An Analysis of Forward Pricing Rates and Their Effectiveness in Indirect Cost Management.
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OHIO SCHOOL OF SYSTEMS AND LOGISTICS
Pagination or Media Count:
Overhead costs make up a substantial portion of the DOD dollars spent in the procurement of defense systems. Therefore, overhead control has become an area of special concern to government contract managers, and has spurred an increasing amount of manpower at the Air Force Plant Representative Offices, Air Force Contract Management Division, and Contract Maintenance Center Detachments to influence aerospace contractors toward greater efficiency and effectiveness in the area of indirect cost management. This study examined the current indirect cost estimating literature and procedures for establishing forward pricing rates for indirect costs. In addition, forward pricing rate data from various aerospace contractors were analyzed to determine whether there are significant trends or patterns among the forward pricing rates proposed by the contractor, the rates negotiated or recommended by the government, and the rates actually experienced by the contractor during the time period under study. The authors found that there is not a statistically significant difference among the rates proposed by the contractor, the rates negotiated or recommended by the government, and the rates actually experienced by the contractor. Author
- Administration and Management
- Economics and Cost Analysis