It’s that time of year again - determining provisional rates for FY2014. Provisional indirect rates, that is, your fringe, overhead, and general administrative costs have a direct impact on your cost reimbursable contract cash flow. Indirect rates also assist in developing cost estimates in response to RFPs.
As we enter the New Year, we know the importance of establishing these rates, but are also aware that you should examine your cost structure to make sure that the structure accomplishes two main objectives:
- Recovering all allowable costs
- Positioning your firm to be the lowest priced and technically acceptable bidder
Adding a second overheadpool or a Material & Subcontractor (M&S) Handling pool might provide that competitive edge that is needed to be the successful bidder. However, understanding the ramifications, making the changes, and avoiding the unintended consequences are equally as important. When making that decision to add a new pool, make sure that you ask yourself these key questions:
- How will that impact my current rates?
- If I add the M&S pool, will my G/A rate be adversely affected?
- How does the change impact my current cost reimbursable contracts?
Whether you’re spending time analyzing costs, developing business projections to create forward pricing rates, modifying your indirect rate structures, or recovering all your allowable costs to pass DCAA review, the labor intensive work becomes a daunting and time consuming task.
NeoSystems works with small to mid-size government contractors to help them strategize and develop provisional indirect cost structures and rates that provide a competitive advantage for pursuing federal contracts. Our subject matter expert’s help provide these rates on a technically acceptable lowest cost basis. Contact us to learn more about Provisional Rates.