggest difference between government and commercial buying practices is symbolized in the Truth in Negotiations Act (TINA). Its main intent is to ensure accuracy of a contractor’s costs before negotiating with the government and includes providing government access to all cost or pricing data the contractor used to develop its offer. If the cost rises and the bidder is found to have withheld any data, the government can get back the added costs.

Keep reading this article at: http://www.federaltimes.com/article/20140826/BLG06/308260017/The-complications-cost-pricing

Learn how the government conducts cost and price analysis, starting June 16

By

The Contracting Education Academy at Georgia Tech is offering a course focusing on the Fundamentals of Cost & Price Analysis in government contracting.  The course begins June 16, 2014, and will be held at the Global Learning Center located on the midtown Atlanta campus of the Georgia Institute of Technology.

To see details or to register, click here.

Academy identifier - gold & black w-white bkgrndThe Academy’s comprehensive, two-week course begins with an in-depth review of the market research process, and provides instruction to help students understand and analyze contractor pricing strategies.

Attendees will learn to accomplish cost-volume-profit analysis, calculate contribution margin estimates, and develop cost estimating relationships in order to accomplish an effective price analysis pursuant to FAR Subpart 15.4.

After learning the basic elements of price and cost analysis, students will build and defend a pre-negotiation objective, including a minimum and maximum pricing objective with a weighted guidelines assessment.

This course is ideal for new hires in the contracting career field.   In addition, for government contractors, this course provides invaluable insights into the government contracting decision-making process.

Student performance will be assessed by graded exams on math fundamentals and applied course material as well as an exercise for student participation and completion of negotiations.

DAU logoCON 170 – Fundamentals of Cost & Price Analysis is Defense Acquisition University-equivalent training that satisfies the FAC-C and DAWIA certification programs.  Students successfully completing the course earn 7.35 continuing education units.

For more information or to register, please visit: http://www.pe.gatech.edu/courses/con-170-fundamentals-cost-and-price-analysis

Contracting News

Read More

Contracting Tips

Read More

GTPAC News

Read More

Georgia Tech News

Read More