preparing proposals june 10, 2004
DESCRIPTION
PREPARING PROPOSALS JUNE 10, 2004. PRESENTER JOE ESTERAK, CPA DCAA. 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 - PowerPoint PPT PresentationTRANSCRIPT
PREPARING PROPOSALSJUNE 10, 2004
PRESENTER JOE ESTERAK, CPA
DCAA
2
DEFENSE CONTRACT AUDIT AGENCY
TOPICSTOPICS• 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
3
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
4
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
5
Advanced Services TechnologiesWashington, DC
Proposal Submitted in Responseto RFP DAAH01-02-R-0001
Element of Cost Amount ReferenceEngineering Labor $452,151 Schedule 1Production Labor 26,412 Schedule 1Direct Labor Overhead @ 56.7% 271,345 Schedule 2Material 113,175 Schedule 3Material Handling Overhead @ 5.0% 5,659 Schedule 4 Subtotal $868,742G&A @ 8.0% 69,499 Schedule 5 Estimated Cost $938,241Profit @ 10.0% 93,824* Total Price $1,032,065
========
*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.
6
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 $69,220Senior Engineer 31,668 24,939 20,370 76,977Junior Engineer 39,816 34,845 21,951 96,612Engineering Aide 26,100 8,377 800 35,277Production Writer - - 15,876 15,876Metallurgist 35,815 23,748 14,546 74,109Draftsman 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 $18,350Assembly - 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 ====== ====== ====== ======
7
Advanced Services TechnologiesWashington, DC
Proposal Submitted in Responseto RFP DAAH01-02-R-0001
Schedule 1A
2002 Engineering Labor Cost Labor Category Rate/Hr Hours Total .Program Manager $33.93 683 $23,174Senior Engineer 26.39 1,200 31,668Junior Engineer 22.12 1,800 39,816Engineering Aide 14.50 1,800 26,100Production Writer 16.00 - -Metallurgist 18.85 1,900 35,815Draftsman 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 $4,340Assembly 9.25 - - . Total D/Labor – Prod 400 $4,340
.Total Direct Labor $202,603
=====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.
8
Advanced Services TechnologiesWashington, DC
Proposal Submitted in Responseto RFP DAAH01-02-R-0001
Schedule 1B
2003 Engineering Labor Cost Labor Category Rate/Hr Hours Total .Program Manager $35.63 760 $27,079Senior Engineer 27.71 900 24,939Junior Engineer 23.23 1,500 34,845Engineering Aide 15.23 550 8,377Production Writer 16.80 - -Metallurgist 19.79 1,200 23,748Draftsman 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 $6,834Assembly 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.
9
Advanced Services TechnologiesWashington, DC
Proposal Submitted in Responseto RFP DAAH01-02-R-0001
Schedule 3Shock Absorber Bill of Material
(Note 3) Support Qty Unit Price Total NotesSheet 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
=======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.
10
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
11
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?
12
Proposal-ExerciseSmall Company, Inc.
Proposal for Technical Support Services
Proposed Reference
Technical Labor $ 75,000 Schedule 1
Labor Overhead 39,937 Note 1
Subtotal Labor & Overhead 114,937
Subcontract Service 72,000 Note 2
Travel 3,000 Schedule 2
Total Cost Input $189,937
G&A 54,004 Note 3
Total before Profit $243,941
Profit 24,394
Price $268,335
13
Small Company, Inc.FY 2004 Budget
677,000
Admin Labor $ 20,000 Advertising 2,000 Allowance for Bad Debt 5,000 Bid & Proposal 5,000 Bldg & Grounds Maintenance 3,500 Computer Lease 3,000 Depreciation 4,000 Fringe Benefits 96,000 Interest 7,500 Management Salary 50,000 Office & Supplies 36,000 Professional Fees 30,000 Subcontracted Services 180,000 Technical Staff Labor 200,000 Travel 10,000 Utilities 5,000
TOTAL $657,000
14
Small Company, Inc.FY 2004 BudgetTotal Direct
Cost Cost Overhead Direct + OH G&A Unallowable
Admin Labor 20,000 - 20,000
Advertising 2,000 - 2,000
Allowance for Bad Debt 5,000 - 5,000
Bid & Proposal 5,000 - 5,000
Bldg & Grounds Maintenance 3,500 3,500 3,500
Computer Lease 3,000 3,000 3,000
Depreciation 4,000 - 4,000
Fringe Benefits 96,000 96,000 96,000
Interest 7,500 - 7,500
Management Salary 50,000 - 50,000
Office & Supplies 36,000 - 36,000
Professional Fees 30,000 2,000 2,000 25,000 3,000
Subcontracted Services 180,000 180,000 180,000
Technical Staff Labor 200,000 200,000 200,000
Travel 10,000 7,000 2,000 9,000 1,000
Utilities 5,000 - 5,000 TOTAL 657,000 387,000 106,500 493,500 146,000 17,500
15
Small Company, Inc.FY 2004 BudgetTotal Direct
Cost Cost Overhead Direct + OH G&A Unallowable
Admin Labor 20,000 - 20,000
Advertising 2,000 - 2,000
Allowance for Bad Debt 5,000 - 5,000
Bid & Proposal 5,000 - 5,000
Bldg & Grounds Maintenance 3,500 3,500 3,500
Computer Lease 3,000 3,000 3,000
Depreciation 4,000 - 4,000
Fringe Benefits 96,000 96,000 96,000
Interest 7,500 - 7,500
Management Salary 50,000 - 50,000
Office & Supplies 36,000 - 36,000
Professional Fees 30,000 2,000 2,000 25,000 3,000
Subcontracted Services 180,000 180,000 180,000
Technical Staff Labor 200,000 200,000 200,000
Travel 10,000 7,000 2,000 9,000 1,000
Utilities 5,000 - 5,000 TOTAL 657,000 387,000 106,500 493,500 146,000 17,500
16
Proposal-ExerciseSmall 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.
17
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 for Technical Support Services
Total Rate Hours
Technical Labor (Note 1) $ 75,000 $ 30.00 2,500
18
Proposal-ExerciseSmall Company, Inc.
Subcontracted ServicesWhat 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.
19
Proposal-ExerciseSmall 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?
20
Small Company, Inc.Proposal for Technical Support Services
Schedule 2
Cost Element # of Trips # of Days Cost Total NoteAirfare 3 na 429 1,287 1 Car Rental 1 3 55 165 2 Lodging 3 2 120 720 3 Incidentals 3 3 40 360 4 Mileage 3 na 36 108 5 Per Diem 3 3 40 360 6
3,000
Purpose of trip: RFP requires that 3 technical staff members fly to Baltimore forbriefing by the contracting activity prior to starting survey.
Note 1. Airfare was estimated by obtaining coach airfarefrom Denver to Baltimore in July 2003. Telephonequotes available on request.2., 3. 4. 5. 6. Etc., etc. Provide basis consistent withyour company policies and procedures.
Travel
21
Proposal-ExerciseSmall Company, Inc.
Proposal for Technical Support Services
Proposed Reference
Technical Labor $ 75,000 Schedule 1
Labor Overhead 39,937 Note 1
Subtotal Labor & Overhead 114,937
Subcontract Service 72,000 Note 2
Travel 3,000 Schedule 2
Total Cost Input $189,937
G&A 54,004 Note 3
Total before Profit $243,941
Profit 24,394
Price $268,335
22
PREPARING FOR AN AUDIT
• Personnel Familiar Readily Available
• An Adequate Accounting System
• Detailed Schedules Used Available
23
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
24
DEFENSE CONTRACT AUDIT AGENCY
SUMMARY•Vital Elements of A Proposal•Proposal Examples •Preparation for An Audit
25
QUESTIONS????
