Attachment 3 Cost Proposal Instructions Non-FAR Other Transactions 2373 Non-APC.pdf

AFRL/RVKC RDKC Cost Proposal Instructions

COST PROPOSAL

INSTRUCTIONS

Non-Procurement (Non-FAR) Contracts/Agreements

Other Transactions (OTs) Procurement for Experimental Purposes

Contracts

AFRL/RVKC & RDKC

3550 ABERDEEN AVE SE

KIRTLAND AFB, NM 87117

Revised: 2 Apr 2021 Page 1 of 12

AFRL/ RVKC RDKC Cost Proposal Instructions

Revised: 2 Apr 2021 Page 2 of 12

COST PROPOSAL ADEQUACY AND STRUCTURE

1. GENERAL INSTRUCTIONS:

a. In response to this Request for Proposal (RFP), the offeror shall prepare and submit financial or cost records and supporting attachments to substantiate their cost proposal.

Note: if the offeror meets the definition of “Nontraditional Defense contractor”, than the offeror should submit information similar to “data other than certified cost or pricing data”. A Nontraditional Defense contractor is an entity that is not currently performing and has not performed, for at least the one-year proceeding the solicitation of sources by DoD for the procurement or transaction, any contract or subcontract for DoD that is subject to full coverage under the cost accounting standards prescribed pursuant to 41 U.S.C 1502 and the regulations implementing such section. If the offeror does not meet the definition of “Nontraditional Defense contractor” than the offeror should submit “data other than certified cost or pricing data”.

(1) The responsibility for providing a well-prepared and fully supported cost proposal lies solely with the offeror. The basis and rationale for all proposed costs shall be provided as part of the proposal so that the Agreements Officer (AO) has the information necessary to evaluate the reasonableness of the proposed price.

(2) If the offeror is unsure as to whether what type of financial or cost records and supporting attachments is required in support of the proposal, the offeror shall contact the Agreements Officer as soon as possible after receipt of the RFP, but in any case prior to proposal submittal, to resolve the questions.

(3) Any significant deviations from the requirements of these instructions will require immediate correction and does not relieve the offeror from the responsibility to comply with any special requirements of the solicitation.

(4) The offeror is encouraged to flow down these instructions to subcontractors/affiliates required to submit financial or cost records and supporting attachments in support of this RFP.

b. The offeror is advised that the Agreements Officer may find costs associated with revision/rework of inadequate cost proposals unreasonable, and will consider the nature and extent of any proposal inadequacies when assessing/negotiating profit (if fee/profit is applicable).

NOTE: Poor quality, untimely proposals, failure to provide an adequate analysis of subcontractor/affiliate costs, hindrance of the evaluation and negotiation of the proposal, and submission of an inadequate proposal will adversely impact the resultant fee amount (if fee/profit is applicable).

c. Cost Proposal Requirements. The following also apply to the cost proposal submitted in response to this RFP.

(1) Breakout by Year. If the proposal includes more than one priced Contract Line Item Number (CLIN), the proposal shall include a breakout of CLIN prices by cost element by Offeror Fiscal Year (OFY). The proposal shall define the timeframe of the Offeror Fiscal Year (for example, January – December).

Revised: 2 Apr 2021 Page 3 of 12

(2) If the proposal includes more than one priced CLIN, recurring/non-recurring costs shall be identified for each priced CLIN.

(3) Provide complete responses to the attached Contractor Information document for the Prime and each Subcontractor/affiliate. If preferred by the offeror, the responses to the information requested may be provided on a similar form or listed on the first page of the cost proposal. (Attachment 1)

(4) Indicate whether Government approval of respective accounting, estimating, and purchasing systems has been obtained. If so, provide evidence of such approval.

(5) Round all dollar amounts to the nearest dollar. Round all labor rates to the nearest penny.

(6) Furnish Tables 1 thru 4 (sample tables are at paragraph 3 below), or in the contractor’s format containing the information outlined in these instructions, for the entire performance period (supported by rationale required by paragraph 2) in hard copy and on CD as IBM PC compatible as described in paragraph 1.e., Submission Of Electronic Cost Model, below.

d. Submission of Electronic Cost Model. The proposal submission shall include an electronic cost model with active formulas demonstrating the mathematical calculation of the proposed cost (in Microsoft Excel format). The electronic cost model shall include build-up by year of cost in total and by CLIN, consistent with the yearly breakout required by paragraph d(1) of these instructions, or as directed by the Agreements Officer. The electronic cost model shall roll up to an annual and total program summary by cost element. All information supporting each CLIN should be visible and verifiable in the electronic cost model. The formulas included in the electronic cost model shall not be locked, and the model shall be editable by the Government. This requirement also applies to subcontracts exceeding the TINA threshold.

2. PROPOSED COST ELEMENTS: The detail required for each major cost element is described below.

Address all cost elements applicable to the proposed effort and provide a narrative to support the basis of estimate. Explain the basis of estimate for each cost element to include the basis for proposed rates. As applicable, provide the following information for each cost element. If a portion of the required information is not applicable for a particular cost element, so state.

a. DIRECT COSTS:

(1) DIRECT LABOR:

(a) As part of Table 1, list the proposed hours, rates, and calculated amounts for each direct labor category by OFY, by CLIN. If separately priced CLINs apply, also include a roll-up to Total Program Summary.

(b) As part of the basis of estimate narrative, provide rationale for proposed hours and labor mix. Explain how the proposed labor hour skill mix has been derived. Explain why the cost element requires an average, higher, or lower than average skill mix. (Information such as historical cost information, judgment, analogy to other similar efforts, etc. is generally accepted as a method of projecting direct labor hours).

(c) Provide the base labor rates for each category. If composite or blended rates are used, Revised: 2 Apr 2021 Page 4 of 12 provide the calculations used in deriving the composite rates. Identify the source of the proposed rates and explain the methodology used to project each rate for subsequent years. If applicable, identify the proposed escalation factors applied to future estimates and rationale for the proposed factors. Submit source data for proposed direct labor rates. If evidence of Forward Pricing Rate Agreement (FPRA), Forward Pricing Rate Recommendation (FRPR), or recent Defense Contract Audit Agency (DCAA) audited direct labor rates are not available for submission, submit the following source data listed in order of preference, current payroll data, or signed employee agreements, or salary survey, etc. to support proposed direct labor rates

(2) SUBCONTRACTS/INTER-ORGANIZATIONAL TRANSFERS (IOTs): NOTE: Highly recommend the offeror provide these cost proposal instructions to all subcontractors. Fully disclosed Subcontractor/IOT proposals are required for ALL subcontractors (including Tables 1 thru 4), and must be submitted to the government by the closing date identified in this solicitation. It is especially important that adequate data on subcontractors be provided. Rates are particularly important. Note that the absence of adequate data on subcontractors is a frequent source of prime contractor inadequate proposals and avoidable delay in contract award.

(a) As part of Table 1, list each subcontractor/IOT cost separately by OFY by CLIN.

(b) Provide a list of anticipated subcontractors/IOTs using Table 2.

(c) Provide an analysis of the proposed subcontract concerning the reasonableness, realism and completeness of each subcontractor’s proposal. Explain the use of decrement factors applied to the subcontract costs (if applicable). If the analysis is based on comparison with prior prices, identify the basis on which the prior prices were determined to be reasonable. The cost analysis should include, but not be limited to, an analysis of: materials, labor, travel, other direct costs and proposed profit or fee rates. Differences between the subcontractor/IOT proposed amounts and the prime contractor proposed amounts must be fully explained.

(d) Obtain competition to the maximum extent practicable when selecting subcontractors.

(e) If the offeror has obtained competitive quotes from potential subcontractors, provide copies of the quotes.

(f) If the offeror has selected other than the low subcontractor bid for inclusion in their proposal or intends to award the subcontract effort on a sole-source basis, provide rationale for that decision.

(g) If the subcontractor is not yet determined, include a list of the tasks to be performed, an explanation of the method used to estimate the subcontract price, and the reason proposals/quotes cannot be requested/provided at this time.

(h) If the proposed subcontractor’s fee rate is higher than the prime’s fee, provide rationale as to why the subcontractor’s risk is greater than the prime’s (if fee/profit is applicable).

(i) If the Inter Organizational Transfer is proposed at other than cost, provide support.

(3) CONSULTANTS:

(a) If the offeror proposes the use of consultants, provide the following FOR EACH NAMED

CONSULTANT:

Revised: 2 Apr 2021 Page 5 of 12

1. The specific project or area in which such services are to be used.

2. Identification of all cost elements included in the consultant's costs. (i.e.: number of hours, the consultant's rate per hour, plus a detailed explanation of any costs that would be charged over and above labor costs.

3. A signed consulting agreement between the offeror and the consultant to include a statement from the consultant that the proposed rate is a "most favored customer rate,” or the reason such a rate was not offered.

4. A determination by the offeror that the rate proposed is comparable to the rates of other consultants doing similar types of work.

(b) In those cases where a consultant IS NOT NAMED but the offeror realizes a need will exist, support the proposed consultant rate by supplying a basis of estimate and source documentation to support the proposed rate.

(4) MATERIALS (if not Baselined):

When the proposal includes material costs, the proposal shall include a consolidated bill of materials (CBOM) at the total contract level in an electronic, sortable format Excel spreadsheet. As part of Table 1, list total material/equipment costs by OFY by CLIN. Using Table 4, provide a more detailed consolidated priced summary of individual material/equipment quantities and the basis for pricing by OFY, by CLIN. As part of the basis of estimate narrative, provide information regarding the rationale/methodology used to derive the proposed material/equipment estimate.

(a) When the amounts proposed in the CBOM include application of escalation, the proposal shall identify the base value, the escalation rate(s) used, and the escalation amount associated with each item escalated.

(b) When the proposed amount is based on historical data which has been adjusted (for example, for differences in quantity), the CBOM shall clearly identify the adjustments made to the historical data and the reason for each adjustment.

(c) Include raw materials, parts, components, assemblies, special tooling or test equipment, and services to be produced or performed by others.

(d) Provide copies of supporting documentation (Purchase Orders, Vendor Quotes, Invoice Prices, Catalog Prices, or Historical Information) to substantiate a MINIMUM of 70% of the proposed material costs. Specifically, provide supporting documentation for the highest unit prices.

(5) OTHER DIRECT COSTS (ODCs) (if not Baselined): As part of Table 1, list ODC costs by OFY by CLIN. As part of the basis of estimate narrative, separately identify other direct costs. Provide rationale for proposed other direct costs.

(a) ODCs - Travel

1. Identify the following information for each trip: location of origin and destination; number of travelers; duration; airfare cost; rental car cost; per diem (meals and lodging) cost; any other

Revised: 2 Apr 2021 Page 6 of 12 costs.

2. As part of Table 1, list travel costs by OFY by CLIN. Using Table 3, separately identify costs for travel. Note that Table 3 is a summary format and may be expanded to include more detailed travel rate information and calculations. As part of the basis of estimate narrative, provide a listing of all proposed travel rates (if not already provided as part of Table 3). Provide the purpose/rationale for the proposed trips, basis for the proposed travel rates.

(b) ODCs - Other

1. Using Table 4, identify and provide a detailed description of any other direct costs that do not fit into the ODC categories above, including the basis for determining those costs (e.g., vendor quotes, catalog pricing data, company estimating procedures, etc.).

2. Provide an explanation/rationale for all other proposed ODCs.

b. INDIRECT COSTS:

(1) As part of Table 1, list the proposed base, rate/factor and calculated amount for each indirect cost by OFY, by CLIN.

(2) As part of the basis of estimate narrative, identify all indirect cost rates/factors (such as Fringe Benefits, Labor Overhead, Subcontractor/Material Overhead, G&A, Facilities Capital Cost of Money (FCCOM), etc.) and the applicable allocation bases.

(3) Identify the basis of proposed rates (e.g., FPRA and date of agreement, bidding rates and submission date, actual rates and effective date, billing rates and approval date, etc.). Submit source data for all proposed indirect rates. If evidence of FPRA, FPRR, approved Provisional Billing Indirect Rates, or recent DCAA audited indirect rates are not available for submission, submit the following source data in order of preference, certified incurred cost submissions, or budgetary data to include details of the indirect rate cost pools, or supporting historical trend data.

(4) Address whether or not the proposed indirect rates consider a change in Business Base pending award of this effort. Provide support data for the impact to indirect rates if applicable.

(5) If proposing FCCOM, submit a properly executed DD Form 1861. Provide the basis for proposed percentage of land buildings and equipment.

(6) Identify any other indirect cost element being proposed which has not been included above and identify the various cost elements for which the rate is applied.

c. COST ESTIMATING RELATIONSHIPS (CER): All costs proposed on the basis of CERs shall be fully supported. The proposal shall identify the basis for the proposed rate, shall identify the base to which the rate is applied, and shall clearly demonstrate the calculation of proposed costs based on CERs.

d. FEE: Identify the Fee rate(s) and the total Fee cost proposed and identify the various cost elements for which the Fee is being applied. Explain the basis for the proposed rate and application base.

e. NEW MEXICO GROSS RECEIPTS TAX (NMGRT):

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(1) NMGRT costs may or may not apply to this effort. Effective 1 January 2016 and prior to January 1, 2031, the New Mexico Taxation and Revenue Department (TRD) has implemented a Gross Receipts Tax deduction for R&D efforts (reference Gross Receipts and Compensating Tax Act Regulations, Section 7-9-115, Deduction--Gross Receipts Tax--Goods and Services for the Department of Defense related to Directed Energy and Satellites (http://www.tax.newmexico.gov/recent-regulation-changes.aspx). It is the responsibility of the prime contractor to determine the applicability of the deduction to potential subcontractors.

(2) For assistance in determining the extent to which NMGRT may or may not apply and applicable rates, contact the New Mexico Taxation and Revenue Department, 5301 Central Ave., NE, PO Box 8485, Albuquerque, NM 87198, (505) 841-6200, http://www.tax.newmexico.gov/Businesses/gross-receipts.aspx.

f. BASELINED OTHER DIRECT COSTS (ODCS) if specified in the solicitation: Acknowledge whether the offer complies with the CLIN description of baselined ODCs.

g. INCURRED COSTS (if applicable): Applies to modifications to existing contracts/agreements. For any costs incurred prior to proposal submission, the proposal shall identify actual hours and cost incurred as well as hours/costs to complete and the time phasing associated with these hours/costs. This information/data shall be consistent with the yearly breakout required by paragraph d.(1) of these instructions.

h. SUBMISSION OF HISTORICAL ACTUAL COSTS INCURRED (if applicable). Applies to follow- on efforts only:

(1) The contractor shall provide the following information for the previous acquisition:

(a) contract number (including modification number if applicable) or other identifier;

(b) contract type;

(c) contract quantity;

(d) contract price; and

(e) actual cost incurred, including a breakout of actuals as recurring/non-recurring costs. If performance is not complete on any of the specified contract actions, provide an estimate to complete and the basis for that estimate.

(2) The contractor shall also request that its top five major sole source subcontractors provide the information listed in the above paragraphs (i) a. through e. on prior contracts for items the prime is purchasing from the subcontractors for this effort. If a subcontractor’s information on prior actuals is not included in the prime’s proposal, the proposal should identify status and anticipated receipt date(s).

If the subcontractor deems the information proprietary, the subcontractor may submit the information directly to the CO.

i. COMMERCIAL ITEM CONSIDERATIONS (if applicable):

(1) The offeror’s proposal shall provide support for any subcontractor Commercial Item Determinations (CID), addressing, at a minimum, the following:

(a) A description of the supplies or services;

(b) Specific identification of the type of commercial item claim and the basis on which the item http://www.tax.newmexico.gov/Businesses/gross-

Revised: 2 Apr 2021 Page 8 of 12 meets the definition; and

(c) For modified commercial items, classification of the modification(s) with supporting rationale as either:

Of a type customarily available in the commercial marketplace; or

A minor modification of a type not customarily available in the commercial marketplace made to meet Federal Government requirements.

(2) For proposed subcontract commercial items “of a type”, or “evolved” or modified, the offeror shall provide a technical description of the differences between the proposed item and the comparison item and thoroughly address the cost differences between the proposed item and the comparison item.

(3) The proposal shall include, or the offeror shall make available, financial or cost records and supporting attachments to establish price reasonableness of the proposed subcontract commercial item by supplying:

(a) Information/data related to competition, if competition is the offeror’s basis for asserting the reasonableness of the proposed subcontract price.

(b) Information/data related to prices (sales data, market price assessments, etc.). Note that subcontractors may submit sales data directly to the CO if the subcontractor deems the data proprietary.

(c) The prime contractor’s or higher tier subcontractor’s price analysis and price reasonableness determination for the commercial subcontract.

(d) Cost information/data (cost element breakdown and supporting documentation)). Instances where cost information may be required include but are not limited to commercial items offered but never actually sold to the public, “of a type” commercial items, or when sales data is limited and/or not recent and/or not for the same/similar quantities. Note that the preferred method of establishing the price reasonableness of commercial items is to obtain commercial sales data. It is recognized that other methods, such as market price assessment data or evaluation of cost data, are also acceptable when prior sales data cannot be obtained. Sales data shall (1) demonstrate sales to the general public; (2) be current; and (3) where possible, be in like quantities. Items sold to state, local, or foreign governments or items sold with applications only to state, local, or foreign government or US Government end items are not considered to be sales to the general public unless the proposed commercial item meets the commercial item definition.

j. ADDITIONAL COST/PRICE PROPOSAL REQUIREMENTS: N/A

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1. SAMPLE COST PROPOSAL TABLES (Revise to comply with established accounting practices):

a. Table 1 (Sample): Cost Element Summary. If applicable, list each Subcontractor and IOT separately.

SAMPLE Table 1 - COST ELEMENT SUMMARY

COST ELEMENT

OFY YYYY

(DD MMM YYYY – DD MMM YYYY)

OFY YYYY

(DD MMM YYYY – DD MMM YYYY)

TOTAL PROPOSED

BASE RATE AMOUNT BASE RATE AMOUNT BASE AMOUNT

Direct Labor Labor Category #1 1,200.0 $ 20.00 $ 24,000 1,200.0 $ 20.00 $ 24,000 2,400.0 $ 48,000 Labor Category #2 2,400.0 $ 30.00 $ 72,000 2,400.0 $ 30.00 $ 72,000 4,800.0 $ 144,000 Labor Category #3 600.0 $ 40.00 $ 24,000 600.0 $ 40.00 $ 24,000 1,200.0 $ 48,000

TOTAL DIRECT LABOR 4,200.0 $ 120,000 4,200.0 $ 120,000 8,400.0 $ 240,000

Labor Overhead $ 120,000 50.00% $ 60,000 $ 120,000 50.00% $ 60,000 $ 240,000 $ 120,000 Fringe $ 180,000 20.00% $ 36,000 $ 180,000 20.00% $ 36,000 $ 360,000 $ 72,000

SUBTOTAL LABOR $ 216,000 $ 216,000 $ 432,000

Subcontracts – IOTs $ 200,000 $ 200,000 $ 400,000 Material $ 100,000 $ 100,000 $ 200,000 Material Overhead $ 100,000 3.00% $ 3,000 $ 100,000 3.00% $ 3,000 $ 200,000 $ 6,000 ODC - Travel $ 8,000 $ 8,000 $ 16,000 ODC - Consultants 600.0 $ 100.00 $ 60,000 600.0 $ 100.00 $ 60,000 1,200.0 $ 120,000 ODC - Other $ 3,000 $ 3,000 $ 6,000

SUBTOTAL $ 590,000 $ 590,000 $ 1,180,000

G&A $ 590,000 10.00% $ 59,000 $ 590,000 10.00% $ 59,000 $ 1,180,000 $ 118,000

SUBTOTAL $ 649,000 $ 649,000 $ 1,298,000

FCCOM - Overhead $ 120,000 1.00% $ 1,200 $ 120,000 1.00% $ 1,200 $ 240,000 $ 2,400

FCCOM - G&A $ 590,000 0.10% $ 590 $ 590,000 0.10% $ 590 $ 1,180,000 $ 1,180

FEE $ 649,000 6.00% $ 38,940 $ 649,000 6.00% $ 38,940 $ 1,298,000 $ 77,880

TOTAL COST & FEE $ 689,730 $ 689,730 $ 1,379,460

NMGRT - Kirtland AFB $ 489,730 6.0625% $ 29,690 $ 489,730 6.0625% $ 29,690 $ 979,460 $ 59,380 NMGRT - Albuquerque $ - 7.0000% $ - $ - 7.0000% $ - $ - $ - NMGRT - Out-of-State $ 200,000 5.1250% $ 10,250 $ 200,000 5.1250% $ 10,250 $ 400,000 $ 20,500

TOTAL PRICE $ 719,420 $ 719,420 $ 1,438,840

b. TABLE 2 (Sample): SUBCONTRACTORS/IOTs

SAMPLE Table 2 - PRICE SUMMARY for SUBCONTRACTORS/IOTs & CONSULTANTS

NAME

TASKS

CONTRACT

TYPE

QUOTED

PRICE

EVALUATED

PRICE

DIFFERENCE

% of

WORK

TOTALS $ - $ - 0.00%

c. TABLE 3 (Sample): TRAVEL

SAMPLE Table 3 - Travel

OFY

From

To

Purpose

No.

Trips

No.

Tvlrs

No.

Days

Per Diem

Lodging

Rental Car

Airfare

Total

YYY1

YYY1

YYY1 Subtotal: $ -

YYY2

YYY2

YYY2 Subtotal: $ -

TOTAL TRAVEL: $ -

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d. Table 4 (Sample): BILL OF MATERIALS & ODCs (other than Travel & Consultants)

SAMPLE Table 4 - MATERIALS & OTHER ODCs

MATERIALS

Item OFY Description Qty Unit Price Total Price Vendor/Source Basis of Estimate Totals

1 YYY1

3 YYY1

4 YYY1

5 YYY1

6 YYY1

7 YYY1

OFY YYY1 Subtotal: $ -

8 YYY2

9 YYY2

10 YYY2

11 YYY2

12 YYY2

OFY YYY2 Subtotal: $ - Total MATERIALS Proposed: $ -

ODCs

Item OFY Description Qty Unit Price Total Price Vendor/Source Basis of Estimate Totals

1 YYY1

3 YYY1

4 YYY1

5 YYY1

6 YYY1

7 YYY1

OFY YYY1 Subtotal: $ -

8 YYY2

9 YYY2

10 YYY2

11 YYY2

12 YYY2

OFY YYY2 Subtotal: $ - Total ODCs Proposed: $ -

Attachment 1

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