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23 Cards in this Set
- Front
- Back
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Price |
Cost + Profit = Price Cost= expenses ktr will incur in performance of kt work Direct |
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Direct Cost |
Expense incurred that can be tied to specific cost objective on the contract. Direct result of accepting work. (“Job” created by contract”) |
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Indirect Cost |
Expense that benefits multiple cost objectives or the company as a whole. (Recorded as incurred and accumulate in cost pools). |
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Direct Cost Examples |
Labor Materials Travel Consultant Costs |
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Indirect Cost Examples |
General Operating expenses, such as: Furniture and equipment Utility costs Pay of management personnel Property taxes and insurance Procedure depreciation for building |
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Variable Costs |
Expenses that go up or down depending on the total volume of work (labor and material costs) |
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Fixed Costs |
Costs that remain the same (relatively) regardless of the amount of production (rent, top level management, property insurance, and property taxes) |
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Semi-Variable Costs |
Costs that are partly fixed and partly variable, depending on the amount of production being done. (Utility costs) |
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When the volume of production increases |
The unit cost decreases because the fixed costs are spread over a larger number of units |
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Direct Labor |
Expense incurred for people who can be specifically identified with the contract work. Examples are scientists, engineers, carpenters, welders, electronic technicians, and similar persons. |
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Direct Material |
Products that become a part of the finished work or are consumed in doing the work. Construction examples: steel beams, concrete blocks, and roofing material. R&D examples to develop a new aircraft: sheet metal, gauges to be used in the cockpit, tires, engines, and radio equipment. |
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Other Direct Costs |
Other than direct labor and direct materials, others include consultant fees, costs for special equipment, and travel costs. |
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Indirect cost categories |
Overhead costs General and administrative (G&A) costs |
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Overhead cost |
“Burden/Loading”. Consists of all the company’s general operating expenses, typically for small businesses with few product lines. Company recovers by including a portion of them in the charges made to each customer. (Pay of division chief, secretary, workbenches, equipment used to produce, maintenance costs, and cost of building |
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General & Administrative (G&A) |
Generally general operating costs not controllable at the division levels. Top level. Pay of president and other company officers, a small admin staff, HQ sales people, advertising, office equipment, utilities, property taxes, insurance costs, building costs, other expenses. |
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Difference between Overhead & G&A costs |
Small companies operating with one major product line or service normally have overhead costs only, and all general operating expenses fall into this category. |
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G |
U |
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Government pays indirect costs? |
Costs must be reasonable, allowable and allocable to the contract. Pays only the fair share of those costs based on the allocation method. |
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Cost Realism |
Independent review and evaluation of specific elements of each offeror’s proposed cost estimate to determine if the estimates are REALISTIC for the work performed, reflect a CLEAR UNDERSTANDING of the requirements and are CONSISTENT with the unique method of performance and materials described in the offeror’s technical proposal. |
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Weighted Guidelines PCFC |
DD Form 1547 for structured approach to profit analysis 4 Profit Factors 1. Performance Risk (Technical/Management Cost Control) ****Technology Incentive for acquisitions that include development, production, or application of innovative new technologies. 2. Contract Type Risk (degree of cost risk accepted by the contractor under varying contract types) (Adjustment added to the profit objective for contract type risk for FFP contracts with progress payments) 3. Facilities Capital Employed (Encouraging and rewarding capital investment in facilities that benefit DoD. Recognizes both the facilities capital that the contractor will employ in contract performance and the contractor’s commitment to improving productivity) land, buildings, equipment 4. Cost Efficiency (incentive for contractors to reduce costs) |
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AFI 63-138 |
Acquisition of services -at or above SAT -performance based -what, not how -cost, schedule, performance outcomes are identifiable and measurable (quality, timeliness, quantity) |
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AFI 63-101 |
Lifecycle Management -think ACAT |
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Changes Clause ...can unilaterally change |
Supplies -drawings, specs, designs -method of shipment/packing -place of delivery Services -description of service -time of performance -place of performance |
