Cost Element Breakdown
Clear, concise and accurate cost proposals reflect the offeror’s financial plan for accomplishing the effort contained in the technical proposal. As a part of its cost proposal, the offeror shall submit cost or pricing data in the format suggested by FAR 15.403-5(b)(1), or in the contractor’s format containing the information outlined below, together with supporting breakdowns. All direct costs (labor, material, travel, computer, etc.) as well as labor and overhead rates should be provided. Following this narrative is an example of pricing information that may be required. The supporting schedules may include summary level estimating rationale used to generate the proposed costs. Information such as historical cost information, judgment, analogy to other similar efforts, etc. is generally accepted methods of projecting labor expenditures. Purchase order history, catalog prices, vendor quotations, firm negotiated values, engineering estimates, etc. are generally accepted methods of projecting material requirements. The cost element breakdown(s) may include the following.
- Direct Costs: For direct inputs such as labor hours, material dollars, non-factored travel costs, computer usage, etc. provide supporting documentation such as: Labor Hours by Category of Labor Labor/Overhead Rates by Category Overhead/Factor Base Identification Breakout of Travel Computations Kinds, Types, and Detailed Pricing of Materials Amount and Kind of Computer Usage and How Costs Derived Direct labor hours, with their applicable rates, must be broken out and the bases used clearly identified. For material costs identify what will be purchased and the basis for the estimated cost, e.g. vendor quote, engineering estimate, etc.
- Labor and Overhead Rates: The labor and overhead rates and all pricing factors should be identified. If the rates are based on current experience in your organization, provide the history base used and clearly identify all escalation, by year, applied to derive the proposed rates. If computer usage is determined by a rate, identify the basis used and rationale used to derive the rate.
- Material/Equipment: List all material/equipment items with associated costs and advise if the costs are based on vendor quotes, data and/or engineering estimates; provide copies of vendor quotes and/or catalog pricing data.
- Subcontractor Costs: Submit all subcontractor proposals and analyses with your cost proposal. If the subcontractor will not submit cost and pricing information to the offeror, this information must be submitted directly to the Government for analysis. On all subcontracts and interdivisional transfers, provide the method of selection used to determine the subcontractor and the proposed contract type of each subcontract. An explanation shall be provided if the offeror proposes a different amount than that quoted by the subcontractor.
- Special Tooling or Test Equipment: When special tooling, and/or test equipment is proposed, attach a brief description of said items and indicate if they are solely for the performance of this particular contract or project and if they are or are not already available in the offeror’s existing facilities. Indicate quantities, unit prices, whether items are to be purchased or fabricated, whether items are of a severable nature and the basis of the price. These items may be included under Direct Material in the summary format.
- Consultants: When consultants are proposed to be used in the performance of the contract, indicate the specific project or area in which such services are to be used. Identify each consultant, number of hours or days to be used and the consultant’s rate per hour or day. State the basis of said rate and give your analysis of the acceptability of the consultant’s rate.
- Facilities Capital Cost of Money: If Facilities Capital Cost of Money is claimed, a properly executed DD Form 1861 is required in support of the dollars proposed.