Government Contract Services
Contract pricing and proposal support Government acquisition of goods and services can be rejected by the customer. A proposal that does not conform to the proposal requirements can be rejected by the customer as non responsive, resulting in a lost opportunity and wasteful expenditure of bid and proposal resources. A contractor’s understanding of these complex processes is critical to the development of capture strategies and winning government contracts. There are two basic approaches to pricing government contracts: cost-based and price-based. The cost-based approach requires estimates of material, labor and other direct costs, plus estimated overhead and general and administrative expenses that would be incurred to accomplish the work required by the contract. In addition to these costs, the prospective contractor may add its profit or fee. The price-based approach relies on prices at which same or similar items previously have been sold in the commercial marketplace. The price-based approach dictates the proposal data submitted by the prospective contractor. The cost-based approach requires “certified cost or pricing data,” per Federal Acquisition Regulation (FAR) 15.403-4, while the price-based approach uses “data other than certified cost or pricing data” per FAR 15.403-3. The distinction is significant because the type of pricing proposal data establishes the government’s access to records and audit rights, as well as remedies over defective pricing. The government’s proposal instructions are contained in the solicitation provisions of the Invitation for Bid (IFB) or Request for Proposal (RFP). The Uniform Contract Format is intended to provide uniformity and consistency in contracting among all federal agencies, as well as to simplify the contract solicitation and award process. Most of the key requirements can be found in Sections L, Instructions, Conditions and Notices to Offerors, and Sections M, Evaluation Factors for Award of the Uniform Contract Format. When the government is purchasing a commercial item, it uses a form other than the standard format. The purpose of the alternative format is to make it easier for commercial companies to sell their supplies and services to the government.
There are fewer contract terms and conditions, and these may be tailored according to customary commercial practice. In these circumstances, key requirements can be found in FAR 52.212-1 and FAR 52.212-2 of the Uniform Contract Format for Commercial Items.
Practical experience Ernst & Young LLP’s Government Contract Services (GCS) professionals draw on their experience as well as technical skills honed while employed by the government or working for companies performing federal contracts. Some have been government contracting officers and others have been government contract auditors. Other GCS professionals have similar experience in private sector positions, such as business management executives and proposal managers. This diversity of experience allows GCS to offer you contract pricing and proposal support services on several fronts. Our contract pricing and proposal support offerings include: • Reviewing IFBs and RFPs for risk and compliance issues and developing questions for government clarification • Assisting in the development and operation of the proposal team • Helping compile pricing proposals, including establishing indirect cost rates and factors • Helping apply the Department of Defense’s Weighted Guidelines Method of profit analysis or the structured approaches required by other government agencies • Helping create special pricing provisions • Drafting basis of estimate documenting the methodology and techniques used to establish proposal cost or pricing • Identifying and helping to resolve issues involving certified cost or pricing data and helping to perform sweeps of cost and pricing data or information other than certified cost or pricing data • Advising on implementation of commercial pricing techniques, including the preparation of the Commercial Sales Practices for Federal Supply Schedule contracts • Working with companies on conducting final or “Red Team” proposal reviews • Helping prepare proposals for equitable price adjustments, termination settlements and claims
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