PREPARING PROPOSALS JUNE 10, 2004 : PREPARING PROPOSALS JUNE 10, 2004 PRESENTER
JOE ESTERAK, CPA
DCAA
Slide2 : DEFENSE CONTRACT AUDIT AGENCY TOPICS Vital Elements of A Proposal (Pamphlet 7641.90)
Proposal Examples, including
Overhead Rate Calculation
General & Admin (G&A) Rate Calculation
Unallowable Costs
Preparing for An Audit
Slide3 : VITAL ELEMENTS OF A PROPOSAL Summary of Total Cost by Element
Consolidated Priced Bill of Materials
Types, Quantities, Cost
FAR 15.408, Table 15-2 II.A.
Breakdown of Labor (FAR 15.408, Table 15-2 II.B.)
Hours
Rates, and Costs by Appropriate Category
Slide4 : VITAL ELEMENTS OF A PROPOSAL Details:
How Indirect Rates Are Computed
How Indirect Rates Are Applied,
Cost Breakdowns, Trends, and Budgetary Data (FAR 15.408, Table 15-2 II.C.)
Identification of All Other Costs by Category and Basis for Pricing (FAR 15.408, Table 15-2 II.C.)
Rationale for Proposed Profit
Slide5 : Advanced Services Technologies
Washington, DC
Proposal Submitted in Response
to RFP DAAH01-02-R-0001
Element of Cost Amount Reference
Engineering Labor $452,151 Schedule 1
Production Labor 26,412 Schedule 1
Direct Labor Overhead @ 56.7% 271,345 Schedule 2
Material 113,175 Schedule 3
Material Handling Overhead @ 5.0% 5,659 Schedule 4
Subtotal $868,742
G&A @ 8.0% 69,499 Schedule 5
Estimated Cost $938,241
Profit @ 10.0% 93,824*
Total Price $1,032,065
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*Contractors can negotiate profit with the contracting officer. Typically, contracting officers use criteria in FAR 15.404-4 for establishing a profit objective. DoD
contracting officers may use the weighted guidelines policy described in DFARS 215.404-4.
Slide6 : Advanced Services Technologies
Washington, DC
Proposal Submitted in Response
to RFP DAAH01-02-R-0001
Schedule 1
Engineering Labor Cost
Labor Category 2002 2003 2004 Total
Program Manager $23,174 $27,079 $18,967 $69,220
Senior Engineer 31,668 24,939 20,370 76,977
Junior Engineer 39,816 34,845 21,951 96,612
Engineering Aide 26,100 8,377 800 35,277
Production Writer - - 15,876 15,876
Metallurgist 35,815 23,748 14,546 74,109
Draftsman 41,690 29,850 12,540 84,080
Total D/L – Eng $198,263 $148,838 $105,050 $452,151
(Sched 1A) (Sched 1B) (Sched 1C)
Production Labor Cost
Labor Category 2002 2003 2004 Total
Fabrication $4,340 $6,834 $7,176 $18,350
Assembly - 1,942 6,120 8,062
Total D/L – Prod $4,340 $8,776 $13,296 $26,412
(Sched 1A) (Sched 1B) (Sched 1C)
Total Direct Labor $202,603 $157,614 $118,340 $478,563
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Slide7 : Advanced Services Technologies
Washington, DC
Proposal Submitted in Response
to RFP DAAH01-02-R-0001
Schedule 1A
2002 Engineering Labor Cost
Labor Category Rate/Hr Hours Total .
Program Manager $33.93 683 $23,174
Senior Engineer 26.39 1,200 31,668
Junior Engineer 22.12 1,800 39,816
Engineering Aide 14.50 1,800 26,100
Production Writer 16.00 - -
Metallurgist 18.85 1,900 35,815
Draftsman 18.95 2,200 41,690
Total D/L – Eng 9,583 $198,263
2002 Production Labor Cost
Labor Category Rate/Hr Hours Total .
Fabrication $10.85 400 $4,340
Assembly 9.25 - - .
Total D/Labor – Prod 400 $4,340
.
Total Direct Labor $202,603
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All hours proposed are based on historical costs, reference contract DAAH01-99-C-0001, account 9271.
The supporting data showing the historical hours and the development of the proposed hours are in file
“DAAH01-02-R-0001, Hours” and is available immediately upon request.
The direct labor rates are based on actual average rates as of 31 October 2001. The supporting data and rate calculation are located in file “DAAH01-02-R-0001, Direct Labor Rates” and is available immediately upon request.
Slide8 : Advanced Services Technologies
Washington, DC
Proposal Submitted in Response
to RFP DAAH01-02-R-0001
Schedule 1B
2003 Engineering Labor Cost
Labor Category Rate/Hr Hours Total .
Program Manager $35.63 760 $27,079
Senior Engineer 27.71 900 24,939
Junior Engineer 23.23 1,500 34,845
Engineering Aide 15.23 550 8,377
Production Writer 16.80 - -
Metallurgist 19.79 1,200 23,748
Draftsman 19.90 1,500 29,850
Total D/L – Eng 6,410 $148,838
2003 Production Labor Cost
Labor Category Rate/Hr Hours Total .
Fabrication $11.39 600 $6,834
Assembly 9.71 200 1,942
Total D/Labor – Prod 800 $8,776
.
Total Direct Labor $157,614
=====
All hours proposed are based on historical costs, reference contract DAAH01-99-C-0001, account 9271.
The supporting data showing the historical hours and the development of the proposed hours are in file
“DAAH01-02-R-0001, Hours” and is available immediately upon request.
The direct labor rates are based on actual average rates as of 31 October 2001 and escalated 5 percent each year. The supporting data and rate calculation are located in file “DAAH01-02-R-0001, Direct Labor Rates” and is available immediately upon request.
Slide9 : Advanced Services Technologies
Washington, DC
Proposal Submitted in Response
to RFP DAAH01-02-R-0001
Schedule 3
Shock Absorber Bill of Material
(Note 3)
Support Qty Unit Price Total Notes
Sheet Metal 1,600 sq. yd $25.00 $40,000 (1)
Casings 750 pcs. 8.50 6,375 (2)
Plastic 7,500 pcs. 5.75 43,125 (1)
Springs 1,700 pcs. 4.00 6,800 (2)
Bolts 7,500 pcs. 2.25 16,875 (2)
Total Material $113,175
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Explanatory Notes
(1) These prices are supported by multiple vendor quotes. The proposed prices are those
provided by the low bidder who was the ACME Corporation in their quotation dated
October 21, 2001. The quotations are included in file "DAAH01-02-R-0001, Vendor
Quotations" that are available immediately upon request.
(2) These prices are supported by the Halloween edition of the Springs R Us Catalog. This
catalog is available for audit in the pricing office.
(3) The proposed quantities are from the engineering drawings for the shock absorber. This
drawing is located in file "DAAH01-02-R-0001, Engineering Drawing" and is immediately
available upon request.
Slide10 : UNALLOWABLE COSTS Determining Allowability (FAR 31.201-2)
Reasonableness
Allocability
Standards Promulgated by the CASB, if applicable; otherwise, GAAP and Practices Appropriate to the Particular Circumstances
Terms of the Contract
Proposal-Exercise : Proposal-Exercise You are the owner of Small Company, Inc. and have just submitted a proposal to the federal government. The government has set aside the task of surveying a plot of land for the construction of a complex of government buildings. The site is environmentally sensitive. Your company does not have the expertise to deal with the suspected pollutants believed to be under the site. Therefore, you have decided to subcontract certain aspects of the environmental site work to the only firm in the country that has the current technology to perform the necessary testing. This is your first proposal that you have prepared for the DoD. Even though the proposal is small, the CO has requested that DCAA perform a pre-award accounting survey and a review of your proposal.
What do you need to check out before the auditor arrives?
What can you anticipate that DCAA will be requesting?
Proposal-Exercise : Proposal-Exercise
Small Company, Inc. FY 2004 Budget : Small Company, Inc. FY 2004 Budget
Small Company, Inc. FY 2004 Budget : Small Company, Inc. FY 2004 Budget
Small Company, Inc. FY 2004 Budget : Small Company, Inc. FY 2004 Budget
Proposal-Exercise Small Company, Inc. : Proposal-Exercise Small Company, Inc. Direct Labor
Need support for the $75,000 bid in this proposal.
Small Co, Inc. is bidding 2,500 hours at $30.00/hour.
Need to supply the basis for the 2,500 hours and the $30.00 per hour.
Small Company, Inc. Proposal for Technical Support Services : Small Company, Inc. Proposal for Technical Support Services Schedule 1
Note 1: Hours are based on Contract XYZ which was performed in FY 2001 and was similar to this effort. The hourly rate is based on the current average rate paid to Technical support staff. Cost records are available upon request.
Proposal-Exercise Small Company, Inc. : Proposal-Exercise Small Company, Inc. Subcontracted Services
What is the basis for the $72,000 estimated?
If it is “sole source” (which we put into the scenario), then Small Co. is responsible for analyzing for reasonableness.
If competitive, then supply the quotes from the various bidders and explain why this one was selected.
Proposal-Exercise Small Company, Inc. : Proposal-Exercise Small Company, Inc. Travel Cost
What is the basis and purpose of the $3,000 estimated travel?
Proposal indicates that this will be a direct cost (How do you know it is direct and not indirect?)
Does the solicitation require a trip?
What is the basis of the pricing?
Small Company, Inc. Proposal for Technical Support Services : Small Company, Inc. Proposal for Technical Support Services
Proposal-Exercise : Proposal-Exercise
Slide22 : PREPARING FOR AN AUDIT Personnel Familiar Readily Available
An Adequate Accounting System
Detailed Schedules Used Available
Slide23 : PREPARING FOR AN AUDIT Data Related to the Proposed Costs (Supporting Documentation) Readily Available
Provide the Proposal and Supporting Data in Electronic Format
Financial Statements of the Company
Slide24 : DEFENSE CONTRACT AUDIT AGENCY SUMMARY Vital Elements of A Proposal
Proposal Examples
Preparation for An Audit
Slide25 :
QUESTIONS????
Slide26 :
JOE ESTERAK, CPA
303-676-3927
joe.esterak@dcaa.mil
Presenters’ Information