Is there an equivalent in DHS or FAA to the DD Form 1547 Weighted Guidelines Application?

[SLK Contractor]

I am a Sr. Accountant for a small business subcontractor. We are bidding on our first primes this year, I am part of the pricing team. In the effort to put together the most competitive bids we can, we are trying to inform ourselves on all pricing strategies out there. My question is in regards to profit.

We came across the Weighted Guidelines structured approach to evaluate profit, and advice that contractors fill out DD Form 1547 in advance, even though it is supposed to be done by the CO, to bid the most supportable profit & assist us in negotiating profit with our DoD customer if we should get an award.

The question came up, does anyone know of a similar structured approach and/or equivalent to Form 1547 that DHS or FAA Contracting Officers would use in profit determination/negotiations? Or do they just default to using the DoD method of weighted guidelines too?

Thanks in advance for any advice or links.

[Guest Vern Edwards]

FAA uses FAA Form 4220.32, "Weighted Guidelines Profit/Fee Objective." Similar to DOD's, but not the same. You can find it and the instructions for its use here, on page 12-6:

http://fast.faa.gov/docs/pricing/Section12.pdf

DHS uses DHS Form 700-17, "Weighted Guidelines Profit/Fee Objective." Instructions for its use are in HSAM Ch. 3015, Appendix A. You can find it here:

https://www.gotovao.com/tools/regulations/hsam/archive/hsam2007-11/forms/DHS-700-17.pdf

[SLK Contractor]

Very helpful, thank you!

[SLK Contractor]

Follow-up question if you please:

1. We understand that the most commonly used method for determining profit/fee is Weighted Guidelines, but there is also reference to "alternate approaches" - on any given contract, is it the CO's decision to use Weighted Guildelines or an alternate approach?

2. Is there any information on these "alternate approaches" available to contractors?

[BZMANINTEXAS]

Per DFAR the CO may use an alternate approach in two areas

1) Nonprofit 215.404-72 Modified weighted guidelines method for nonprofit organizations other than FFRDCs.

or

2) see below - - I would imagine it would be at least one level above the CO for use of non-standard approach, but I am not in the DOD world as a civilian or military CO anymore.

215.404-73 Alternate structured approaches.

(a) The contracting officer may use an alternate structured approach under 215.404-4(c ).

(B ) The contracting officer may design the structure of the alternate, but it shall include—

(1) Consideration of the three basic components of profit--performance risk, contract type risk (including working capital), and facilities capital employed. However, the contracting officer is not required to complete Blocks 21 through 30 of the DD Form 1547.

(2) Offset for facilities capital cost of money.

(i) The contracting officer shall reduce the overall prenegotiation profit objective by the amount of facilities capital cost of money under Cost Accounting Standard (CAS) 414, Cost of Money as an Element of the Cost of Facilities Capital (48 CFR 9904.414). Cost of money under CAS 417, Cost of Money as an Element of the Cost of Capital Assets Under Construction (48 CFR 9904.417), should not be used to reduce the overall prenegotiation profit objective. The profit amount in the negotiation summary of the DD Form 1547 must be net of the offset.

(ii) This adjustment is needed for the following reason: The values of the profit factors used in the weighted guidelines method were adjusted to recognize the shift in facilities capital cost of money from an element of profit to an element of contract cost (see FAR 31.205-10) and reductions were made directly to the profit factors for performance risk. In order to ensure that this policy is applied to all DoD contracts that allow facilities capital cost of money, similar adjustments shall be made to contracts that use alternate structured approaches.

[SLK Contractor]

Thank you!