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  • Question

    Is there any part of contract cost/price analysis that is solely the responsibility of the CO to analyze that cannot be sent to pricing assist (DCMA)? Specifically, since FAR 15.404-4 and PGI 215.404-4 speak of a CO's responsibility for profit analysis, does that mean that only a CO can perform profit analysis, or can profit analysis also be performed by pricing assist (DCMA)? In this case, the prime is asking DCMA to review their sub's profit. Is profit something that a subcontractor can withhold from the prime? If so, can DCMA review it or only a CO? Also, for my edification, is it correct to assume that cost elements and profit are mutually exclusive? I'm new to DCMA and the government, so thank you for your patience with my questions.


    Answer

    This response is based on the information provided.  We suggest you discuss with your contracting team, program manager and/or legal department as appropriate.

     

    Contracting Officer (CO/KO) is a generic term.  The contracting officer may be a Procuring Contracting Officer (PCO) [usually at an acquisition center such as TACOM or Redstone Arsenal] or an Administrative Contracting Officer (ACO) [usually in a DCMA office].  If the action is program specific the PCO would generally handle profit analysis.  If the issue has been delegated or specifically an administrative issue the ACO could do the profit analysis.

     

    The situation you describe is different in that the one requesting an assist is a contract administrator (non-government contracts person).  A government contracting officer can assist in this area especially if the sub does not want to reveal that information to the prime contractor.  With all parties aware, the government can work directly with the sub specifically on profit leaving the underlying assessment of "fair and reasonable" (other than profit) as the responsibility of the prime contractor.

     

    While the FAR excerpt is not related to profit it is reasonable to extrapolate and apply to your circumstance.

     

    "FAR 15.404-3 Subcontract pricing considerations.

          ...(c)(1) The contractor shall submit, or cause to be submitted by the subcontractor(s)..."

    "or cause to be submitted by the subcontractor"  This indicates the understanding that there are occasions when a sub may not provide required information to the prime and thus the prime, unable to conduct appropriate analysis itself, seeks assistance from the government.  The PCO or ACO can provide this assistance.

     

    Are cost elements and profit are mutually exclusive?  The important thing to understand as the FAR addresses this issue is that in a cost analysis all cost elements and profit must be analyzed/evaluated.  Profit is not a cost element (Cost + Profit = Price), but it must be assessed.  Rather than thinking of them as mutually exclusive, it might be clearer to understand them as two aspects of price.

     

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