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WELCOME! Small Business Boot Camp 3. What are Rates, Build Ups, Pricing and Cost Centers?. Purpose . To Provide and useful overview of components involved in building rates for all types of service contracts i.e.: Cost Plus Fixed Fee, Time and Material, Cost Plus Award Fee, Firm Fixed Price.

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welcome small business boot camp 3

WELCOME!Small Business Boot Camp 3

What are Rates, Build Ups, Pricing and Cost Centers?

purpose

Purpose

To Provide and useful overview of components involved in building rates for all types of service contracts i.e.: Cost Plus Fixed Fee, Time and Material, Cost Plus Award Fee, Firm Fixed Price

slide3

What is Direct Labor?

What is a Fully Burdened Rate?

How do I get a Fully Burdened Rate?

Can someone please explain what a cost center is?

slide4

Direct Labor Rate

Covers the basic labor cost of the employee

Fully Burdened Rate

Proposed by offeror to cover direct labor, indirect costs, and profit under a service contract.

slide5

FRINGE BENEFITS

  • DEFINITION: The costs associated with benefits provided to employees working for the corporation.
slide6

FRINGE BENEFITS

  • Paid Leave
  • Paid Holidays
  • Medical and Dental
  • Short and Long Term Disability
  • Life Insurance
  • Retirement Programs
  • Bonuses
  • Severance Pay
  • Social Security, Federal , and State Taxes
  • Employee Morale and Welfare
  • Tuition Assistance
  • Workman’s Compensation
slide7

OVERHEAD (OH)

  • DEFINITION: Overhead is traditionally defined as costs to operate local corporate operations providing indirect support to clients and direct support to contractor employees working for the client. Overhead costs are usually broken down into two separate rates:
slide8

OVERHEAD (OH)

  • CLIENT SITE: This is a rate normally applied to the cost of a contractor who is working at a government or client site.
  • CORPORATE SITE: This is a rate normally applied to the cost of a contractor who is working in support of a client, but working at an off-site location. This rate is normally higher for the client because the corporation must pay for additional facilities and equipment to provide the required support.
slide9

OVERHEAD (OH)

  • Supervisory Labor and Benefits
  • Recruiting and Hiring
  • Human Resource Support to Employees
  • Security Clearance Processing
  • Regional Office Staff Labor
  • Operating Supplies/Materials
  • Leases, Rent, and Utilities
  • Repairs and Maintenance
  • Licenses/Taxes
  • Depreciation
  • Travel
  • Professional Development
slide10

GENERAL AND ADMINISTRATIVE EXPENSES (G&A)

  • DEFINITION: Costs associated with the overall management and operation of a business (corporate headquarter costs).
slide11

GENERAL AND ADMINISTRATIVE EXPENSES (G&A)

  • Corporate Staff Labor & Benefits
  • Operating Supplies/Materials
  • Leases, Rent, and Utilities
  • Repairs and Maintenance
  • Licenses/Taxes/Insurance
  • Accounting/Banking Fees
  • Depreciation
  • Travel/Conferences
  • Business and Development
  • Professional Development
slide12

PROFIT

  • DEFINITION: The dollar amount over and above allowable costs that is paid to the firm for contract performance.
  • Remember that companies are in business to make a profit, and that in addition to covering the costs of running their businesses, they must also make a profit for growth (investment) and their shareholders (increase shareholder equity).
slide13

What is Fee then?

  • Is it the same as profit?
slide14

Wrap Rate

Someone said Wrap Rate. What is that?!

What is a good one?

Why does the Government look at that?

slide15

So, I know what components make up pricing so how does it work?

  • What gets added to what?!
  • Attachment 3 - Sub Pricing Model boot camp.xls
slide16

Cost and Price Analysis

Determining whether the proposed labor and indirect rates are fair and reasonable may require using various evaluation techniques with input from Government sources, such as:

  • Defense Contract Audit Agency (DCAA)
  • Administrative Contracting Officers (ACO)
  • ProcuringContracting Officer (PCO)
slide17

Cost and Price Analysis

We have all heard this one before:

COST REALISM…What the heck is that? Who get to decide how realistic my pricing is and why?

Let’s put the government on the spot.

slide18

Thank you!

And a big thank you to our panelist volunteers!!!