Forward Pricing Cost Proposals

U.S. government officials are adamant that cost proposals be prepared following federal solicitation requirements and they may reject bids they find inadequate.

Your company’s cognizant federal auditor, typically the Defense Contract Audit Agency (DCAA), has the discretion to judge — and reject — price proposals.

The auditors use guidelines found in Federal Acquisition Regulation (FAR) 52.215-20, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data. That regulation in turn requires that FAR Table 15-2 be used for most cost proposals. These requirements apply to the negotiation of contract prices based on certified cost or pricing data.

If an audit is requested, the auditor typically uses a standard checklist to determine if the proposal meets the requirements. Copies are available from your local contract audit office or online here on the DCAA website. Checklists of this nature may also be included in solicitations, or provided by the soliciting agency or by upper tier contractors to their subcontractors.

The DCAA’s checklist follows the Table 15-2 criteria for, among other things, general content, submitting information regarding proposed materials, direct labor, indirect costs, facilities capital cost of money and profit. For example, the checklist asks if the proposal includes an index referencing all cost or pricing data and information accompanying or identified in the proposal, which relates to FAR Table 15-2.1.B. There are also checklist items that apply to change order proposals.

Your business can use the checklist as the baseline for developing its own even more detailed lists that are tailored to each line of business. Your enterprise should also use the checklist for a final pre-submission review to verify that the pricing proposal is adequate.

When you devise your own internal checklist, include additional questions that identify:

  • Internal guidance and standard indexing, numbering, or lettering schema;
  • The functional area responsible for indexing the proposal contents; and
  • The organizational element that will be responsible for verification once the proposal is complete but before it is submitted.

Tips

  • Use the U.S. Government forward pricing checklist to prepare your own, tailored to specific jobs.
  • Expand your checklist to incorporate unique aspects, nuances and internal standards and approaches.
  • Identify the individuals responsible for performing each element on the checklist.
  • Identify the individuals responsible for final verification that all checklist items have been satisfactorily accomplished.
  • Incorporate your checklist into your estimating policies and procedures.

 

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