Cost Proposal Narrative

The following is a sample Cost Proposal Narrative, found in typical cost proposals submitted to the government or government prime or upper level contractors.

1 Cost Proposal Introduction

This cost proposal presents our estimated costs in response to RFQ________________________. This volume includes [ Enter Contractors Name Here] total cost to provide the products/perform the services described in our Technical Proposal. The first page of this volume provides the total proposed cost, fee and total cost as required by the RFQ.

To help [ Customer] achieve its strategic objectives, [ Contractors Name] proposes to provide a team of knowledgeable professionals with unmatched qualifications and demonstrated expertise. Our ability to provide the best mix of professionals to meet your requirements is matched by our ability to deliver services in a cost-effective manner. We are submitting technical and cost proposals that provide the greatest value for work performed, while minimizing the total costs to the government for completing assigned tasks/delivering identified products. Our costs are realistic, and our ability to deliver work at our stated costs is demonstrated by our previous contract delivery/support efforts. Our cost is an important element in this total proposal.

1.1 Achieving Cost Realism

We propose realistic deliverable costs that reflect the right mix of professional skills needed to execute assignment orders effectively. We establish costs that are achievable, and we manage our work to complete assigned deliveries/tasks within contracted costs. Our historical record of contract performance supporting the Federal government provides evidence of our cost realism:

• We have achieved contract compliance exhibiting the highest standards of cost accountability in cost audits and in detailed reviews of our costs with various Contracting Officer’s Representatives (CORs).

• [Contractor] has consistently met all contract deliverable requirements for all of our customers contracts. Our record of delivery speaks for itself; we complete the job on schedule and within the limits of funding assigned/fixed contract price to the contract. We provide quality services/products at a fair price.

1.2 Ensuring the Cost-effectiveness of Our Work

It is important to recognize the cost effectiveness of our products/services. We have consistently delivered, and will continue to deliver, quality services and products on an economical basis. We understand the need to minimize the cost to our customers. We provide our services and products for less total cost.

Our cost-effective support is based upon our ability to minimize the level of effort required to complete assigned tasks. We require fewer hours and incur less cost in performing work, and you spend less time in obtaining the solutions you require. These benefits and savings occur throughout the contract period of performance, not just at the start of the contract. We achieve these savings by:

• Developing and applying proven technical approaches and performing credible analyses that are effective, achieve the results required, and provide direct benefits and cost savings to your programs;

• Applying structured methodologies and specialized models adapted to your requirements that automate data compilation and documentation tasks, enabling us to increase our analytical support while significantly reducing the number of hours required to support your programs;

• Integrating common efforts across multiple programs and organizations, eliminating redundant tasks and providing consistent and accurate information and analysis to support management’s requirements;

• Using our direct experience in working with all areas of the Federal Government to anticipate your requirements and provide responsive support, thereby eliminating start-up, learning, and training costs for each task; and

• Assigning the best mix of labor by assigning work among each labor category in the most cost-effective manner.

Our approach results in reduced time and effort required by our project team members and your technical managers in performing work. [Contractor] applies proven technical approaches and performs each task properly, providing you with cost savings and a total reduction in the cost of work performed throughout the contract period of performance.

1.3 Delivering the Greatest Value

We provide tangible returns for every contract dollar invested in us. We accomplish this by providing credible cost analyses, effective management approaches, and pertinent information to enable you to achieve maximum results. We intend to deliver our results to you with the best value for the Government and with fewer contract hours. You can achieve significant returns for each contract dollar invested with benefits and cost savings ultimately vesting with the EPA. 2 Cost Proposal Methodology

2.1 Overview

This just gives provides a high level overview of the specific requirements, and how those requirements are going to be met and lays out the cost proposal format and information presentation. Examples are:

• 1. Total Contract Summary Proposal

• 2. Total Base Period (Including Base and Optional Quantities)

• 3. Base Period, Base Quantity

• 4. Base Period, Optional Quantities

• 5. Total Option Period 1 (Including Base and Optional Quantities)

• 6. Option Period 1, Base Quantity

• 7. Option Period 1, Optional Quantities

• 8. Total Option Period 2 (Base Quantity Only)

or

• Schedule 1 - Cost Summary by Cost Element Consolidation Schedules

• Schedule 2 - Summary Costs by Cost Element by Item Number/CLIN

• Schedule 3 - Detail Cost by Cost Element by Item Number/CLIN

2.2 Assumptions, Practices, and Exceptions

[Contractor]discloses the following assumptions, practices, and exceptions:

• 1) Period of performance,

• 2) Proposed Loaded Direct Labor rates,

• 3) Personnel compensation policies, and

• 4) Work Hours.

2.2.1 Period of Performance

[Contractor] used a period of performance beginning May 15, 2002, in this proposal:

• Base Period: May 15, 2002 – May 14, 2004 (24 months total)

• Option Period 1: May 15, 2004 – May 14, 2006 (24 months total)

• Option Period 2: May 15, 2006 – May 14, 2007 (12 months total)

Escalation

In this proposal, we escalate our direct costs at 2.0% per year for out-years. We use the budgeted FY 2006 indirect cost rates for subsequent proposed years.

2.2.2 Personnel Compensation Policies

Contractors’s policy provides for a complete review of all salaries and subsequent adjustments and promotions yearly. This review is the culmination of our career planning and performance evaluation process that involves informal feedback and discussion, as well as required evaluations and reviews.

Salary increases are based predominately on performance, but are also affected by market forces and the economic well-being of our practice.

Contractor awards annual compensation increases effective July 1 and bonuses in August of each fiscal year. Benefits to employees include eight holidays, four to six weeks of personal days, depending on labor classifications, and other benefits including payroll taxes, health and life insurance, and pension.

2.2.3 Work Hours

Office hours are 8:30 a.m. to 5:30 p.m., Monday through Friday, with one hour per day for lunch. This translates into a 40-hour workweek. There is no overtime compensation for exempt employees. Any “uncompensated overtime” in actual practice reduces our overhead pools as appropriate.

We do not propose “uncompensated overtime”.

2.3 Proposed Elements

The major elements of our proposal include

• 1) direct labor,

• 2) other direct costs,

Materials,

Travel

• 3) team subcontract costs,

• 4) indirect costs, and

• 5) fixed fee.

2.3.1 Direct Labor

[Contractor] does not propose direct labor for company management or clerical hours. In accordance with our CASB Disclosure Statement, the labor costs associated with company management are indirect labor and recovered as part of our indirect rates. Although we do not currently anticipate the need for clerical efforts, depending on the requirements of a particular task assignment order, and in accordance with our CASB Disclosure Statement, any direct labor hours incurred by clerical labor will be proposed and charged directly to the contract assignment task order.

Exhibit 1. [Contractor] Direct Labor Rates

Labor Category	FY2002 Rates	FY2003 Rates
Manager	$98.80	$100.78
Engineer	$72.75	$74.21
Analyst	$54.33	$55.42

2.3.2 Certification of Key Personnel

[Contractor] certifies that all key personnel (including subcontractor personnel) meet the qualifications specified in the RFP and and are available to begin work upon contract award. Upon assignment of individuals other than key personnel to a particular task order, if requested, we agree to provide documentation to demonstrate the employee’s qualifications for the labor category proposed.

2.3.3 Other Direct Costs

Since it is not known what ODC requirements will be for a particular task assignment, we propose the other direct cost amounts specified in the RFP.

In accordance with our CASB Disclosure Statement, [Contractor] charges the following ODCs included in the RFP direct to contracts:

• Direct Travel,

• Direct Materials

• Direct Software Licensing,

• Equipment

We charge all other ODCs listed in the RFP as indirect costs in our DCAA approved accounting system. In accordance with our CASB Disclosure Statement, [Contractor] applies full G&A to the total estimated cost for other direct costs.

We have submited detailed ODC breakdowns for each task assignment/product.

2.3.4 Subcontract Costs

The proposed subcontract costs represent the proposed cost for the level of effort to be provided by our three team subcontractors:

1) John Doe Information Solutions (JDIS),

2) Marshall International, Inc., and

3) Haney Systems, Inc.

In accordance with our CASB Disclosure Statement, [Contractor]applies full G&A to the total estimated subcontract costs.

Enclosures 1, 2, and 3 are each subcontractor’s sealed cost proposal.

As noted in Section 2.1 above, each of the subcontractors consider their cost proposals proprietary and competition-sensitive. Therefore, Attachment 4-Cost Summary Consolidation Schedules consolidates fully-loaded direct labor exclusive of fixed fee for [Contractor] and our three team subcontractors. KPMG Consulting requested each subcontractor to propose no more than a 4% fixed fee on total costs. Please see each subcontractor’s sealed package in the Enclosure section of the original proposal only.

2.3.5 Indirect Cost Structure

2.3.5.1 Contact Information

Verification of our proposed Direct Labor Rates, Overheads, and G&A rates and our accounting practices as described in our Cost Accounting Standards Board (CASB) Disclosure Statement should be directed to:

John Doe, Supervisory Auditor

Defense Contract Audit Agency (DCAA)

[XYZ] Branch Office

Street

City, State, Zip Code

(999) 123-4567 [hone]

John.Doe@dcaa.mil

Our internal DCAA Liaison point of contact for accounting system and supporting documentation is:

Jim Bob, Manager

Street

City, State, Zip

(999 123-4567 [Phone]

Jim.Bob@Contractor.com

2.3.5.2 Indirect Cost Pools, Bases, and Rates

[Contractors'’] indirect rates structure consists of three different indirect costs rates:

1) Fringe

2) Overhead, and

3) General and Administrative (G&A).

Fringe

Describe Pools and Bases

Overhead

Describe Pools and Bases

General and Administrative (G&A)

Describe Pools and Bases