ALICE_Cost_Charts.pdf

Cost/Price Proposal Overview

Aircraft Maintenance, Logistics, Integration, Configuration Management, and Engineering

(ALICE)

Herb Rocha Cost/Price Analyst

August 1, 2016

Agenda

• SEB Pricing Process

• Government Resource Estimate (GRE)

• Workbook Templates Overview

– Workbook Process Flowchart

– Workbook Technical Template

– Workbook Cost Templates

• Common Cost/Price Volume Errors

The SEB Pricing Process

• What does the SEB do with your cost/price proposal?

– Read all narrative portions of Cost Volume

– Validate all Offerors’ Excel Pricing Models (EPMs)

– Integrate EPMs of the prime and major subs

– Test EPMs

– Make probable cost/cost realism adjustments (if necessary)

• Error Corrections/Reconciliations

• Direct Labor Rate and/or Indirect Rate Adjustments

• Staffing Adjustments (FTEs and/or Skill Mix)

• Non-Labor Resource Adjustments

The SEB Pricing Process (Con’t)

• Examples of probable cost/cost realism adjustments:

– Error Corrections/Reconciliations

• Mathematical corrections

• Formula error corrections

• Linking error corrections

• Subcontractor FBRs utilized by the Prime Offeror do not match the FBRs proposed by the Subcontractor

– Direct Labor Rate Adjustments

• Incumbent Labor Rates – Where an Offeror has indicated the intention of both retaining incumbents and paying incumbent direct labor rates, and has not utilized the incumbent direct labor rate, the Offeror’s proposed direct labor rate will be adjusted to reflect the incumbent direct labor rate (reference the EPM Templates “TC(d) – Incumbency Assumptions” and “Incumbency Retention and Pay (IRAP)”).

Scenario A: Offeror proposes 100% incumbent retention for SLC

“X” and indicates intention to pay incumbent direct labor rates to 100% of incumbents, but does not utilize the incumbent direct labor rate. 100% of the Offeror’s proposed direct labor rate will be adjusted to reflect the incumbent’s direct labor rate.

– Direct Labor Rate Adjustments (Con’t)

• Incumbent Labor Rates (Con’t) Scenario B: Offeror proposes 100% incumbent retention for SLC

“X” and indicates intention to pay incumbent direct labor rates to 75% of incumbents, but does not utilize the incumbent direct labor rate. 75% of the Offeror’s proposed direct labor rate will be adjusted to reflect the incumbent’s direct labor rate. The remaining 25% of the proposed direct labor rate will not be adjusted to reflect the incumbents proposed direct labor rate, but will be evaluated for reasonableness based upon the Offeror’s supporting rationale and/or documentation provided.

– Direct Labor Rate Adjustments (Con’t)

• Incumbent Labor Rates (Con’t) Scenario C: Offeror proposes 10% incumbent retention for SLC

“X” and indicates intention to pay incumbent direct labor rates to 50% of incumbents, but does not utilize the incumbent direct labor rate. 5% (10% x 50% = 5%) of the Offeror’s proposed direct labor rate will be adjusted to reflect the incumbent’s direct labor rate. The remaining 95% of the proposed direct labor rate will not be adjusted to reflect the incumbents proposed direct labor rate, but will be evaluated for reasonableness based upon the Offeror’s supporting rationale and/or documentation provided.

– Direct Labor Rate Adjustments

• Other Than Incumbent Labor Rates – Use latest Department of Labor (DOL) wage determination rates and/or area survey for non-exempt labor categories. Use current labor market surveys for exempt labor categories.

– Indirect Rate Adjustments

• Use DCAA and/or DCMA indirect rate information, where available. Use information contained on the Offeror’s Overhead and G&A templates.

– Technical/Management Evaluation (Staffing and NLRs)

• Based on all technical or management weaknesses related to resources (FTEs and/or Skill Mix and/or NLRs).

Discrepancies between Technical and Cost/Price Volumes.

• Develop Pricing Charts for Presentation to the Source Evaluation Board (SEB) & the Source Selection Authority (SSA)

– Proposed Cost vs. Probable Cost and Delta

– Rationale for Probable Cost Adjustments

Government Resource Estimate

(GRE)

• What is the GRE?

– Government’s best estimate of resources (FTE and/or skill mix) necessary to perform the baseline effort

– Based on historical usage factors

– Grass roots estimate, not budgetary

• GRE will be provided to Offerors

– Applicable to the effort over a twelve month period (CY 1)

– FTEs and skill mix provided for baseline effort

– NLRs provided for baseline effort

• The GRE is not intended to influence the Offeror’s proposed estimates. Offerors shall develop their own estimates that are:

– Consistent with Offeror’s Management Approach

– Consistent with Offeror’s Technical Approach

Workbook Templates Overview

• Workbook Process Flowchart

– Completion Form Baseline Effort

(Con’t)

• Workbook Process Flowchart

– IDIQ Effort

Fully Burdened Rates Template (FBR)*

(Major Subcontractor)

Fully Burdened Rates Template

(FBR)*

(Prime Contractor)

FBR from Minor Subcontractor

Template (MST)

IDIQ Summary Cost Template – Specified Resources Template

(ISCT– SR JSC)

IDIQ Summary Cost Template – Specified Resources Template

(ISCT- SR ELP)

IDIQ Summary Cost Template – Specified Resources Template

(ISCT– SR LARC)

* FBR includes check boxes applicable to JSC, El Paso and Langley

Conversion Fully Burdened Rates

Template

(CFBR)

Incumbency Retention and Pay Template (IRAP)*

• Workbook Technical Template

– Technical Resources Summary Template – Completion Form (TRST – CF)

• One template that covers all contract years.

• Functions as the link between Volume I – Mission Suitability and Volume III – Cost/Price Proposal

– Technical templates are required from Prime Offeror only

• Workbook Cost Templates

1. Completion Form Baseline Effort Templates

• *Labor Pricing Template (LPT)

• *Overtime Pricing Template (OPT)

• **Major Subcontractor Cost Summary Template

(MSCST)

• ***Prime Cost Summary Template (PCST)

*Required from Prime and each Major Subcontractor ($5M value per contract year or >)

**Required from each Major Subcontractor ($5M value per contract year or

***Required from Prime only

• Workbook Cost Templates (Con’t)

2. IDIQ Supporting Templates

• *Incumbency Retention and Pay Template (IRAP)

– Also supports the LPT and OPT for Completion Form

• *Fully Burdened Rates Template (FBR)

• ***Minor Subcontract Template (MST)

*Required from Prime and each Major Subcontractor ($5M value per contract year or >)

• Workbook Cost Templates (Con’t)

3. IDIQ Template

• ***IDIQ Summary Cost Template – Specified Resources (ISCT– SR XXX)

– Government Specified Hours (Anticipated Future Task Orders, although not guaranteed)

• Workbook Cost Templates (Con’t)

4. Other Templates

• *Overhead Template (OHT)

• *General & Administrative Template (GAT)

• *Total Compensation Templates [TC(a), TC(b), TC(c), and TC(d)]

• *Cognizant Audit Office Template (CAOT)

• ***Phase-in Template (PIT)

*Required of Prime and each Major Subcontractor ($5M value per contract year or >)

**Required of Prime only 17

Common Cost/Price Volume Errors

• Proposals with omissions:

– Lack of detail on Overhead, G&A and Other Indirect Rates

– Lack of narrative supporting rationale

• Logic Issues:

– Inconsistent content within the proposal

• Failure to follow template instructions:

– Using hard numbers instead of formulas and/or links where appropriate

– Placing Prime or Major Subcontractor FBRs where Team

Composite FBRs are Required

– Proposed FBRs in Cost/Price Volume do not match the

Section B FBRs identified in the Model Contract

• Discrepancies and/or Lack of reconciliation between different areas of the Offeror’s proposal

– Technical Approach

– Management Approach

– Cost/Price Volume

– Major Subcontractor data submitted to the Government versus Major Subcontractor data utilized in the Prime’s Proposal

– Basis of Estimate (BOE) not provided or inadequate

• BOE should be specific, clear, and detailed

Common Cost/Price Volume Errors (Con’t)

Cost/Price Proposal

Questions?