Preamble: This special notice is to gauge industries level of interest regarding newly developed draft language and techniques to support Government evaluation of indirect rates to support cost realism analysis. This proposed initiative aims to reduce proposal development burden, reduce evaluation burden, and improve effectiveness of discussions. The Government is considering an approach that utilizes DCAA or DCMA rate approval letters (e.g., Forward Pricing Rate Agreement / Forward Pricing Rate Recommendation), or allows industry to submit evidence of rate approval, in the form of letters, from state or agency approved third party accounting firm. The proposed initiative is aiming to reduce evaluation of indirect rates only. Direct rates will not be affected by this proposed approach.
The Government is considering this approach in lieu of requesting traditional cost realism analysis supporting documentation. The FAR defines Cost realism analysis as "the process of independently reviewing and evaluating specific elements of each offeror’s proposed cost estimate to determine whether the estimated proposed cost elements are realistic for the work to be performed; reflect a clear understanding of the requirements; and are consistent with the unique methods of performance and materials described in the offeror’s technical proposal." (FAR 15.404-1(d)(2))
Below is an excerpt of the draft Section L language to support the Governments proposed initiative described above. Please review the draft language and address the following questions below by Friday, November 22nd, 2024 at 3:00PM EST.
Draft Section L Language:
"The Offeror shall provide for itself, and all other entities submitting cost / price information (e.g., subcontractor, JV team member(s)) evidence of either DCMA indirect rate approval letters (e.g., Forward Pricing Rate Agreement / Forward Pricing Rate Recommendation, but not provisional billing rates) or shall provide proof, from a third party accounting firm, (i.e. Certified Public Accountant (CPA) firms approved by its state or a national certification organization), that indirect rates proposed in support of proposing to this requirement are properly estimated and accurate in accordance with the accounting principles and regulations applicable to this contract: FAR 52.215-1 and FAR 52.216-7. The letter must include the rates, and years of applicability, that are being verified by the letter, and these rates must exactly match those used in the proposal. No alternate forms of proof will be accepted. If the Offeror utilizes the third party verification, it must include the following statement: “Based on all information known today regarding the applicable forecasted costs, revenues, expected business changes and other information necessary for the estimation of such rates, the rates contained herein represent the likely financial indirect rates for <insert company name here> for the performance of this contract which is government fiscal years 25 - 31. This verification is not one of scientific certainty, but rather confirmation that the rates are reasonably accurate."
The Government is seeking responses to the following statements:
