“Pricing”
Florida SBDC at FGCU
Helping Businesses
Grow & Succeed
“Doing Business with the Government”
State Designated as Florida’s Principal Provider of Business Assistance [§ 288.001, Fla. Stat.]
Helping Businesses Grow & Succeed
Mission Statement
We are a customer-driven organization of business professionals, dedicated to helping small businesses succeed, by enthusiastically providing creative solutions which exceed customer, employee, and stakeholder’s expectations.
Helping Businesses Grow & Succeed
Statewide Infrastructure
Our NetworkStatewide network of 43 centers involving: • State Universities• Colleges• Chambers of Commerce• Economic Development Councils• Federal, State & Local Government
Agencies
Additional outreach is provided at more than 50 outreach locations, utilizing resource partners such as chambers of commerce, economic development organizations, business incubators and lending institutions.
Locations
Helping Businesses Grow & Succeed
Accelerating Florida’s Economy
Only statewide provider of entrepreneurial and emerging growth company services, playing a vital role in Florida’s economic development:
• Assisting entrepreneurs in every stage of the business cycle, from prospective entrepreneurs to mature businesses looking for growth opportunities and more;
• Working with firms in all industry sectors; • Utilizing the expertise and resources of some of the best universities in
Florida (Florida Gulf Coast University)and a professional staff of eleven business consultants;
• Accessing the resources of a national network of more than 5,000 SBDC professionals; and
The FSBDCN is nationally accredited through the Association of SBDCs by Congressional mandate.
Helping Businesses Grow & Succeed
FSBDC Services
Consulting Personalized, confidential and provided at no cost
TrainingValue-added from the basics to advanced topics
Business Data & InformationCurrent and expansive information for better decision-making
Helping Businesses Grow & Succeed
Objectives
Cost
Cost Realism
Price
Price Analysis
Profit
Helping Businesses Grow & Succeed
References
FAR 14 Sealed Bidding
FAR 15 Contracting By Negotiations
FAR 16 Type of Contracts
FAR 30 Cost Accounting Standards Administration
FAR 31 Cost Principles and Procedures
FAR Appendix B Cost Accounting Rules
www.acquisition.gov/far
Helping Businesses Grow & Succeed
Methods of Procurement
Sealed Bids (Price only) Invitation For Bid (IFB)
Negotiated (Price or Cost) Request For Quote (RFQ) (Price only) Request For Proposal (RFP) (Price or Cost Data)
Helping Businesses Grow & Succeed
What is Cost?
Cost is the expense the contractor will incur in performing the work
Helping Businesses Grow & Succeed
Cost Criteria:
Reasonable, Allowable and Allocable
Variable, Fixed, andSemi-Variable
Direct and Indirect
Helping Businesses Grow & Succeed
COST CONTRACTS
Cost-Plus-Fixed Fee
Cost-Plus-Award Fee
Cost-Plus-Incentive Fee
Cost-Sharing
Helping Businesses Grow & Succeed
Three Basic Cs For Cost Type Contracts
Know your Costs
Know your Customer
Know your Competition
Helping Businesses Grow & Succeed
What will the Government Pay?
The Government will reimburse the contractor to do the work as long as the costs are allowable, reasonable, and properly allocable to the contract
Helping Businesses Grow & Succeed
What are the Cost Elements? (Your Company)
Direct Labor Overhead Material Subcontractors General and Administrative Travel Profit
Helping Businesses Grow & Succeed
1) Overhead may include:
Cost of Doing Business!!!!! Taxes
Federal Taxes Social Security (FICA)
Employer Portion Medicare Taxes Property Taxes
Licenses State Licenses County Business Licenses
Helping Businesses Grow & Succeed
2) Overhead Continued:
Fringe Benefits:
Employee Health Insurance Annual Leave Sick Leave Family Leave Retirement
Helping Businesses Grow & Succeed
3) Overhead Continued:
Office Space Furniture Electricity Air Conditioning Heat Equipment
CopierComputersPhone
Helping Businesses Grow & Succeed
4) Overhead Continued:
Utilities: Sewage Waste Water Treatment Trash Removal Recycle Program
Helping Businesses Grow & Succeed
InsuranceBuilding, Car, TruckWorker’s Compensation
Contract Requirements Credit Cards Bldg. Maintenance Lawn Service
Depreciation
Interest on Loans
5) Overhead Continued:
Helping Businesses Grow & Succeed
What are the Cost Elements? (State) Salaries Fringe Benefits Travel Other Direct Costs In-House Charges Indirect Cost Profit
Helping Businesses Grow & Succeed
Build a Cheeseburger?
Helping Businesses Grow & Succeed
One make every 30 seconds, start to finish Includes:
Direct Labor Overhead Material Profit
Base Line for the Cheeseburger
Helping Businesses Grow & Succeed
Direct Labor
½ minute labor $00.20 1 minute labor $00.40
Counter Clerk $8.05 Cashier $8.05 Cook $8.05 Total $24.15
Helping Businesses Grow & Succeed
Overhead
100%
Helping Businesses Grow & Succeed
Materials
Build a cheeseburger starting at the bottom Bun Bottom Mayonnaise Mustard Patty Cheese Pickle Lettuce Tomato Ketchup Sesame Seed Bun Top
Helping Businesses Grow & Succeed
Bun Bottom $00.1251 Mayonnaise $00.0005 Mustard $00.0007 Patty $00.2900 Cheese $00.0300 Pickle $00.0200 Lettuce $00.0080 Tomato $00.0500 Ketchup $00.0004 Sesame Seed Bun Top $00.1253
Total $00.6500
Material Costs
Helping Businesses Grow & Succeed
Material Costs
Wrapping Paper $00.015 Bag $00.015 Napkins $00.015 Salt/Pepper $00.015
Total $00.006
Helping Businesses Grow & Succeed
Cost Elements for the Cheeseburger?
Direct Labor $00.20 Overhead 100% $00.20 Material $00.71 Subtotal $01.11 Profit 10% $00.11 Total Cost $01.22
Helping Businesses Grow & Succeed
Cost Elements + Profit = Total Cost
What is Total Cost?
Helping Businesses Grow & Succeed
Cost Realism
Cost and Technical proposals must be realistic for the work to be performed
Reflect a clear understanding of the requirement
Cost must be consistent with the various elements of the technical proposal
Helping Businesses Grow & Succeed
Profit
Represents the payment the contractor may receive for performance over and above the cost incurred for doing the work
Contractor/Government Risk
Helping Businesses Grow & Succeed
Profit Statutory Limits
Cost Plus Fixed Fee 10%
Research and Development Cost Plus Fixed Fee 15%
Architect and Engineering Services 6%
Helping Businesses Grow & Succeed
What is Price?
Cost Elements + Profit = Price
Helping Businesses Grow & Succeed
What is the Price for your Service?
Helping Businesses Grow & Succeed
Price
Direct Labor $10.00 (Unloaded Rate)
Overhead $15.00 Est. 150%
Material $03.20 Subtotal $28.00
Profit $02.80
Total Price $31.00 (Loaded Rate)
Helping Businesses Grow & Succeed
Profit Factors for FFP Contracts
Market Competition
Contractor Risk 100%
Helping Businesses Grow & Succeed
Sales-Direct Cost-Indirect Cost= Net Profit
Are you Making a Profit?
Helping Businesses Grow & Succeed
Price Analysis
Process of examining and evaluating a proposed price without regard to evaluating the separate cost elements and proposed profit.
Helping Businesses Grow & Succeed
Firm-Fixed-Price Firm-Fixed Price with Economic Adjustments Indefinite Delivery Contracts Time and Material Labor Hour Letter Contract
Firm Fixed Price Contracts
Helping Businesses Grow & Succeed
Price must be Fair and Reasonable
Based on: Adequate Price Competition Previous Prices Yardstick Published Prices or Independent Government Estimate
Helping Businesses Grow & Succeed
2080 Hours = Government Year Loaded-Unloaded Rates Separate Technical and Cost Proposals DCMA-
Direct Labor Rates Overhead G&A (For a Specific Company)
Best Value Awards Technical Past Performance Price
TIPS
Helping Businesses Grow & Succeed
Cost
Cost Realism
Price
Price Analysis
Profit
Summary
Helping Businesses Grow & Succeed
Q & A
“Daniel Telep Jr.”Florida Gulf Coast University FSBDC239.745.3708 or 239.745.3700“[email protected]
www.fsbdcswfl.org