Contracting officers and primes must determine a price fair and reasonable before contract award which requires performing either cost or price analysis. Luckily, not all proposals must endure rigorous cost analysis, but you still must provide enough information to aid in the determination of a fair and reasonable price. We’ll explain the differences between cost and price analysis, the reasons for each, and best practices to help you maximize profit and minimize findings.   Learning Objectives 1. Identify and collect all costs associated with a product or service 2. Calculate and allocate indirect rates 3. Present cohesive and logical cost and pricing support www.leftbrainpro.com

1. Competitive Cost &
Price Analysis

2. Robert E. Jones
Government Contracts & Accounting Expert
CPA, CPCM, NCMA Fellow
Meet your presenter:
• Robert has over 15 years of Department of
Defense contract and accounting experience.
• He has successfully managed over $30 million
in federal contracts and has a 100% success
rate for all audits he has helped support.
rjones330

3. Melissa Metzger
Government Accounting & Finance Advisor
MAFM
Meet your presenter:
• Melissa has successfully developed and
instituted compliant and efficient processes
that have saved businesses over $1.5 million
during the last 5 years.
• She has successfully managed over $100
million in annual federal funds.
Melissa-Metzger-mafm

4. Today we’ll learn:
How to help the contracting officer make a determination
of fair and reasonable prices.

5. “We can complain because rose
bushes have thorns, or rejoice
because thorns have roses.”
~ Alphonse Karr
French critic, journalist, and novelist

6. Learning
Objectives
1. Identify and collect all costs
associated with a product or
service
2. Calculate and allocate indirect
rates
3. Present cohesive and logical
cost and pricing support

7. Room Poll
Are you currently working on government contracts?
• Yes
• Not yet - we need help!
• Not interested

8. Identify & Collect
All Costs
Direct
Indirect
Fringe
Overhead
G&A

9. Direct
Labor
Materials
Travel
ODC
Subcontractors

10. Indirect
Fringe
Overhead
G&A
Unallowable

11. Fringe
Costs of maintaining employees
• Employer Taxes
• Health Insurance
• Retirement
• Paid Absences

12. Overhead
Costs of supporting customers or products
• Customer/Product Support
• Facilities
• Labor & Personnel
 Training
 Overtime Premium
• Supplies & Equipment
 Operating Supplies
 Depreciation
 Repairs & Maintenance
• Travel

13. General & Administrative (G&A)
Costs of operating the business
• Labor & Personnel
 Training
• Office Supplies
• Business Development
• Licenses
• Taxes
• Travel

14. General & Administrative (G&A)
Costs of operating the business
• Professional Services/Fees
 Accounting
 Human Resources
 Information Technology
 Legal

15. Room Poll
Is your general ledger (G/L) currently organized into cost
pools?
• Yes
• No - not needed
• Not yet - we need help!
• Unsure

16. Calculate & Allocate
Indirect Rates
Fringe
Overhead
G&A

17. Fringe
Base
All W-2 labor
Allocation Methods
• Labor Dollars (most common)
• Labor Hours

18. Overhead
Allocation Methods
• Units of Production
• Direct Labor Hours
• Direct Labor Dollars
• Direct Material Dollars
• Prime Costs
• Machine Hours

19. General & Administrative (G&A)
Allocation Methods
• Total Cost Input (TCI) – most common
• Value Added
 = TCI – Materials & Subcontracts
 Default when using Material & Sub Handling

20. Room Poll
How do your rates compare with others in your industry?
• We're higher
• About the same
• We're lower
• I don't know

21. Present Cohesive &
Logical Support

22. Follow RFP Instructions
File format
Excel vs PDF
FAR Table II
Hours & Dollars
by Labor Category
by CLIN
by Year (time phased)

23. Provide Complete Details
Provide all information requested
Fixed price
• Should only be top-level price
• May ask for price by CLIN or item, but should not be cost elements
Cost-type
• Base labor and material costs
• Details of Fringe, Overhead, and G&A

24. Verify the Math
Have an outsider verify the math
Ensure columns foot and cross-foot
Ensure supporting documents match
Ensure supporting tables tie to summary

25. Room Poll
Do you need help with cost and pricing?
• Yes – please hurry!
• No – we’re experts
• Unsure

26. Discussion
and Q & A

27. www.LeftBrainPro.com/rccd-cost-19
Connect with
us
Download the presentation
Left Brain
Professionals Inc.
@LeftBrainPro
@LeftBrainPro

28. Melissa R. Metzger
MAFM
melissa@leftbrainpro.com
Robert E. Jones
CPA, CPCM, NCMA Fellow
robert@leftbrainpro.com