“SMALLTOFEDS” – By Ken Larson
“Understanding the weighted guidelines method can assist in achieving a higher profit because a contractor can present a profit position in a contract proposal that logically supports the elements required by FAR Part 215-404-4.”Profit”during negotiation.“
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“The accepted template for negotiated procurements with the government is as follows:
A. Audit
B. Fact-finding
C. Pre-award Survey
D. Cost Negotiations
E. Final Profit Negotiations
F. Contract Award
Although policy in FAR Part 215-404-4 states that contracting officers ….” do not perform a profit analysis when assessing cost realism in competitive acquisitions”, it is wise to understand that during Steps A trough D above, the contracting officer and his representatives are indirectly forming opinions of the risk to the contractor and the mix of cost elements in the proposal. That opinion directly effects profit negotiations and judgments at Step E, above.
Although the above FAR clause allows for 3 methods of profit negotiation, the most common method contracting officers use is the Weighted Guidelines Method.
You can influence the government negotiator (s) on the weighted guidelines profit elements during the early stages of negotiations as you settle on cost factors.
You do so by presenting the data and narrative basis of estimate in such a fashion as to identify risk and other key area of weighted guidelines analysis. Insure the technical, management and cost volumes of your proposal, if they are required, are consistent in that regard.”
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