What is the correct way to calculate the 3.9% admin fee and have it flow through the rate structure appropriately without double dipping on profit?
Ability one website states the following:
What if the AbilityOne product or service does not have a commercial equivalent, then how is the price validated?
The Commission recognizes that for truly government-unique requirements, it is necessary to use cost analysis to evaluate pricing proposals. In these cases, the CNA Fee will not be a separate line item, but included in overhead costs. This fee is similar to those paid by commercial firms to belong to trade and industry associations related to their government contracts. Specific disclosure of this cost element is not required of commercial firms, is considered an allowable cost, and is not specifically called out in price negotiations.
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As you stated, in cost analysis, the CNA fee should not be a separate line item, but included in overhead costs, and not specifically called out in price negotiations. Contact AbilityOne at 703-603-2100 and discuss this issue with their experts. The phone number and email address is at the bottom of this website http://www.abilityone.gov/laws,_regulations_and_policy/genpolicy_CNA.html
Since fee should already be included in their overhead rates or G&A if no overhead rates apply as they are not required to disclose the element if they are a commercial firm. It appears they are applying it as pass through cost to the government. Of course, reaching a fair an reasonable prices does not mean that the contracting officer should be pre-occupied with any single element but rather should balance the contract type, cost, and profit or fee negotiated to achieve a total result that is fair and reasonable to the Government and contactor (FAR 15.405(b)).