Bootcamp Day 1 (Bidding/Proposal/Negotiations/TINA/Cost or pricing data

Question 1

TINA acronym

Answer 1

Truth in Negotiations Act

Question 2

Cost vs. Price vs. Estimate?

Answer 2

Cost – Generally assumed to be “actual” cost as provable by company’s books and records. (May include allocations from overhead pools)
* Price – Price is whatever the company chooses to set for an item in a market. No relationship to costs.
* Estimate – An estimate is often an element of either price or cost. It generally does not represent actual costs incurred and may represent future costs to be incurred

Question 3

major components of pricing?

Answer 3

• Material
  – Direct purchase
  – Inter-organizational transfers
• Labor
  – Direct – Productions
  – Engineering (NRE)
• Overhead
  – Direct
  – Material handling O/H
  – Direct labor burden
• G & A – Selling
  – Administration
  – Plant-level
  – Corporate allocations
• Profit
• Cost of money
  – facilities

Question 4

costs billed to government?

Answer 4

• Must be allowable
• Includes both direct and indirect costs
  – Direct (material, labor, ODCs etc.)
  – Overhead (department indirect)
  – General and administrative
• Need for consistency
  – estimated/costing/invoicing

Question 5

indirect rates serve what 3 purposes?

Answer 5

• Bidding
  – All types of contracts
• Billing
  – Cost-type contracts and progress payments under fixed price
• Final billing rate
  – Adjustment of billing

Question 6

What is Cost or Pricing Data?

Answer 6

• FAR defines “cost and pricing data” as :
  – All facts
  – As of the time of price agreement
  – That prudent buyers and sellers would reasonably expect to affect price negotiations
• Cost and pricing data are factual, not judgmental, and are therefore verifiable
• Cost and pricing data includes, but is not limited to, such factors as: – Vendor quotations
  – Nonrecurring costs
  – Information on purchasing volume
  – Data supporting projections of business prospects and objectives and related operations costs
  – Unit-cost trends such as those associated with labor efficiency
  – Make-or-buy decisions
• Planning devices such as budgets and business plans are not cost or pricing data because they are judgments
• The definition of cost or pricing data includes what the contractor actually knew at the time of agreement on price. The knowledge of individuals within the company is imputed to the contractor. It is not limited to what the individual negotiator actually knows.
• If the contractor has reasonable assurance that a future event will occur, such as an additional order which will enable the contractor to take advantage of vendor’s discount, then the contractor is require to disclose this information

Question 7

define “SWEEPS”

Answer 7

• Under TINA, the legal obligation, which is clear, is to have disclosed all current cost or pricing data as of the date of the contract price agreement, not the signing of the certificate. It could be argued that a SWEEP after an agreement on price, but before the date of signature, would be a useful preventative measure. There is no legal obligation to SWEEP up to the date the contract is signed, but it is just good business practice
• The FAR doesn’t require SWEEPS, but a review after “price agreement” date, but before signing the certificate (date), is important to see whether anything has changed or details missed that should have been disclosed