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Patrick Mathern

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    Santa Barbara, CA
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    Cost analysis, price analysis, supplier rate and factor audits, business system reviews, training, consulting, exchanging ideas, networking

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  1. Hi Caitlin - If you've allowed the sub to include G&A on travel, then it's the sub's G&A rate that would be applied. This is the cost to you, the Prime, which is what is then passed to the government. Applying the sub's G&A to travel does not impact whether or not you need to submit an incurred cost submission. However, I'm not familiar with the specifics of your contract, so you will want to get clear with your contracting officer to understand whether you have ICS requirements on the travel line or not. My guess is that they would have structured the contract in such a way to avoid an ICS on this piece, but you'll want to clarify.
  2. I am attempting to research the negotiated fee % paid by DoD (DARPA, more specifically) on CPFF contracts. I've searched records on FPDS and SAM - I don't see anywhere that I can obtain the fee data as a percent of cost. This leads me to believe my only path forward is a FOIA request. Does anyone have insight into... 1. Whether this data already exists somewhere 2. Whether this is a valid FOIA request 3. What agency this should be directed to
  3. @Retreadfed and @Vern Edwards: Thanks for that input - are you saying that firms were open to R&D contracts as a way to bring in revenue in lean times? Or what did the contractors get out of the deal that made it attractive? Were these firms in question new to government contracting, or was having ongoing government work part of their strategy?
  4. To take a step back and clarify, I'm specifically talking about profit as a tool to increase interest in DoD R&D efforts. Increasing profit is likely to increase that interest, but I'm not saying it's the only lever or that it's the even most impactful lever. You mentioned data rights, Vern, and I agree that this is a big factor in whether a firm decides to work with the government or not. There are other factors as well. Where the WGL comes into play is how contractors and contracting officers view it as being directly related to the effort required. Does it ask the right questions and produce the answer expected given the situation? Small businesses surely don't believe that to be the case. Who else might feel slighted and why? That's where I would like to go. Have thoughts on this? This group absolutely has the depth of knowledge to shed light on this.
  5. I can’t speak for “Industry” as a whole at this point. This is exactly what we hope to ascertain in the near future. We are designing a survey that hopes to get some insight into this and other considerations regarding profit that results from WGL. “Alternate approaches” to the WGL have been mentioned a few times in this thread, but I’ve yet to see specific examples presented that meet FAR/DFARS requirements. Anybody have one they could share?
  6. I appreciate this perspective, but I think there’s a different incentive that the DoD is currently concerned with that this comment doesn’t consider: Current profit levels attract current offerors. Raising profit levels could inspire new entrants to the DoD marketplace (specifically in R&D scenarios). I don’t have hard evidence to support this, Vern, but basic economic theory holds that if you offer more money to do a job, it will be more interesting to a larger group of potential workers.
  7. Good point - what are some other areas that the WGLs miss the mark, especially in the case where the government is trying to entice new commercial entities to take on CPFFs?
  8. SpendLogic has received an award from DARPA to research the government's calculation and application of profit objectives, as they relate to R&D contracts. Currently, this is accomplished using the Weighted Guidelines. In industry, the Weighted Guidelines is generally regarded as a game - a subjective set of rules that have little or no bearing on reality. Similarly, in a conversation with one Contract Specialist recently, it was noted that the WGL "uses magic to come up with a profit value." This comment was tongue-in-cheek, but the point made aligned with the position of Industry: The values resulting from a Weighted Guidelines analysis are generally arbitrary and mysterious with little or no obvious relation to the work being completed. I'm looking for anyone that might have knowledge on how the WGL calculations came to be. For example, WHY is the standard value for performance risk 5%? Why not 4.72% or 6.39%? I'm familiar with the regulatory history, but would like to know more about the origins of the calculations themselves. Anybody have this knowledge or source material tucked away somewhere?
  9. Regarding this... I would never recommend sending your weighted guidelines. There are too many pitfalls and a good negotiator will be able to shoot down your points without much effort. This is subjective, but here's my two cents based on experience: Save profit for last and be prepared to start talking bottom-line pricing before too long. It's not the norm to come to full agreement on all elements of cost and profit. Bottom-line negotiations allows each side to get what they need out of the agreement and show whatever profit they want.
  10. Is certified cost or pricing data (CCOPD) required in this situation? At the very least, this is a poor explanation. If no CCOPD requirement applies, then as Joel notes, the author should at least provide an explanation of the data that they used to arrive at this conclusion. Same applies if CCOPD is required, but the requirement for supporting data is greater. As for the details above, you may be going too deep for what's required. If the author can cite and provide the supporting data (and any calculations) that led to their stated conclusion, that should be sufficient.
  11. This is less of a FAR question and more of a contract question. What does your RFP say? Most contractors state in the RFP to subs that providing a proposal does not entitle them to a contract. Without a contract, there’s no basis for payment.
  12. The DCMA CIG Handbook does cite "uses same production line as commercial items" as support for an assertion of commerciality, but it is not an acceptable basis in and of itself for claiming commerciality. Your first big hurdle is to be able to draw a connection between the item and a commercial market for this or similar items. If you can't do this, the likelihood of withstanding scrutiny of "the customarily used by non-government..." part of the definition is extremely low and it's likely to be rejected as invalid. The supplier should walk through each phrase of the definition they're claiming and provide support on how they meet each.
  13. If your Prime is FFP, use the same with your subs and leave it to them to figure out their indirects and profit. Your budget is what it is...they can either do the job for that price or they can't. Their rates are irrelevant as long as they provide the contractual deliverable. No need to get hung up on "mandating" rates...they are under no obligation to do the job if it loses money for them.
  14. Not sure if this belongs here or on a new thread, but regarding flowing down to subcontractors, are there exceptions to 52.204-24 and 52.204-25 based on either value or commercial item status? Would it apply to a low-value COTS purchase from an online retail site?
  15. So the short answer is "likely yes." If you determine that it's subject to Certified Cost or Pricing Data (exceeds $2M and is not otherwise exempt based on flowdown or exemptions listed in 15.403-1 shown here) then you'll need to write a cost analysis. That analysis covers each cost element separately as well as profit. Taking it one step further, if you need training on cost analysis or want to outsource this effort, this is something we do regularly on behalf of DoD Primes and would be happy to do so for your company as well. Patrick
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