Sanity Check please.

RE: A contractor?s proposal

Are the following statements correct?

o If a single source contractors fixed lump sum proposal over $650K can be determined to be fair and reasonable (F&R), using means other than obtaining certified cost or pricing data (CPD), even if the method of making the F&R determination isn?t one of the exemptions listed for not getting CPD, CPD is not required.

o A contractors audited forward pricing rates, by themselves, can be judged "F&R" based solely on a DCAA audit report finding nothing objectionable - that is, the rates are reasonable.

o If the other elements by which the reasonable rates are multiplied - i.e. the number of labor hours, materials, etc. can be determined to be F&R, then the proposal is F&R

None of the statements offered are necessarily correct, standing alone.

1. The requirement for CPD is statutory, and there are only 4 exceptions. The circumstances you describe might fall under the fourth exception (Waivers), but only the Head of the Contracting Activity can decide if the specific circumstances justify a waiver, and that will probably depend on the method used to make the F&R determination.

2. A contractor's audited forward pricing rates may be considered F&R only if the circumstances upon which they are based remain substantially unchanged. For example, if the contractor's audited forward pricing rates were based on a certain level of revenue, and your proposal was going to result in a significant increase in that level, the contractor's indirect rates might well be affected, and the forward pricing rates might no longer be F&R.

3. A rote roll-up of calculations based on "reasonable" rates cannot, by itself, support a F&R determination. One must examine and consider the resulting price as well. And since you're doing a cost analysis, you'll have to consider profit/fee separately.

None of the statements offered are necessarily correct, standing alone.

1. The requirement for CPD is statutory, and there are only 4 exceptions. The circumstances you describe might fall under the fourth exception (Waivers), but only the Head of the Contracting Activity can decide if the specific circumstances justify a waiver, and that will probably depend on the method used to make the F&R determination.

2. A contractor's audited forward pricing rates may be considered F&R only if the circumstances upon which they are based remain substantially unchanged. For example, if the contractor's audited forward pricing rates were based on a certain level of revenue, and your proposal was going to result in a significant increase in that level, the contractor's indirect rates might well be affected, and the forward pricing rates might no longer be F&R.

3. A rote roll-up of calculations based on "reasonable" rates cannot, by itself, support a F&R determination. One must examine and consider the resulting price as well. And since you're doing a cost analysis, you'll have to consider profit/fee separately.