Cost and Price Analysis

The acquisition of goods and services with Federal money requires diligence and business acumen. You will be able to conduct acquisitions for your organization with confidence with a better understanding of price and cost analyses in accordance with the Federal Acquisition Regulation (FAR). This course is designed for those with a good understanding of the Federal contracting process.

Learning Objectives

• Determine if pricing is fair and reasonable
• Suggest modifications to price or cost to assure reasonableness

Course Topics

Contract Pricing—An Overview

• Identifying the Government’s Pricing Objective
• Identifying Government Approaches to Contract Pricing
• Identifying Potential Participants in the Price Analysis
• Exercise: Fair and Reasonable

Conducting Market Research for Price Analysis

• Reviewing the Independent Government Estimate
• Reviewing Acquisition Histories
• Research Market Data
• Using Market Research to Estimate Probable Price
• Exercise: Brittle Bearings

Obtaining Offeror Information for Analysis

• Requiring Data Other Than Certified Cost or Pricing Data
• Requiring Certified Cost or Pricing Data
• Exercise: Motley Systems

Applying Price-Related Factors

• Applying Assumed Administrative Cost Factors
• Applying the Buy American Statute Criteria
• Applying Government-Furnished Property Factors
• Applying Transportation Cost Factors
• Lease vs. Purchase
• Price Evaluation Preference for HUBZone Small Business Concerns
• Determining Offered Price(s)
• Evaluating Possible Award Combinations
• Exercise: Loadstar

Comparing Prices

• Making Comparisons
• Types of Comparisons

Calculating the Should-Pay Price

• Price Index Numbers
• Trend Analysis
• Price-Volume Analysis
• Cost Estimating Relationships
• Ratio of Price to Estimated Direct Cost

Introduction to Cost Analysis

• Cost
• Cost Analysis
• Exercise: Costs and Cost Analysis

Contract Cost Principles

• General Cost Principles on Allowability
• Specific Cost Principles
• Exercise: Applying Selected Cost Principles
• Exercise: Allowability

Preparing for Cost Analysis

• Collecting and Reviewing Available Data
• Requesting and Analyzing Technical Support
• Exercise: X.Pert Analysis Request
• Requesting and Analyzing Audit Support
• Exercise: FAST Audit

Direct Labor Costs

• Analyze Direct Labor Mix
• Analyze Labor Hour Estimates
• Analyze Wage Rate

Direct Material Costs

• Proposed Direct Material Mix
• Summary Cost Estimates
• Detailed Cost Estimates
• Major Subcontract Requirements

Indirect Costs

• Importance and Composition of Indirect Costs
• Indirect Cost Rates
• The Indirect Cost Allocation Cycle
• Exercise: Cover Industries

Profit or Fee

• Identifying the Factors Affecting Profit/Fee Analysis
• Developing an Objective Using the DOD Weighted Guidelines
• Developing an Objective Using the Department of Transportation Structured Approach

Preparing for Negotiation

• Trade-Off Analysis
• Contract Type and Prenegotiation Objectives
• Documentation
• Exercise: Woodson Works