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I am a cost analyst. My company gets lots of proposals that include fully burdened rates. We have no visibility into their OH, G&A, etc. Just their fully burdened rates (never even a base rate). We do have labor categories so we are able to go to websites like salary.com, bls, etc. to find comparable base rates.

My question is, what do you use to account for the indirect rates when you are checking the reasonableness of a proposed rate? Do you use Global Insight Burdened Wage Calculator? Do you have another way to account for it? This is always the trickiest part of determining the reasonableness of proposed labor. I understand it would be an estimate/ball park way of doing it. Even if it is a tool that uses industry averages for indirect rates. Just need a way/tool that is defensable.

Proposed rate for an electrical engineer (including all indirects): $162

Base rate (from salary.com) for an electrical engineer: $54

What tools would you use to estimate/build up the rate from salary.com? Prefereably something that has been looked at/approved by DCMA/DCAA.

Any help would be greatly appreciated.

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Hi Realquiet -

We've developed a labor rate analysis tool that relies on government data (BLS, Census, and IRS) and does just what you're asking, plus writes the price analysis document.  Email me (patrick@spendlogic.com) and I can show you and example and get you set up with a free trial.

Patrick

 

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general_correspondence,

Does the data from this website hold up to a DCAA/DCMA audit review of a Cost/Price Analysis Report? Or, is it data that they'll throughout as unreliable?

Do the rates include fee?

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The rates are fully burdened, and provide median, high low ranges.  As for this data holding up through audit, I can't say, but this is the government web site, that would tell me it should stand up.  You can get free trials from others, I have with ERS. ERS is used by DCAA and DCMA so if you have $1500 you can rest assured you have a solid price analysis.

1.5 is a fairly standard rate multiplier.  but 1.5 can go up or down depending on several factors such as industry, overhead, geographic, etc...

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I've seen the DCMA reject the use of GSA in a CPSR and issue findings.  Most large companies know this and have notes in their procedures that GSA data cannot be used as a basis for price analysis.  CALC is a great tool when used in conjunction with other methods, but relying on it or basing a price analysis on the data is inadvisable from an audit perspective.

I probably don't have to say this, and I don't believe general_correspondence mean it to be used as such, but applying a random multiplier is also something that will get you dinged by the DCMA and DCAA.

 

General_Correspondence:  What is ERS?  Can you provide a link?

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On 10/31/2018 at 8:51 PM, general_correspondence said:

or try this on the GSA web...

 

 

 

18 hours ago, general_correspondence said:

The rates are fully burdened, and provide median, high low ranges.  As for this data holding up through audit, I can't say, but this is the government web site, that would tell me it should stand up.  You can get free trials from others, I have with ERS. ERS is used by DCAA and DCMA so if you have $1500 you can rest assured you have a solid price analysis.

1.5 is a fairly standard rate multiplier.  but 1.5 can go up or down depending on several factors such as industry, overhead, geographic, etc...

 

39 minutes ago, Patrick Mathern said:

I've seen the DCMA reject the use of GSA in a CPSR and issue findings.  Most large companies know this and have notes in their procedures that GSA data cannot be used as a basis for price analysis.  CALC is a great tool when used in conjunction with other methods, but relying on it or basing a price analysis on the data is inadvisable from an audit perspective.

I probably don't have to say this, and I don't believe general_correspondence mean it to be used as such, but applying a random multiplier is also something that will get you dinged by the DCMA and DCAA.

 

General_Correspondence:  What is ERS?  Can you provide a link?

 I believe that the GSA schedule rates are OK to use as a budgeting tool and perhaps for market research . However I myself would not use those rates  as a pre-negotiation objective other than as a high range number.  The GSA rates are like looking at a Grainger catalog and reading the list prices in that or other material and equipment catalogs.

Like,  I got a 30% standard “contractors discount” on Sherwin Williams Paint yesterda at  one of their company stores, simply by mentioning my 10% Lowe’s military discount.

Contractors don’t pay the catalog prices in Grainger and the GSA rates are rate caps. 

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My apologies, it is the ERI Salary Assessor, not ERS.

She should give me a free subscription for the plug here :)

1.5 rate multiplier is random.  No doubt about that.  You need more research and data to support whatever rate multiplier used for your procurement. 

I'm aware GSA rates are not always reliable to stand audit, but as someone pointed out in this forum some years ago, price reasonableness concerns itself whether the price you pay is too high. Write your price analysis under that premise, and blend a comment or two about the GSA schedule if the GSA is paying a comparable price its hard to argue the price is too high, or unreasonable for prudent  people to pay.  

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Just took a look at ERI Salary Assessor - it doesn't appear to me that it has any insight into markup.  This appears to just be salary...please correct me if I'm misreading this, general_correspondence.  SpendLogic is (still) the only tool I know of that provides automated bottoms-up analysis of rates including markup (indirects and profit).

1 hour ago, general_correspondence said:

I'm aware GSA rates are not always reliable to stand audit, but as someone pointed out in this forum some years ago, price reasonableness concerns itself whether the price you pay is too high. Write your price analysis under that premise, and blend a comment or two about the GSA schedule if the GSA is paying a comparable price its hard to argue the price is too high, or unreasonable for prudent  people to pay.  

Also, I disagree with this comment regarding using GSA.  The problem with GSA is that it DOESN'T show what GSA pays...

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Patrick

The DCAA uses ERI.  They don't just acknowledge it.  It's more robust than you think, its a layered pay plan, 

I work as a defense contractor, in the role of a subcontracts manager. Almost all I do is sole source subcontractors.  My focus is to maintain what all CPSR audits look for, and typically find - which is poor price analysis, and too many sole source procurement's. To write an effective price analysis ( the key word is "effective") I reach into the toolbox for a few of the most appropriate tools for the situation, and draft a beginning, middle end, story that persuades the reader.  That's the goal, and that's the best you can do, because "effective" also means arrows can be slung at it, I know of no perfect price analysis absent the perfect bid tab with the perfect results from adequate price competition. The tools I refer to could be CALC, GSA, CPI, ERI, cost and price data, market research, and others..it just depends, I agree the general public is not privy to what GSA's pay price is on the federal schedules, i'm not trying to doubt you, doubt what you do, I'm sure you have a successful business, or debate you, I just wanted to show the poster of this thread CALC.gsa.gov was a tool to use.

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Hi General_Correspondence,

Thank you very much for your input; I've been a cost/price analyst for about 15 years, and, believe it or not, I've never heard of, or, used CALC.gsa. Neither had my colleagues (with many years experience). We are very excited about the prospect of this tool; and, we recognize that it cannot be used as THE sole data point; however, it will be very useful in conjunction with the other tools we employ; the more tools the merrier. 

In fact, we are well aware of the fact that GSA cannot be used as the SOLE basis of determining a fair and reasonable price, Shay Assad has said as much on several occasions.

Thanks again. This is what I was after. I wish there was something like this that wasn't based on GSA contracts. It'd be nice to have averages of indirect rates based on NAICS/size of company/location/etc. Something defendable and useful to use when determining the reasonableness of proposed wrap rates.

Thanks, GC

 

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