book

Guide to Contract Pricing, 5th Edition

Name: Guide to Contract Pricing, 5th Edition
Author: John E. Murphy
ISBN: 9781567263060

by John E. Murphy

May 2009

Beginner to intermediate

272 pages

8h 44m

English

Berrett-Koehler Publishers

Read now

Unlock full access

Cover
Title Page
Copyright
About the Author
Contents
Preface
Acknowledgments
Chapter 1: Basic Pricing Policy and Concepts
Pricing Restraints in Government ContractingUse of Public FundsPromote Full and Open CompetitionPricing Advantages in Government ContractingThe Government Is the Only BuyerHigh Volume PurchasesThe Government Pays Its DebtsPrompt Payment of BillsMost Favored Customer TreatmentCost and Pricing DataWhat Is a Fair and Reasonable Price?Market-Based PricesCost-Based PricesDefinition of CostDefinition of ProfitDefinition of PriceCost-Plus-Profit PricingMore on the Pricing of Commercial ProductsVariable (Incremental) Cost PricingPrice AnalysisCost AnalysisAdequate Price CompetitionA Single Reasonable OfferCertificate of Independent Price Determination (FAR 3.103-1)Precautions against Buy-Ins
Chapter 2: Contracting Methods and Contract Types: Pricing Implications
Contracting MethodsSealed Bidding (FAR Part 14)Negotiation (FAR Part 15)Government Contract Types (FAR Part 16)Impact of Cost or Price Evaluation on Contract Type (FAR 15.305(a)(1))Fixed-Price Contracts (FAR Subpart 16.2)Cost-Reimbursement Contracts (FAR Subpart 16.3)Simplified Acquisition Procedures (Far Part 13)Price Analysis for Purchases below $100,000
Chapter 3: Price Analysis
Purposes of Price AnalysisForecasting the Likely Price of an AcquisitionEvaluating Bids, Proposals, and QuotationsSelecting the Bidder or Offeror for AwardPreparing for Price Discussion in NegotiationMethods for Performing Price AnalysisPrice AnalysisPricing Information Provided By the OfferorAuxiliary Techniques for Price AnalysisThe Best Way to Do Price Analysis

Chapter 4: Cost Principles and Cost Classifications
Cost AccountingCost ClassificationsReasonable, Allowable, and Allocable CostsVariable, Fixed, and Semi-Variable CostsDirect and Indirect CostsCost PrinciplesCost Accounting Standards
Chapter 5: obtaining Cost or Pricing data
Obtaining Cost and Pricing DataHierarchical PreferencesExceptions to Cost or Pricing Data RequirementsCost Analysis and Cost RealismCost AnalysisCost RealismObtaining Cost InformationInformation Other than Cost or Pricing Data (FAR 15.402(a)(2) and 15.406-2)Certified Cost or Pricing DataSubmission of Cost or Pricing DataPaper or Electronic Data SubmissionIdentifying the Consequences of Certifying Defective DataDefective Pricing ExamplesDefective Cost or Pricing DataContract Clauses
Chapter 6: analysis of direct Labor Costs
Analyzing Direct Labor CostsDirect Labor CostIndirect Labor CostAllocation of Labor to Direct or Indirect CostHow Companies Estimate Direct Labor CostsWork Breakdown StructuresPhase DiagramsThe Importance of Analyzing Direct Labor CostsFixed-Price ContractsCost-Reimbursement ContractsFormat for Submitting Direct Labor CostsGeneral Method for Analyzing Direct Labor CostAnalysis of Proposed Skills and HoursAnalysis of Proposed RatesAssessing Proposed Average Wage RatesProjecting Wage RatesThe Historical Cost Method for Estimating Labor CostsLabor Standards Methods for Estimating Labor CostsMeaning and Types of Labor StandardsComponents of Standard TimeHow Labor Standards Are UsedEstimating Labor Hours Based on StandardsThe Learning Curve (Improvement Curve)Learning Curve TablesLearning Curve Applications and LimitationsAnalysis of Engineering or Scientific LaborFactors to Consider in Analyzing an Engineering and Scientific Labor ProposalDirect and Indirect Labor in Manufacturing
Chapter 7: analysis of Direct Material and other Direct Costs
Direct Material CostsEstimating Direct Material CostsEstimating Unit CostsCost Analysis for Direct Materials—General RulesFar Submission Requirements For Material CostsAnalysis of Proposed Estimated Materials CostsAnalysis of Proposed Materials and Quantities—Estimating Direct Material CostsThe Statistical ApproachPriced Bill of MaterialsProjection of Average Unit Material CostUnit Price of MaterialImportance of the Direct Material Cost EstimateNegotiating Fixed-Price ContractsNegotiating Cost-Reimbursement ContractsOther Direct Costs
Chapter 8: analysis of indirect Costs
What Are Indirect Costs?Types of Indirect CostsOverhead ExpenseControlling Overhead CostsThe Composition of Overhead CostsMethods of Allocating Overhead CostSummary of AllocationEffect of Different Allocation BasesTypical Example of Overhead AllocationUnderabsorption and Overabsorption of Overhead CostsCost Analysis of Overhead RatesAnalysis of the Overhead RateLocation of Certain Labor-Related ExpensesVacation, Holiday, and Sick PayProper Handling of Overtime Premium CostsForward Pricing Rate AgreementsAnalysis of Overhead CostAnalysis of the Basis of AllocationThe Importance of Overhead Rate AnalysisGeneral and Administrative (G&A) ExpenseThe Government View of G&A ExpenseThe Allowability of G&A ExpenseProblems in the Allocation of G&A ExpenseAllocation Methods for G&A ExpenseThe G&A Portion of a Pricing SubmissionAnalysis of the G&A Rate
Chapter 9: Facilities Capital Cost of Money
The Concept of Facilities Capital Cost of MoneyThe Allowability of Facilities Capital Cost of MoneyContract Provisions and ClausesThe Procedure for Determining Facilities Cost of MoneyStep 1: Determine the Current Cost-of-Money RateStep 2: Record Net Book Value of PropertyStep 3: Allocate the Average Net Book Value of PropertyStep 4: Record Total Net Book Value by Organization SegmentStep 5: Calculate the Imputed Cost of CapitalStep 6: Allocate the Total Imputed Cost for All FacilitiesFacilities Capital Cost of Money Factors (Column 7)Final Calculation of Facilities Capital Cost of Money
Chapter 10: Profit or Fee determination
How Are Profits Set By A Company?Broad Government Policies Regarding ProfitMisconceptions about Profit and FeeAdequate Profit Is in the Government’s Best InterestDetailed Government Policies Regarding ProfitContracting Officer Responsibilities (FAR 15.404-4(c))Factors Bearing on Profit Levels for Government ContractsThe Structured Profit ApproachGSA Structured Profit GuidelinesProfit FactorsSummary
Chapter 11: Pricing Equitable adjustments for Contract Changes
Reasonable Cost Approach: Preferred Measure of Equitable AdjustmentIndirect Costs in Equitable AdjustmentProfit in Equitable AdjustmentProcessing of Equitable AdjustmentsTimeliness of Equitable AdjustmentsEquitable Adjustment Based on Segregated CostsApproaches to Equitable AdjustmentReasonable Cost ApproachTotal Cost ApproachJury Verdict ApproachReasonable Value ApproachFormat for Submitting Proposals for Equitable AdjustmentsCase Illustration: FMI Services, Inc.—Equitable AdjustmentEquitable Adjustments for Government-Caused DelaysBasic Eichleay FormulaModifications to the Basic Eichleay Formula
Chapter 12: Contract Pricing: the Role of auditors
Reviewing and Evaluating Proposed or Incurred CostsPreaward Survey to Review and Approve Accounting SystemsPreaward Survey to Determine Financial CapabilityDefense Contract Audit Agency
Appendix A: Cost-reimbursement Contracts: How they Work
Appendix B: Cost accounting System Review Self-assessment Pursuant to Standards in Preaward Survey of Prospective Contractor Accounting System (SF 1408)
Appendix C: demonstrating Market-Based Commercial Prices
Appendix D: Government Contract Pricing Sources of information
Appendix E: Sample Cost or Pricing data and Cost Allocation Plans
Index

Content preview from Guide to Contract Pricing, 5th Edition

APPENDIX B

Cost Accounting System Review Self-Assessment, Pursuant to Standards in Preaward Survey of Prospective Contractor Accounting System (SF 1408)

Each standard from SF 1408 is shown in bold type, followed by the M&M assessment.

Murphy & Murphy Associates (M&M)http://www.mma.com/100 Oak Street, Suite 303Pittsburgh, PA 15213

Telephone: 412.897.4305Fax: 412.897.4309

INSTRUCTIONS FOR USE

FAR 16.301-3(a) provides that a cost-reimbursement contract may be used only when, “The contractor’s accounting system is adequate for determining costs applicable to the contract.” Often contracting officers will ascertain if the contractor’s accounting system meets this requirement by commissioning a Preaward Survey of Prospective Contractor Accounting System ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.

Read now

Unlock full access

More than 5,000 organizations count on O’Reilly

O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.

Julian F.

Head of Cybersecurity

I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.

Addison B.

Field Engineer

I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.

Amir M.

Data Platform Tech Lead

I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.

Mark W.

Embedded Software Engineer

Publisher Resources

ISBN: 9781567263060

Cloud Computing

Data Engineering

Data Science

AI & ML

Programming Languages

Software Architecture

IT/Ops

Security

Design