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Contract Pricing Training. Curriculum Modernization Functional Advisor letter of 2001 directed DAU to modernize curriculum: – based on updated competency.

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Presentation on theme: "Contract Pricing Training. Curriculum Modernization Functional Advisor letter of 2001 directed DAU to modernize curriculum: – based on updated competency."— Presentation transcript:

1 Contract Pricing Training

2 Curriculum Modernization Functional Advisor letter of 2001 directed DAU to modernize curriculum: – based on updated competency list – Incorporate distance learning technologies Level I curriculum designed to develop price analysis skills Level II curriculum designed to develop cost analysis skills.

3 Pricing Competencies Knowledge of the range of contract pricing techniques and appropriate applications Price & Fee Adjustment Price analysis (negotiated acquisitions) Cost analysis

4 Modernization Philosophy Alignment of mission outcomes with contract performance outcomes Command of a Common Process across any mission area –Develop solid foundation of technical understanding Thinking Business Strategists who can –Think Critically to develop effective support strategies –Think Strategically and Tactically –Team Effectively linking Mission Results with optimum Business Strategies

5 Level II certification CON 202 Intermediate Contracting 2 weeks classroom CON 204 Intermediate Contract Pricing 2 weeks classroom CON 210 Contract Law 1 week classroom Level I certification Level III certification 1 Elective 2 Electives CON 110 Mission Support Planning CON 111 Mission Planning Execution CON 112 Mission Performance Assessment CON 100 Shaping Smart Business Arrangements CON 120 Mission Focused Contracting 1 week classroom 2 weeks classroom CON 353 Advanced Business Solutions for Mission Support 2 weeks classroom 16 -24 hours, on-line Competency Based Contracting Certification Training Track current courses new courses Level I Cert Level II Cert Level III Cert 2 Electives 90 hours on-line target 2 Electives Case Based Application Supply – Body Armor Services - IT Services Supply CON 214 Effective Business Practices CON 215 Services Case CON 217 Cost/Pricing & Negotiation CON 218 Supply Case CON 216 Legal Issues 8 days classroom 9.5 days classroom 20- 30 hours, on-line 26-40 hours, on-line

6 Assignment Specific Courses Overhead Management of Defense Contracts (CON 232) – calculate the overhead, IR&D/B&P rates, and depreciation Advanced Contract Pricing (CON 235) – Procurement Environment – Market Research – Research Methods – Risk Analysis – Parametric Techniques

7 Contracting Community of Practice

8 Back-up Slides

9 Mission Planning Execution (CON 111) Purpose of conducting an analysis of a contractor’s price proposal Factors that affect price analysis considerations Factors that affect cost analysis and cost realism analysis Determine whether to use price analysis or cost analysis Preferred price analysis techniques Other information needed to perform analysis Factors that affect price comparability Select appropriate price evaluation technique Develop pre-negotiation objective Subcontract pricing considerations

10 Contracting for Mission Support (CON 120) Calculate the Government's price objective using Price Index Numbers Calculate the Government's price objective using Cost- Volume Analysis Given a contracting scenario, determine price reasonableness Determine the basis for comparison when performing price analysis

11 Cost Analysis & Negotiation Techniques (CON 217) Intro to Cost Analysis Contract Audits Accounting & Estimating Systems Analyzing Direct Material Analyzing Direct Labor Analyzing Other Direct Costs Analyzing Indirect Costs Facilities Capital Cost of Money Profit & Fee Analysis Statistics Simple Regression Analysis Improvement Curve Analysis

12 Advanced Contracting for Mission Support (CON 218) Demonstrate knowledge of various types of audits Use a DCAA audit to prepare a negotiation position Determine the allowability of contractor costs Evaluate the impact/implications of contractor accounting and estimating systems in proposal evaluation Select the appropriate method for calculating an equitable adjustment Apply the full range of contract pricing techniques Determine the appropriate contract adjustment Establish the final price or fee adjustments

13 Advanced Contract Pricing (CON 235) Procurement Environment –Seller's perspective (business and marketing strategies) –Statutory/regulatory environments with respect to TINA, TINA waivers, cost and pricing data, information other than, commercial items, commercial mods –Contract financing (PBP and commercial item) Market Research –Process/application –Techniques –Sources (including in a services environment) –Using technical experts to understand pertinent technical aspects

14 Advanced Contract Pricing (CON 235) Research Methods –Survey of pricing methods (analogies, expert opinion, cost estimating relationships, forecasting) –Normalization - compare apples and oranges –"Seeing" the data using graphical techniques –Portraying and explaining data –Using EVM data Risk Analysis –Understanding distributions –Using probabilities –Understanding risk in an IPT pricing environment

15 Advanced Contract Pricing (CON 235) Parametric Techniques –Cost Estimating relationships (CERs) –Factors –Cost Improvement Curves and applications –Simple, Multiple and Non-linear regression

16 Principles of Contract Pricing (CON 104) Contract PricingCost Analysis Market research for cost analysisDefining costs Maximizing price competitionObtaining information for cost analysis Price related information from offerorsEvaluating work design Identifying and applying price related factorsDirect material costs Comparing pricesDirect labor costs Price index numbersOther direct costs Cost-volume-profit analysisIndirect costs Net present value analysisCost allowability Cost estimating relationshipsFacilities capital cost of money Regression analysisAnalyzing profit or fee Improvement curves Accounting for differences Documenting pricing actions

17 Intermediate Contract Pricing (CON204 ) Statistics Regression Indirect Cost Analysis Fixed Price & Cost Plus Incentive arrangements Index Numbers and Economic Price Adjustments Market Research Net Present Value Equitable Adjustments Cost Realism Defective Pricing Improvement Curves Equitable Adjustments for Work Stoppages Pricing Terminations

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