going_alone

Hi all, Newbie here - I have spent the weekend reading FAR guidelines, DCAA requirements, all about NAICS, DUNS, SAM etc... I am an engineer, not a contract specialist. I work for a small defense contractor that routinely subcontracts out T&M LOE contracts to a large defense contractor (think Boeing, Raytheon etc.). I am very heavily weighing starting my own 1 person LLC and setting up my own subcontract with the larger company and charging them a similar rate for my services that my current smaller company performs. I am trying to understand what my FAR/DCAA requirements are. These contracts would be 6 months to a year and be in the mid 6 figure range, so below the FAR 15.403-4 threshold. It is simple enough to define direct labor project codes for my various contracts in a spreadsheet and make sure I am recording time daily to be used when I invoice... I am not going to be bidding Cost Plus Fee contracts directly to the government so I am hoping officially computing labor rates is not needed. All of the things I am reading, like establishing provisional labor rates with DCAA (calculating G&A %, OH %, Fringe %, fee %) - all look to be when entering a contract as a prime. I have no intention of doing that and if I needed to calculate rates like this it would be interesting because a single member LLC is taxed as a sole proprietor, the owner does not have a salary, they simply gain income after deducting expenses from revenue. Rates are competition sensitive so I know G&A %, base labor rate etc. are all not disclosed to the larger company - when my smaller company presents a proposal it is simply direct labor cost with labor rate/category breakdown (# hours x final labor cat rate = total cost over a PoP). Questions are: Am I at risk of being audited by the DCAA? I have no employees and no concept of indirect charges as there is no salary or hourly rate computed? Even then, I am thinking I only need the categories I anticipate charging: Travel ODC and Labor Direct Cost per contract so I should be fine from an audit standpoint from my simplified situation (am I being naive here) Do I need to have G&A, OH, Fringe, etc. computed at all? I am going to set my rate to the same as my previous company, perhaps slightly lower, because of the enormous risk of living contract to contract and being out of work for months at a time. Paid vacation and sick days, holidays, salary - these things don't exist in a single member LLC as a sole prop for taxation. I am going into this thinking there is very little for me to do from a federal regulation standpoint (ignoring contract/agreements/NDAs I need to work out with the larger defense co). I would register my LLC in DUNS and get an NAICS # because that's simply enough just to have, but I don't plan on bidding contracts to the fed.