Florida Procurement Technical Assistance Center

1. Helping Businesses Grow & Succeed at Florida Gulf Coast University Presents: Florida Procurement TechnicalAssistance Center Pricing Your Product or Service Government Contracting Services are offered by the Florida Procurement Technical Assistance Center at Florida Gulf Coast University

2. Learn more online at www.FPTAC.org Government Contracting Services are offered by the Florida Procurement Technical Assistance Center at Florida Gulf Coast University (FGCU) This Procurement Technical Assistance Center (PTAC) is funded in part through a cooperative agreement with the Defense Logistics Agency.

3. Objectives • Cost • Cost Realism • Price • Price Analysis • Profit

4. References • FAR 14 Sealed Bidding • FAR 15 Contracting By Negotiations • FAR 16 Type of Contracts • FAR 30 Cost Accounting Standards Administration • FAR 31 Cost Principles and Procedures • FAR Appendix B Cost Accounting Rules • www.acquisition.gov/far

5. Methods of Procurement • Sealed Bids (Price only) Invitation For Bid (IFB) • Negotiated (Price or Cost) Request For Quote (RFQ)(Price only) Request For Proposal (RFP) (Price or Cost Data)

6. What is Cost? • Cost is the expense the contractor • will incur in performing the work

7. Cost Criteria: • Reasonable, Allowable and Allocable • Variable, Fixed, andSemi-Variable • Direct and Indirect

8. COST CONTRACTS • Cost-Plus-Fixed Fee • Cost-Plus-Award Fee • Cost-Plus-Incentive Fee • Cost-Sharing

9. Three Basic Cs For Cost Type Contracts • Know your Costs • Know your Customer • Know your Competition

10. What will the Government Pay? • The Government will reimburse the contractor to do the work as long as the costs are allowable, reasonable, and properly allocable to the contract

11. What are the Cost Elements? (Your Company) • Direct Labor • Overhead • Material • Subcontractors • General and Administrative • Travel • Profit

12. 1) Overhead may include: • Cost of Doing Business!!!!! • Taxes • Federal Taxes • Social Security (FICA) • Employer Portion • Medicare Taxes • Property Taxes • Licenses • State Licenses • County Business Licenses

13. 2) Overhead Continued: • Fringe Benefits: • Employee Health Insurance • Annual Leave • Sick Leave • Family Leave • Retirement

14. 3) Overhead Continued: • Office Space • Furniture • Electricity • Air Conditioning • Heat • Equipment • Copier • Computers • Phone

15. 4) Overhead Continued: • Utilities: • Sewage • Waste Water Treatment • Trash Removal • Recycle Program

16. 5) Overhead Continued: • Insurance • Building, Car, Truck • Worker’s Compensation • Contract Requirements • Credit Cards • Bldg. Maintenance • Lawn Service • Depreciation • Interest on Loans

17. What are the Cost Elements? (State) • Salaries • Fringe Benefits • Travel • Other Direct Costs • In-House Charges • Indirect Cost • Profit

18. Build a Cheeseburger?

19. Base Line for the Cheeseburger • One make every 30 seconds, start to finish • Includes: • Direct Labor • Overhead • Material • Profit

20. Direct Labor • ½ minute labor $00.20 • 1 minute labor $00.40 • Counter Clerk $8.05 • Cashier $8.05 • Cook $8.05 • Total $24.15

21. Overhead • 100%

22. Materials • Build a cheeseburger starting at the bottom • Bun Bottom • Mayonnaise • Mustard • Patty • Cheese • Pickle • Lettuce • Tomato • Ketchup • Sesame Seed Bun Top

23. Material Costs • Bun Bottom $00.1251 • Mayonnaise $00.0005 • Mustard $00.0007 • Patty $00.2900 • Cheese $00.0300 • Pickle $00.0200 • Lettuce $00.0080 • Tomato $00.0500 • Ketchup $00.0004 • Sesame Seed Bun Top $00.1253 • Total $00.6500

24. Material Costs • Wrapping Paper $00.015 • Bag $00.015 • Napkins $00.015 • Salt/Pepper $00.015 • Total $00.006

25. Cost Elements for the Cheeseburger? • Direct Labor $00.20 • Overhead 100% $00.20 • Material $00.71 • Subtotal $01.11 • Profit 10% $00.11 • Total Cost $01.22

26. What is Total Cost? • Cost Elements + Profit = Total Cost

27. Cost Realism • Cost and Technical proposals must be realistic for the work to be performed • Reflect a clear understanding of the requirement • Cost must be consistent with the various elements of the technical proposal

28. Profit • Represents the payment the contractor may receive for performance over and above the cost incurred for doing the work • Contractor/Government Risk

29. Profit Statutory Limits • Cost Plus Fixed Fee 10% • Research and Development Cost Plus Fixed Fee 15% • Architect and Engineering Services 6%

30. What is Price? • Cost Elements + Profit = Price

31. What is the Price for your Service?

32. Price • Direct Labor $10.00 (Unloaded Rate) • Overhead $15.00 Est. 150% • Material $03.20 • Subtotal $28.00 • Profit $02.80 • Total Price $31.00 (Loaded Rate)

33. Profit Factors for FFP Contracts • Market Competition • Contractor Risk 100%

34. Are you Making a Profit? • Sales-Direct Cost-Indirect Cost= Net Profit

35. Price Analysis • Process of examining and evaluating a proposed price without regard to evaluating the separate cost elements and proposed profit.

36. Firm Fixed Price Contracts • Firm-Fixed-Price • Firm-Fixed Price with Economic Adjustments • Indefinite Delivery Contracts • Time and Material • Labor Hour • Letter Contract

37. Price must be Fair and Reasonable • Based on: • Adequate Price Competition • Previous Prices • Yardstick • Published Prices or • Independent Government Estimate

38. TIPS • 2080 Hours = Government Year • Loaded-Unloaded Rates • Separate Technical and Cost Proposals • DCMA- • Direct Labor Rates • Overhead • G&A (For a Specific Company) • Best Value Awards • Technical • Past Performance • Price

39. Summary • Cost • Cost Realism • Price • Price Analysis • Profit

40. Q & A • Point of Contact Daniel Telep Jr. dtelep@fgcu.edu239.745.3708 www.fsbdcswfl.org www.fptac.org