The Independent Government Cost Estimate - Case Study Example

ICGE and the Statement of Work Introduction Every Government needs to make an estimate of the projected costs that it expects a contractor of a given contract to incur in the performance of the contract. This estimate is referred to as an Independent Government Cost Estimate. This report prepares an Independent Government Cost Estimate for the procurement worthy $2 Million, for the purchase of construction of fifty three towers, with cameras and radar. The contract period is expected to be ten years or less, and the contract includes training for camera operators. The report evaluates the importance of the importance of the IGCE and provides reasons for confidentiality of the IGCE. It also proposes actions that should be taken in order to maintain the confidentiality of the IGCE. The report also provides a detailed cost estimate for the project. In this report, the types of statement of work (SOW) in regard to compatibility with this contract have been evaluated to determine the most appropriate type of statement of work (SOW) for this contract. Importance of the IGCE The Independent Government Cost Estimate is very important in the acquisition process. This is because the Independent Government Cost Estimate will assist in determining the rationality of a contractor’s cost and technical proposals and gain assurance that there is a congruence in ideas between the Federal Government’s contract awarding office and contract vendors pertaining to the scope of the contract. Secondly, the Independent Government Cost Estimate will assist in developing and presenting the position of the Government. An Independent Government Cost Estimate is normally based on actual costs (NAVSEA, 2013). Third, when an Independent Government Cost Estimate is in place, it will help to avoid or to alleviate against major risks and adverse consequences. This will improve the probability of purchase and project success. Furthermore, the Independent Government Cost Estimate will enable resource managers to plan and budget confidently because it offers a reasonable assurance of cost. It will determine the selection of sources because it acts as a baseline for cost or price evaluation (Ipsaro, 2011). This is what will help in the determination and choice of the right offeror. An Independent Government Cost Estimate helps the Government in cost estimation and supports government defense if a vendor loses the competition and protests the decision (Ipsaro, 2011). This Independent Government Cost Estimate will be used to speed up the process of contract award because it a solid Independent Government Cost Estimate. The Independent Government Cost Estimate is important because it will be used by contracting officer’s technical representatives to estimate a reasonable cost or price of a contract modification when changes in scope occur during the contract’s period of performance. Contracting officer’s technical representatives monitor a contract’s cost or budget schedule during a contract’s administration (Ipsaro, 2011). Further, this Independent Government Cost Estimate will be essential in estimating contract cost with accuracy and confidence. This is because the Independent Government Cost Estimate will use market research to obtain data that will be used for price analysis. Such market research data will include labor standards, analysis of cost trends for direct labor and material, to avoid past inefficiencies creeping into the proposal. The Independent Government Cost Estimate will determine whether the elements of the offeror are realistic for the work to be performed. It will also help in determining and establishing whether offerors reflect a clear understanding of the requirements of the contract. Third, the Independent Government Cost Estimate will help in establishing the consistency of the contractors with the unique methods of performance and materials that will be described in the offerors’ technical proposals (Engelbeck, 2002). Finally, the Independent Government Cost Estimate will be helpful in checking the rationality of a contractor’s cost proposal and make sure that the offered prices are within the budget range for the particular program. It will also help in selecting the sources needed to support the project (Cha, Echard, & Richey, 2009). Reasons for Confidentiality of the IGCE The Independent Government Cost Estimate must be extremely confidential. This will prevent government officials from using the information contained in the Independent Government Cost Estimate to inform their close friends and relatives about its details. This will help to prevent waste, inefficiency, corruption and favoritism. This will also reassure citizens that Government officials are using tax dollars in working, only for the public good, and not for private interest (El-Ayouty, Ford, & Davies, 2000). The provision of confidentiality will help protect government secrets. Confidentiality will protect trade secrets of firms that do business with the Government and the privacy of individual citizens, as well. Another reason why confidentiality is crucial in the Independent Government Cost Estimate is to prevent sensitive or proprietary government information from being leaked to other agency employees or commercial marketplace people. Equal competition among commercial vendors will be hindered, if this information leaks to the public (Compton, 2010). There will be no competitive and transparent bidding for the contracts because some people will have accessed the contents of the Independent Government Cost Estimate. Finally, confidentiality will ensure the autonomy of the Independent Government Cost Estimate (U.S Federal Government, 2005). Consequently, the Independent Government Cost Estimate will be free from outside influence. Some actions should be taken to maintain the confidentiality of the Independent Government Cost Estimate. First, the Independent Government Cost Estimate should not be given to proposing vendors prior to receipt of proposals. This will ensure that the proposing vendors or contractors do not get access to the sensitive information contained in the Independent Government Cost Estimate. Access to the contents of the Independent Government Cost Estimate might make proposing vendors to alter their bidding to win the contract. To prevent this, the Independent Government Cost Estimate must be made confidential by not giving it out to proposing vendors before the receipt of proposals. Secondly, the IGCE should not be made available to anyone outside the acquisition team that is preparing the pre-award documentation for the proposed acquisition. This will help in preventing vital information contained in the Independent Government Cost Estimate from leaking out to the public. Cost Estimate for the Project Personnel High Work Hours Average Work Hours High Charge Per Work Hour ($) Average Charge Per Work Hour ($) Total (High Charge) ($) Total (Average Charge) ($) Direct Labor Project Manager 2,200 2,000 100 80 220,000 160,000 Financial Analyst/Controller 1,800 1,600 70 60 126,000 96,000 Design Engineer 2,200 2,000 80 70 176,000 140,000 IT Specialist 1,500 1,300 80 70 120,000 91,000 Instructor 1,000 800 60 50 60,000 40,000 Systems Developer 1,200 1,000 70 60 84,000 60,000 Total Direct Labor 786,000 587,000 Direct Costs (Other) Travel 300,000 250,000 License Acquisition Costs 250,000 220,000 Total Direct Costs (Other) 550,000 470,000 Total Direct Costs (All) 1,336,000 1,057,000 Overhead Costs Administrative costs 346,000 320,000 General Costs 220,000 205,000 Total Indirect Costs 566,000 525,000 Total Estimated Cost 1,902,000 1,582,000 Types of Statements of Work in Regard to Compatibility with this Contract Based on the state requirements pertaining to the acquisition of supplies and services in terms of functions to be performed, vital physical characteristics, and the level of performance required, functional-based, performance-based and design statements of Work (SOW) are compatible with this contract. This is because these Statements of Work will provide details of the contract requirements as per the Government position. They will also specify the duties of a contractor and applicable specification and standards that are needed, as well as, the required results. The general services administration index of federal specifications will be used as a source of the federal provisions that should be applied by federal agencies. This details what, when, where, how many, and how well the work in this contract must be performed. A functional-based statement of Work will describe what is required, where it is required and when it is required to meet the supplies and service requirements of this contract. It will allow the contractor to exercise freedom in the determination of the most efficient means of completing the contract. A performance-based statement of Work, on the other hand, will describe the objectives of the contract. It will describe the purpose of the contract and the desired work output in detail. However, it will not provide specifications on how the work is to be accomplished (Compton, 2010). A design-based statement of Work will define design requirements and essential physical characteristics that will be used in the completion of this contract. The Statement of Work will provide details on how the work will be performed and materials that will be used. This Statement of Work will describe the nature and volume of work to be done. It will also describe the estimated price range of the project or contract (Compton, 2010). The most Appropriate Type of Statement of Work (SOW) for this Contract A design-based statement of Work is the most appropriate for this contract. This is because the contract entails specific and clearly defined targets. The contract also specifies the technical and schedule requirements, stated in terms of desired results. Further the contract requires appropriate methods of performance measurement and clearly conventional deliverables and other reporting requirements. The contract also has mandatory requirements that are limited to the Government's actual minimum needs. A design-based statement of Work is appropriate for this contract because the contract falls under architect-engineer and construction category of contracts. It will, therefore, provide details of the work that will be performed and the materials that are required. Given that the Government’s independent cost estimate for the project will not be revealed, but an estimated cost that will be stated as a range will be provided, a design-based SOW will be appropriate. This is because it will describe the nature and volume of work, including the estimated cost range of the contract (Compton, 2010). Essential, physical characteristics will also be described so that contractors will seek to best meet the needs of the government. . References Cha, C., Echard, J., & Richey, K. (2009). GAO Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs. Washington, DC: United States Government, Accountability Office Press. Compton, P. B. (2010). Federal Acquisition: Key Issues and Guidance. Vienna: Management Concepts Press. El-Ayouty, Y., Ford, K. J., & Davies, M. (2000). Government Ethics and Law Enforcement: Toward Global Guidelines. Westport: Praeger Press. Engelbeck, R. M. (2002). Acquisition Management. Vienna : Management Concepts Press. Ipsaro, M. (2011, June ). How an Independent Goverment Cost Esimate can Help you Determine How Much your Contract Should Cost. Retrieved from http://www.integritymc.com/files/IPA12327-Web_June_IGCE_CM_Article_Ipsaro.pdf NAVSEA. (2013). Independent Government Cost Estimate and Funding. Retrieved from http://www.seaport.navy.mil/Buy/PlanCostEstimate.aspx U.S Federal Government. (2005). The Code of Federal Regulations of the United States of America. New York: U.S. Government Printing Office. Read More