Is the Weighted Guidelines Method for establishing profit for MILCON only OR
Does it apply to Civil Works, too?
I.E. == Does using the Weighted Guidelines Method for estimating profit apply for Civil Works Projects?
This response is based on the information provided. We suggest you discuss with your contracting team, program manager and/or legal department as appropriate.
As DoD employees we are required to do some structured analysis of profit when we require certified cost or pricing data. If your Civil Works Projects are commercial (FAR part 12) efforts, structured analysis is not required, but some analysis is needed. If your Civil Works Projects are non-commercial efforts, an alternate structured analysis may be used.
"DFARS 215.404-4 Profit.
(b) Policy.
(1) Contracting officers shall use a structured approach for developing a prenegotiation profit or fee objective on any negotiated contract action when certified cost or pricing data is obtained, except for cost-plus-award-fee contracts (see 215.404-74 , 216.405-2 , and FAR 16.405-2) or contracts with Federally Funded Research and Development Centers (FFRDCs) (see 215.404-75 ). There are three structured approaches—
(A) The weighted guidelines method;
(B) The modified weighted guidelines method; and
(C) An alternate structured approach.
(c) Contracting officer responsibilities.
(1) Also, do not perform a profit analysis when assessing cost realism in competitive acquisitions.
(2) When using a structured approach, the contracting officer—
....
(C) May use an alternate structured approach (see 215.404-73 ) when—
(1) The contract action is—
(i) At or below the certified cost or pricing data threshold (see FAR 15.403-4(a)(1));
(ii) For architect-engineer or construction work;
(iii) Primarily for delivery of material from subcontractors; or
(iv) A termination settlement; or
(2) The weighted guidelines method does not produce a reasonable overall profit objective and the head of the contracting activity approves use of the alternate approach in writing.
(d) Profit-analysis factors.
(1) Common factors. The common factors are embodied in the DoD structured approaches and need not be further considered by the contracting officer. DFARS 215.404-73 Alternate structured approaches.
(a) The contracting officer may use an alternate structured approach under 215.404-4 (c).
(b) The contracting officer may design the structure of the alternate, but it shall include—
(1) Consideration of the three basic components of profit—performance risk, contract type risk (including working capital), and facilities capital employed. However, the contracting officer is not required to complete Blocks 21 through 30 of the DD Form 1547.
(2) Offset for facilities capital cost of money."
We find additional guidance in at:
"DFARS 215.404-73 Alternate structured approaches.
(a) The contracting officer may use an alternate structured approach under 215.404-4 (c).
(b) The contracting officer may design the structure of the alternate, but it shall include—
(1) Consideration of the three basic components of profit—performance risk, contract type risk (including working capital), and facilities capital employed. However, the contracting officer is not required to complete Blocks 21 through 30 of the DD Form 1547.
(2) Offset for facilities capital cost of money.
(i) The contracting officer shall reduce the overall prenegotiation profit objective by the amount of facilities capital cost of money under Cost Accounting Standard (CAS) 414, Cost of Money as an Element of the Cost of Facilities Capital (48 CFR 9904.414). Cost of money under CAS 417, Cost of Money as an Element of the Cost of Capital Assets Under Construction (48 CFR 9904.417), should not be used to reduce the overall prenegotiation profit objective. The profit amount in the negotiation summary of the DD Form 1547 must be net of the offset.
(ii) This adjustment is needed for the following reason: The values of the profit factors used in the weighted guidelines method were adjusted to recognize the shift in facilities capital cost of money from an element of profit to an element of contract cost (see FAR 31.205-10) and reductions were made directly to the profit factors for performance risk. In order to ensure that this policy is applied to all DoD contracts that allow facilities capital cost of money, similar adjustments shall be made to contracts that use alternate structured approaches."