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WEIGHT
| WEIGHTED GUIDELINES PROFIT/FEE OBJECTIVE |
| Click here for DOT guidance regarding elements to consider when completing this form. Also, click on each highighted factor or sub-factor contained in this form for DOT guidance specific to that factor or sub-factor. Please note that to return to the weighted guidelines form from the guidance document, click on the document labeled "weight" at the bottom of the guidance document page. |
With the exception of Material Acquisition Subcontracted Items (see block 7.a.), include all subcontractor costs under block 11 titled "Other Costs". Consider the profit range of 1% to 5% stipulated under Sub-factor 7.a. when assigning a weight for subcontractor effort.
With regard to Item 14 "Cost Risk" indicate assigned weights of less than one as a decimal to the third position (e.g., .5% should be input as .005 in column (f)).
| 1 | a. COMPANY NAME | | b. DIVISION NAME (IF ANY) | | |
| CONTRACTOR | | | | | |
| IDENTIFICATION | c. STREET ADDRESS | d. CITY | | e. STATE | f. ZIP CODE |
| 2. WEIGHTED GUIDELINES CATEGORY (CHECK ONE) | | 3. TYPE OF CONTRACT |
| a. MANUFACTURING | b. RESEARCH AND DEVELOPMENT | |
| c. SERVICES | | |
| 4. BASIC PROCUREMENT INSTRUMENT IDENTIFICATION NO. | | | | 5. SPECIALIST NAME |
| a. PURCHASING OFFICE | b. FY | c. C/S PROD/SVCS CODE | d. PR NO. | |
6 WEIGHTED GUIDELINES PROFIT FACTORS
| PROFIT/FEE | MEASUREMENT | PROFIT WAGE RANGES | | | ASSIGNED | PROFIT/FEE |
| FACTOR OR SUBFACTOR | BASE | MFG (%) | R&D (%) | SVCS (%) | WEIGHT (%) | DOLLARS |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) |
| PART I - CONTRACTOR EFFORT | | | | | | |
| 7. MATERIAL ACQUISITION | | 1 TO 5 | 1 TO 5 | 1 TO 5 | $0 |
| a. SUBCONTRACTED ITEMS | | | | | |
| b. PURCHASED PARTS | | 1 TO 4 | 1 TO 4 | 1 TO 4 | $0 |
| c. OTHER MATERIAL | | 1 TO 4 | 1 TO 4 | 1 TO 4 | $0 |
| 8. ENGINEERING | | 9 TO 15 | 9 TO 15 | | $0 |
| a. DIRECT LABOR | | | | | |
| b. OVERHEAD | | 6 TO 9 | 6 TO 9 | | $0 |
| 9. MANUFACTURING | | 5 TO 9 | 5 TO 9 | | $0 |
| a. DIRECT LABOR | | | | | |
| b. OVERHEAD | | 4 TO 7 | 4 TO 7 | | $0 |
| 10. SERVICES | | | | 5 TO 15 | $0 |
| a. DIRECT LABOR | | | | | |
| b. OVERHEAD | | | | 4 TO 8 | $0 |
| 11. OTHER COSTS | | | | | $0 |
| 12. GENERAL MGMT - G & A | | 6 TO 8 | 6 TO 8 | 6 TO 8 | $0 |
| 13. TOTAL EFFORT | $0 | | | | $0 |
| PART II - CONTRACTOR RISK | | | | | |
| 14. COST RISK | (Total from Col. b) | 0 TO 8 | 0 TO 7 | 0 TO 4 | $0 |
| $0 | | | | |
| PART III - FACILITIES INVESTMENT | | | | | |
| 15. CAPITAL EMPLOYED | (Line 8 of DOT F 4220.34) | | $0 |
| | 16 TO 20 | |
| 16. BASIC PROFIT/FEE OBJECTIVE | (Items 13 + 14 + 15, Col. g) | | $0 |
| PART IV - SPECIAL FACTORS | | | |
| 17. SPECIAL PROFIT/FEE OBJECTIVE | | | | | $0 |
| a. PRODUCTIVITY | | | | | |
| b. INDEPENDENT DEVELOPMENT | | 1 TO 4 | 1 TO 4 | | $0 |
| c. OTHER | (Total from Item 16) | -5 TO +5 | -5 TO +5 | -5 TO +5 | $0 |
| $0 | | | | |
| d. TOTAL SPECIAL PROFIT/FEE OBJECTIVE | | | | | $0 |
| 18. SUBTOTAL PROFIT/FEE OBJECTIVE | (Items 16 + 17, col. g) | | | | $0 |
| PART V - COST OF MONEY OFFSET | | | | | |
| (Applicable to Research and Development and Services Weighted Guidelines only.) | | | | | |
| 19. LESS: FACILITIES CAPITAL COST OF MONEY | | | | | $0 |
| | ERROR:#DIV/0! | | | $0 |
| 20. TOTAL PROFIT/FEE OBJECTIVE | (Items 18-19, col. g) | | | | |
Form DOT F 4220.32 (REV. 11/04) (EXCEL) PREVIOUS EDITION OBSOLETE AUTHORIZED FOR LOCAL REPRODUCTION
INSTRUCTIONS
| DOT STRUCTURED APPROACH FOR PROFIT OR FEE OBJECTIVE |
| INTRODUCTORY REMARKS. |
| When using the Form DOT F 4220.32, Weighted Guidelines Profit/Fee Objective, the contracting officer shall categorize the acquisition |
| as a manufacturing, research and development (R&D) or a services effort. To determine to which category a particular acquisition belongs, |
| the contracting officer shall rely on the nature of the work to be performed. When acquisitions involving R&D and services require a |
| significant amount of facilities for efficient contract performance (as determined by the contracting officer), the manufacturing weighted |
| guidelines method may be appropriate. Similarly, certain contracts for the manufacture of small quantities of high technology supplies and |
| equipment may not require a significant amount of facilities. In these cases, an R&D classification may be appropriate. |
| In determining profit or fee, DOT recognizes the tax posture of the business entity. A fair and reasonable management fee to a non-profit |
| organization with a tax-exempt status is considerably lower than a profit/fee to a commercial enterprise with a taxable status. |
| Non-Profit Organizations. |
| The following applies to non-profit organizations: |
| 1. As used in this subchapter, non-profit organizations are defined as those business entities organized and operated exclusively for |
| charitable, scientific, or educational purposes; of which no part of the net earnings accrue to the benefit of any private shareholder or |
| individual; of which no substantial part of the activities include carrying on propaganda, or otherwise, on behalf of any candidate for public |
| office; and which are exempt from Federal income taxation under Section 501 of the Internal Revenue Code. |
| 2. When the Weighted Guidelines Method for arriving at a profit/fee position is used for non-profit organizations, the contracting officer |
| shall make the following adjustments: |
| a. The weight ranges for "Cost risk" (Item 14 on the DOT F 4220.32) shall be replaced with -1 to 0. |
| b. The Total Profit/Fee Objective (Item 20 on the DOT F 4220.32) shall be reduced by up to 1% for manufacturing type efforts and up to 3% |
| for R&D or Services type efforts. |
Commercial Organizations.(See (FAR) 48 C.F.R. 31.103)
| I. CONTRACTOR EFFORT. |
| This factor takes into account what resources are necessary and what the contractor must do to meet the contract performance |
| requirements. To evaluate and assign weight to this factor on the DOT F 4220.32, the cost content of the proposed contract |
| must be analyzed in the following areas: |
A. Material acquisition (e.g., subcontracted items, purchased parts, and other material).
| 1. Consider the managerial and technical efforts necessary for the prime contractor to administer subcontracts and select subcontractors, |
| including efforts to break out subcontracts from sole sources through the introduction of competition. |
| 2. Consider whether the contractor's purchasing program makes a substantial contribution to the performance of a contract through the use |
| of subcontracting programs involving many sources; new complex components, systems, or subsystems; and close surveillance by the |
| prime contractor. |
B. Direct labor (e.g., engineering, service, manufacturing, and other labor).
| 1. Analysis of the various items of cost shall include evaluation of the comparative quality and level of the engineering talents, manufacturing |
| and service skills, and experience to be employed. In evaluating labor for the purpose of assigning profit weights, consideration shall be given |
| to the amount of notable scientific talent, unusual or scarce engineering talent needed, in contrast to journeyman engineering effort or |
| supporting personnel. Higher weights are normally assigned to engineering, professional, or highly technical skill levels and lower weights to |
| semiprofessional or other skill levels. |
| 2. The variety of engineering, manufacturing and other types of labor skills required and the contractor's manpower resources for meeting |
| these requirements shall be considered. |
C. Overhead and general management (general and administrative (G&A)).
| When analyzing overhead and G&A, consider the makeup of these expenses and how much they contribute to contract performance. If the |
| contractor proposes a single indirect cost rate, the contracting officer shall breakout the composite rate or contact the auditor to determine |
| what is in the overhead and G&A expense pools. This information will assist in determining the appropriate weights for overhead and G&A on |
| the DOT F 4220.32. |
D. Other costs.
| Include all other direct costs associated with contractor performance under this item. This includes airfare, lodging, computer support, etc. |
| The assignment of a weight on the DOT F 4220.32 for this factor shall be based on the nature of these costs and how much they contribute |
| to contract performance. |
II. CONTRACTOR RISK.
| The degree of cost risk assumed by the contractor should influence the amount of profit/fee anticipated. Consider the following when |
| determining a weight for cost risk: |
A. Contract type.
| The degree of cost risk is related to the selection of contract type. For example, if a portion of the risk has been shifted to the Government |
| through cost-reimbursement, or other risk reducing measures, the weight assigned to this factor should be less than acquisitions where the |
| contractor assumes most or all of the risk. This is particularly evident when using time-and-material and labor-hour contracts priced on a |
| time and material basis. These contract types shall be considered to be cost-plus-fixed-fee contracts for the purpose of establishing a profit |
| weight in the evaluation of the contractor's assumption of cost risk. |
B. Subcontracting program.
| The contractor's subcontracting program may have a significant impact on the contractor's acceptance of risk under a particular contract |
| type. Analysis is necessary to determine if real cost risk has been transferred to a subcontractor. If this is the case, the contract cost risk |
| weight assigned may be below the range that would normally be assigned. |
C. Definitization.
| For procurement actions that involve definitization of a letter contract, unpriced change orders, etc., where partial performance has occurred, |
| evaluate the effect on total contract cost risk. If it is determined that the total amount of cost risk has been effectively reduced as a result of |
| the partial performance, a lower weight may be appropriate. In addition, evaluate the type of work performed (e.g., complexity) and the type of |
| work remaining to ensure an equitable weight assignment. |
III. CAPITAL INVESTMENTS.
| Form DOT F 4220.34, Contract Facilities Capital and Cost of Money, is used to determine the capital employed and cost of money amounts |
| to be entered on the DOT F 4220.32. |
A. Utilization.
| To evaluate how facilities contribute to the profit objective requires knowledge of the level of facilities utilization needed for contract |
| performance, the source and financing of the required facilities, and the overall cost effectiveness of the facilities offered. Contractors |
| furnishing their own facilities that significantly contribute (as determined by the contracting officer) to lower total contract costs generally |
| receive additional profit/fee. Conversely, contractors that rely on the Government to provide or finance needed facilities normally receive a |
| correspondingly lower profit/fee. The following factors should also be considered: |
| 1. The productivity improvements resulting from the facilities capital investment including the economic value of the facilities capital (e.g., physical |
| age, undepreciated value, idleness, and expected contribution to future Government needs). |
| 2. The degree to which the capital investment has direct, identifiable, and exceptional benefits to the Government, such as: new investments in |
| state-of-the-art technology which reduce acquisition cost or yield other tangible benefits such as improved product quality or accelerated deliveries, |
| or investment in new equipment for R&D applications. |
B. New Investment.
| To assist in evaluating new investment, the contracting officer should request the contractor to submit reasonable evidence that the new facilities |
| investment will result in benefits to the Government. |
IV. SPECIAL FACTORS.
A. Productivity.
| The purpose of this factor is to recognize a prospective contractor's investment in modern cost-reducing facilities and other improvements in |
| efficiency. This factor is applied when the acquisition is a follow-on manufacturing effort, actual cost data are available to establish a baseline, and |
| changes in item configuration are not large enough to invalidate price comparability. The dollar amount inserted under the measurement base of the |
| DOT F 4220.32 is based on the estimated cost reduction that can be attributed to productivity gains. |
B. Independent development.
| The purpose of this factor is to recognize independent research and development on the part of the prospective contractor pertaining to the end |
| item being procured. To determine the appropriate weight to assign this factor on the DOT F 4220.32, it is important to evaluate whether the |
| development cost was recovered directly or indirectly from Government sources. This factor is applied when the item is important to the |
| advancement of the DOT mission and the prospective contractor demonstrates initiative in determining the need and application of the |
| developed item. |
C. Other.
| 1. Socioeconomic programs. This factor covers a number of special circumstances or particular acquisitions. It relates to the prospective |
| contractor's participation in Federal socioeconomic programs. In addition to providing a reward for unusual initiative in supporting Government |
| socioeconomic programs, failure or unwillingness on the part of the prospective contractor to support these programs should be viewed as |
| evidence of poor performance for the purpose of establishing this profit/fee objective factor. |
| 2. Performance. The purpose of this factor is to evaluate the prospective contractor's past and present performance in such areas as: product |
| quality, meeting specifications and contract schedules (including the administrative aspects of performance), efficiency in cost control (including the |
| need for and reasonableness of costs incurred) especially under cost reimbursement contracts, accuracy and reliability of previous cost estimates, timely |
| processing of changes, standards of good workmanship, history for reasonable and cooperative behavior and commitment to customer satisfaction, and the |
| prospective contractor's business-like concern for the interest of the customer. |