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Everything posted by here_2_help

  1. here_2_help

    Probability Problem #2

    The UK uses probability distributions and Monte Carlo simulations to quantify "cost risk"--which can then be distributed between government and contractor through negotiations. I don't believe the US government is set up to do that. I agree with jayandstacey.
  2. My best advice is to either (1) tell the customer that you don't have a corporate SB plan and have no metrics, or (2) develop a corporate SB plan and submit that, saying you have no metrics but will have some in the future. Also, and this is gratuitous advice, if you are going to hunt with the big dogs, you need to have a corporate SB plan, just like they do. Otherwise, you may be perceived as being not ready for prime time.
  3. here_2_help

    Wrap Rate Variations

    The appropriate wrap-rate methodology is the one that follows the contractor's unique cost accounting structure. The structure will vary. For example, some contractors add Fringes to Direct Labor when calculating their Overhead allocation base; others do not do so. Other contractors allocate G&A on a Total Cost Input base; others use a Value-Added Base or even a Single Cost Element base. One size will not fit all and I suggest you not try to force fit all contractors into one methodology.
  4. here_2_help

    Volume 2

    To me, the CAS stuff is fascinating. I hope somebody is reading it closely.
  5. I don't like your stated assumption. It's usually a mistake to assume much, if anything, in this environment. I don't know if anybody has ever asked, or thought about, or addressed your question before. Therefore, without any support whatsoever I'm going with "Sure. Why not?" The phrase "other than cost" means exactly what it says--something other than actual, allowable, cost. A standard cost without variance may well fit into that phrase. Make the auditors prove you wrong. I'm fairly confident they will not be able to do so.
  6. here_2_help

    Bottoms-up pricing

    Three other thoughts, FWIW-- 1. Every time I priced, back when I priced, management had a "bogey" they wanted me to hit. I think the kids call it "Price2Win" these days. It didn't matter that the pricing followed inevitably from the estimating input; they always wanted the bottom-line number they wanted to see. I learned to deliver the number regardless of my opinion regarding its predictive accuracy. 2. One time I did some consulting work for a DOE contractor who was remarkably effective at winning new contract awards. Its secret? When the solicitation contemplated a cost-type contract, they bid it FFP. The government was delighted to award on an FFP basis, as it was perceived to lower the risk. I was called in to consult on a T4C. I was surprised to find that the company was losing money on every single DOE contract it had. Apparently there was a reason the work was let as cost-type and not FFP. Anyway the only contract that contractor made money on in that year was the one that had been T4C'd. At least, it didn't lose as much on that one as the others. Unsurprisingly, that contractor is no longer in business. 3. I knew this company--a Beltway Bandit--that fired its entire estimating staff as a cost-cutting measure. PMs kept complaining that the estimators didn't give them sufficient budget to perform the work. So the company fired the estimators and put the PMs in charge of the estimates and associated pricing. Then those same PMs would run the job after award. No more complaints, right? Unfortunately, the PMs knew next to nothing about estimating and pricing. One example: 4 commercial plants in 4 different CONUS locations; each bid FFP. Brilliant PM idea: detailed estimate for the first plant, then replicate for the others, cutting out 10% for learning curve efficiency. Guess what? Each location had a unique site with unique geology and unique environmental conditions. Each location had a unique governmental permitting and regulatory oversight process. Oops! Unsurprisingly, that contractor is no longer in business. Hope these anecdotes amuse somebody out there.
  7. here_2_help

    Bottoms-up pricing

    There is cost-based pricing and market-based pricing. Typically, the government expects the former when cost analysis is involved.
  8. Just looked at the new DoD Class Deviation posted on the WIFCON home page. Apparently, the availability of funds will be a mandatory evaluation criterion for these "commercial" orders. That's a new one for me. How is the availability of funds (as opposed to price) a meaningful discriminator between offerors?
  9. here_2_help

    Proposal Preparation Costs

    I understand your point about additional hours. One might reasonably think that the hours were captured at the time, if the contractor had an adequate timekeeping system. It calls into question the system's adequacy. Further, your comment about "subcontractor costs" interests me. Apparently, the subcontractor incurred hours in preparing the ECPs and direct-charged them to its subcontract. Your predecessor funded the subcontractor's ECP prep costs in a separate prime contract CLIN. I can see why one might do so (in some cases) but, before I did so I would want to be sure that the subcontractor had a practice of direct-charging certain proposal prep costs. After all, it's not a mandatory practice. It would be bad if the subcontractor were charging the contract both for direct-charged proposal prep costs and indirect-charged proposal prep costs in violation of FAR 31.202(a) and CAS 402. If the subcontractor is a large, well-established, defense contractor then it's probably not a big deal; but if the subcontractor is a smaller or more commercial type of contractor, then I might be a bit more worried. If the additional subcontractor costs are indirect costs getting finalized, then oh well. But if the additional costs are also labor hours, then I smell something fishy myself and you are right to be concerned. Somebody is messing about with labor hours.
  10. Did you review 31.205-26(e)?
  11. here_2_help

    Proposal Preparation Costs

    Gosh, have you checked how far behind DCAA and DCMA are with respect to finalizing billing rates? I'm not saying that's the problem, but it would not surprise me at all if the root cause was that rates were finalized 6 years later and the final, negotiated, rates caused an overrun.
  12. It seems fairly clear to me at the IFF is a "fee" paid to GSA for the privilege of selling stuff on a Schedule contract. You actually have to pay it to the GSA; it's calculated as a percentage of sales, isn't it? Accordingly, I think that when you are trying to calculate sales, the IFF should be excluded--i.e., subtracted from actual billings. I am not certain but I believe you pay the IFF on all billings, regardless of whether it was priced into every element. I hope this helps. Your question was a bit "vague" so I had to interpret.
  13. Vern, I would appreciate it if you would refrain from speculation regarding my motivation for declining to engage further in this discussion. Some might say that your last comment about my motives is in violation of Rule #1 of this Forum. Knowing you, I know it wasn't an intentional affront.
  14. As I said on my first post on this thread, I'm not making an argument and I'm not trying to convince (or even persuade) anybody. I'm sorry if that disappoints you (or anybody else). You and I have been down this road before and we are, I suspect, largely talking past each other. For example, I use the phrase "competitive advantage in the marketplace" and your response is that "if there is competition there is no requirement for cost or pricing data." Non sequitur. It's obvious that I'm not communicating well and I take responsibility for that.
  15. Actually, no. I do not have to explain it. As a hint, you might consider looking at the quote to which I was responding. I requoted it to show the context of my statement. If the context is not clear then there's nothing else I can do.
  16. It should be apparent that the ability to conduct effective, timely, TINA sweeps is a competitive advantage. That has always been the case, but the recent Assad memo should make it blindingly clear. Litigation avoidance as a competitive advantage in the marketplace. Think about it.
  17. Given that I spent more than a decade in the E&C industry, and then several years consulting to that industry, I'm pretty sure you are somewhat familiar with more than one of the companies I once worked for.
  18. 15.407-1 Defective certified cost or pricing data. ***** (b)(1) If, after award, certified cost or pricing data are found to be inaccurate, incomplete, or noncurrent as of the date of final agreement on price or an earlier date agreed upon by the parties given on the contractor's or subcontractor's Certificate of Current Cost or Pricing Data, the Government is entitled to a price adjustment, including profit or fee, of any significant amount by which the price was increased because of the defective data. The first date is the date of price agreement; the second date is the effective date on the CCCPD. The dates do not have to be the same. For example, if the date of price agreement was 1 June but the contractor's final sweep was 28 May, then the parties could agree that the certification date is 28 May ... and any new cost or pricing data that arises between 28 May and 1 June is irrelevant to a determination that the contractor defectively priced. I don't know why this is hard. It doesn't have to be.
  19. Gosh fellows. I have been involved in several negotiations in my time, and we always knew when we were close to agreement. Further, we were frequently sweeping with subKs and ourselves during negotiations, seeking to see if we should update our pricing. It was always good news when we could deliver a cost savings during negotiations, through updated pricing. The customers always liked that. But please don't think I'm trying to persuade you of anything. You do you. By all means, proceed with your post-agreement sweeps, if that's what you feel you have to do. Take as long as you need. Finally, your comments don't address the difference between the effective date of the CCCPD and the date of price agreement. Two dates; not one.
  20. Vern and I have debated this issue (privately) in the past. I maintain that post-price agreement sweeps are essentially worthless because they don't mitigate defective pricing risk, which ends on the date of price agreement. Accordingly, I assert that a contractor must perform its final sweep just before the final price agreement is reached, and that date becomes the effective date of the Certificate of Current Cost or Pricing Data. As to "incentive" -- would a Level 3 CAR on the Estimating System provide adequate incentive? I would think that it would.
  21. Prime contractors' costs to develop and administer small business reporting programs is not insignificant. And the costs associated with mistakes can be expensive as well. http://www.asbca.mil/Decisions/2017/59876 BAE Systems Southwest Shipyards Mayport LLC 7.13.17.pdf
  22. Jenkins83, You keep using the term "ODC" but I'm not sure you are using it correctly. If your question is whether the program office should have acquired hotspot services via an already existing BPA versus asking the contractor to provide, then the answer does NOT turn on what you or the contractor call the hotspot services. Totally separate issue. However, if you have concluded that it is appropriate to ask the contractor to provide hotspot services, then you may reasonably ask how the contractor should account for the cost of the services and bill them to the government. If that is the question before you, then what you are asking encompasses questions about the contractor's disclosed or established cost accounting practices. For example, you could reasonably ask how the contractor has accounted for such services in the past, when charged directly to a government contract. Does the contractor consistently treat hotspot services, when charged direct, as a "subcontract" or as a material item or as an "ODC"? Those are reasonable questions that the contractor should be able to easily answer. So which is it?
  23. If it doesn't fit "ODC" then where would you expect it to go?
  24. The prime contractor is responsible for execution risk on the contract. If the subcontractor doesn't perform the warranty work, who does the government hold accountable? Not the subcontractor ... When costs are incurred, they are recorded into allowable and unallowable categories. The contractor uses profit on allowable work to pay for its unallowable costs. When you deny the contractor profit on its costs then you are not allowing the contractor to cover its unallowable costs. I'm not in favor of such a situation.
  25. here_2_help

    COR Conflict of Interest

    A more on-point question is whether the employee left in good circumstances and whether they might now harbor a grudge or animus against their former employer.