“Pricing”
“Doing Business with the Government”
State Designated as Florida’s Principal Provider
of Business Assistance [§ 288.001, Fla. Stat.]
Florida SBDC at FGCU
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 Network
Statewide network of 43 centers
Locations
involving:
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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.
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
Training
Value-added from the basics to advanced topics
Business Data & Information
Current 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, and
Semi-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)
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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:
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Employee Health Insurance
Annual Leave
Sick Leave
Family Leave
Retirement
Helping Businesses Grow & Succeed
3) Overhead Continued:
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Office Space
Furniture
Electricity
Air Conditioning
Heat
Equipment
Copier
Computers
Phone
Helping Businesses Grow & Succeed
4) Overhead Continued:
 Utilities:
 Sewage
 Waste Water Treatment
 Trash Removal
 Recycle Program
Helping Businesses Grow & Succeed
5) Overhead Continued:
 Insurance
Building, Car, Truck
Worker’s Compensation

Contract Requirements
Credit Cards
Bldg. Maintenance
Lawn Service
 Depreciation
 Interest on Loans
Helping Businesses Grow & Succeed
What are the Cost Elements?
(State)
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Salaries
Fringe Benefits
Travel
Other Direct Costs
In-House Charges
Indirect Cost
Profit
Helping Businesses Grow & Succeed
Build a Cheeseburger?
Helping Businesses Grow & Succeed
Base Line for the Cheeseburger
 One make every 30 seconds, start to finish
 Includes:
 Direct Labor
 Overhead
 Material
 Profit
Helping Businesses Grow & Succeed
Direct Labor
 ½ minute labor $00.20
 1 minute labor $00.40
 Counter Clerk
 Cashier
 Cook
Total
$8.05
$8.05
$8.05
$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
Material Costs
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Bun Bottom
Mayonnaise
Mustard
Patty
Cheese
Pickle
Lettuce
Tomato
Ketchup
Sesame Seed Bun Top
Total
$00.1251
$00.0005
$00.0007
$00.2900
$00.0300
$00.0200
$00.0080
$00.0500
$00.0004
$00.1253
$00.6500
Helping Businesses Grow & Succeed
Material Costs
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Wrapping Paper
Bag
Napkins
Salt/Pepper
Total
$00.015
$00.015
$00.015
$00.015
$00.006
Helping Businesses Grow & Succeed
Cost Elements for the
Cheeseburger?
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Direct Labor
Overhead 100%
Material
Subtotal
Profit 10%
Total Cost
$00.20
$00.20
$00.71
$01.11
$00.11
$01.22
Helping Businesses Grow & Succeed
What is Total Cost?
 Cost Elements + Profit = 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
 Subtotal
$03.20
$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
Are you Making a Profit?
 Sales-Direct Cost-Indirect Cost= Net 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 Contracts
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Firm-Fixed-Price
Firm-Fixed Price with Economic Adjustments
Indefinite Delivery Contracts
Time and Material
Labor Hour
Letter Contract
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
TIPS
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
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Helping Businesses Grow & Succeed
Summary
 Cost
 Cost Realism
 Price
 Price Analysis
 Profit
Helping Businesses Grow & Succeed
Q&A
“Daniel Telep Jr.”
Florida Gulf Coast University FSBDC
239.745.3708 or 239.745.3700
“dtelep@FGCU.edu
www.fsbdcswfl.org
Helping Businesses Grow & Succeed