2013-MG203

Supplier Cost/Price Analyses

Management Track

MG2-3_Presentation_SupplierCostPriceAnalyses_Bishop

Abstract:

Under United States Federal Government contracts, an important but overlooked aspect is the audit and evaluation of a subcontractor’s cost proposal. Requirements in the Federal Acquisition Regulations (FAR) provide for certain visibility into subcontractor’s cost proposal depending on the value of the proposal. Additionally it is critical to note the FAR puts the onus of subcontractor cost (or price) analysis on the prime contractor. The expectation is that the same level of detail that the prime includes in its proposal should be included as support to a subcontractor’s cost proposal. Effectively the prime must perform subcontractor cost analysis in accordance with the FAR. The actual scope of the prime contractors review will depend on each particular situation such as type of product or service, dollar value, purchase method, and subcontract type.
Material and subcontract costs are a significant cost element in most proposals. Estimating professionals are challenged to evaluate supplier proposals and quotes and include the best estimate of the supplier prices in their proposals. This presentation will cover best practices in obtaining adequate information from the suppliers and techniques for evaluating that information. We will present:
• Techniques for obtaining adequate information and proposals from the supplier for evaluation;
• Guidelines for evaluating supplier information and proposals;
• Examples of working papers to document the evaluations;
• Best practices for evaluating supplier direct labor, material, forward pricing rates, and other costs;
• Techniques for evaluating the technical aspects of supplier information such as direct labor hours and bill of material quantities;
• Examples of analytical procedures to use in evaluating supplier information, including sampling techniques, learning curves, and regression analyses; and
• Examples of information included in Cost Estimating Manuals.
Your presenters are well experienced in the government contracting community with one having 30 plus years with DCAA and another having 20 plus years working within industry. If you would like to attend a discussion where hands-on experienced presenters will communicate real time examples and practices to fit your needs, plan on attending.

Author(s):

David Eck
Dixon Hughes Goodman
David has more than 31 years experience working in the government accounting field. He has extensive knowledge and experience in all aspects of government laws and regulations, including the Federal Acquisition Regulations, individual agency supplements to the FAR, the Truth in Negotiations Act, the Cost Accounting Standards, and the Office of Management and Budget (OMB) Circulars. Prior to working with Dixon Hughes Goodman, David worked over 30 years with the Defense Contract Audit Agency (DCAA) at field, regional and headquarters offices. Over the last several years, he was the Regional Director of DCAA’s Central and Mid-Atlantic Regional Offices and responsible for auditing over 100 major contractors and several thousand smaller contractors.
David has extensive knowledge and experience with:
Contractor Business Systems
Contract proposals and postaward (defective pricing) audits
Forward pricing rate proposals
Incurred cost submissions
Supplier cost/price analyses
CAS compliance, Disclosure Statements, and Cost Impact Statements
Terminations/equitable adjustment proposals
Earned Value Management System (EVMS) guidelines
Audits of grants, cooperative agreements, and contracts at educational institutions and other nonprofit organizations, including A-133 Single Audits
He has participated extensively in the development of changes to the FAR, DFARS, and the OMB Circulars, more recent noting his participation in the development of the new Contractor Business Systems DFARS rule. David was also responsible for development and implementation of DCAA’s contract audit policy, including the Contract Audit Manual and standard audit programs. He led the development of the Parametric Estimating Manual, which contributed significantly to improving estimating techniques to price government contracts.

Todd Bishop
Dixon Hughes Goodman
Todd has over 20 years of experience helping companies identify and resolve issues associated with cost accounting, financial management systems, requests for equitable adjustments, and claims. He has an extensive background in the application and interpretation of rules, regulations, and standards applicable to government contractors.
Todd began his career as an auditor with a government contractor responsible for performing DCAA type audits for civilian agencies. He was responsible for evaluating contractor submissions to ensure that they were based on current, accurate, and complete information and were prepared according to appropriate regulations. Subsequent to this, Todd consulted with Federal Government contractors for 12 years and spent 7 years with a multi-billion dollar contingency contractor, leading its Government Compliance department.
Todd’s work includes helping clients understand the requirements associated with compliance with Federal business system requirements, developing and implementing pricing strategies, indirect cost allocation solutions, developing accounting, estimating, procurement, project management and integrated system requirements for clients in various fields including manufacturing, health care, construction, energy and service industries. Examples of specific projects include:
– Analyzed contractor and subcontractor claims in accordance with contract requirements and provided guidance to ensure allowability of the costs.
– Provided litigation support in reviewing and analyzing contractor’s information.
– Provided testimony to international arbitration tribunals related to contractual disputes
– Audited contractor’s claims on behalf of the Massachusetts Turnpike Authority’s “Big Dig” project.
– Assisting in developing and preparing the price proposal including the narrative to ensure compliance with basic FAR Part 15 requirements.
– Assisted in negotiating and definitizing specific pricing and cost issues on multi-billion dollar proposals.
– Performed standard business system reviews for federal government contractors including accounting, billing, labor, purchasing, estimating and compensation.
– Performed a billing business system review and developed the policies and procedures for a large contingency contractor meeting the contractor’s specific requirements where the Government deemed the system adequate.
– Performed an estimating business system review and developed a cost estimating manual tailored to meet the contractor’s specific requirements including policies and procedures, detailed instructions, and the general information necessary to prepare supportable cost estimates where the Government deemed the system adequate.
– Provided training on various topics including cost allocations, cost allowability, Cost Accounting Standards, timekeeping, etc.
Professional & Civic Organizations
– National Contract Management Association, member
– Professional Services Council, member
Education
Washington & Lee University
– Bachelor of Science in Business Administration with an emphasis in Accounting