1. 1 Cost/Price Proposal Overvi ew Communications, Outreach, Multimedia and Informational Technology (COMIT) John Moore Cost/Price Analyst February 18, 2015

2. 2 Agenda SEB Pricing Process Government Resource Estimate (GRE) Workbook Templates Overview –Workbook Technical Templates –Workbook Cost Templates –Workbook Process Flowchart Common Cost/Price Volume Errors

3. 3 The SEB Pricing Process What does the SEB do with your cost/price proposal? –Read all narrative portions of Cost Volume –Validate all Offerors’ Excel Pricing Models (EPMs) –Integrate EPMs of the prime and major subs –Test EPMs –Make probable cost/cost realism adjustments (if necessary) Error Corrections/Reconciliations Direct Labor Rate and/or Indirect Rate Adjustments Staffing Adjustments (FTEs and/or Skill Mix) Non-Labor Resource Adjustments

4. 4 The SEB Pricing Process (Con’t) Examples of probable cost/cost realism adjustments: –Error Corrections/Reconciliations Mathematical corrections Formula error corrections Linking error corrections Subcontractor FBRs utilized by the Prime Offeror do not match the FBRs proposed by the Subcontractor

5. 5 The SEB Pricing Process (Con’t) Examples of probable cost/cost realism adjustments: –Direct Labor Rate Adjustments Incumbent Labor Rates – Where an Offeror has indicated the intention of both retaining incumbents and paying incumbent direct labor rates, and has not utilized the incumbent direct labor rate, the Offeror’s proposed direct labor rate will be adjusted to reflect the incumbent direct labor rate (reference the EPM Templates “TC(e) – Incumbency Assumptions” and “Fully Burdened Rates Template (FBR)”).  Scenario A: Offeror proposes 100% incumbent retention for SLC “X” and indicates intention to pay incumbent direct labor rates to 100% of incumbents, but does not utilize the incumbent direct labor rate. 100% of the Offeror’s proposed direct labor rate will be adjusted to reflect the incumbent’s direct labor rate.

6. 6 The SEB Pricing Process (Con’t) Examples of probable cost/cost realism adjustments: –Direct Labor Rate Adjustments (Con’t) Incumbent Labor Rates (Con’t)  Scenario B: Offeror proposes 100% incumbent retention for SLC “X” and indicates intention to pay incumbent direct labor rates to 75% of incumbents, but does not utilize the incumbent direct labor rate. 75% of the Offeror’s proposed direct labor rate will be adjusted to reflect the incumbent’s direct labor rate. The remaining 25% of the proposed direct labor rate will not be adjusted to reflect the incumbents proposed direct labor rate, but will be evaluated for reasonableness based upon the Offeror’s supporting rationale and/or documentation provided.

7. 7 The SEB Pricing Process (Con’t) Examples of probable cost/cost realism adjustments: –Direct Labor Rate Adjustments (Con’t) Incumbent Labor Rates (Con’t)  Scenario C: Offeror proposes 10% incumbent retention for SLC “X” and indicates intention to pay incumbent direct labor rates to 50% of incumbents, but does not utilize the incumbent direct labor rate. 5% (10% x 50% = 5%) of the Offeror’s proposed direct labor rate will be adjusted to reflect the incumbent’s direct labor rate. The remaining 95% of the proposed direct labor rate will not be adjusted to reflect the incumbents proposed direct labor rate, but will be evaluated for reasonableness based upon the Offeror’s supporting rationale and/or documentation provided.

8. 8 The SEB Pricing Process (Con’t) Examples of probable cost/cost realism adjustments: –Direct Labor Rate Adjustments Other Than Incumbent Labor Rates – Use latest Department of Labor (DOL) wage determination rates for non-exempt labor categories. Use other current labor market surveys and indices for exempt labor categories. –Indirect Rate Adjustments Use DCAA and/or DCMA indirect rate information, where available. Use information contained on the Offeror’s Overhead and G&A templates. –Technical/Management Evaluation (Staffing and NLRs) Based on all technical or management weaknesses related to resources (FTEs and/or Skill Mix and/or NLRs). Discrepancies between Technical and Cost/Price Volumes.

9. 9 The SEB Pricing Process (Con’t) Develop Pricing Charts for Presentation to the Source Evaluation Board (SEB) & the Source Selection Authority (SSA) –Proposed Cost vs. Probable Cost and Delta –Rationale for Probable Cost Adjustments

10. 10 Government Resource Estimate (GRE) What is the GRE? –Government’s best estimate of resources (FTE and/or skill mix) necessary to perform the Task Orders (TOs) –Based on historical usage factors –Grass roots estimate, not budgetary GRE will be provided to Offerors –Applicable to the TOs over a twelve month period (CY 1) –FTEs and skill mix provided for Task Order 1 –FTEs only provided for Task Orders 2 and 3 The GRE is not intended to influence the Offeror’s proposed estimates. Offerors shall develop their own estimates that are: –Consistent with Offeror’s Management Approach –Consistent with Offeror’s Technical Approach

11. 11 Workbook Templates Overview (Con’t) Workbook Technical Templates –Technical Resources Template – IDIQ (TRT – IDIQ) One template for each Task Order –Technical Resources Summary Template – IDIQ (TRST – IDIQ) One template that covers all three TOs and captures resource estimates before and after proposed efficiencies, if any. Functions as the link between Volume I – Mission Suitability and Volume II – Cost/Price Proposal –Technical templates are required from Prime Offeror only

12. 12 Workbook Templates Overview (Con’t) Workbook Cost Templates –*Fully Burdened Rates Template (FBR) –**Minor Subcontract Template (MST) –**Task Order Pricing Template (TOPT) –**IDIQ Summary Cost Template – Task Order (ISCT – TO) Offeror Proposed Hours (Task Orders 1, 2, and 3) –**IDIQ Summary Cost Template – Specified Resources (ISCT – SR) Government Specified Hours (Future Task Orders) * Required of Prime and each Major Subcontractor ($5.0M value or >) **Required of Prime only

13. 13 Workbook Templates Overview (Con’t) Workbook Cost Templates (Con’t) –* Overhead Template (OHT) –*General & Administrative Template (GAT) –*Total Compensation Templates [TC(a), TC(b), TC(c), TC(d), and TC(e)] –*Cognizant Audit Office Template (CAOT) –**Phase-in Template (PIT) * Required of Prime and each Major Subcontractor ($5.0M value or >) **Required of Prime only

14. Workbook Templates Overview (Con’t) Workbook Process Flowchart 14

15. 15 Common Cost/Price Volume Errors Proposals with omissions: –Lack of detail on Overhead, G&A and Other Indirect Rates –Lack of narrative supporting rationale Logic Issues: –Inconsistent content within the proposal Failure to follow template instructions: –Using hard numbers instead of formulas and/or links where appropriate –Placing Prime or Major Subcontractor FBRs where Team Composite FBRs are Required –Proposed FBRs in Cost/Price Volume do not match the Section B FBRs identified in the Model Contract

16. 16 Discrepancies and/or Lack of reconciliation between different areas of the Offeror’s proposal –Technical Approach –Management Approach –Cost/Price Volume –Major Subcontractor data submitted to the Government versus Major Subcontractor data utilized in the Prime’s Proposal –Basis of Estimate (BOE) not provided or inadequate BOE should be specific, clear, and detailed Common Cost/Price Volume Errors (Con’t)

17. Cost/Price Proposal Questions? 17