Our team carried out a price investigation and overhead investigation into an R-LTPA proposal.
Our team carried out a price investigation and overhead investigation into an R-LTPA proposal. This followed on from the fixed-price investigation into the Test Aircrew Training and Air Range Modernization Programmes agreed a year earlier, which split the original long-term purchase agreement (LTPA) 25-year contract.
Situation
Our client had a detailed proposal and quotation for the LTPA Test and Evaluation Programme from a third party and was unclear on the value for money, having transferred the detailed understanding of the programme over to them.
The new proposal had to adhere to the new regulations demanded from the Single Source Pricing Regulations mandated for Quality Defence Contracts (QDC).
Task
Our team was involved in a cost estimate review and schedule analysis to ensure the programme had a basis of estimate with clear assumptions and could justify the size of resources specified for each task.
In addition, an overhead analysis was undertaken as the third party were trying to convert the task to a fixed price, including a fixed overhead contribution. This task then expanded and we reviewed the complete attribution and allocation of overheads across all contracts to establish whether the Ministry of Defence (MOD) was funding the right amount of these indirect costs.
Action
We undertook a detailed review of the overhead costs to establish whether a fair attribution of these costs had been applied to the LTPA proposal in line with allowable, attributable and reasonable allocation rules. Several significant costs and allocations were recommended to be disallowed in the Price Negotiations.
Results
We produced the investigation report, carried out the review of the allowable cost report, facilitated the commercial contract negotiations and presented this to the Indirect Cost Programmes Team.
