;jA/202/B-94/OU3
United States Office of EPA-202-B-94-003
Environmental Protection Annunciation and June 1994
Agency Resouice: Management
&EPA Guide For Preparing
Independent Government
Cost Estimates
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GUIDE FOR PREPARING INDEPENDENT GOVERNMENT
COST ESTIMATES
I. PURPOSE OF GUIDE - 4 -
II. BACKGROUND - 4 -
III. DEFINITION AND USES OF IGCEs - 5 -
1. Definition - 5 -
2. Types of Cost Estimates - 5 -
3. Uses of IGCEs - 6 -
4. Who is responsible for preparing IGCEs? - 7 -
IV. PREPARING THE IGCE - 7 -
1. Statement of Work - 7 -
2. Work Breakdown Structure (WBS) - 8 -
3. Databases - 8 -
4. Identifying Costs - 9 -
5. Steps for Estimating Direct Labor - 11 -
6. Fringe Benefits - 14 -
7. Overhead - 14 -
8. Travel - 14 -
9. Other Direct Costs (ODCs) - 14 -
10. General and Administrative (G&A^) - 15 -
11. Profit or Fee - 16 -
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A. Sample Work Breakdown Structure (WBS)
B. Sample IGCE - Cost Reimbursable Contract
C. Sample IGCE - Fixed Rate/Indefinite Quantity Contract
D. IGCE Forms - Cost Reimbursable Contract
E. IGCE Forms - Fixed Rate/Indefinite Quantity Contract
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I.
PURPOSE OF GUIDE
This guide has been prepared to provide
general guidance to the Environmental Protection
Agency (EPA) personnel in their preparation of
independent government cost estimates (IGCEs).
This document does not contain required Agency
procedures. It demonstrates ways of preparing
IGCEs and provides forms and examples which will
be helpful in preparing your IGCEs. IGCEs are
prepared in support of procurement requests leading
to new contracts, to support modifications and change
orders, and to support the issuance of new work
assignments and delivery orders under existing EPA
contracts. This basic guidance can be used for new
and existing contracts. On existing contracts we
should have better defined needs for work assign-
ments (WA) and delivery orders (DO) which should
result in more detailed cost estimates.
This guide does not provide program specific
guidance. It does provide a thorough overview for
preparing an IGCE. It is expected that each EPA
program office will supplement this guide with
information relative to the specific program's require-
ments. The development and maintenance of good
databases are essential to effective cost estimating.
Some programs have developed program specific
databases and computer software that facilitate the
preparation of their IGCEs. All program offices are
encouraged to take similar actions.
H. BACKGROUND
Independent Government Cost Estimates
have always been an integral part of effective acquisi-
tion programs both in Government and private indus-
try. The Administrator's Standing Committee on
Contract Management in its report issued on June 30,
1992, disclosed that this agency provides little guid-
ance on cost estimating and has not allocated ade-
quate program resources to support development of
IGCEs. The General Accounting Office (GAO) has
long been concerned with EPA's failure to develop
independent cost estimates. The EPA Office of the
Inspector General (OIG) has identified improper
contractor assistance with cost estimation on
Automated Data Processing (ADP) contracts. The
Administrator's Task Force on Implementation of the
Superfund Alternative Remedial Contracting Strategy
(ARCS), issued its report (the Dunne Report) in
October 1991, and commented on the lack of
independent cost estimates in the Superfund program.
As a result of the Dunne Report, Superfund began
developing guidance and databases specifically for the
Superfund remedial programs.
For purchases of ADP equipment, related
services and related equipment, the Federal Infor-
mation Resources Management Regulations (FIRMR)
require agencies to establish and document require-
ments for Federal Information Processing (FIP)
resources by conducting a requirements analysis
commensurate with the size and complexity of the
need. This analysis and an alternatives analysis are
required to accompany the Agency Procurement
Request to obtain a Delegation of Procurement
Authority (DPA) (when a DPA is required). "The
analysis of alternatives requires Agencies to compare
the costs of each feasible alternative unless the
anticipated cost of the acquisition is less than $50,000
(41 CFR 201-20.2). Required guidance for cost
calculations can be found in Office of Management &
Budget (OMB) Circular N. A-94, "Benefit-Cost
Analysis of Federal Programs; Guideline and
Discounts" for calculating alternative costs."
"Further information on whether the FIRMR applies
to your solicitation is in the FIRMR (41 CFR 201-
20.305) and associated FIRMR Bulletins (Bulletin A-
1), published by Government Services Administration
(GSA) and available in the Headquarters Library.
Further guidance on when your solicitation may
require a Delegation from GSA may be found in the
FIRMR (41 CFR 201-20.305)."
The Administrator's Standing Committee
report says the development of in-house cost esti-
mation skills is an Agency contracts management
priority. This guide is one step in complying with
the Standing Committee recommendation on IGCEs
and making IGCEs a normal part of the EPA
acquisition process.
The current policy requires IGCEs be
submitted with contract actions greater than
$25,000. Contract actions include new contract
awards, modifications to increase the scope of
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work of the contract, work assignments and
delivery orders.
in. DEFINITION AND USES OF
IGCEs
1. Definition
Determine if management has the
need for any built in reserves and
what impact budgets may have on
your estimating.
Document all ground rules and as-
sumptions.
A cost estimate is generally defined as a
projection or forecast of the economic or financial
value of goods and/or services to be delivered in the
future. An Independent Government Cost Estimate
is a detailed estimate of the cost to the Government
for services and/or supplies to be acquired, generally
from contractors. The estimate must be the Govern-
ment's own in-house estimate and must not be based
upon information obtained from contractors/ offerers
from which proposals will be solicited. An IGCE is
the Government's estimate of what a responsible
contractor should propose based on the statement of
work. The IGCE should not be divulged to any
potential contractor.
There are various steps required in the
development of an IGCE. All are necessary for a
good cost estimate. The time expended and the depth
of information needed for each step will depend on
the phase and complexity of the work being
estimated. The various steps are summarized in the
following paragraphs:
A. Know the requirement, project or service
being procured. In Government contracts,
the Statement of Work (SOW) is the source
document which defines the requirement,
project or service. Any work not included
in the SOW should not be included in the
cost estimate.
B. Establish ground rules and assumptions.
Examples of things to look for here include
the following:
• Determine what the schedules and
milestones are for completing the
cost estimate and for completion of
the entire project.
• Determine if this is a brand new
endeavor, continuation or follow-on
procurement.
C. Determine if any historical databases are
available and what other sources of data are
available for the cost estimator to use. This
could include experience on like or similar
efforts, any type of professional materials,
surveys and personal expertise of the cost
estimator and co-workers. Document all
sources of information.
D. Determine what method of estimating will be
used. The two methods to be discussed in
this guide are the "Top-down and the Bot-
toms-up" methods. You may use a
combinations of these methods. Document
the estimating method chosen and why it
was selected.
E. Using the chosen method of estimating, pre-
pare your estimate for quantities for labor,
materials, travel and other elements of cost.
Document the quantities used and how they
were determined.
F. Review and organize your information and
estimate unit costs for each category of cost
and compute your estimate. Document the
source and dates of your costs.
G. Review the resulting cost estimate for credi-
bility, reasonableness, accuracy, and com-
pleteness. Make sure all steps in the IGCE
preparation have been well documented.
H. Use the estimate to prepare the procurement
package.
2. Types of Cost Estimates
Every cost estimate will be based on
forecasts and cannot be predicted with absolute
certainty. EPA's goal for cost estimates is to achieve
predictions that are as accurate as possible using the
information available and the best estimating
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technique for a given situation. Generally speaking,
there are two major types of cost estimates,
parametric (top down) and engineering (bottoms-up).
In many instances a combination of these two
methods may be used.
Parametric or Top Down. This is called the ballpark
approach and is based upon pricing major measurable
units such as manhours, cubic yards, number of
moves, number of laboratory tests or number of
computers, major computer systems requirements,
etc. to determine an approximate estimate of the
costs. This approach requires the use of a database
with like elements of work. It requires collecting and
organizing historical data and relating it to the work
output being estimated. When making any estimates
based on historical data, adjustments have to be made
to the database information for the specific work
required and for cost increases/decreases due to
differing requirements and economic conditions.
The top down method would be used in the
early planning stages of a project when the precise
quantities or needs are not yet known or when
requirements are not fully known or detailed
specifications are not available. This is the method
which would probably be used when preparing an
IGCE for a new contract as opposed to a work
assignment or a delivery order on an existing
contract. The estimate would result in an "order-of-
magnitude" projection of costs, and would have to be
refined as the work product becomes more defined.
The top down approach may not detail all peripheral
costs, such as site preparation access, regulatory per-
mitting costs, specific license requirements, main-
frame time-share costs or software, but some
estimates of the cost of these items should be
included.
Engineering or Bottoms-up. This is called the
detailed estimate and represents the opposite end of
the cost estimating spectrum. It presumes that the
total effort can be separated into a work breakdown
structure (WBS), and pricing can be applied to each
element such as labor, overhead, travel, equipment,
other direct costs and G&A. The database for a
bottom-up estimate has to be very detailed and
represents the accumulated experiences of many
previous and similar projects. Adjustments still have
to be made and you should never depend entirely
upon any historical database. If a program is just
starting to prepare IGCEs, formal supporting databas-
es may not exist. However, there may be sufficient
in-house experience and prior contracts for similar
work which will provide information to assist you in
using this method.
This type of estimate is prepared following
completion of a detailed design specification of a
proposed construction project, detailed requirements
for software development, and whenever the needs
are well defined. Each program should have as a top
priority, preparing well defined needs for your SOW
prior to even considering a Purchase Request (PR)
package. In this scenario, fairly complete knowledge
of the work to be done is assumed, and exact work
steps or tasks and subtasks have been developed.
Typically, SOWs address "what is required", not
"how to do it." Therefore, offerers may propose
different methods of "how to do it" than anticipated
by the cost estimator. The Agency wants the bottom-
up type of detailed IGCE for all work assignments
and delivery orders.
3.
Uses of IGCEs
EPA uses IGCE's for several purposes.
Among them are the following:
A. For evaluation of proposals for new con-
tracts. Once an IGCE has been completed,
all offers received can be compared to the
IGCE. Differences and similarities can be
compared and various conclusions can be
drawn. The Project Officer (PO),
Contracting Officer (CO), cost estimator and
cost analyst participate in this comparison
analysis, depending on the situation. Exam-
ples of what this comparison might disclose
include the following:
(1) The proposals overstate work re-
quired.
(2) The proposals understate the work
required.
(3) The SOW does not sufficiently
explain the requirements.
(4) The SOW is good, the IGCE is
good, the technical proposals are
good, but the proposal prices are
either too high or too low.
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(5) The proposals may include ideas
and/or new technologies not
considered by the Government.
B. For budget purposes prior to awarding con-
tracts, issuing DOs and WAs. A good
IGCE can be used to prepare the budget,
prioritize areas of concern and monitor the
work in process. You must always keep in
mind that the IGCE is an estimate and may
differ from the final cost. In an ideal situa-
tion these differences will be insignificant.
However, there may be significant differ-
ences. You should analyze closely the
differences to understand why they occurred
and learn from them for the future. It is a
good idea to document significant differenc-
es for future references.
C. For evaluating proposals for work assign-
ments and delivery orders. This is similar
to evaluating proposals for new contracts.
One difference is the lack of competition
since the contract has already been awarded.
The lack of competition increases the impor-
tance of a complete and accurate IGCE.
The quantities and levels of expertise and the
associated amounts for other direct costs
used in the IGCE are extremely important in
this situation since rates for labor and
indirect cost and associated amounts for
other direct costs will have been negotiated
for the contract as a whole.
D. To document negotiation objectives. This is
a continuation of the process of comparing
the IGCE to the proposals. The differences
and similarities should be highlighted and
the CO and PO should work together to
determine what the Government's nego-
tiation objectives should be and what issues
will be discussed during negotiations.
Desired outcomes should be documented as
part of the CO's prenegotiation plan.
E. To document award decisions. Any contract
award should be based on a fair and reason-
able price for the required work. The IGCE
will assist the CO and POs in their deter-
mination that the Government will pay a fair
and reasonable price and will get an accept-
able service or product. Any significant
4.
difference between the IGCE negotiation
objective and the final cost/price negotiated,
should be addreseed and documented for the
contract file.
Who is responsible for preparing IGCEs?
It is the responsibility of the Program Office
(RPMAVAM.PO/DOPOor other technical personnel)
to develop the Independent Government Cost
Estimate. These persons are responsible for
determining the resources necessary to perform the
work described in the statement of work. If your
office or region has an in-house cost estimator he/she
will probably be utilized for new procurements and
large, complex WAs/DOs. In these situations the
program technical personnel and the cost estimator
should work very closely to ensure that the cost
estimator is receiving and utilizing current, accurate
and complete technical information and that there is
complete agreement among all concerned parties as to
the content of the IGCE. For most of the WAs/DOs,
the project officer or lower level technical personnel
will be responsible for preparing the IGCE. The
accuracy and completeness of the IGCE are the
responsibility of the Program Office, not the
Contracting Officer. However, the Contracting
Officer should be available to address specific
contractual issues. Teamwork between the
contracting office and the program is vital for a good
IGCE.
IV. PREPARING THE IGCE
1.
Statement of Work.
The basic requirement for a sound and
defensible IGCE is a good SOW. The SOW is the
starting point for the cost estimator in the preparation
of the IGCE. The SOW is the source document that
defines the Government's requirements for a
product, project or service. It should provide
information on the requirements, descriptions of the
efforts required, and the timing and locations of
efforts. An accurate and defensible IGCE cannot be
developed without a clear, complete and concise
SOW and detailed specifications. The SOW is the
basis for both the IGCE and the contractor's
proposals. A good SOW should provide the
necessary foundation for the EPA to obtain the goods
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and services it contracts for at a fair and reasonable
cost and to get the best product, project or service on
time and within the budget.
Planning the SOW. EPA personnel must
allow a reasonable amount of time to develop and
prepare the SOW so that it includes detailed
descriptions of the technical requirements for a
material, product, or service and includes the criteria
for determining whether the requirements are met.
A rushed project will usually result in a poor SOW
with incomplete requirements and may lead to failure
of the entire project. To start the SOW process, an
outline of the major tasks to be performed should be
developed. This will reduce the likelihood of major
omissions and redundant steps.
Developing the SOW. After the SOW out-
line has been completed, the details can be added
with the assurance that all facets of the work are
included and that a clear, concise and complete SOW
will emerge.
Utilizing the SOW. In addition to the obvi-
ous use of the specification in the resulting contrac-
tual instrument, it is also used to develop the
performance schedule, evaluation criteria for
negotiated contracts, provide a basis of measurement
for analyzing contractor performance, identification
of deliverables, and to develop the work breakdown
structure (WBS).
2.
Work Breakdown Structure (WBS)
A well written SOW should permit the user
to develop a work breakdown structure for the
requirement. Sometimes the WBS is actually
prepared before the SOW. The important point is to
prepare a WBS.
A WBS is prepared by dividing a
requirement, project or service into its major tasks
and dividing its major tasks into subtasks and
dividing the subtasks into sub-subtasks, etc. This
division into small subtasks makes it easier to identify
the work required, to determine required staffing
needs, to schedule the work and to estimate the initial
cost for the desired output. It permits the cost
estimator to assign quantities such as manhours,
disciplines, labor category levels, number of trips,
duration of trips, and equipment, etc.
A WBS provides overall visibility to the
work to be performed and provides some assurance
that all required tasks and subtasks are considered.
It is a valuable tool for identifying activities, deliv-
erables and milestones and provides a baseline to
track actual vs. estimated costs to help determine
potential cost overruns and underruns. It can be used
to identify potential duplications and redundant tasks.
This is an important tool not only for
estimating initial costs, but for scheduling the work,
managing the resources and costs, and tracking the
deliverables and expended effort throughout the
period of performance. Good planning should allow
sufficient time and effort to be devoted to preparing
a WBS to produce a useful product. We recommend
the WBS be prepared using some type of automated
spreadsheet so changes can be made easily.
Included as Appendix A, is a sample WBS
for building a Garage and using the WBS for esti-
mating direct labor hours and dollars.
3.
Databases.
A database is a collection of information.
The simplest form of a database is a list. The more
complex databases are computerized and contain
many different types of information which can be
sorted to provide printouts in different formats to fit
the needs of the user. Each program should be
developing databases appropriate to their needs.
In almost every situation, having a database
of like and/or similar projects will facilitate the
preparation of an IGCE. The cost estimator is
strongly cautioned to not rely completely on historical
data. Historical data may, in some instances, reflect
quantities and prices that are unreasonable and
unacceptable under current conditions or include
inefficiencies for past works. They are a good
starting point, but adjustments have to be made based
on current needs. Historical databases usually will
consist of two primary categories: (1) the quantity of
items to be acquired such as hours (level of efforts)
pieces of equipment, number of service calls of a
particular type, number of types and duration of
trips, number and type of lab analyses, number of
PCs ordered, (2) the specific costs or dollar amounts
incurred for these items.
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The database of quantities should reflect pro-
jects which are similar in scope - in terms both of
type of work and size - to the project for which the
estimate is being prepared. If no formal database
exists, the IGCE preparer should review invoices and
monthly progress reports containing the actual costs
incurred for WAs or DOs which were issued for like
purposes. The information may or may not be broken
down into tasks and subtask level of detail to permit
a meaningful analysis.
The database of costs will consist of the
specific cost or pricing information such as direct
costs (hourly labor rates, travel costs, equipment
costs, etc.), indirect costs, fixed rates or prices and
unit prices. If there is no formal database, review of
prior invoices and progress reports and personal
experience will all be helpful. If the IGCE is being
prepared for a WA or DO on an existing contract,
the contract will contain much of the cost data needed
to prepare the IGCE.
If relevant databases are unavailable, the
IGCE preparer may consult with other programs or
agencies where similar work may be performed to
obtain assistance. Examples of other agencies which
might have useful information are the U.S. Army
Corps of Engineers for Superfund Clean-up or GSA
for ADP requirements. The Work Assignment
Managers (WAMs) and Delivery Order Project
Officers (DOPOs) can consult with senior or more
experienced project officers. Each major program
office should take steps to develop and maintain data-
bases for all work commonly performed by contrac-
tors. It is extremely important to keep a database
updated once it is in place. Some EPA programs
may have to update their reporting requirements in
their contracts to facilitate the establishment of a
useful database for use in preparing IGCEs, staying
within budgets and better overall management of their
contracts and budgets.
4.
Identifying Costs
As stated in Part III of this guide, an IGCE
is essentially a forecast of what the estimator believes
it will cost the Government for services and/or
supplies to be acquired, generally from contractors.
This estimated cost includes any profit or fee that the
contractor will earn.
In this section we address a broad spectrum
of costs. When you prepare your IGCE you have to
exercise your professional judgement as to the detail
you include on each cost element. You should be
careful about letting external forces, such as time
constraints or funding limits influence your IGCE.
Contractors incur costs in two broad catego-
ries, direct costs and indirect costs. A distinction is
made between the two categories because they are
given different accounting treatments. For a Gov-
ernment contract this distinction insures that a
contractor recovers the costs of performing work and
that only those costs for which a benefit is received
by the Government are charged to the Government.
It is important to have a general
understanding of the difference between direct and
indirect costs because it is necessary to make a
distinction between direct and indirect costs when
preparing an IGCE. Federal Acquisition Regulation
(FAR) 31.202 and 31.203 define these terms. These
terms are simplified for this guide. Direct costs are
costs that can be directly associated with a particular
project or contract. If a cost is incurred specifically
for a contract and would not otherwise be incurred,
it is a direct cost. Examples of direct costs include
direct labor, materials, travel, equipment,
subcontracts, consultants, computer usage time,
courier service and long distance phone calls to name
just a few. An estimator preparing an IGCE has
more control over direct costs than indirect costs.
Indirect costs are not directly associated with a
specific project or contract but are necessary for the
work to be done. Examples of possible indirect costs
are as follows:
Utilities
Management salaries
Maintenance cost
Recruitment costs
Office supplies
Legal fees
Depreciation
Accounting fees
Rent
Telephone
Fringe benefits
There is no specific rule or cost principle
which defines whether a particular cost will be direct
or indirect. A particular element of cost may be
treated as direct or indirect depending upon the
circumstances as long as the contractor treats the cost
consistently. Clerical labor is an element of cost that
can be charged direct or indirect depending on the
specific contractor's practices. Generally, contractors
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will charge clerical labor which can be identified with
specific contracts as direct labor and all other clerical
labor as indirect labor. This is acceptable as long as
the accounting is consistent. It is important that the
estimator understands the way a contractor charges
the different cost elements on current contracts. On
new procurements the estimator must document
whether he/she considered specific elements of cost
as direct or indirect. Whether a cost is direct or indi-
rect depends on the contractor's accounting system
and consistent treatment of like costs. A contractor
cannot be directed or required to charge a cost in
a way that differs from his usual accounting
practice unless his procedure is in violation of
accepted Government cost principles. For exam-
ple, if it is a contractor's accounting practice to direct
charge the president's time when he meets on
problems dealing with a specific contract, EPA
cannot direct or require him to charge his time to an
indirect account when he holds meetings for your
specific contract. At EPA it is not the
responsibility of the estimator to review and
analyze the contents of the indirect pools and
bases. These details are left to the experts in the
Cost Policy and Rate Negotiation Branch (CPRNB)
of EPA's Cost Advisory and Financial Analysis
Division located in the Office of Acquisition
Management.
CPRNB is a central office which is
responsible for approving indirect billing rates and
negotiating final indirect rates for contractors. Any
confirmation of an indirect rate or any question
dealing with indirect rates should be addressed to this
Branch. Remember, the estimator only needs to
know the rates and the bases to which they are ap-
plied. Any detailed assessment of details is the re-
sponsibility of agency experts in the accounting and
cost advisory areas.
Contractors may have one indirect rate or
dozens of indirect rates. It depends on their ac-
counting systems. Generally speaking, most
contractors will have a minimum of two indirect rates
i.e., an overhead rate and a General & Admin-
istrative (G&A) rate. Overhead expenses are
common expenses for everyday management of a
project or contract such as rent, utilities, clerical
labor, etc. The base for the overhead expense pool
may be direct labor hours, machine hours, direct
material costs or direct labor dollars. The most
common base is direct labor dollars. On an existing
contract, it is necessary for the cost estimator to
know and use the contractor's basis for allocating
indirect costs to ensure accurate amounts for indirect
costs. On a new procurement, it is necessary for the
cost estimator to select a basis of allocation for
indirect rates and document his selection.
G&A expenses are generally expenses for
the overall management of a company. Examples of
expenses found in G&A pools are salaries for upper
management, accounting and legal expenses, rent and
utilities for corporate offices, etc. The base for
allocating G&A expenses is generally total cost, but
other allocation bases may be used. For example, a
contractor may use a base that excludes subcontracts.
There is no rule for an acceptable or
unacceptable number for an indirect rate. No one
can make an informed opinion about a company's
proposed costs from just knowing their indirect
rate(s). A complete understanding of the pools, bases
and the accounting system is required. Any question
regarding the indirect rates should be addressed to the
CPRNB.
When preparing the IGCE, the estimator
should generally assume that all work will be
performed by the prime contractor. In other words
do not price team subcontract costs out separately.
Pricing in this way simplifies the process and the cost
impact is small.
However, there may be instances on existing
contracts where the estimator and/or PO are aware
that the required work falls within the expertise of
one or more of the subcontractors. In these instances
the cost estimate should be based on the subcontract-
ors' rates and any oversight costs required by the
prime contractor.
When preparing the IGCE, document why
costs have been included and any assumptions made
that impact the costs. Once a project has been
completed you can go back and determine where the
differences are and where your assumptions differ
from actual occurrences. Also, when using your
IGCE during negotiations, having your assumptions
all laid out will make it much easier for you to
discuss areas of differences with the contractor.
Each and every assumption and/or decision used in
choosing cost factors, quantities, schedules and any
other IGCE item should be documented not only for
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use during and after negotiations but for any possible
future reviews by management or other interested
parties.
It is strongly recommended that an automat-
ed cost template or spreadsheet be set up for each
contract, WA or DO. This will prevent simple math
errors and allow for changes with a minimum of
effort. Remember to update your documentation
whenever you change your template.
5.
Steps for Estimating Direct Labor.
Because such a large percentage of EPA's
contracts are labor intensive, a good Government
estimate for direct labor is fundamental to a clear,
concise and complete IGCE. Preparing a good
estimate for direct labor is both the most difficult
and the most important part of the IGCE. Recom-
mended steps for estimating direct labor are as
follows:
A. In order to prepare a good estimate of direct
labor, the estimator must have a good under-
standing of the work required. This should be
clearly delineated in the SOW so that the con-
tractor and the EPA estimator have the same
understanding of the work effort required.
As stated above, preparing a good estimate for
direct labor is both the most important and the
most difficult part of the IGCE. As such, the
estimator should make use of all the Govern-
ment expertise available. Probably the most
effective method of tapping the available
Government expertise is to use the so called
roundtable method. This involves bringing
together Government representatives having the
specific knowledge and experience of the subject
requirement. Each invited expert should be
given a copy of the SOW in advance and given
sufficient time to study the SOW and
independently estimate the number of hours
required for their area of expertise. At the
roundtable discussions, differences will be
highlighted, and strong and weak areas of the
SOW will be disclosed. If the requirement has
a good SOW, the experts will have little
difficulty understanding it. However, an unclear
and disorganized SOW will result in the experts
having difficulty understanding it and the esti-
mates may be meaningless. The roundtable
discussions should be completely open and allow
the invited experts to discuss all aspects of the
requirement. These discussions will probably
result in adjustments to the individual estimates.
The round-table method may also be utilized in
the acquisition planning stage. It is the respon-
sibility of the estimator to determine the final
estimate of hours based on the input from the
experts. The SOW may be revised at this point
to clarify areas of concern disclosed by the
roundtable discussions. Using the information
and knowledge gained from the roundtable dis-
cussion, the estimator is ready to continue with
his estimate of direct labor. At the WA or DO
level, discussions with your supervisor and some
of your peers may give you sufficient input to
determine if you have a strong SOW or if you
have a lot of experience, your personal
experiences and professional judgement may be
adequate.
B. A work breakdown structure (WBS) of the
project will enhance everyone's understanding of
the requirement, facilitate the roundtable
discussions and result in a more meaningful
IGCE. If a WBS has not been prepared, you
should prepare one. This includes breaking the
statement of work into as many tasks and
subtasks as can be identified or as considered
necessary.
C. Identify the hours, Professional (P) & Technical
(T) levels and disciplines and/or labor categories
and associated descriptions required for each
task. A helpful hint to keep in mind is "if the
work was performed 'in-house' what resources
would be needed." The write-up must include
all assumptions and the basis for selections.
Decisions will probably be derived from one or
a combination of the following:
(1) Current database for similar work being
performed on this contract or a similar
contract with adjustments for any differenc-
es.
(2) Roundtable discussions with Government
experts, supervisors and peers.
(3) Personal experiences and professional judge-
ment.
- 11 -
-------
(4) Available Government models for the type
of work required.
(5) Historical data on prior similar contracts.
(Caution: You should never rely completely
on historical data; there will generally be
some adjustments required.)
D. If this is a delivery order on a contract already
in place, compare the estimated P & T levels
and disciplines with the contract to insure that
the contract contains these levels and disciplines.
If this is a new contract to be placed, work with
the CO to insure that the appropriate P & T
levels and disciplines are included in the solici-
tation.
E. Price the hours, P & T levels and disciplines
identified in C above.
If the estimate is for a new procurement, use
historical databases on previous work with ad-
justments for escalation and differences in the
complexity of work. You may also contact one
of the Cost Advisory offices in the Office of
Acquisition Management (Headquarters, Cincin-
nati, and RTP) to see what information they
may have on rates being currently proposed on
similar procurement. Sometimes, you may have
a situation when you know the maximum dollar
amount available to you and you have to basical-
ly estimate how many hours you can potentially
buy. Whatever situation you find yourself in —
always document your decision in writing.
If you have a delivery order under an existing
fixed rate type contract, use the negotiated rates
from the contract for each applicable category.
These are usually loaded rates (i.e., they include
the direct labor, overhead, G&A and profit).
The only additional items to be priced would be
any travel and/or ODCs and applicable G&A
and profit on these additional direct costs.
If the estimate is for a DO or WA under an
existing cost type contract, generally there have
been average rates negotiated for each P and T
level which may be used for pricing. However,
there may be situations where the level of exper-
tise or personnel required is of a significantly
higher or lower level than the average rate. In
these situations the accuracy of the estimate can
be increased by getting the contractor's average
rates for more specific categories instead of the
P & T categories. If you provide more specific
categories or disciplines to the CO, he/she can
request current information from the contractor
or they can request the Cost Analyst to get this
information from the contractor. The COs are
the best sources for information on existing
contracts.
If the work crosses a contractor's fiscal year, it
will be necessary to either use escalation factors
or review the contract files to determine if
different rates have been negotiated for subse-
quent years. In some cases you may want to
use weighted average rates which cover more
than one year. The contract or contractor's best
& final (BAFO) proposal should provide rates
for each contract year.
After the number of hours are estimated,
completing the direct labor estimates includes
multiplying the number of estimated hours by
the labor rates.
The next page contains an example of how a
final direct labor hour estimate may look.
- 12-
-------
COST TEMPLATE FOR DIRECT LABOR
YEAR 1 YEAR 2
YEAR 3
TOTAL
LABOR
CATEGORY
PROJECT
MANAGER
HYDROLOGIST
CHEMIST
ENVIRONMEN
TAL ENGINEER
SYSTEMS
ANALYST
BIOLOGIST
CHEMIST
COMPUTER
PROGRAMMER
SYSTEMS
ANALYSTS
COMPUTER
PROGRAMMER
ENVIRONMEN
TAL ENGINEER
COMPUTER
PROGRAMMER
SYSTEMS
ANALYST
LAB
TECHNICIAN
DRAFTSMAN
LAB
TECHNICIAN
TOTAL P/T
CLERICAL
TOTAL LABOR
P/T
LEVEL
P4
P4
P4
P4
P4
P3
P3
P3
P3
P2
P2
PI
PI
T3
T3
T2
HOURS
1800
500
200
500
500
2400
3600
2000
1500
900
1500
2000
500
2000
600
2000
22500
1800
24300
RATE
$55
$45
$40
$40
$35
$30
$33
$29
$28
$19
$22
$15
$15
$14
$15
$12
$13
AMOUNT
$ 99,000
$ 22,500
$ 8,000
$ 20,000
$ 17,500
$ 72,000
$118,800
$ 58,000
$ 42,000
$ 17,100
$ 33,000
$ 30,000
$ 7,500
$ 28,000
$ 9,000
$ 24,000
$606,400
$ 23,400
$628,800
HOURS
1800
600
200
500
500
2400
3300
1500
1000
500
800
1300
300
2000
400
2000
19100
1800
20900
RATE
$57.75
$4725
$4200
$4200
$36 75
$31 50
$34.65
$30 45
$29 40
$19 95
$23.10
$15.75
$1575
$14 70
$15 75
$1260
$13 65
AMOUNT
$103,950
$ 28,350
$ 8,400
$ 21,000
$ 18,375
$ 75,600
$114,345
$ 45,675
$ 29,400
$ 9,975
$ 18,480
$ 20,475
$ 4,725
$ 29,400
$ 6,300
$ 25,200
$559,650
$ 24,570
$584,220
HOURS
1200
400
200
400
400
2400
3000
1000
800
300
500
900
200
2000
300
2000
16000
1800
17800
RATE
$60 64
$49 61
$44.10
$44.10
$38 59
$33.08
$36 38
$31.97
$31.87
$20 95
$24 26
$1654
$16.54
$15.44
$16.54
$13 23
$14.33
AMOUNT
$ 72,765
$ 19,845
$ 8,820
$ 17,640
$ 15,435
$ 79,380
$109,148
$ 31,973
$ 24,696
$ 6,284
$ 12,128
$ 14,884
$ 3,308
$ 30,870
$ 4,961
$ 26,460
$478,595
$ 25,799
$504,395
HOURS
4800
1500
1400
1400
1400
7200
9900
4500
3300
1700
2800
4200
1000
6000
1300
6000
57600
AMOUNT
$275,715
$ 70,675
$ 25,220
$ 58,640
$ 51,310
$226,980
$342,293
$135,648
$ 96,096
$ 33,359
$ 63,608
$ 65,359
$ 15,533
$ 88,270
$ 20,261
$ 75,660
$1,644,645
$ 73,769
$1,718,414
Notes
(1) Every Work Assignment Manager
(WAM) or Delivery Order Project Officer
(DOPO) should have access to the basic
contract or information on the various rates
in the contract. They are available from
either the Project Officer or Contracting
Officer. CAUTION! These documents
contain Confidential Business Information
and unauthorized release of the information
may be a criminal offense.
(2) If the requirement is a work assignment
or delivery order under an existing contract,
the authorized labor categories may be
contained in the contract files.
(3) P (Professional) and T (Technical)
factors are based on the education and
experience level of the people that will be
needed for the project. You may have to
go to the Best and Final proposal to get the
negotiated rates. CAUTION! These
documents contain Confidential Business
Information and unauthorized release of the
information may be a criminal offense.
- 13-
-------
6. Fringe Benefits.
numbers of persons per trip
Many contractors apply a fringe benefits rate to
direct labor dollars in order to recover the cost of
items such as health insurance, social security, etc.
If the cost estimate's for an order under an existing
contract, check the contract to determine if a fringe
benefit rate is contained in the contract. If there is a
fringe benefit rate, compute the fringe benefit costs
by multiplying the rate times the direct labor total.
7. Overhead.
Once the direct labor pricing has been
computed, the estimator applies the applicable over-
head rate(s). Check Section G in the contract for the
appropriate bases and rates. If the contract has been
in effect for any length of time the rates may have
changed. Therefore, any amendments regarding rates
should be reviewed. You may also contact the EPA
Cost Policy and Rate Negotiation Branch at head-
quarters for the latest information on indirect rates
for specific contractors.
If an IGCE is being prepared for a new
procurement, the project officer may consult program
personnel with experience with similiar contracts, the
CPRNB to obtain information on typical contractors
who might bid on the procurement or the contracting
officer for advice on how to estimate the indirect
cost.
For new procurements, the estimator may want
to use an average loaded rate for projected P&T
levels which would include labor, indirects (overhead
and G&A) and profit. This information could be re-
trieved from the historical database for similar work
with adjustments for escalation and any other differ-
ences. If you are pricing an individual work assign-
ment and/or delivery order, you will want to be more
specific and price categories of cost separately.
8. Travel.
Determine if performance of the SOW will
require any travel by the contractor. If yes, the IGCE
should be specific as to :
• The purpose of the travel and the contractor's
role
• number of trips
• the beginning and ending destinations for each
trip and the length of time for each trip
• expected necessity of car rental vs. public
transportation
• estimated per diems
• estimated airfares and/or train fares
• estimated amounts for taxis and other mis-
cellaneous expenses
The narrative should include the purpose of each
trip and any assumptions you have made regarding
travel required to perform the SOW. This will be
used to compare your estimate with the contractors
estimate. Note: Contractors' travel costs must be in
compliance with FAR 31.205-46 which generally
limits travel costs to those authorized for Federal
employees.
9. Other Direct Costs (ODCs1.
Determine what ODCs will be required for
contract performance. Examples of ODCs include
the following:
Telephone Supplies Reports
Postage Reproduction Computer
Equipment Messenger Service
The narrative should include all assumptions you used
in pricing these items. Some points to consider for
each of the above are as follows:
Telephone - Based on historical data or personal
experience, estimate the number of long distance
calls per week and the average amount per call.
i. e. 2 calls per week at $5 per call and 52
weeks per year
2 X $5X52 = $520 for telephone calls/year
Postage - Consider what types of items are
mailed. Some contracts have a lot of samples
that are mailed or shipped.
e.g. 25 samples per month at $45/sample
25 X $45 = $1,125/month shipping charges
- 14-
-------
Equipment - For any special equipment needs
consider specific items. Does the Government
already own such items that can be used for the
contract or project? Would it be more
economical to rent or lease rather than buy?
Include specific quantities and cost for each
equipment item. It is EPA's policy that general-
ly, contractors should provide all resources
necessary to perform agency contracts. This
includes equipment. However, in some situa-
tions it may be necessary to provide
Government furnished equipment or to permit
the contractor to acquire specialized equipment
at Government expense. This is a CO decision
and must be based on a written justification of
need provided by the PO with concurrence at
the Program Office Division Director or
equivalent level. The requirements and regula-
tions pertaining to Government furnished
property are found in Chapter 5 of the Contracts
Management Manual (CMM) and FAR Part 45.
The requirements and regulations pertaining to
lease vs purchase of equipment are found in
FAR Subpart 7.4 - Equipment Lease or
Purchase.
Reports - Review what reports are being re-
ceived on the current contract or similar con-
tracts. How many are being received? What is
being done with them? Can any be cut out or
the number reduced? Are additional reports
required? Could some reports be combined?
Keep in mind that any changes to reports on a
current contract would require CO approval and
modification of the contract. Once the number
of reports and the estimated number of pages
needed per report, has been determined, the cost
estimator can estimate, based on historical data
how much it costs per page and compute the
total estimate,
i.e. if the historical base shows a cost of$3.50/-
page and the average report is 50 pages and 3
different reports are required per month.
$3.50 X50X3 = $525/month for reports
Reproduction - This is usually estimated on a
per page basis. The rates generally range from
$.05 to $.15 per page. You could use an
average of$. 10 and an estimate of pages needed
based on prior history.
$.10 X 10,000 pages = $100 month for xerox-
ing.
Note: Environmental Protection Agency
Acquisition Regulation (EPAAR) 1552.208.70
Reproduction or copying is permitted up to
5,000 copies of one page not to exceed 25,000
copies in the aggregate of multiple pages per job
or individual requirement.
Messenger Service - This is an area where cost
savings can be realized if monitored closely.
Many times contractors use a messenger service
at $15 or $20 per trip when an item could be
mailed for $3 or $4. If time is not of the es-
sence, items should be mailed instead of using
a messenger. Calling several messenger
services in the area and asking for quotes for
deliveries in given areas will give a good
estimate for the unit cost. Then project the
number of deliveries per month.
e.g. 4 deliveries per month at $15 per delivery
equates to - $15 X 4 = $60/month
Computer Related Costs - This is one of the
more difficult area to estimate, because the
category covers so many facets. It can include
the purchase of personal computers, different
computer usage rates for main frame and
personal computers and other computer related
costs. Are there special computer software
packages that are required for your contract or
project? If so, this cost could be included in
this category. This is an area where assistance
from an experienced professional is extremely
helpful. You may wish to consult with
representatives from the Office of Information
Resources Management at Headquarters.
Miscellaneous ODCs - If this category is includ-
ed you should have specific things in mind to
include. Contractors include such things as
temporary office help, special licenses and some
surprises in this category. You should always
identify what you are including in miscellaneous
costs. There should never be excessive amounts
in this category.
10. General and Administrative (G&A).
- 15 -
-------
Once the pricing has been completed for direct
labor, overhead, travel and ODCs, the applicable
G&A rate should be applied. Check Section G in the
contract for the appropriate bases and rates. If the
contract has been in effect for any length of time the
rates may have changed. Therefore, any amendments
to the rates should be reviewed. The EPA Cost
Policy and Rate Negotiation Branch at headquarters
can provide the latest information on indirect rates
for specific contractors.
11. Profit or Fee.
Since an IGCE is an estimate of the total cost to
the Government, it should include profit or fee.
Profit is associated with fixed price contracts and fee
is associated with cost reimbursable type contracts.
If the IGCE is for a contract already in place, the
estimator should review the contract for any special
fee provisions and apply the negotiated fee percentage
to the total estimated costs.
The estimate of the profit/fee for a new procure-
ment is an area where the CO can be particularly
helpful. He/she can either give you a "normal" fee
percentage to use or work with you in preparing an
estimate based on EPA's Weighted Guidelines for
profit/fee. When estimating fee on an award fee
contract, take the conservative approach and include
the maximum fee available.
The time and effort expended and the details
included in the IGCE will vary with the size and
complexity of the project. Generally, the more
details you include in your IGCE, the more useful it
will be. Each program is different. Some items
discussed in detail in this Guide may not pertain to all
programs. For example, some EPA contracts contain
only small dollar amounts' for ODCs and other EPA
contracts contain high dollar amounts of ODCs. This
guidance will have to be adapted for the specific
needs of each program. Remember, each program
should know more about its contract needs than
anyone else and is the most qualified to estimate the
cost of the work required.
We have included examples of IGCEs utilizing
information included in this guide. To the extent
possible IGCEs should be estimated on a task or
subtask level. We did not do this in the examples
because it would make the guide to voluminous. The
examples show all the information typed, but this is
not required. Your IGCE may be handwritten.
We have also included blank forms which may
be copied and used to prepare IGCEs. These are not
standarized forms. Your office may already have
existing IGCE forms, if not, the forms included in
this guide may be used. The forms may be used for
new procurements or WAs and DOs on existing
contracts. For WAs and DOs substitute task or
subtask for year. A limited number of forms on 5"
disks are available. Please contact Cost Advisory and
Financial Analysis Division if your office would like
a copy of the disk.
- 16-
-------
APPENDIX A
SAMPLE WORK
BREAKDOWN STRUCTURE
(WBS)
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APPENDIX A
PAGE 2 OF 2
GARAGE
DIRECT LABOR EFFORT
BRICK CONCRETE DRYUALL
TASKS & SUBTASKS LABORERS ELECTRICAN CARPENTERS LAYERS FINISHERS INSTALLERS PAINTERS TOTAL
1.1 FLOOR/ FOUNDATION
1.1.1 FOOTERS 12 6
1.1.2 BLOCK 10
1.1.3 CONCRETE FLOOR 12 12
1.2 FRAMING
1.2.1 STUDS 24 50
1.2.2 SHEATHING 16
1.2.3 SIDING 16
1.3 ROOF
1.3.1 ROOFING 16
1.3.2 SHINGLES 16
1.3.3 GUTTERS 6
1.4 INTERIOR
1.4.1 INSULATION 6
1.4.2 ELECTRICAN 16
1.4.3 DRYWALL
1.4.4 TRIM 8
1.5 PAINTING
1.5.1 INTERIOR
1.5.2 EXTERIOR
1.6 GRADING & FINISHING
1.6.1 RAKE & CLEAN 16
1.6.2 LANDSCAPING 7
1.6.3 SEEDING 1
DIRECT LABOR HOURS 78 16 134 10 12
LABOR RATES $15 $30 $25 $30 $20
TOTAL DIRECT LABOR $1,170 $480 $3,350 $300 $240
18
10
24
74
16
16
16
16
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$20 $20
$640 $260 $6,44!
-------
APPENDIX B
SAMPLE IGCE
COST REIMBURSABLE
CONTRACT
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION/CONTRACT RFP#009876 - A1
PREPARER J.DOE
DATE X/XX/9X
NEW CONTRACT __X
WORK ASSIGNMENT
DELIVERY ORDER _
OTHER
SUMMARY COST ESTIMATE
COST REIMBURSABLE CONTRACTS
CATEGORY
1. Direct Labor (WS- 1)
2. Fringe Benefits (WS-2)
3. Total Direct Labor & Fringe Benefits (lines 1 &
•.-.•.-.
4. Overhead (WS-2)
'• '• f
5. Total Travel (WS- 3)
..-- ' - - . . -
6. Total Other Direct Costs (WS - 4)
7. Sub -Total (lines 3,4, 5 & 6)
% *•
8. G&A (WS-2)
: -
9. Total Costs (lines 7 & 8)
''....' ". " : .
10. Prof it/Fee (WS- 5)
:
1 1. Total Cost and Profit (lines 9 & 10)
YEAR 1
$631,150
$220,903
$852,053
•" .. '<".'"V ••'''* "«*•
$596,437
$33,630
'.- * ;--x • '•-';-: '.''
$253,256
.. :' ' •'"' :-.:':'' '. *•
$1,735,376
$260,306
:•. ..'" ' .' ' " •'
$1,995,682
$175,620
$2,171,302
YEAR 2
$576,170
$201,660
$777,830
**&.$•?*'•'••?>'•':
$544,481
$34,975
.&$'. •$*:'.. ':'f •:£'"':
$206,261
'•..",'" '-.-. ' - '•
$1,563,547
$234,532
'. • ••£.• '?£... Vy. ":1;;
$1,798,079
$158,231
'•':''.-.•'••• v\--i':.. ' '•
$1,956,310
YEAR 3
$493,318
$172,661
$665,979
<:''••" ': . •''•":''-x '
$466, 186
$36,374
»•;•:••" •'••'' :•• '
$193,558
$1,362,097
$204,315
.:;;•••; ":% ":' • '
$1,566,412
$137,844
$1,704,256
TOTAL
$1,700,638
$595,224
$2,295,862
' ... ,- • '•' , , .< -',.-': '_
$1,607, 104
$104,979
• ' •:••• .:<•'(:
$653,075
'-'• • •"'
$4,661,020
$699, 153
$5,360,173
$471,695
$5,831,868
SAMPLE WORKSHEET
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INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # 009876-A1 NEW CONTRACT X
PREPARER J. DOE WORK ASSIGNMENT _
DATE _ XX/XX/9X DELIVERY ORDER
OTHER
DIRECT LABOR ESTIMATE WORKSHEET
COST REIMBURSABLE CONTRACTS
LABOR HOURS:
For the labor hours, we reviewed the current usage by Region and also had each Region submit their
expected needs for the next 3 years under this contract. The Regions were able to break the effort down
into tasks and in some cases to subtasks. This allowed us to determine (we think more accurately)
the specific labor categories, skill levels and hours required to perform the work. We analyzed this data
and used it as the basis for the hours for this contract. In the current contract, Pro jet Manager is 1,800 hrs.
This should provide sufficient coverage to manage the effort, so no change was made, except to reduce
it in year three due to total hours being reduced. This reduction for year three was agreed to be all Regions.
The hours for the P4 Hydrologist are based on the expected needs for the Region III problem plus some
extra hours in case this specific problem occurs in any other Region. We expect a heavy workload in
programming and systems analysis during the first year and decreasing workloads in this area in years two
and three. This is reflected in the number of hours we have included for computer programmers and system
analysts for the entire three year period. We have a total of 7,400 hours in this area for year one and this
decreases to 3,600 in year three. All other categories reflect for the most part what is being used on the
current contract and the projected needs for each Region.
*AII correspondence from the Regions and notes pertaininQ to any telephone conversation are contained
in the programs back-up file for this IGCE.
LABOR RATES:
The current contract is a cost reimbursable contract and the labor is shown as a lump sum with no breakdown
of cost per category on the invoices. We went back to the Contracting Officer and got a copy of the
Best and Final for the current contract to get an idea of what the rates by category should be
and added 5% escalation to the current rates. For computer programmers and the system analysts,
we asked our C. O. to find out what EPA is paying tor these labor categories on the agency's ADP contracts.
We got input from the Corps of Engineers on what they are currently being charged for a highly experienced
hydrologists. We then called the Cost Advisory Branch at headquarters and compared our projected rates
with rates currently be ing sumitted for review. We also received their input on the escalation for years two
and three. They advised, based on current economic conditions, an escalation factor of between 3%
and 5% be used for pricing the outyears. We used an average of 4% for years two and three. We included
direct clerical hours in our cost estimate. Clerical hours are generally not part of the LOE hours in EPA
contracts. Contractors are told in the RFP to add their best estimate for clerical hours if it is their accounting
policy to direct charge clerical hours which can be specifically identified to a contract. It is our experience that
most contractors direct charge clerical hours if they can specifically identify them to a contract. Based on
experience on prior similar contracts, we haveaddeda factor for direct clerical hours equivalent to 10%of
the LOE hours for year one and two. For year three, we added a factor for direct clerical hours equal to 12.5%
of the LOE hours. These additional hours in year three are for the increase in reports to be delivered
at the end of the contract.
"•/Votes pertaining to all telephone conversations with OIRM, Cost Advisory Branch and the Corps of Engineers
and worksheets computing our estimated rates are contained in the program's back-up file for the IGCE.
SAMPLE WORKSHEET
(WS — 1) Continuation Page
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION
PREPARER __J. DOE
DATE XX/XX/9X
RFP # 009876 - A1
NEW CONTRACT _ X
WORK ASSIGNMENT"
DELIVERY ORDER _
OTHER
INDIRECT COST RATES WORKSHEET
Estimating rates for computing indirect costs is different because the rates depend on how a contractor
accounts for his costs and on what basis the indirect costs are allocated. For estimating purposes,
we assumed the following: ~~
1. A Fringe benefit rate of 35% with total labor as the base. The current contract has a fringe
benefit rate of 29%. However several other in-house contracts have fringe benefit rates ranging
from 31% to 38%. We spoke with a representative of the Cost Policy and Rate Negotiation Branch
and found social security expenses are increasing beginning January of next year. We made
a roundtable judgement decision to use 35% for an estimated fringe benefit rate.
2. The Overhead rate for the current contract has fluctuated over the three year period
of performance from 60% to 80%. Other contracts within our program office have overhead rates
ranging from 50% to 120%. We made a roundtable judgemental decision to use the average rate
from the current contract. The basis of allocation is total direct labor and fringe benefits.
3. G&A on the current contract has been in the 13% to 15% range for 3 years. Other
contracts in our program office have G&A rates ranging from 5% to 45%. We made a
judgemental decision to use for estimating purposes the 15% from the current contract for the
current year with an allocation base of total cost exclusive of G&A expenses.
These are our best estimates and material differences in rates could be proposed by contractors based on their
accounting systems.
For Estimating purposes, use the following:
Fringe Benefits
35%
Application Base for this contract
Direct Labor
Overhead
70%
Direct labor and fringe
G&A
15%
Total estimated costs exclusive of G&A expenses
(General and Administrative)
SAMPLE WORKSHEET
(WS-2)
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION RFP # 009876 - A1
PREPARER__J. DOE
DATE XX/XX/9X
NEWCONTRACT_X
WORK ASSIGNMENT"
DELIVERY ORDERS ^_
OTHER
WORKSHEET FOR TRAVEL COSTS
TRAVEL
YEAR1
YEAR 2
YEARS
TOTAL
Airfare
$13,050
$13,572
$14,115
$40, 737
Per Diem
$16,080
$16,723
$17,392
$50,195
Car Rental
Mileage
Ground Transportation
$4,500
$4,680
$4,867
$14,047
Other (explain)
TOTALTRAVEL
$33,630
$34,975
$36,374,
$104,979
NOTES, ASSUMPTIONSAND COMPUTATIONS
Based on prior experience on similar requirements, the roundtable discussions of Dec. 2,1992,
with all branch chiefs and on the specific travel requirementsfor travel on page 5 of the
Statement of Work, the following assumptions were used for estimating travel amounts:
1. 15 Roundtrips per year from various locations around the country to Washington, DC.
These trips will be for information gathering purposes and for working meetings with
EPA personnel. For estimating purposes, Seattle, Chicago, Dallas, Atlanta and Boston
are the origination cities and we have priced three trips from each city.
2. Some trips will require two or more persons and some will require only one. For estimating
purposes we have used two persons per trip and each trip has a duration of four days.
3. The destinations for all trips are Washington, DC. Public transportation is available;
therefore, there should be no need for car rentals.
Roundtrips to Washington, DC from:
Atlanta
$525 x 3 trips x 2 persons/trip =
$3,150
Boston
$250 x 3 trips x 2 persons/trip =
1,500
Chicago
$350 x 3 trips x 2 persons/trip =
2,100
Dallas
$525 x 3 trips x 2 persons/trip =
3,150
Seattle
$525 x 3 trips x 2 persons/trip =
3,150
TOTAL
4. Estimated per diems are for Washington, DC at the current government rate of $134.
15 trips x 4 days/trip x 2 person/trip x $134 =
(Use additional pages if necessary)
SAMPLE WORKSHEET
WS-3
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP #009876-A1 NEW CONTRACT __X
PREPARER _J. DOE WORK ASSIGNMENT
DATE _XX/XX/9X DELIVERY ORDERS
OTHER
IGCE CONTINUATION WORKSHEET- TRAVEL
5. For estimating purposes we are including $150 per traveler per trip lor ground
transportation, mileage of personal vehicle to airport and parking at airport.
Hotels are available close to EPA Headquarters so that taxi fares, if used, will
minimal and Metro can be used,
15 trips x 2 persons/trip x $150 = $4,500
6. For estimating purposes, we have added escalation of 4% per year for years 2 and 3 based on discussions
with the Washington Cost Advisory Branch.
Contiunation page (WS-3)
SAMPLE WORKSHEET
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION
PREPARER
_ RFP # 009876 - A1
J. DOE
DATE XX/XX/9X
NEW CONTRACT _X
WORK ASSIGNMENT"
DELIVERY ORDER '_
OTHER
OTHER DIRECT COST ESTIMATE
OTHER DIRECT COSTS
YEAR 1
YEAR 2
YEAR 3
TOTAL
COURIER/MESSENGER
$936
$973
$1,012
$2,922
COMPUTER RELATED COSTS
$174,600
$124,459
$108,484
$407,543
MATERIAL/SUPPLIES
$41,000
$42,640
$44,346
$127,986
POSTAGE/FEDERAL EXPRESS
$5,460
$5,678
$5,906
$17,044
REPORTS
$18,360
$19,094
$19,858
$57,313
REPRODUCTION
$1,200
$1,248
$1,298
$3,746
TELEPHONE
$11,700
$12,168
$12,655
$36,523
TOTAL ODCs
$253,256
$206,261
$193,558
$653,076
NOTES, ASSUMPTIONSAND COMPUTATIONS
COURIER/MESSENGER
Call to three local couriers disclosed the following:
Quoted prices for courier service between EPA office and contractor's local office;
Courier Co. A - $15
Courier Co. B - $18
Courier Co. C - $20
Average
-$17.67 (rounded to $18)
On prior contracts the contractor has used courier service for almost every item whether it
was a priority or not. Most of the time the items could be sent by regular mail or carried by
personnel from the contractor coming in for meetings with the project officer or the
Contracting Officer. Our data base shows on prior contracts courier deliveries averaging
three times a week. We encourage the contractor to use the regular mail to the extent
possible. There should be no need for courier service more than once a week.
Therefore, for each year of the contract, our estimate for courier service is computed
as follows:
52 weeks x 1 delivery/week x $18/delivery =
$936
Year two with escalation of 4%
Year three with escalation of 4%
$973
$1.012
(Use additional pages if necessary)
WS-4
SAMPLE WORKSHEET
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION
PREPARER_J. DOE
DATE XX/XX/9X
RFP # 009876 - A1
NEW CONTRACT _ X
WORK ASSIGNMENT
DELIVERY ORDERS J
OTHER
IGCE CONTINUATION WORKSHEET- OTHER DIRECT COSTS
COMPUTER RELATED COSTS
The estimated computer related cost is based on historical usage and on current projected
increases for programming and systems analysis for year one plus adjustments for escalation
of 4% per year. An analysis of historical data (three years of data on the current contract)
disclosed an average usage of one hour of computer time for every five hours of direct
labor incurred. This does not mean there is a direct relationship between direct labor
incurred and computer usage. However, for estimating purposes, it provides a standard
measurement for projecting hours of usage. Most of the computer related costs ha ve been
and are expected to continue to be for personal computer (PC) and mainframe usage, usually
charged at an hourly rate. On the current contract, the usage has been evenly & equitably distributed
between personal computer (PCs) and mainframe usage. There will also be specific software
programs required in order to be compatible with the EPA program software. For estimating
purposes, we are dividing the hours equally between personal computer (PC) and mainframe
usage. For estimating purposes we are using one hour of computer usage for every
five hours ofLOEplus an additional 1,000 hours for year one for the increased programming
and systems analysis projected for year one. We have estimated the purchase of ten
software programs for year one and included $500 each year for years two and three
lor software updates. The hourly rates are based on the current contract with a 4%
escalation factor each year including year one because by the time this contract is awarded,
the current rates will be over a year old. We estimated an average of $300/software
program based on current market rates for year one. Our computations are as follows;
PC
MAINFRAME
Computer Rates
$10.00/hr.
$50.00/hr.
add escalation of 4%
x 1.04
x 1.04
Year One Rates
$10.40
$52.00
add escalation of 4%
x1.04
x 1.04
Year Two Rates
$10.82
$54.08
add escalation of 4%
xl.04
x 1.04
Year Two Rates
$11.25
$56.24
SAMPLE WORKSHEET
Continuation page
(WS-4)
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # 009876 - A1 NEW CONTRACT X
PREPARER __J. DOE WORK ASSIGNMENT
DATE _XX/XX/9X DELIVERY ORDERS _
OTHER
IGCE CONTINUATION WORKSHEET- OTHER DIRECT COSTS
COMPUTER RELATED COSTS - continued
Year One
22,500/LOE/5= 4,500 Based on historical data
1,000 Hours based on additional needs
5,500 Total hours
2,750 personal computer (PC) hours
2,750 mainframe hours
2,750 hrs. x $10.40/hr. for PC usage = $28,600
2.750 hrs. x $52.00/hr. for mainframe usage = $143,000
Software purchases
10 programs @ $300/program - $3,000
Total Year One Estimate $174,600
Year Two
19,100/LOE/5= 3,820 Based on historical data
1,910 personal computer (PC) hours
1,910 mainframe hours
1,910 hrs. x $10.82/hr. for PC usage = $20,666
1,910hrs. x$54.08/hr. for mainframe usage = $103,293
Software updates $500
Total Year Two Estimate
Year Three
16,000/LOE/5= 3,200 Based on historical data
1,600 personal computer (PC) hours
1,600 mainframe hours
1,910 hrs. x $10.82/hr. for PC usage = $18,000
1,910hrs. x$54.08/hr. for mainframe usage = $89,984
Software updates $500
Total Year Three Estimates $108,484
TOTAL COMPUTER RELATED COSTS
Year One $174.600
Year Two $124.459
Year Three $108.484
TOTAL $407.543
Continuation page (WS-4)
SAMPLE WORKSHEET
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # 009876 - A1 NEW CONTRACT X
PREPARER _J. DOE WORK ASSIGNMENT"
DATE _XX/XX/9X DELIVERY ORDERS _
OTHER
IGCE CONTINUATION WORKSHEET- OTHER DIRECT COSTS
MA TERIAL/SUPPLIES
Based on prior similar contracts, there are some specific supplies needed to perform the contract.
Examples are specific reference books, expendable lab supplies and office supplies.
We are basing our estimate on prior utilization of material and supplies with an additional increment
lor more lab supplies since the scope of work on this procurement includes an increased
requirement for lab work. The amount incurred for the last five years has been fairly consistent
with differences due to increased cost rather than increased quantities. Therefore, we are using
the data for the most current year and adding escalation and an increment for increased lab supplies.
Current year cost $25, OOP
escalation at 4% $1,000
Lab increment $15,000
TOTAL - Year One $41.000
Escaltion: Year Two- 4%
Escaltion: Year Three - 4%
TOTAL $127.986
POSTAGE/FEDERAL EXPRESS
Postage used for mailing letters and small packages has been running approximately $30/month
on current contracts. There is no projected increase to postage. Federal Express or other
overnight delivery makes up the bulk of the costs for this category of ODCs. The current rate
on the open market ranges from $13 to $21 per package. We have been experiencing aroun 20
overnight deliveries per month on the current contract. We reviewed the need for such overnight
packages and most of them have been for documents that required immediate attention.
Therefore, we don't see any decrease in the numbers. In fact, due to the increase in lab work,
the number will increase. For estimating purposes we are projecting 25 packages/month at an average rate
o1$17/pkg.
Year one costs: postage - 12 months x $30 = $360
Overnightpkgs. - 12mo. x $17 x 25 pkg/mc $5,100
YEAR One estimate $5.460
YEAR Two estimate: escalation at 4%
5.678
YEAR Three estimate: escalation at 4% $5.906
TOTAL $17.044
We did not include any escalation lor year one costs because we used an average of current rates
and most of the packages will be small and in the $14 - $15 range. We think postage costs can and will
remain stable during year one at approximately $30/month.
Continuation page (WS-4)
SAMPLE WORKSHEET
10
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # 009876 - A1 NEW CONTRACT X
PREPARER _J. DOE WORK ASSIGNMENT
DATE _XX/XX/9X DELIVERY ORDERS _
OTHER
IGCE CONTINUATION WORKSHEET- OTHER DIRECT COSTS
REPORTS
Monthly reports and annual reports are requirements on this contract. Our past experiences has
indicated an estimate of so much per page provides the best indication of cost. This per page unit
cost includes special binding and covers, word processing cost and copying the reports.
The total number of reports required by the Statement of Work per month is eight including all copies.
At the end of each year an additional six reports, including copies are required. Reports on similar
contracts averaged 40 pages per report at $3.50 per page. These reports have been sufficient to meet
our needs. On this contract we anticipate an increase in the number of pages due to additional areas
which have to be addressed as required by the SOW. We estimate an increase of five pages per report.
These reports are extremely important and we want to be sure there are sufficient dollars in the contract
to cover the cost. Therefore, we have increased our estimated cost per page to $4 to account for
increases due to inflation and for any unexpected reports we may require.
Year One Estimated Costs:
8 reports/month x 45 pages x 12 = 4,320 pages
6 additional reports x 45 pages = 270 pages
Total pages 4.590 x$4.00 = $18.360
Year Two estimated costs: escalation @4% $19.094
Year Three estimated costs: escalation @4% $19.858
REPRODUCTION
For IGCE estimating purposes we have used $.10 per page and have estimated 1, OOP pages
per month. This is based on the current prices we are paying and prices on the open market.
our computed amount is as follows: 1,000 pages x $. 10 = $100/month
Year 1: 12 months x $1OO = $1.200
Year 2: escalation @ 4% $1.248
Year 3: escalation @ 4% $1.298
TOTAL $3.746
Continuation page (WS-4)
SAMPLE WORKSHEET
11
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # 009876 - A1 NEW CONTRACT X
PREPARER __J. DOE WORK ASSIGNMENT"
DATE _XX/XX/9X DELIVERY ORDERS _
OTHER
IGCE CONTINUATION WORKSHEET- OTHER DIRECT COSTS
TELEPHONE
For IGCE estimating purposes we are basing our estimate on the number of long distance phone calls
required to perform the contract at an acceptable level. Based on experience we have found
the more verbal communications there are between the program and the contractor, the less mistakes
we have. On the current contract we are averaging two long distance call a day with an average duration
of 20 minutes each. With the increased requirements on this procurement we expect phone calls to
increase to three calls a day of 30 minutes duration. We have experienced an average of $.50
per minute on the current contract. The phone company indicated they did not expect to increase
the rates for at least a year. Therefore, our computed amounts for telephone are as follows:
(52x5 = 260) 260 day/yr. x 3 callsx 30 minutes/call = 23,600 minutes/year
Year 1: 23,400 minutes x $.50/min. = $11.700
Year 2: escalation @ 4% $12.168
Year 3: escalation @ 4% $12.655
TOTAL
MISCELLANEOUS
We have not included any amount lor miscellaneous. We believe we have covered the necessary costs.
There are no specific items that we can think of that would be included here. If a contractor proposes
an amount for this element of cost, we will review it and make a determination of its necessity to
this contract.
Continuation page (WS-4)
SAMPLE WORKSHEET
12
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP #009876 - A1 NEW CONTRACT _X_
PREPARER J. DOE WORK ASSIGNMENT
DATE _XX/XX/9X DELIVERY ORDER '_
OTHER
PROFIT/FEE WORKSHEET
We requested assistance from the Contracting Officer for estimating profit/fee. She recommended using
the EPA weighted guidelines method for determining our estimated fee. We met with the Contracting Officer
and provided input on the importance and necessity of each element of cost and she prepared a weighted
guideline analysis for the fee. The weighted guidelines method disclosed a fee of 8.8%. We think
that is a fair and acceptable fee percentage. We have included the computations and assumptions
with the Independent Government Cost Estimate.
Since this is a LOE contract, direct labor is the most important factor for desired performance.
The weighted guidelines allows from 8% to 15% to be applied to direct labor. We assigned 15% to
P4 labor because the expertise and level of competence required at this level is the highest for all the
labor. 14% was assigned to the P3 labor. The required expertise is not as high as P4 but the effort to be
expended by the P3 labor represents 43% of the total effort. The effort for P2, P1, technical and clerical
effort is of lesser importance and the expertise required is at a lower level than the P4 and P3.
We assigned a 10% factor to P2 and P1 labor and an 8% factor to the technical and clerical labor.
After applying the percentages to the appropriate labor dollars, we computed the weighted percentages
of 12.96% for direct labor. For fee estimating purposes, we included the fringe benefit dollars with direct
labor dollars.
TRAVEL AND ODC: We combined travel and other direct costs (ODCs) for fee computation purposes.
The weighted guidelines allows a fee range for travel and ODCs of 1% to 3%. Since G&A is also
applied to travel and ODCs, we felt 1 % was a reasonable fee factor.
INDIRECT COST RATES -OVERHEAD AND G&A: The weighted guidelines allow a range of 6% to 8%
for overhead and 5% to 8% for G&A. There is nothing out of the ordinary for indirects on this
procurement. We used the average percentage of 7.5% for overhead and 6,5% for G&A.
(WS-5)
SAMPLE WORKSHEET
13
-------
PROFIT/FEE OBJECTIVE
WEIGHTED GUIDELINES
1. CONTRACTOR: IGCE 2. RFP/CONTRACT NO. 009876-A1
3.
COST INPUT TO TOTAL PERFORMANCE
COST
CATEGORY
DIRECT
MATERIALS
PURCHASES
SUBCONTRACTS
EQUIPMENT
ENGINEERING
MANUFACTURING
DIRECT LABOR
OVERHEAD
DIRECT LABOR
OVERHEAD
CONSULTANTS
OTHER DIRECT COSTS
GENERAL & ADMINISTRATIVE
TOTAL
GOV'T COST
OBJECTIVE
(a)
$2,295,862
$1,607,104
$758,054
$699,153
$5,360,173
WEIGHT
RANGES
(b)
1% TO 4%
1% TO 5%
1% TO 2%
8% TO 15%
6% TO 9%
5% TO 9%
4% TO 7%
2% TO 5%
1% TO 3%
5% TO 8%
XXXXXXXXXX
ASSIGNED
WEIGHT
(c)
12.96%
7.50%
1.00%
6.50%
xxxxxxxxxxxx
4. COMPOSITE PROFIT ON COST INPUT TO TOTAL PERFORMANCE [Col . (d) /Col . ( a) ]
5. COST RISK
6 . PERFORMANCE
7. SELECTED FACTORS
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
0% TO 6%
-2% TO +2%
8. LESS: NOT-FOR-PROFIT PERCENTAGE
TOTAL PROFIT/FEE OBJECTIVES (Lines 4 thru 8)
WEIGHTED FEE
Col. (a)*Col. (c)
(d)
$0
$0
$0
$297,544
$120,533
$0
$0
$7,581
$0
SO
$45,445
$471,103
8.79%
0.00%
0.00%
0.00%
8.79%
No cost risk for contractors-cost reimbursable contract
No information on prior performance
Rounded to 8.8%
PREPARED BY (Name & Title) SIGNATURE, (/ . // DATE
Mary Smith, Contracting Officer />7 f\n/J ^j^^/A-' 7!u-*^- / /?9
-------
APPENDIX C
SAMPLE IGCE
FIXED RATE INDEFINITE
QUANTITY CONTRACT
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION RFP # W001234-D1.
PREPARER __J. SMITH
DATE XX/XX/9X
NEW CONTRACT _X
WORK ASSIGNMENT
DELIVERY ORDER
OTHER
SUMMARY COST ESTIMATE
FIXED RATE/INDEFINITE QUANTITY CONTRACTS
CATEGORY
/. Direct labor (WS - 1,2 & 5)
' " ," V - "' * ",--- *V/, st *, s'
- f ', , '- ft,,- :
2. Total Travel (WS-3)
•> : -5. ^ , -', '\ / '"*, *' $ '?'',
3. Total Other Direct Costs (WS-4)
>. , "• ; •• ••' ' •.$ •',
. -••'.- .1" ..'\f. r.*y..*.*' -
4. G&A on travel and ODCs (if applicable} (WS - 2)
- ; — J * -r™r-,-; \ ,;;s „, , , n»?">
5. Total Costs (lines 1.2.3& 4)
YEAR 1
$1,771,670
, ' "'$ "•
$11,342
-------
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-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # W001234-D1 NEW CONTRACT _X
PREPARER J. SMITH WORK ASSIGNMENT
DATE XX/XX/9X DELIVERY ORDER __
CATEGORY_FIXED LOADED HOURLY RATES OTHER
DIRECT LABOR ESTIMATE WORKSHEET
LABOR HOURS:
For the labor hours, we reviewed the current usage on contract 68-01-2222 and determined the current hours
were sufficient for the program needs. At this point in time, there is no projected increase in our workload except
for the work to be performed by the Sr. LANS Specialist and the Technical Writer. We provided a questionnaire
to the Branch Chief and project officers which utilize this contract and received their input on the number
of hours needed for the Sr. LANS Specilaist and the Technical Writer and their input on current usage on the
other labor categories. They identified the work these categories will perform into specific subtasks
needed for the next three years under this contract. We reviewed their estimates, including their assumptions
and used their recommended hours for each category.
We added clerical labor to our estimate. The RFP did not include a specific cartegory of hours for clerical.
The contractor's were instructed to add loaded clerical hours to the RFP hours if it is their accounting
policy to direct charge clerical labor when it can be specifically identified to a contract. Based on prior
experience on contract 68-01-2222, we included 2000 hours for direct clerical labor in our estimate.
*AII correspondence from the Branch Chief and project officers and notes pertaining to any telephone
conversations are contained in the program's back-up file for this IGCE.
LABOR RATES:
The current contract is a fixed rate/indefinite quantity contract and the labor is shown as a fixed rate for
each labor category for each year. This fixed rate includes labor, indirects and profit and is called a loaded rate.
In order to compute our estimate for loaded rates, we utilized published average survey rates for the computer
industry for the Washington area (most work will be performed there) for the labor categories in this
procurement. We added percentages for fringe benefits, overhead, G&A and fee.
We worked with the Contracting Officer and the Cost Policy and Rate Negotiation Branch to get
some ranges for the indirect rates. We realize each company is different and their rates depend on their
specific accounting system. The indirect rates used for estimating purposes are average rates from the
ranges provided. We included a 10% fee factor for each category for estimating purposes. We used this
percentage to ensure we did not under estimate costs. After we completed our computations, we compared our
estimated rates to the rates in the current contract. We found some rates were higher and some lower,
but overall were reasonable. We then added escalation of 3% for year one, 4% for years two and three. Our
estimated escalation factors were included after discussions with the Washington Cost Advisory Branch.
*AII workpapers showing the various computations and comparisons we performed and all notes pertaining
to all telephone conversations with the Contracting Officer, Cost Policy and Rate Negotiation and
Washington Cost Advisory Branches are contained in the program's back-up file for this IGCE.
(WS - 1) Continuation Page
SAMPLE WORKSHEET
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP #W001234-D1 NEW CONTRACT X
PREPARER J. SMITH WORK ASSIGNMENT"
DATE _XX/XX/9X D ELIVERY O RD E R _
CATEGORY FIXED LOADED HOURLY RATES OTHER
INDIRECT COST RATES WORKSHEET
We talked with the Contracting Officer and the Rate Negotiation Branch at headquarters and got some current
rates for companies likely to bid on this contract (i.e. capable of performing the work). We performed a
straight average of the rates provided. Once we have computed loaded rates for each labor category, we will
compare them to the current contract rates and make any adjustments we feel are necessary.
Fringe Overhead G&A
Company A 28% 110% 9%
Company B 35% 93% 14%
Company C 29% 101%
Company D 25% 103% 8%
Company E 33% 91% 11%
AVERAGE 30% 100% 10%
SAMPLE WORKSHEET
(WS-2)
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION_RFP# W001234-D1
PREPARER J. SMITH
DATE XX/XX/9X
NEW CONTRACT _X
WORK ASSIGNMENT"
DELIVERY ORDERS _
OTHER
WORKSHEET FOR TRAVEL COSTS
TRAVEL
YEAR1
YEAR 2
YEAR 3
TOTAL
Airfare
$3,870
$4,025
$4,186
$12,081
Per Diem
$3,312
$3,444
$3,582
$10,339
Car Rental
$1,800
$1,872
$1,947
$5,619
Mileage
$1,820
$1,893
$1,969
$5,681
Ground Transportation
$540
$562
$584
$1,686
Other (explain)
TOTAL TRAVEL
$11,342
$11,796
$12,268
$35,405
NOTES, ASSUMPTIONS AND COMPUTATIONS
Most of the work on this contract will be performed in the Washington area. Therefore, most of the
travel costs will be for local travel. On the current contract, there has been the need to travel
to the Program office in RTF approximately once a month for a two day visit. On this contract
with the addition of the technical writer to assist the program with some of the written technical
descriptions, there will be a need for the technical writer to meet with program officials. Based on
discussions with the Branch and Section Chiefs who will use this contract, we are projecting six,
two day trips per year for the technical writer. For local travel, we assumed a maximum of
25 miles one way distance from the EPA Headquarters offices, two trips per week for meetings, or to
deliver emergency reports and used the current mileage rate Government workers are reimbursed
when using privately owned cars. For years two and three, we have escalated year one total travel
by 4% for each year. The escalation factor is based on discussions with Washington
Cost Advisory Branch.
Computations are as follows;
Local travel
Two trips per week - 50 miles maximum roundtrip
Parking @$5.00/trip
Two trips/week x 52 weeks =104 trips x $5/trip parking = $520 for parking
Mileage @$.25/mile
Two trips/week x 52 weeks x 50 miles/trip = 5,200 miles/year = $1,300/year for mileage
Mileage =
$1,300
Parking =
$520
Total Local travel $1,820
(Use additional pages if necessary)
SAMPLE WORKSHEET
WS-3
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION RFP #W001234-D1
PREPARER _J. SMITH
DATE XX/XX/9X
NEW CONTRACT _X
WORK ASSIGNMENT"
DELIVERY ORDERS _
OTHER
IGCE CONTINUATION WORKSHEET - TRAVEL
RTF Trips
18 trips total - two days each trip
Airfair $215 - 18 trips x $215 =
$3,870
Perdiem $92/day - 18 trips x two days x $92/day =
$3,312
Car Rental $50/day - 18 trips x two days x $50/day =
$1,800
Parking & mileage $15/day - 18 trips x two days x $15/day =
$540
Total RTP Travel
$9.522
Total Year One Travel - Local
$1,820
Total Year One Travel - RTP
$9, 522
Total Year 1
$11.342
add escalation of 4% for Year 2
$11,796
add escalation of 4% for Year 3
$12.268
SAMPLE WORKSHEET
Contiunation page (WS-3]
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION RFP #W001234-D1
PREPARER J. SMITH
DATE XX/XX/9X
NEW CONTRACT _X
WORK ASSIGNMENT
DELIVERY ORDER __
OTHER
OTHER DIRECT COST ESTIMATE
OTHER DIRECT COSTS
YEAR 1
YEAR 2
YEAR 3
TOTAL
COURIER/MESSENGER
$2,080
$2,163
$2,250
$6.493
COMPUTER RELATED COSTS
$41,650
$38,036
$39,479
$119,165
MA TERIAL/SUPPLIES
$600
$624
$649
$1,873
POSTAGE/FEDERAL EXPRESS
$900
$936
$973
$2,809
REPORTS
$32,500
$33,800
$35,152
$101,452
REPRODUCTION
$1,200
$1,248
$1,298
$3,746
TELEPHONE
$13,000
$13,520
$14,061
$40,581
TOTAL ODCs
$91,930
$90,327
$93,862
$276,119
NOTES, ASSUMPTIONS AND COMPUTATIONS
COURIER/MESSENGER
From our historical data, we determined we were paying an average of $18 per trip for courier
service and there was an average of three trips per week. We reviewed what was being delivered by
courier and determined some items being delivered were routine reports or follow-ups of meetings
that could be delivered by regular mail or delivered by people coming for regularly scheduled
meetings. Two trips per week are more than sufficient to serve the needs of the program.
We checked the Washington Post for courier advertising and found rates of$15/trip to $30/trip.
We called three courier services and got the following quotes:
Company A: $15/trip - 5 mile radius; $30/trip - 5 miles and beyond
Company B: $20/trip in metro area
Company C: $21/trip in metro area
Based on the above information, we are using $20/trip for estimating purposes and
4% escalation for years two and three.
Computations
2 trips/week x 52 weeks x $20/trip -
$2,080 Year One
4% escalation
$2.163 Year Two
4% escalation
$2.250 Year Three
Total for 3 years
$6.493
(Use additional pages if necessary)
WS-4
SAMPLE WORKSHEET
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # W001234-D1 NEW CONTRACT __X_
PREPARER _J. SMITH WORK ASSIGNMENT _
DATE XX/XX/9X DELIVERY ORDERS
OTHER
IGCE CONTINUATION WORKSHEET - OTHER DIRECT COSTS
COMPUTER RELATED COSTS
This contract requires extensive use of computers. EPA provides some PCs as government
furnished property and some of the work is performed using various LANS and the mainframe.
Our projected cost for computer related costs are for costs the contractor will incur for
contractor owned equipment. Our review of the workload on the current contract disclosed
80% of the computer related hours were for personal computer (PC) usage and the remainder for
mainframe usage and additional software to provide comparability with EPA programs. The
program office branch chief projected a 10% increase in computer usage time on this contract due to the
addition of more LANS at EPA and usage by the technical writer. The program is currently reviewing
the need to provide more government PCs to this contract. However, a decision on this
will not be made for at least a year. For estimating purposes we have utilized the current
usage hours plus 10% for PCs and mainframe.
PCs
Current average usage hours - 1,200 per month
Projected in-house increase of 10% 120
Total projected PC usage 1,320 hours
Mainframe
Current average usage hours = 300 per month
v.^ ^
Projected in-house increase of 10% 30
Total current mainframe usage 330 hours
The PC usage rate under the current contract is $11/hr. and the mainframe rate is $55/hr.
We looked at two other contracts in our program that have PC and Mainframe usage and did a straight
average of the rates for each.
PC Mainframe
current contract $11/hour $55/hour
contract B $15/hour $60/hour
contract C $10/hour $55/hour
Average 36/3 = $12/hr. 170/3 = $57/hr.
Because the average rates are higher than the current contract rates, we decided to use
them for estimating purposes and to add escalation of 4% for years two and three.
Continuation page (WS-4)
SAMPLE WORKSHEET
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # W001234-D1 NEW CONTRACT X_
PREPARER _J. SMITH WORK ASSIGNMENT _
DATE XX/XX/9X DELIVERY ORDERS
OTHER
IGCE CONTINUATION WORKSHEET- OTHER DIRECT COSTS
COMPUTER RELATED COSTS - continued
For software, the program needs the flexibility to work with new software programs that come
on the market. They are aware of some new programming in process that could enhance their work.
To cover current needs and possible new software needs we are estimating 20 software programs at an
average cost of $350 for year one. For years two and three, we are estimating $2, OOP per year for
updating software.
Year One Estimate
PCs: $12/hourx 1,320 hours = $15,840
Mainframe: $5?'/hour x 330 hours = $18,810
subtotal $34,650
Software: 20 programs x $350 each = $7,000
Total Year One $41,650
Year Two and Three Estimate
PC year one rate x 1.04 = year two rate x 1.04 - year three rate
$12x 1.04 = $12.48x 1.04 = $12.98
Mainframe year one rate x 1.04 = year two rate x 1.04 = year three rate
$57 x 1.04 = $59.28 x 1.04 = $61.65
Year Two Estimate
PCs: $12.48/hourx 1,320 hours = $16,474
Mainframe: $59.28/hourx 330 hours = $19,562
subtotal $36,036
Software updates $2, OOP
Total Year Two $38,036
Year Three Estimate
PCs: $12.98/hourx 1,320 hours = $17,134
Mainframe: $61.65/hour x 330 hours = $20^345
subtotal $37,478
Software updates $2,000
Total Year Three $39.478
GRAND TOTAL $119.164
Continuation page (WS-4)
SAMPLE WORKSHEET
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # W001234-D1 NEW CONTRACT __X_
PREPARER _J. SMITH WORK ASSIGNMENT _
DATE __XX/XX/9X DELIVERY ORDERS
OTHER
IGCE CONTINUATION WORKSHEET- OTHER DIRECT COSTS
MA TERIAL/SUPPLIES
This category of cost is for graphic supplies, some office supplies and specific publications
required for this contract. This has been a minimal cost in the past and there is no forseeable reason
for it to increase a great deal in the future. For the past 3 years on the current contract it has averaged
approximately $50/month. We are using this average for year one with escalation of 4% for years 2 and 3.
Year One: $600 ($50 x 12)
escalation 1.04
Year Two $624
escalation 1.04
Year Three $649
TOTAL $1.873
POSTAGE/OVERNIGHT DELIVERY
Postage on the current contract is currently running approximately $20/month and overnight delivery
$50/month. With the decrease in courier service recommended, the mailing cost should increase
by abourt $5/month. Overnight delivery is expected to remain at the same level. We have included
escalation of 4% for years two and three.
Year One:
Postage: $25/month x 12 = $300
Overnight delivery: $50/month x 12 = $600
Total $900
Year Two: with 4% escalation $936
Year Three: with 4% escalation $973
TOTAL $2.809
Continuation page (WS-4)
SAMPLE WORKSHEET
10
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # W001234-D1 NEW CONTRACT __X_
PREPARER _J. SMITH WORK ASSIGNMENT _
DATE __XX/XX/9X DELIVERY ORDERS
OTHER
IGCE CONTINUATION WORKSHEET- OTHER DIRECT COSTS
REPORTS
Monthly reports and annual reports are requirements for this contract. Our past experience has
indicated an estimate of so much per page provides the best indication of cost. This per page
unit cost includes special bindings and covers, word processing costs and copying the reports.
The total number of reports required by the Statement of Work per month is ten including a/1 copies
At the end of each year an additional ten reports, including copies are required. Reports on similar
contracts averaged 50 pages per report at $4.50 per page. These reports have been sufficient
to meet our needs. On this contract we anticipate an increase in the number of pages due to
additional areas which have to be addressed as required by the SOW. These reports are extremely
important and we want to be sure there are sufficient dollars in the contract to cover the cost.
Therefore, we have increased our estimated cost per page to $5 to account for increases due to
inflation and for any unexcpected reports we may require.
Year 1 Estimated Costs:
10 reports/month x 50 pages x 12 = 6, OOP pages
10 additional reports x 50 pages = 500 pages
Total pages 6,500 pages x $5.00 $32,500
Year 2 Estimated Costs: with escalation @ 4% $33,800
Year 3 Estimated Costs: with escalation @ 4% $35,152
REPRODUCTION
For IGCE estimating purposes we have used $. 10 per page and have estimated 1, OOP pages
per month. This is based on the current prices we are paying and prices on the open market.
Our computed amount is as follows: 1. OOP pages x$. 10 = $100 month
Yearl: 12 months x $100 $1,200
Year 2: with escalation @ 4% $1,248
Year 3: with escalation @ 4% $1,298
TOTAL $3.746
Continuation page (WS-4)
SAMPLE WORKSHEET
11
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP # W001234-D1 NEW CONTRACT __X_
PREPARER __J. SMITH WORK ASSIGNMENT _
DATE __XX/XX/9X DELIVERY ORDERS
OTHER
IGCE CONTINUATION WORKSHEET- OTHER DIRECT COSTS
TELEPHONE
For IGCE estimating purposes we are basing our estimate on the number of long distance phone calls
required to perform the contract at an acceptable level. Based on experience we have found
the more verbal communications there are between the program and the contractor, the less mistakes
we have. On the current contract we are averaging ten long distance call a day with an average duration
of 10 minutes each. We have experienced an average of $.50 per minute on the current contract.
The phone company indicated they did not expect to increase the rate for at least a year.
Therefore, our computed amount for telephone are as follows:
(52x5 -260) 260 days/yr. x 10 calls/day x 10 minutes/call = 26,000 minutes/year
Yearl: 26,000 minutes x $.50 = $13,000
Year 2: with escalation @ 4% $13,520
Year 3: with escalation @ 4% $14,061
TOTAL $40,581
MISCELLANEOUS
We have not included any amount for miscellaneous. We believe we have covered the necessary costs.
There are no specific items that we can think of that would be included here. If a contractor proposes
an amount for this element of cost, we will review it and make a determination of its necessity to
this contract.
Continuation page (WS-4)
SAMPLE WORKSHEET
12
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION RFP #W001234-D1 NEW CONTRACT _X
PREPARER J. SMITH WORK ASSIGNMENT
DATE _XX/XX/9X DELIVERY ORDER "
OTHER
PROFIT WORKSHEET
We talked to the contracting officer regarding profit. She recommended we take the conservative approach and
use a 10% profit factor to provide better assurance that we don't under estimate our costs. We have taken the
contracting officer's recommedation and used a 10% profit factor for all categories.
The RFP is allowing for G&A on travel and other direct costs, but states there will be no profit paid on travel
and other direct costs for this procurement. Therefore, we did not include any amounts for profit on the travel and
other direct costs.
SAMPLE WORKSHEET
(WS-5)
13
-------
APPENDIX D
IGCE FORMS
COST REIMBURSABLE
CONTRACT
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION/CONTRACT
PREPARER
DATE
NEW CONTRACT
WORK ASSIGNMENT"
DELIVERY ORDER
OTHER
SUMMARY COST ESTIMATE
COST REIMBURSABLE CONTRACTS
CATEGORY
1. Direct Labor (WS-1)
2. Fringe Benefits (WS-2)
3. Total Direct Labor & Fringe Benefits (lines 1 & 2)
:
4. Overhead (WS-2)
5. Total Travel (WS-3)
6. Total Other Direct Costs (WS-4)
f
7. Sub-Total (lines 3,4, 5 & 6)
8. G&A (WS-2)
• '
9. Total Costs (lines 7 & 8)
, .-.;**
10. Profit/Fee (WS-5)
1 1 . Total Cost and Profit (lines 9 & 1 0)
TASK 1
$
$
$
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$
-,.,.,::,.^ /£,::..
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$
$
$
$
$
TASK 2
$
$
: _-•-.,:
$
$
$
$
$
$
$
$
TASK 3
$
$
$
$
$
$
$
$
$
$
$
TOTAL
$
$
$
$
$
$
$
$
$
$
$
-------
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-o
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z
-------
INDEPENDENTGOVERNMENTCOST ESTIMATE TYPE OF ACTION
SOLICITATION/CONTRACT NEW CONTRACT
PREPARER WORK ASSIGNMENT
DATE DELIVERY ORDER
OTHER
DIRECT LABOR ESTIMATE WORKSHEET
(WS — 1) Continuation Page
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION/CONTRACT NEW CONTRACT
PREPARER WORK ASSIGNMENT
DATE DELIVERY ORDER
OTHER
INDIRECT COST RATES WORKSHEET
(WS-2)
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION/CONTRACT
PREPARER
DATE
NEW CONTRACT
WORK ASSIGNMENT
DELIVERY ORDERS _
OTHER
WORKSHEET FOR TRAVEL COSTS
TRAVEL
YEAR1
YEAR 2
YEAR 3
TOTAL
Airfare
$
Per Diem
Car Rental
Mileage
Ground Transportation
Other (explain)
TOTAL TRAVEL
$
$
$
NOTES, ASSUMPTIONS AND COMPUTATIONS
(Use additional pages if necessary)
WS-3
-------
INDEPENDENTGOVERNMENTCOST ESTIMATE
TYPE OF ACTION
SOLICITATION/CONTRACT
PREPARER ~_
DATE
NEW CONTRACT
WORK ASSIGNMENT
DELIVERY ORDER
OTHER
OTHER DIRECT COST ESTIMATE
OTHER DIRECT COSTS
YEAR1
YEAR 2
YEARS
TOTAL
COURIER/MESSENGER
$
$
$
$
COMPUTER
MATERIAL/SUPPLIES
POSTAGE/FEDERAL EXPRESS
REPORTS
REPRODUCTION
TELEPHONE
MISCELLANEOUS
TOTALODCs
$
$
$
$
NOTES, ASSUMPTIONS AND COMPUTATIONS
WS-4
-------
INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION/CONTRACT NEW CONTRACT
PREPARER WORK ASSIGNMENT
DATE DELIVERY ORDERS _
OTHER
IGCE CONTINUATION WORKSHEET
Contiunation page
-------
INDEPENDENT GOVERNMENT COST ESTIMJYPE OF ACTION
SOLICITATION/CONTRACT NEW CONTRACT
PREPARER WORK ASSIGNMENT
DATE DELIVERY ORDER _
OTHER
PROFIT/FEE WORKSHEET
(WS-5)
-------
APPENDIX E
IGCE FORMS
FIXED RATE INDEFINITE
QUANTITY CONTRACT
-------
INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION/CONTRACT
NEW CONTRACT
PREPARER
DATE
WORK ASSIGNMENT
DELIVERY ORDER
OTHER
SUMMARY COST ESTIMATE
FIXED RATE /INDEFINITE QUANTITY CONTRACTS
CATEGORY
1
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. Direct Labor (WS - 1 ,2 & 5)
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2. Total Travel (WS-3)
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3. Total Other Direct Costs (WS-4)
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4. G&A on travel and ODCs (if applicable) (WS - 2)
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5. Total Costs (lines 1 ,2,3 & 4)
YEAR 1
$
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$
# A
$
'
$
%
$
YEAR 2
$
i -
$
-
$
"" '.
$
; ' j
$
YEAR 3
$
$
$
$
$
TOTAL
$
$
$
$
$
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NOTES, ASSUMPTIONS AND COMPUTATIONS
(TOTAL DIRECT LABOR
| Clerical
| TOTAL LOE
| TOTAL
H
M
| TOTAL
H
«
| TOTAL
-H
1
A
I TOTAL
TJ
1
•^
I TOTAL
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ro
| TOTAL
T>
U>
| TOTAL
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1
1 Labor Category
Hourly Rate
Unloaded
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Subtotal
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Hours/year
H
1
_h
1
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1
Loaded
Estimated
CONTRACT COSTS
DIRECT LABOR ESTIMATE WORKSHEET
SCHEDULE OF LOADED FIXED RATES
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33 H
m >
33d
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m
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INDEPENDENTGOVERNMENTCOST ESTIMATE TYPE OF ACTION
SOLICITATION/CONTRACT NEW CONTRACT
3REPARER WORK ASSIGNMENT
DATE DELIVERY ORDER
OTHER
DIRECT LABOR ESTIMATE WORKSHEET
(WS — 1) Continuation Page
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INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION/CONTRACT NEW CONTRACT
PREPARER WORK ASSIGNMENT
DATE DELIVERY ORDER
OTHER
INDIRECT COST RATES WORKSHEET
(WS-2)
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INDEPENDENT GOVERNMENT COST ESTIMATE
TYPE OF ACTION
SOLICITATION/CONTRACT
PREPARER
DATE
NEW CONTRACT
WORK ASSIGNMENT'
DELIVERY ORDERS _
OTHER
WORKSHEET FOR TRAVEL COSTS
TRAVEL
YEAR1
YEAR 2
YEAR 3
TOTAL
Airfare
$
$
$
Per Diem
Car Rental
Mileage
Ground Transportation
Other (explain)
TOTAL TRAVEL
$
$
NOTES, ASSUMPTIONS AND COMPUTATIONS
(Use additional pages if necessary)
WS-3
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INDEPENDENTGOVERNMENTCOST ESTIMATE
TYPE OF ACTION
SOLICITATION/CONTRACT.
PREPARER
DATE
NEW CONTRACT
WORK ASSIGNMENT
DELIVERY ORDER ~_
OTHER
OTHER DIRECT COST ESTIMATE
OTHER DIRECT COSTS
YEAR1
YEAR 2
YEAR 3
TOTAL
COURIER/MESSENGER
$
$
$
$
COMPUTER
MATERIAL/SUPPLIES
POSTAGE/FEDERAL EXPRESS
REPORTS
REPRODUCTION
TELEPHONE
MISCELLANEOUS
TOTALODCs
$
$
$
$
NOTES, ASSUMPTIONS AND COMPUTATIONS
WS-4
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INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION/CONTRACT NEW CONTRACT
PREPARER WORK ASSIGNMENT
DATE DELIVERY ORDERS _
OTHER
IGCE CONTINUATION WORKSHEET
Contiunation page
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INDEPENDENT GOVERNMENT COST ESTIMATE TYPE OF ACTION
SOLICITATION/CONTRACT NEW CONTRACT
PREPARER WORK ASSIGNMENT
DATE DELIVERY ORDER __
OTHER
PROFIT WORKSHEET
(WS-5)
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