Supplier Proposal Adequacy Guidelines Strategic Affordability Analysis

Supplier Proposal Adequacy Guidelines Strategic Affordability Analysis PacSci EMC September 2017

Purpose of this Guideline This guideline explains the basic requirements for proposals submitted to PSEMC when cost or pricing data are required. This guideline does not apply to proposals that are: Valued at less than the cost or pricing threshold set in FAR 15.403-4. Based on competition. Based on commercial pricing. Questions regarding these requirements should be addressed to your PSEMC Supply Chain contact. 2 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Table of Contents When cost or pricing data is required, the supplier’s proposal needs to include the following sections: Required Items Page FAR Reference Supplier Proposal Adequacy Checklist Pg. 5-6 PSEMC Policy Cover Sheet - SF1411 or equivalent Pg. 7-8 FAR 15.408, Table 15-2, I. A. Index Pg. 9-10 FAR 15.408, Table 15-2, I. B. Cost Element Breakdown Pg. 11-12 FAR 15.408, Table 15-2, I. D. Summary Cost Element Breakdown Pg. 13-15 FAR 15.408, Table 15-2, I. E. Material (Including Consolidated BOM) Pg. 16-23 FAR 15.408, Table 15-2, II. A. Labor Pg. 24-29 ODC Pg. 30 FAR 15.408, Table 15-2, II. B. FAR 15.408, Table 15-2, II. D. NRE Pg. 31-32 Rates Pg. 33-34 FAR 15.408, Table 15-2, II FAR 15.408, Table 15-2, II. C. 3 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Table of Contents Summary cost element breakdowns and consolidated Bills of Material (BOM) are the two most frequently missed items in supplier proposals. Additional areas of proposal support, which are not applicable to most proposals: Required Items Page FAR Reference Commercial Justification Pg 38-40 FAR 2.101 & FAR 15.403 Change Proposal Pg. 41-46 FAR 15.408, Table 15-2, III. B. Additional Guidance Pg. 47 PSEMC Support 4 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Supplier Proposal Adequacy Checklist PSEMC Policy requires suppliers to complete a PSEMC Supplier Proposal Adequacy Checklist (sent with the RFP) for all proposals that exceed the Cost & Pricing Threshold. Additionally, PSEMC request the cost element breakdown, bill of material and labor detail in Excel format. The purpose of this form is as follows: To provide the supplier with a checklist to help ensure that all the supporting documentation has been included so the proposal will be deemed adequate by PSEMC, our customer and the DCAA. To provide PSEMC with a tool to more quickly verify where the supporting documentation can be found in the proposal. An example is provided on the next slide and under the commercial justification section of this module. 5 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Supplier Proposal Adequacy Checklist Example – Reference DI-SUP-105F03 Proposal Pricing Instructions Supplier Proposal Adequacy Checklist Completion of this checklist and supporting information is required for all single source proposals that exceed the TINA threshold where no valid exception (FAR 15.403-1) applies. If the supplier is claiming an exemption for commercial terms, only the first line on the checklist is applicable. Supplier Exemption to C&P Data/ Commercial Item (Section 3 of Instruction) Supplier Proposal Number Support Included Located in Section / Page Pricing Proposal Coversheet or Equivalent (2.1 of Instruction) Included Located in Section / Page Point of Contact (2.1 of Instruction) Included Located in Section / Page DCMA/DCAA Points of Contact, (Include Name, Phone, Address, Cage Code and E-mail Address) (2.1 of Instruction) Cost Element Detail and Cost Element Summary (2.4 of Instruction) Included Located in Section / Page Included Located in Section / Page Individual Bill of Material and Consolidated Bill of Material (2.5 of Instruction) Included Located in Section / Page Material Basis of Estimate (2.5.1 of Instruction) and Copies of POs/Quotes Included Located in Section / Page Sub-tier Cost Analysis (if required) (2.5.1 of Instruction) Included Located in Section / Page or ECDs Labor History (2.6 & 2.6.1 of Instruction) and Basis of Estimate Included Located in Section / Page Support for ODC (2.7 of Instruction) Included Located in Section / Page Support for Rates (1.7 and 2.8 of Instruction) Included Located in Section / Page Nonrecurring Engineering (NRE) (1.4 and 1.5) Use of Government Property to Include Serial Tooling and/or Special Test Equipment Expenditure Plan (Required to Support Cost Type Proposals or Performance Based / Progress Payments) Included Located in Section / Page Included Located in Section / Page Supplier By Signing below, you are confirming that required cost and pricing data is part of your proposal and meets the requirements of Pacific Scientific’s proposal pricing instructions. Seller’s Representative (type or Print) Signature Date (MM/DD/YYYY) Pacific Scientific By Signing below, the supplier manager is confirming receipt of the items required for this proposal and meets the requiremen ts of Pacific Scientific’s proposal pricing instructions. Buyer (Type or Print) Signature Date (MM/DD/YYYY) Supplier Manager (Type or Print) Signature Date (MM/DD/YYYY) 6 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Cover Sheet Include a cover sheet that includes the following information: Solicitation Number Name and Address of offeror. Name and Telephone number of point of contact. Name, address, phone number and email for your DCMA and DCAA. Type of contract action. Proposed cost, profit or fee, and total price – maximum proposal value. If you will require the use of government property. Whether your organization is subject to cost accounting standards (CAS) – see details in FAR 15-408, Table 15-2, I. A. (8). The statement designated in FAR 15.408, Table 15-2, I. A. (9). Date of Submission Name, title and signature of authorized representative. Most contractors use the Government Form 1411 or equivalent. An example is provided on the next slide. 7 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Cover Sheet Example – Reference Form DI-SUP-105F02 Point of Contact Proposed Cost Period of Performance DCMA Contact Information DCAA Contact Information Include Statement from FAR 15.408, Table 15-2, I.A (9) 8 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Index Include an index that references where the supporting data for your estimates is located in the proposal. The Index should include the following information: Title of information being referenced (Summary cost element breakdown, material, labor, etc. Location in the proposal (page number or file name and page if located in a separate file/document). An example is provided in the next slide. 9 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Index Example Proposal No.: HLQxxxxx Date: January xx, xxxx ABC Company Index 1. Cover sheet Page xx 2. Business section Page xx 3. 4. 2.1 Assumptions and Conditions Page xx Pricing Page xx 3.1 Unit Pricing Page xx 3.2 Cost Element by Part Number Page xx 3.3 Cost Element Summary Page xx Material Page xx 4.1 Bill of Materials by Part Number Page xx 4.2 Consolidated Bill of Materials Page xx 4.3 Purchase Orders and Quotes (File PO-Quotes.PDF) Page xx 5. Labor Page xx 6. Etc. Page xx 10 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Cost Element Breakdown by Line Item A cost element breakdown is required for each proposed line item. If the proposal covers multiple price points or multiple years, a cost element breakdown will be required for each price point for each year. For example, assume your proposal includes the following three line items: Part Number Quantity Unit Price Total Price Part ABC 50 12,500 625,000* Part ABB 75 10,300 772,500 NRE 1 Total 145,000 1,542,500 You would need to provide separate cost element breakdowns for parts ABC, ABB and the NRE. See the next slide for an example. * Slight differences due to rounding FAR 15.408, Table 15-2, I. D. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 11

Cost Element Breakdown by Line Item Example FAR 15.408, Table 15-2, I. D. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 12

Summary Cost Element Breakdown When more than one contract line item (Part Number, NRE, etc.) is proposed, you must provide summary total amounts covering all items for each element of cost. If the proposal covers a high, mid and low point, the summary needs to only be for those points, not all the different combinations that can result from range pricing. If the proposal is for multiple years there needs to be a summary for each of the years. For example, if your proposal included the following: Part Number Quantity Unit Price Total Price Part ABC 50 12,500 625,000* Part ABB 75 10,300 772,500 NRE 1 Total 145,000 1,542,500 You would need to provide a summary by cost element that includes the total proposed value of 1,542,500. See the next slide for an example showing the three individual cost elements being combined into a summary. * Slight differences due to rounding. FAR 15.408, Table 15-2, I. E. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 13

Summary Cost Element Breakdown - Example FAR 15.408, Table 15-2, I. E. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 14

Summary Cost Element Breakdown - Example If the proposal is a base year plus option years, there needs to be a summary Cost Element Breakdown for each of the years at the points in the RFP requiring Cost or Pricing data. FAR 15.408, Table 15-2, I. E. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 15

Material Include a BOM for each individual part proposed. A BOM is a list of the raw materials, subassemblies, etc., needed to manufacture a product. Provide your BOMs in Excel format. The consolidated and individual BOMs need to identify the following for each line item: Part Number and description. Supplier Quantity Unit Price – Unit pricing on the BOM should tie to the support. Total Price Basis for pricing (vendor quotes, purchase orders).** ** Source of pricing (purchase order, quotes, etc.) must be referenced in the BOM PSEMC will require copies of the support (i.e., quotes, purchase orders) for a sample of the items on the BOM during the cost analysis. FAR 15.408, Table 15-2, II. A. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 16

Material If attrition/yield or scrap are added to your material, you will need to submit adequate basis of estimates and support as appropriate. There are time when your BOM may be impacted by minimum buys or NRE that is passed along from your supplier. If this happens, make sure this is clearly identified on the BOM and the support quotes or purchase orders. In addition to the individual BOMs, FAR requires a consolidated BOM in your proposal. A consolidated BOM is a listing of the material needed for the proposal. A consolidated BOM combines all the materials for each of the parts being procured, as well as assemblies, services or material associated with NRE. FAR 15.408, Table 15-2, II. A. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 17

Individual Bills of Material Example 18 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Consolidated Bill of Material Example Below is an example of a consolidated BOM. This BOM was developed by taking the three individual BOM’s on the previous page and combining them together. In a consolidated BOM part numbers and quantities should be combined (or subtotaled) if they are the same parts. For example, the BOMs for Part Nos. ABC and ABB both require the same Connector and Screw. In the consolidated BOM the requirements have been combined and reflect the total number of Connectors and Screws that will be needed for this proposal. 19 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Consolidated Bill of Material If the proposal is for a base year plus option years, there needs to be a consolidated BOM for each of the years at each of the points in the RFP requiring cost or pricing. To determine if a subtier cost analysis is required, you need to add together the anticipated costs for each supplier for all years. In the above example, there are two suppliers that will require cost analysis (Ford and Motion). 20 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Material Supplier proposals A cost analysis report is required if any of your suppliers’ proposals exceed the Truth in Negotiations Act (TINA) threshold. These need to be submitted with your proposal. If the cost analysis for a supplier is not complete at the time of your proposal submittal, a schedule listing the estimated completion dates for each supplier needs to be provided in the proposal. If an exemption applies that eliminates the need for a cost analysis (commercial or competitively priced), documentation needs to be provided to support these claims. FAR 15.408, Table 15-2, II. A. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 21

Material If you claim your supplier was competed and the value is over the TINA threshold, you will need to provide the following: Evidence that an RFP or solicitation to bid was sent to two or more suppliers capable of providing the goods or services requested. Copies of the quotes received from each of the suppliers who were competed. Supplier’s analysis with basis of rationale for why the winning bid represents the best value (lowest price, technical considerations, etc.). If you claim your supplier’s parts or services are commercial refer to the commercial, section in this document. FAR 15.408, Table 15-2, II. A. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 22

Material Refer to the detailed instructions in the RFP when your proposal supports a base year plus options contract or a long term agreement. Guidance should be provided here on the consolidation and subtier requirements. If you have any questions regarding this, contact your PSEMC Supply Chain representative. Inter-organizational costs Inter-organizational costs are defined as the costs of items transferred between divisions within the same company. If you have bid any inter-organizational costs in your proposal, you will need to provide a cost element breakdown for each inter-organizational transfer and support as appropriate. One more thing: If you have a supplier with a value in excess of 13.5 million or is greater than 10 percent of your total proposal and exceeds the TINA threshold, FAR 15.408 Table 152 requires that we submit the supplier’s proposal and cost or pricing data with our own proposal. FAR 15.408, Table 15-2, II. A. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 23

Labor Labor Hours: Provide a time-phased (e.g., monthly, quarterly) breakdown of labor hours, rates and cost by appropriate category, and furnish basis for estimates. FAR 15.408, Table 15-2, II. B. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 24

Labor Labor Hours: Proposed labor hours are generally a combination of direct and support labor hours. Direct Labor Hours – Hours that can be identified specifically to a final end item. Support Labor Hours – Hours that cannot be specifically identified to one end item. For example, a production manager may be in charge of overseeing the manufacturing of multiple parts. FAR 15.408, Table 15-2, II. B. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 25

Labor You need to provide a breakdown of the labor hours by labor category and function along with a basis of estimate for the proposed labor hours. For example if you propose 500 hours for an end item, you would need to provide a breakdown by category/function (assembly, inspection, supervisor, engineer, etc.). You also will need to provide a detailed basis of estimate for each category/function showing how your arrived at the hours for the proposed labor category. Generally the basis should be actual production history. An alternative approach is the use of engineering estimates, if the item has not been manufactured before. Cost Accounting Standards (CAS) 401 requires that a company is consistent between proposals and accounting practices. The way a company estimates its labor hours needs to also be the way it accumulates its production history. FAR 15.408, Table 15-2, II. B. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 26

Labor Hours Example Proposal No.: HLQxxxxx Date: January 1, 20xx ABC Corporation Labor Hours Proposed Labor Hours – 82.79 hrs/unit for Part ABC Direct Labor Hrs/Unit Assembly 38.00 Machinist 3.50 QA 7.62 Engineer 1 2.38 Subtotal Production Support 51.51 Hrs/Unit Mfg Supervisor 9.20 Eng Supervisor 3.68 QA supervisor 9.20 Production Mgr 9.20 Subtotal 31.28 Total Hrs 82.79 27 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Labor Hours Example – Actual Production History Acutal Production History - Part ABC Duration - Months Qty End Date 7 30 11/15/2006 9 39 9/8/2007 Direct Labor Assembly Machinist QA Engineer 1 Total Hrs 1,836 169 368 115 Hrs/Unit Total Hours 61.20 1,675 5.64 154 12.38 336 3.83 105 Production Support MFG Supervisor Eng Supervisor QA Supervisor Production Mgr Total Hrs 268 107 268 268 Total Hrs 345 138 345 345 Proposed 12 50 24 110 9/1/2009 Hrs/Unit 42.95 3.96 8.62 2.69 Total Hrs 4,338 400 870 272 Total Hrs 920 184 920 920 Hrs/Unit 39.44 3.63 7.91 2.47 Total Hrs 1,900 175 381 119 Hrs/Unit 38.00 3.50 7.62 2.38 Total Hrs 460 184 460 460 Hrs/Unit 9.20 3.68 9.20 9.20 Hrs/Unit 82.79 28 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Labor Hours Examples – Basis of Estimate Basis of estimate for direct labor: Basis of estimate for the manufacturing supervisor: Proposed direct labor hours were developed by apply a 90 percent learning curve to the production labor history for part BBC. You need to provide a basis for the 90 percent curve. The manufacturing supervisor’s time is based on the latest production history for Part ABC. The latest production history for Part ABC (shown on the previous page) shows that 920 hours were used over a 24-month period. Since the current proposal has been estimated to cover 12 months, 460 hours were applied to the manufacturing supervisor (920 divided by 2). Basis of estimate for engineering supervisor: The engineering supervisor’s time is based on the latest production history for Part ABC. The latest production history for Part ABC (shown on the previous page) shows that 184 hours were necessary to complete the task. This task is similar, and so we estimate 184 hours. 29 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Other Direct Costs (ODC) List other expenses not otherwise included under material and labor (e.g. travel, freight) and provide basis for pricing. For example, the basis for travel would include the location, number of trips, number of people attending and the estimated expenses for the travel. FAR 15.408, Table 15-2, II. D. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 30

Nonrecurring Expenses (NRE) NRE refers to one-time costs that you would not normally see from proposal to proposal. Examples of NRE are as follows: Special Tooling New Equipment Equipment Refurbishment Hours and materials associated with increase throughput capacity. Hours and materials to research, develop, design and test new processes. One-Time review events. FAR 15.408, Table 15-2, II PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 31

NRE As mentioned earlier, NRE charges must be broken out by cost element. This means the material and labor components associated with the NRE are clearly broken out. Material – any material associated with NRE should be supported by supplier quotes or purchase orders. Labor – labor hours associated with NRE should have basis of estimates (BOE) that are broken down by labor category and include detailed descriptions of the tasks that will be performed. FAR 15.408, Table 15-2, II PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 32

Rates Rates include direct labor, overhead, general and administrative expenses (G&A) and cost of money (COM). PSEMC has the capability to perform rate audits on suppliers in lieu of having the DCAA do this. If you allow PSEMC to perform this rate audit, you need to provide the following information: Explanation as to how the rates were calculated. Detailed documentation (financial statements, labor pools, listing of unallowable expenses, etc.) that support the rate calculations. If the detailed documentation is based on budgetary numbers, you will also need to provide three years of your most current actuals to support you budgetary numbers. If budgetary numbers differ significantly from the most recent actuals, provide detailed explanations for these differences. FAR 15.408, Table 15-2, II. C. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 33

Rates Facilities Capital COM: When you elect to claim COM, submit a completed form CASB-CFM (Facilities Capital Cost of Money Factors Computation) in accordance with FAR 31.205-10. Also, complete DD Form 1861 and include a copy in your proposal submission. Both forms can be found on-line at various locations. FAR 15.408, Table 15-2, II. C. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 34

Summary In summary, all noncompetitive, noncommercial proposals valued at more than the cost and pricing threshold (TINA) are required to include the following information: Required Items Page FAR Reference Supplier Proposal Adequacy Checklist Pg. 5-6 PSEMC Policy Cover Sheet - SF1411 or equivalent Pg. 7-8 FAR 15.408, Table 15-2, I. A. Index Pg. 9-10 FAR 15.408, Table 15-2, I. B. Cost Element Breakdown Pg. 11-12 FAR 15.408, Table 15-2, I. D. Summary Cost Element Breakdown Pg. 13-15 FAR 15.408, Table 15-2, I. E. Material (Including Consolidated BOM) Pg. 16-23 FAR 15.408, Table 15-2, II. A. Labor Pg. 24-29 ODC Pg. 30 FAR 15.408, Table 15-2, II. B. FAR 15.408, Table 15-2, II. D. NRE Pg. 31-32 Rates Pg. 33-34 FAR 15.408, Table 15-2, II FAR 15.408, Table 15-2, II. C. 35 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Summary Sufficient rationale and supporting documentation to support each of the proposed cost elements is also required. Obtaining adequate supplier proposals is always on the critical path, since PSEMC cannot submit its proposal to the government until it has received adequate proposals from its subcontractors. Therefore it is critical that adequate supplier proposals are obtained as quickly as possible. 36 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Other Types of Proposals Commercial item proposals Change proposals The following slides are only applicable in certain situations. 37 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.

Commercial Items (if applicable) If you or one of your suppliers is providing a commercial part, cost or pricing data and a cost analysis is not required. However, you must demonstrate that the part is commercial and that the price is reasonable. A commercial item is any item other than real property, that is a type customarily used by the general public or by a nongovernment entity. Has also been sold, leased or licensed to the general public, or has been offered for sale, lease, or license to the general public. A final commercial determination is made by the government contracting officer. If the items is deemed to not be commercial the supplier is required to submit a complete proposal that includes cost and pricing data. FAR 2.101 and FAR 15.403 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 38

Commercial Items (if applicable) If you claim one or more of your parts are commercial, you need to support your position by providing the following information: Copies of applicable portions of a company catalogue or website address that shows the item with a description and unit price. Show that these items can be purchased by the general public or nongovernmental agency. If a website or catalogue is not available, copies of invoices showing the sale of these items to nongovernment entities is sufficient. FAR 2.101 and FAR 15.403 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 39

Commercial Items (if applicable) PSEMC policy requires suppliers to complete a PSEMC Supplier Proposal Adequacy Checklist (sent with the RFP) for all proposals where the supplier claims its parts are commercial. An example of the Supplier Proposal Adequacy Checklist for commercial items is attached, reference form # DI-SUP-310F01: Commerial Item Status PSEMC Policy PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 40

Change Proposals This section of Table 15-2 describes the format an estimating approach we are required to use when developing a proposal to modify an existing contract. In addition to the cost element breakdowns required as described in the previous slides, when there is a modification or change proposal, FAR also requires the following table to be inserted into your proposal: Estimated Cost Elements Cost of all Work Deleted (1) Cost of Deleted Work Already Performed Net Cost to be Deleted Cost of Work Added Net cost of Change Reference (3) (4) (5) (6) (7) (2) FAR 15.408, Table 15-2, III. B. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 41

Change Proposals B. Change Orders, modifications and claims Cost Elements Estimated Cost of all Work Deleted Cost of Deleted Work Already Performed Net Cost to be Deleted Cost of Work Added Net cost of Change Reference (1) (2) (3) (4) (5) (6) (7) Column Column 2 2 includes includes the the cost cost of all work deleted. This of all work deleted. This includes includes cost cost of of work work deleted already performed deleted already performed (amount (amount in in Column Column 3) 3) and and cost of work deleted not cost of work deleted not yet yet performed performed (Column (Column 4) 4) Column Column 3 3 includes includes the the cost cost of deleted work already of deleted work already performed. performed. This This amount amount will not be included will not be included in in the the credit (delete) adjustment credit (delete) adjustment amount amount (e.g. (e.g. we we will will not not give back costs already give back costs already incurred). incurred). Column 4 includes cost for deleted work not yet performed – must be priced using current estimates (but the current estimate may be the same as the original estimate) – it is develed similar to a normal “add” proposal with a few exceptions. Column 5 includes the cost of the new work and is developed as we do any other proposal. FAR 15.408, Table 15-2, III. B. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 42

Change Proposals Detail for columns listed on previous page: 1. Enter appropriate cost element. 2. Enter current estimates of what it would take to complete the deleted work that has not yet been performed. 3. Enter current cost of deleted work already performed. This should be based on actuals and copies to support these actuals should be included in the proposal. 4. Enter the net cost to be deleted (Column 2 minus Column 3) 5. Enter your estimate for cost of work added by the change. 6. Enter the net cost of change (Column 5 minus Column 4) 7. Identify where in your proposal the supporting documentation and basis of estimate can be found for each of these sections. FAR 15.408, Table 15-2, III. B. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 43

Change Proposals For purposes of determining if a proposal an cost or pricing data are required from individual suppliers on a change proposal the absolute value of the “delete” amount plus the “add” amount is computed for each supplier that exceeds the cost and pricing threshold (TINA). Remember from FAR 15.403-4(b) – if the absolute value for an individual supplier exceeds the cost and pricing threshold (TINA) and the supplier is either an actual supplier (will continue to provide parts/services on this contract), the supplier is required to provide a proposal and cost or pricing data in support of the change proposal. Deleted amount is our current estimate (generally no the original contract value unless it is our current estimate). FAR 15.408, Table 15-2, III. B. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 44

Change Proposals If a supplier’s quantities are changing due to a modification, the net delete or add amount is used to determine if the supplier exceeds the cost and pricing threshold (TINA). The estimator should not consider the old quantity as the delete and the new quantity as the add (e.g. in computing absolute value) when determining if the supplier exceeds the threshold in cases where quantities are changing. The development of the appropriate deletion is not simply the estimated cost of the deleted quantity – this will overstate the credit. FAR 15.408, Table 15-2, III. B. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 45

Change Proposals: Cost of Work Deleted for a Partial Deleted Quantity In cases where part of a material quantity is being deleted (e.g., original contract requires 100 widgets and the contract is modified to delete 30 of them), one method of estimating the amount of the delete is: 1. Develop a current estimate of the extended cost for the item(s) given the original quantity. 2. Develop a current estimate of the extended cost for the items at the lower (remaining) quantity. 3. The delta between these two values represents the amount of the delete. The same method can be used if the contract is modified to increase a quantity for a part. FAR 15.408, Table 15-2, III. B. PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC. 46

Supplier Proposal Adequacy Checklist The Supplier Proposal Adequacy Checklist is accessed from the external PSEMC supplier website. Additional supplier proposal guidance and resources are available (information, templates and tools to assist in building a FAR compliant proposal. Supplier proposal guidance Supplier Proposal Adequacy Guidelines PSEMC document templates: Supplier proposal adequacy checklist. Contract pricing proposal cover sheet. https://psemc.com/suppliers/ 47 PacSci EMC Proprietary Rights are included in the information disclosed herein. Information is furnished for evaluation purposes only and shall no be used, disclosed, or reproduced for any purposes without the expressed written consent of PacSci EMC.