1270+HO+Week+2+Integrating+Case+Participant+Guide.pdf - CON...

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CON 270
Intermediate Cost and Price Analysis
Week 2 Integrating Case
STUDENT VERSION

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Con 270
Week Two Integrating Case
You are a contract specialist responsible for the production buy of the Mobile
Explosive Detection Device (MEDD,) a new type of hand-held Silicon nanowire
device to be used for the trace detection of multiple types of explosives;
specifically Trinitrotoluene (TNT), Pentaerythritol tetranitrate (PETN) and
Research Department Formula X (RDX). Your acquisition team is currently
working on the development of an overall acquisition planning strategy in
anticipation of preparing the solicitation.
The R&D effort was a complete success and resulted in the development of 8
prototype detectors. In addition, the government secured all the pertinent data
rights necessary to move in to production. The design of the detectors themselves
is relatively straight forward and the science involved is such that the team feels
confident that there are several adequate sources available to produce the
detectors.
But despite the team’s confidence that this will be a competitive acquisition,
there is concern about how much risk is involved, especially in the area of cost,
with this first production buy. The PM is interested in what the team will
recommend as an appropriate contract type given the desire to incentivize cost
control and perhaps some level of performance. The assignment follows.

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ASSIGNMENT PART 1
THREE POINT ROLL-UP
1. Your team will begin by developing a spreadsheet that contains estimated
Low, Objective, and High position (3-point roll-up) given the information
below.
2. Reference the Table below for direct labor hourly rates and the indirect
rate estimates:
a. The hourly rates for engineering and manufacturing labor represent a
composite rate based on a statistical sampling of the most recent
rates paid within the industry. The data was normalized to
incorporate those labor categories that the team expects would be
most representative of the workforce involved in producing the
MEDD.
b. All indirect rate estimates are based on a statistical analysis of
multiple companies with experience similar to this type of
manufacturing and engineering effort. Knowing that the actual rates
proposed by individual contractors will vary, it was decided that the
following indirect rates would be used in this analysis in order to
ensure consistency in determining the appropriate risk assessment
for selecting contract type. The resultant values identified in the
table below represent the median rates resulting from the team’s
statistical analysis.
Hourly
Rate
Indirect
Rate
Material 5.00%
Engineering $34.00 125.00%
Manufacturing
(Fabrication and
Assembly/QC)
$21.00 185.00%
G&A (TCI) 8.00%

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