Contract Pricing and Negotiations

In other to get an idea on how to do this assignment, I want you to read through this document. it was the first assignment that was done by one Tutor and I did bad on the grading. After the references to this paper, you will see the instructor note. please read it carefully before attempting to write the second paper. The due date is on the attached document. it is on the 3rd of November.

Independent Government Cost Estimate (IGCE)

Momo D. Kamara

University of Maryland University College

Author Note

This paper was prepared for ASCM 628 9040 taught by Professor Dorrell Crittenden

Why IGCE is Important?

The IGCE (Independent Government Cost Estimate) refers to the estimated price or cost for the purchases or the services which are to be for, by the government to the federal government (Compton, 2010). IGCE is very important in the government contracts. This is because when the government is contracting all the cost which is to be incurred by the contractor are factored in the IGCE. This is irrespective of whether the cost is direct or indirect. For instance, the cost of labor would include the annual, monthly and hourly payments for all the workers involved are factored in. Other items which should be factored in the IGCE include the performance period of the contract, the administrative cost, travel, transport and communication cost and the fringe benefits. The IGCE is required as a complete document when the contract is being signed by the government and the contractor (Feldman & Keyes, 2011).

The IGCE is the cost estimate of the suppliers and the purchases that are made by the national government to the federal governments. Therefore, it is possible for the estimates to either be overestimated or underestimated (Compton, 2010). Consequently, the estimates are prepared incorrectly. The audit review of the acquisition has shown that most of the contract entered to, have inadequate or incomplete estimates. However, the standard materials which are available in the market such as the catalog and the information on the market survey may be enough for effective estimates if used well. The following discussion focuses on the estimates of the services where the catalogs or any information on the market survey on the prices is not available.

The estimation of the cost plays three key roles. The first role is to help the government to determine the funds to reserve at the acquisition planning phase. This is because the estimates help the government to compare the process proposed by the prospective vendors and determines how reasonable the prices are as they try to solicit for a vendor. The estimates are also important in the establishment of the priorities in the allocation of funds and forecasting of the budgets annually (Compton, 2010). The main objective of the IGCE in a written form is to help the government to get the most cost-effective supplies and services. This means that government will be sensitive to cost as it negotiates the contracts (Feldman & Keyes, 2011).

IGCE and Confidentiality

According to Compton (2010), the IGCE should always remain confidential. The main reason why the IGCE should be confidential is to ensure that the process of awarding the tenders is transparent and competitive among the contenders. The other reason why the IGCE should remain confidential is to prevent the contractors from knowing what amount the government is likely to accept. In this regard, it is important to safeguard the IGCE because there is no existing situation which allows the vendors to access it before they make their proposals. It should be safeguarded from access by any person who is not part of the acquisition team tasked with the responsibility of preparing the pre-awarding documentation. The maintenance of the confidentiality of the IGCE protects the leakage of any sensitive information which if released can compromise the integrity of the process making the contracting officer (CO) cancel the acquisition. The CO has the authority to cancel the acquisition if it comes to his knowledge that the vendors are not likely to compete fairly.

One of the best ways to maintain the confidentiality of IGCE is to minimize the number of people who have access or handles it. Further to enhance the public trust in the whole process of acquisition, the representatives of the CO must avoid any conflict of interest in the process. In case any of the representatives has any interest in the matter in question, they should inform their supervisors in advance so that the appropriate measures may be taken (OUSD (AT&L) Website, 2015). Given the above position, the most appropriate persons to handle the IGCE are the project manager or the CO. The other way to ensure the Confidentiality of IGCE is through restrictive marking. For instance, if it is marked ‘confidential’ it will have to be kept at a very confidential area with limited access to the acquisition team. This would ensure that the procurement information does not leak to any unauthorized party.

Types of Statements of Work in regard to Compatibility with this Contract

In the government contracting, one of the most challenging tasks is the preparation of the statements of work. This is because there is the risk on one undervaluing them which becomes a challenge to the execution of the contract (ICN, 2012).

The main types of the statements of work are three. The functional statements of work which is the first, describes where, when and what supplies and services will be provided. This allows the contractor an opportunity to decide the most effective way of executing the contract. The other type is performance-based statements of work which allows flexibility on how the contractor will meet the objectives of the contract (Compton, 2010). It outlines and defines the goals of the contract as well as the schedule requirements without providing on how those goals are to be met. The design based statements of work provide the physical characteristics and the designs of the work. It provides how the work is to be done as well as the material to be used. It is mostly used in construction work (Compton, 2010).

The most Appropriate Statement of Work in the Present Contract

The performance-based is the most effective for the contract of construction of forty towers with CCTV surveillance. This is because the statement of work will provide all the aspects as well as the objective of the contract. It is possible to, measure the performance and

the quality of the work done. Further, this statement of the work will allow the contractor creativity and innovation in their work. It will, therefore, be easy to hold them accountable for any work not well done.

basic cost/price elements estimates

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 cost of Materials Supplies and purchases Other Materials		$225800 $35000
The Total cost of Materials		$260,000
Other Direct Cost
Travel Consultants Other		$25650 $101850 0
SUM OF DIRECT COSTS		$127500
Contingencies and other Expenses		$155450
Profit		$40000
TOTAL CONTRACT COST		$2M

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.

ICN (2012) Statements of Work That Work.” Procurement Consulting: Strategic Sourcing Process: Negotiation Training: Procurement Conference: DoBetterDeals.com.

OUSD(AT&L) Website (2015)”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).

INSTRUCTOR NOTE

ASCM 628 9040 2178 Paper #1
Name: Momo Kamura
Date: 10/15/2017
MHP IGCE Cost Element Documentation	Rating	Score
MHP Direct Cost basis Documentation	Partially Met	1.563
MHP Indirect Cost basis Documentation	Partially Met	1.563
MHP G&A, COM, and Profit basis Documentation	Partially Met	1.563
MHP IGCE Cost Element Documentation Total		4.69
Organization and Mechanics
Paper length	Substantially Met	1.250
4 References	Substantially Met	2.500
General writing mechanics – Organization, Headings, Formatting, Correctness	Substantially Met	2.500
Organization and Mechanics Total		6.25
Assignment Total		11.00
Momo, The scope focus of the Paper 1 Assignment called for documentation to support the basic cost/price elements estimates that are included in the given MHP IGCE, explain how each of these elements are typically derived in the estimation process, and present Paper 1 using appropriate academic writing mechanics and within APA formatting standards. You did a good job in capturing important points by explaining why the IGCE is important, its confidentiality, and Statements of Work. It highlights a good explanation and rationale that may be tied to the acquisition process beyond the IGCE and for future negotiations. It includes some well-designed templates to identify, analyze, and selection for proceeding with the technical negotiation relevant to CCTV surveillance, which is not a requirement, and beyond the scope of this Assignment and IGCE Cost Elements. You did earn partial credit for the information because it is implicitly useful for analysis in future work. Please keep in mind that the level of aggregated total cost is disaggregated to represent a summary sub-total costs at the Cost Element level for the MHP IGCE. That is direct, indirect costs, Cost of Money, G&A, and Profit. Your Paper briefly mentions direct and indirect costs but does not unpackage the detail and how the individual cost elements are typically derived, a major requirement. Improvement would be made by discussing (documenting) the specific Cost Elements in the MHP IGCE in primary favor of listing the requirements for CCTV specifications, which are not relevant in the scope of this Paper 1 Assignment. There are abundant sources for information to document the basis of Cost Elements in the IGCE. Your Course Material provides adequate background to meet the basic Assignment requirements. Module 1: Assigned presentations in Module 1 especially the cost principles & procedures presentation shows the fundamentals of direct and indirect costs elements. Other examples may be found in FAR Part 31.2, www.usaid.gov/sites/default/files/documents/1868/3… – Independent Government Cost Estimate. http://ezproxy.umuc.edu/login?url=http://search.eb… – Improving the Reliability & Validity of Independent Government Cost Estimates. Module 2, Market Research Summary also Reference useful information for the cost element composition. Mechanically, you earned credit for the satisfactory page length, and relative quality, and you used, at least 4, relevant sources important for benchmarking critical thought, to develop ideas that are appropriate for contributing to the discipline and theme of the Assignment. In context citations and parenthetical documentation are appropriate, and are in agreement with the Reference List. The Paper is done with the use of Headings, and no errors in grammar which impede the conveyance of the narrative you presented.