BUS501001- The Independent Government Cost Estimate and the Statement of Work
Evaluate the importance of the IGCE
Defined as the estimated cost or price of supplies or services to be purchased for the federal government (Compton, Page 19), the Independent Government Cost Estimate (IGCE) plays an intricate role in government contracting. All expected cost to be incurred by the contractor is included in the IGCE. Costs will either be direct or indirect. An example of direct labor would be the annual and hourly salaries for all workers. Other items that should be listed on the IGCE are period of performance, fringe benefits, overhead, travel, transportation and general and administrative expenses (G&A). It is a required document in a complete contract file. (State, 14 FAH-2 H-351)
Since an IGCE is an estimate of products or supplies, there’s always the possibility of them being either underestimated or overestimated. As a result, many are prepared incorrectly. Acquisition audit reviews have shown that too many contracts have incomplete or inadequate estimates. (Compton, Page 19) For standard materials readily available on the commercial market, catalog or market survey prices may suffice for the estimate. The remaining discussion will consider the estimate when the requirement is for services, or for materials for which catalog or market prices are not available.
Cost estimates have three primary purposes: to reserve funds for the contract during the acquisition planning phase, as a basis for comparison for costs or prices proposed by prospective vendors and to determine price reasonableness if only one vendor responds to a solicitation. (Compton, Pages 19-20) They are also useful in establishing funding priorities and forecasting annual budgets. The ultimate goal is to prepare a well written IGCE that will result in best buy for the government. This means that it will be cost effective in the preparation to award thorough contracts.
Examine the reasons for confidentiality of the IGCE. Propose two (2) actions that should be taken in order to maintain the confidentiality of the IGCE.
The purpose of confidentiality for the IGCE is to ensure full and open competition amongst the contractors. Another purpose of IGCE confidentiality is to prevent contractors from knowing exactly how much the government will accept. Therefore, it is important to safeguard the IGCE. There are no situations that exist that allow potential vendors to have access before proposals are received. Not only should the IGCE be safeguarded from contractors, but also anyone that is not a part of the acquisition team. It is also not wise to make it available to anyone outside the acquisition team that is preparing the pre-award documentation for the proposed acquisition. (Compton, 21) Maintaining IGCE confidentiality protects sensitive or proprietary information from being released. In the event that the IGCE has been released, the Contracting Officer (CO) has the authority to cancel the acquisition. The CO may cancel the proposed acquisition if he or she determines that all vendors cannot compete equally. (Compton, Page 21)
Maintaining IGCE confidentiality can be accomplished by limiting the amount of individuals responsible for handling them. In order to maintain a high level of trust from our public, Contracting Officer Representatives (COR) must avoid all appearances of conflicts of interest. CORs who may have direct or indirect financial interest in an organization that they are monitoring must advise their supervisor of the conflict so that appropriate action may be taken. (DOD COR Handbook, Page 16) Therefore, it should only be handled by either the CO or the Project Officer. Another method to use is to ensure that the IGCE is stored appropriately and marked as confidential also known as restrictive markings. This will require a locked safe, cabinet, drawer or room in a secured area with limited access by only by top members of the acquisition team. It should not be discussed with employees outside of acquisitions or potential bidders. With this method, information is privy to certain individuals. As a result of the information being leaked, there would be only two suspects. As a CO, there are several ways to ensure confidentiality regarding the IGCE: restrictive markings and a non-disclosure agreement. In addition, all acquisition team members should sign a Non-Disclosure Agreement. This agreement confirms that employees understand penalties will be accessed if sensitive procurement information is revealed by them.
Create a detailed cost estimate
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Contracting Officer Tijuana Silvers
Period of Performance
January 26, 2015 through January 25, 2016
Project Description: Build 52 Towers with Camera and Radars
Overhead
Direct Labor By Category
Days
Rates/Day
Foreman
3390
$150
508500
Structural Iron/Steel Workers
3390
$75
254250
Painters
2650
$30
79500
Systems Specialist
3100
$175
542500
IT Training
140
$225
31500
Total Direct Labor
$1,416,250
Fringe Benefits
Included In Direct Labor Cost
Direct Material Costs
Purchased parts and Supplies
Subcontracts
Other Materials
$225800
0
$35000
Total Material Costs
$260,000
Other Direct Cost
Travel
Consultants Other
$25650
$101850
0
TOTAL DIRECT COSTS
$127500
General and Administrative Expense
$155450
Profit
$40000
TOTAL CONTRACT COST
$2M
Evaluate the types of statements of work in regard to compatibility with this contract.
Statements of Work are also undervalued in terms of contracting. They are supposed to detail the specifics of the contract. The formation of a good statement of work can be a challenging task. (ICN, 2012) There are three primary types of statements of work: FunctionalBased SOW, Performance-Based SOW, and Design Base SOW. A functional-based SOW describes the “what, when, and where” of the supplies or services to be provided, and it allows the vendor the freedom to determine the most efficient means of accomplishing the work. (Compton, Page 49) The Performance-Based SOW is similar to the traditional SOW but allows for more flexibility in how the contractor will satisfy the contract objectives. It outlines clearly defined and specific goals; technical and schedule requirements are stated in terms of desired results; but “it does not describe how the work is to be accomplished.” (Compton, Page 50). The Design-based SOW describes design requirements or essential physical characteristics and is used for primarily architect-engineer, construction, and commercial contracts. This type SOW generally outlines how the work is performed and materials to use (Compton, p. 51).
Determine the most appropriate type of statement of work for this contract. Support your position.
The Performance-Based SOW is the best statement of work to use for the purchase of constructing fifty-two towers with cameras and radars because this type of SOW structures all aspects of the acquisition around the purpose of the work to be performed as opposed to a broad and imprecise statements of work. It accentuates measurable, measurable performance requirements and quality standards, including surveillance. This type of SOW permits the buyer a better arrangement of flexibility. More precisely, it will change the focus from processes to outputs, holds the contractor liable for finished outcome, decrease cost from exclusion of needless work that will save in training and maintenance cost throughout the 10 year life of the contract. This allows for innovation by the contractor, and reduction in government oversight.
References
Compton, P. B. (2010). Federal Acquisition: Key Issues and Guidance. Vienna, VA:
Management Concepts, Inc.
Feldman, S. W., & Keyes, W. N. (2011). Government Contracts in a Nutshell (5th Edition). St. Paul, MN: Thomson Reuters.
"Office of the Under Secretary of Defense for Acquisition, Technology & Logistics
OUSD(AT&L)."Office of the Under Secretary of Defense for Acquisition, Technology & Logistics OUSD(AT&L). N.p., n.d. Web. 26 Jan. 2015.
Statements of Work That Work."Procurement Consulting : Strategic Sourcing Process :
Negotiation Training : Procurement Conference : DoBetterDeals.com. N.p., n.d. Web. 26 Jan. 2015.
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