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Cost-Based Pricing

Book Description

This master reference is essential if you contract with the government!
Correctly pricing your goods or services—and making certain that those prices are in compliance with myriad federal rules and regulations—is essential to doing business with the government…and ensuring your commercial success. Cost-Based Pricing: A Guide for Government Contractors shows you how to appropriately estimate and price for government contracts and defend those estimates in a government contracting and subcontracting environment. This practical book includes coverage of all government pricing rules and regulations as well as pertinent aspects of related laws, such as the Truth in Negotiations Act.
The book walks you through every step of the estimating process. From figuring direct labor costs to intra-company transfers to contract modifications, the coverage is extensive yet accessible for even those new to the process. Using Cost-Based Pricing, you will be able to:
• Develop more realistic estimates
• Enhance your support of those estimates in negotiations
• Avoid violations of the Truth in Negotiations Act
• Increase your chances of securing a fair and reasonable price
Cost-Based Pricing: A Guide for Government Contractors can make the difference between your success—and profitability—and failure in the federal government arena.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. About the Author
  5. Dedication
  6. Contents
  7. Illustrations
  8. Tables
  9. Exhibits
  10. Preface
  11. Chapter 1: Pricing Concepts
    1. Cost-Based Pricing
    2. Parametric Estimating
    3. Should-Cost Pricing
    4. Other Pricing and Estimating Methods
  12. Chapter 2: Direct-Labor Dollars
    1. Direct-Labor Hours
    2. Direct-Labor Rates
    3. Basis of Estimate
  13. Chapter 3: Direct Material and Subcontract Costs
    1. Material Quantities
    2. Material Prices
    3. Subcontract Prices
    4. Intercompany Transfers
    5. Basis of Estimate
  14. Chapter 4: Indirect Costs
    1. Indirect Cost Structure
    2. FAR Subpart 31.2 Cost Limitations
    3. Estimating Principles
    4. Estimating Worksheets
  15. Chapter 5: Other Direct Costs
    1. Establishing Other Direct Costs
    2. Estimating Other Direct Costs
    3. Currency Exchange
    4. Basis of Estimate
  16. Chapter 6: Facilities Capital Cost of Money
  17. Chapter 7: Profit or Fee
    1. The Federal Acquisition Regulation
    2. Department of Defense Profit Guidelines
    3. NASA Guidelines
    4. Other Agencies’ Guidelines
  18. Chapter 8: Federal Acquisition Regulation Requirements
    1. FAR Table 15-2
    2. Field Pricing Support
    3. Consistency in Estimating and Recording Costs
    4. Price and Cost Realism
    5. Estimating Systems—FAR
    6. Estimating Systems—Defense FAR Supplement
    7. Forward Pricing Rate Agreements
    8. Defense Contract Audit Agency Proposal Reviews
    9. Proposal Presentation
  19. Chapter 9: Contract Modifications
    1. Direct-Labor Hours
    2. Direct-Labor Rates
    3. Direct Materials and Subcontracts
    4. Other Direct Costs
    5. Estimating Techniques
    6. Profit
  20. Chapter 10: Improvement Curves
    1. Application of the Improvement Curve Concept
    2. Description of the Improvement Curve
    3. Fitting the Improvement Curve to Data
    4. Characteristics of the Improvement Curve
    5. Improvement Curve Types
    6. Fitting the Improvement Curve to Lot Data
    7. Improvement Curve Techniques
    8. Coefficient of Determination
    9. Selection of the Curve
    10. Engineering and Other Changes
    11. Variations in the Theory
  21. Chapter 11: Commercial and Market-Based Pricing
    1. Commercial and Market Pricing
    2. Commercial Pricing Additives
    3. Price Analysis
    4. Value-Based Pricing
    5. Incremental Pricing
    6. Activity-Based Costing and Pricing
    7. Design-to-Cost
  22. Chapter 12: Defense Contract Audit Agency Proposal Reviews
    1. Direct Labor
    2. Direct Materials
    3. Other Direct Costs
    4. Indirect Costs
  23. Chapter 13: The Truth-in-Negotiations Act (Public Law 87-653)
    1. Covered Contracts
    2. Special Subcontracting Considerations
    3. Proving Defective Pricing
    4. Letter Contracts
    5. Preventing Defective Pricing
  24. Appendices
    1. Appendix A: Audit Program for Evaluation of Cost Realism in Price Proposals
    2. Appendix B: Audit Program for Estimating System Controls
    3. Appendix C: Audit Program for Audit of Forward Pricing Rate Agreement
    4. Appendix D: Audit Program for Price Proposal
    5. Appendix E: Audit Program for Cost Element Review
    6. Appendix F: Internal Control Matrix for Audit of Estimating System Controls
  25. Index