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SLK Contractor

How to handle rounding difference between price to Prime & sealed package price to Govt?

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We are bidding on a CPFF GSA contract as a subcontractor, the ultimate customer is the Army.

For the pricing volume we need to show rates per labor category loaded through cost, then fee = CPFF rate x hours = extended price for each labor category.

As a subcontractor, we do not want to submit the full breakout (OH & G&A) of the loading of the rates to our Prime, so they will receive the template only showing each final rate loaded through cost, fee applied and resulting CPFF rate. But in the Sealed Package to the Army of course, we have to show the full breakout.

The problem is, when we use the ROUND function to truncate the computed rates to 2 decimals, the price we give to our Prime is slightly off from that we compute for our Sealed Package to the Army.

If we remove the ROUND function, the difference goes away. But then if someone takes the rate formatted with 2 decimal points x hours on a calculator, the result is slightly off between the two templates.

Question how best to handle this?

Do we:

  1. Use the ROUND function, leaving the small difference in total prices there, and include explanation that the difference between rates to Prime and Sealed package are due to rounding, or
  2. Turn off the ROUND function (thus the actual rates go out to 5 decimal points or more) which eliminates the difference – but then the rates shown (with 2 decimals) are not exactly the rates used times the hours to arrive at the price – and include an explanation about this fact?

Or is there another way to handle this?

(Note the total difference amounts to ~ $50 per year over 5 years)

(Since it is a CPFF we realize during performance we will just be billing actual costs. This question just relates to the proposed rates and how to handle the difference between total prices to Prime vs Sealed Package to Army caused by rounding.)

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I think it is customary to do calculations with high precision, and round only for presentation. Thus, rounded values are not used for further calculations.

But regardless, don't you create your own problem when you round for the prime submission but don't round for the Government submission? Why not use the same approach for both, and then you won't have a problem. In your submission to the Government, you can show a calculated rate of 5.234892% (as an example) but add a note that you rounded to 5.23% in your submission to the prime. Rounding error is easy to explain.

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