Estimate for Contract Modification NAVFAC 4330/43

[spatel]

Reference: Form NAVFAC 4330/43 (No matter what version you use, similar outcomes)

On the left hand column under "Prime Contractor's Work", there is a line item "Prime's Field Office Overhead" which based on the FAR Clauses, should not exceed 10%.

Going down under "Summary", there is a line item "Prime's Overhead on Sub-Contractor".

We have given percentage value, 10% and 5% respectively. The government has come back and asked what is the reasoning for that. How does one prove or provide some sort of evidence to keep those percentages in tact. Nothing in the contract has anything against it nor does it have anything for it.

So basically, for the overhead, we need proof of how the overhead comes to be for the two line items i have listed above. (Please assume this Mod is less than $500,000.00)

[Guest Vern Edwards]

Well, the calculation of overhead is supposed to be based on an analysis of your costs, usually based on some kind of accounting information. You can't just charge whatever you want or make stuff up and then make up more stuff to back up the first stuff you made up.

Can your bookkeeper support the rates you proposed? If not, maybe you ought to rethink those numbers.

[here_2_help]

spatel,

Are you clear on the difference between (1) an indirect cost rate as bid, and (2) a prenegotiation objective regarding indirect cost rates, and (3) a structured analysis of profit on indirect costs and on subcontracted work?

I'm asking because you are new to WIFCON; I'm not sure of your knowledge level.

Thanks,

H2H