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FEE-PROFIT ANALYSIS TRAINING

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FEE-PROFIT ANALYSIS TRAINING Powered By Docstoc
					    PROFIT & FEE ANALYSIS
   (WEIGHTED GUIDELINES)
   TRAINING PRESENTATION



Presented by: Joanne Banks
             MAY 2002
• FAR 15.404-4, PROFIT -
 provides policy to establish the profit
 or fee pre-negotiation objective.
             “PROFIT” & “FEE” –
        TERMS NOT INTERCHANGEABLE

• “PROFIT” - Used for fixed price and time and material
             type contracts

• “FEE” - Used for cost type contracts
Profit/Fee - Represents the potential total remuneration
(compensation) for contract performance over and
above allowable costs. (FAR 15.404-4(a)(1))

Total Remuneration + Govt’s Estimate of Allowable Costs =
          Govt’s Total Prenegotiation Objective
• Negotiations having a goal of reducing prices by reducing
  profit/fee WITHOUT PROPER RECOGNITION OF THE
  FUNCTION OF PROFIT/FEE, are not in the Government’s
  best interest. (FAR 15.404-4(a)(3))

• FEE ANALYSIS IS NOT REQUIRED when competition
  has been obtained.
Prenegotiation Cost Objective amounts are used
to calculate the profit/fee prenegotiation
objective, excluding FCCM. (FAR 15.404-4(c)(3))

NOTE: FCCM will not be allowable if the
contractor does not identify in its proposal.
(FCCM breakdown provided on a
DD Form 1861.)
  STATUTORY LIMITATIONS (10 U.S.C. 2306(c)
      and 41 U.S.C. 254(b) - (FAR 15.404-4(4))
    (Not applicable to T&M & FP requirements)

   15 % Experimental, developmental, or R&D under CPFF

              6%       Architect-engineer services

                 10%     Other CPFF contracts


DOCUMENTATION REQUIRED in Business Clearance
that the statutory fee limitations have not been exceeded.
   COMPLETION OF DD Form 1547, Record of
      Weighted Guidelines Applications:

     See DFARS 253.215-70 – Lines 1 through 39

  DD Form 1547 located in Excel on the N:Drive:
WG-Interim – Use when applying Cost Efficency Factor only
          WG – Use for all other requirements
                                                                              REPORT CONTROL SYMBOL
RECORD OF WEIGHTED GUIDELINES APPLICATION
                                                                                   DD - AT&L(Q)1751
1. REPORT   2. BASIC PROCUREMENT INSTRUMENT IDENTIFICATION NO.   3. SPIIN   4. DATE OF ACTION
NO.
            a. PURCHASING b. FY   c. TYPE PROC INST   d. PRISN              a. YEAR               b.
            OFFICE                CODE                                                            MONTH
 0003-02 N65236            01          D                XXXX                    2002                  02




LINE 1: Report Number. (i.e., 0003-02) – (See next slide)
LINE 2: Basic Procurement Instrument Identification
        Number (solicitation/contract number)
LINE 3: Supplement Procurement Instrument
        Identification Number (SPIIN) – Mod or order
        number
LINE 4: Date of action – Year & Month
         DD-1547 REPORT NUMBERS

 Retrieved from the Weighted Guidelines (WG)
  log book on the N:Drive in Excel.

 Upon contract award, send original
  DD Form 1547 to Joyce Murphy (Code
  02AJM) and retain copy for your respective
  files. (See Local Instructions on page 21 &
  22 of Training Module.)
5. CONTRACTING OFFICE CODE
           D910B
6. NAME OF CONTRACTOR
Glotech, Inc.
7. DUNS NUMBER 8. FEDERAL SUPPLY CODE
42135348         R425
9. DOD CLAIMANT 10. CONTRACT TYPE CODE
PROGRAM
   S10            U
11. TYPE EFFORT 12. USE CODE
     3            2



LINE 5:         Contracting Office Code (always D910B)
LINE 6:         Name of contractor
LINE 7:         Contractor’s DUNS number
LINE 8:         Federal Supply Code (from DD-2579 or DD-350)
LINE 9:         DOD Claimant Program (See Attachment 2)
LINE 10:        Contract Type Code (See DFAR 253.215-70(c)(10)
LINE 11:        Type of Effort (See DFAR 253.215-70(c)(11)
LINE 12:        Use Code (See DFAR 253.215-70(c)(12) – to be updated
GOV’T COST OBJECTIVE FOR TOTAL COST
ITEM             COST CATEGORY        OBJECTIVE
13.    MATERIAL                         $     141,000.00
14.    SUBCONTRACTS                     $     931,755.00
15.    DIRECT LABOR                     $      1,157,735
16.    INDIRECT EXPENSES                $              -
17.    OTHER DIRECT CHARGES             $     240,000.00
18.    SUBTOTAL COSTS (13 thru 17)      $      2,470,490
19.    GENERAL AND ADMINISTRATIVE       $        209,992
20.    TOTAL COSTS (18 + 19)            $      2,680,482

LIST FEE-BEARING COSTS ONLY
LINE 13: Material cost objective (excluding G&A)
LINE 14: Subcontracts cost objective
LINE 15: Direct labor cost objective
LINE 16: Indirect expenses (e.g., overhead & fringe costs)
LINE 17: Other Direct Charges (ODCs) cost objective (e.g., travel
         - excluding G&A)
LINE 18: Subtotal of cost objective
LINE 19: General & Administrative (G&A) cost objective
LINE 20: Total cost objective
                 WEIGHTED GUIDELINES PROFIT/FEE FACTORS
       CONTRACTORS         ASSIGNED    ASSIGNED      BASE            PROFIT
TEM    RISK FACTORS        WEIGHTING    VALUE     (ITEM 18)        OBJECTIVE
21. TECHNICAL                   60.00%   6.00%
22.   MANAGEMENT/COST CONTROL    40.00%   6.00%
23.   RESERVED
24.   PERFORMANCE RISK (COMPOSITE)        6.00%   $    2,470,490    $ 148,229.40
25.   CONTRACT TYPE RISK                  1.00%   $    2,470,490    $   24,704.90


 LINE 21: Technical factor - See DFAR 215-404-71-2(b)
 LINE 22: Management/Cost Control factor –
          See DFAR 215-404-71-2(b)
 LINE 23: RESERVED
 LINE 24: Performance Risk (composite) factor resulting from lines
          21 & 22
 LINE 25: Contract Type Risk factor – See DFAR 215-404-71-3(b)
        NORMAL & DESIGNATED RANGES
     FOR TECHNCIAL & MGT/COST CONTROL
                 FACTORS
            (DFAR 215.404-71-2(c))

                       Normal Value   Designated Range
Standard                   5%             3% to 7%

Technology Incentive       9%            7% to 11%

Standard: Applies to most contracts
Technology Incentive: Applies for acquisitions that
include development, production or innovative new
technologies. (NOTE: Applicable for technical
factor only).

 (Justification is not required when using the normal value,
    but is required when using other than normal value.
                    (DFAR 215.404-71-1(b))
       NORMAL & DESIGNATED RANGES
      FOR CONTRACT TYPE RISK FACTOR
                     (DFAR 215.404-71-2(c))
                                                       Normal     Designated
                Contract Type                 Notes   Value (%)    Range (%)
Firm-fixed-price, no financing                 (1)        5         4 to 6.
Firm-fixed-price, with performance-based       (6)        4       2.5 to 5.5.
payments
Firm-fixed-price, with progress payments       (2)           3      2 to 4.
Fixed-price incentive, no financing            (1)           3      2 to 4.
Fixed-price incentive, with performance-based  (6)           2    0.5 to 3.5.
payments
Fixed-price with redetermination provision     (3)
Fixed-price incentive, with progress payments  (2)           1      0 to 2.
Cost-plus-incentive-fee                        (4)           1      0 to 2.

Cost-plus-fixed-fee                             (4)     .5          0 to 1.
Time-and-materials (including overhaul          (5)     .5          0 to 1.
contracts priced on time-and-materials basis)
Labor-hour                                      (5)     .5          0 to 1.
Firm-fixed-price, level-of-effort               (5)     .5          0 to 1.
                      COSTS FINANCED   LENGTH FACTOR   INTEREST RATE
26. WORKING CAPITAL                                          *


LINE 26: Working Capital – (See DFAR
         215-404-71-3(b))

 The interest rate is: (1) determined by the Secretary of
  the Treasurer under Pub L 92-41 (85 Stat 97) – (DFAR
  230.7100(c)(1); and (2) established semi-annually and is
  published in the Federal Register during the 4th week of
  December and June. (DFAR 230.7101-1(a))

       Prompt Payment Act Interest Rate Website:
   http://www.publicdebt.treas.gov/opd/opdprmt2.htm
                     FACILITIES CAPITAL COST OF MONEY (FCCM)
             CONTRACTOR        ASSIGNED   AMOUNT

 FACILITIES CAPITAL EMPLOYED    VALUE     EMPLOYED

27.   LAND                          0%                   $
                                                          -
28.   BUILDINGS                     0%                   $        $      -
                                                          -
29.   EQUIPMENT                     0%                   $        $      -
                                                          -
30.                                                TOTAL PROFIT   $   0.12
                                                     OBJECTIVE



                  LINE 27: FCCM attributable to land -
                           See DFAR 215-404-71-4(b)
                  LINE 28: FCCM attributable to buildings –
                           See DFAR 215-404-71-4(b)
                  LINE 29: FCCM attributable to equipment –
                           See DFAR 215-404-71-4(b)
                  LINE 30: Total of LINEs 29 & 30
   NORMAL & DESIGNATED RANGES
       FOR FCCM FACTORS
               (DFAR 215-404-71-4)


  Asset Type   Normal Value   Designated Range
Land               0%               N/A
Buildings          0%               N/A
Equipment         17.5%          10% to 25%
                                                      NEGOTIATED SUMMARY
                                                 NEGOTIATED SUMMARY
                                                         PROPOSED         OBJECTIVE         NEGOTIATED
31.   TOTAL COSTS                                         $           1        $       1

32.   FACILITIES CAPITAL COST OF MONEY (DD FORM            $          -        $        -
      1861)
33.   PROFIT                                              $       1.00         $      .12
34.   TOTAL PRICE (Line 31 + 32+ 33)                      $           2        $       1                 $
                                                                                                         -
35.   MARKUP RATE (Line 32 + 33 divided by 31)                 100.00%          12.00%
35a. PROFIT RATE (Line 33 divided by 31)                       100.00%          12.00%



“Proposed” Column:
LINE 31: Fill in contractor’s total costs (fee-bearing costs only)
LINE 32: Fill in contractor’s FCCM from DD 1861
LINE 33: Fill in contractor’s profit/fee
LINE 34: Total Price - result of lines 31 through 33
LINE 35: Markup Rate – result of lines 32 & 33 divided by LINE 31
LINE 35a: Profit Rate – result of line 33 divided by line 31 (Use this rate in
Business Clearance profit/fee documentation)
“Objective” Column is populated electronically from data above.
“Negotiated” Column is manually filled in upon reaching Government’s
objective.
                                                  CONTRACTING OFFICER APPROVAL
36. TYPED/PRINTED NAME OF CONTRACT- 37. SIGNATURE OF CONTRACTING OFFICER 38. TELEPHONE NO. 39. DATE SUBMITTED
      ING OFFICER (Last, First, Middle Initial)                                                (YYYYMMDD)




LINE 36: Contracting Officer’s name & signature.
Complete phone number with area code.



                                                         OPTIONAL USE
96.                                97.                      98.                  99.




LINES 96 through 99 – BLANK
A good workout with those
  weights works wonders!

				
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