Government Costing Procedures with the Defense Supply Center Philadelphia

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Government Costing Procedures with the Defense
Supply Center Philadelphia
May 22-24, 2005
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Recent DSCP CT Obligationsfor NISH CRPs
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DSCP CT Procurement Process

• Government requirement determined
• Allocation initiated
• Proposal submitted
• Proposal reviewed by CT personnel
• Cost/Price analysis
• Recommendation (acceptance/negotiations)
• Price agreement
• Contract award

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Can the burden be changed? (Increased)

• If a project has been on the PL for many years,
  how does DSCP allow for changes in the
  marketplace? Under one year contracts, a CRP
  could use a price granted to another manufacturer
  under a Purchase Exception to re-set the burden.
  Now that NISH is using out year options, this is
  not an alternative available to us.
• Can DSCP revisit the burden?
• Under what conditions?
• What documentation would be required?

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Does DSCP take into account special circumstances
that may cause CRP coststo be higher that
commercial competitors?

• Although it is our objective to compete on par
  with the commercial market, there are a number of
  costs that we incur to create jobs for people
  with disabilities.
• What can DSCP do to take these differences into
  account as it evaluates our prices?

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Why should there be a single price forall CRPs
making the same item?

• Assuming the same materials costs, CRPs operate
  out of various locations which have indigenous
  wage rates, overhead structures, and shipping
  costs to DSCP customer locations. Often contract
  quantities vary significantly across the CRPs,
  spreading the overhead across more or less
  product.
• When DSCP makes multiple commercial awards, it
  does not expect the same price for each, why
  shouldnt this apply to NISH contracts?

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When NISH suggests an item for the PL, impact on
the shrinking industrial base is always an issue
of paramount concern to DSCP.

• Every year, NISH becomes a more significant
  portion of the IB, particularly for clothing
  items. It has access to a substantial workforce
  eager to find meaningful employment and dedicated
  to working hard. Import penetration, not
  disabled people is responsible for the
  constriction of the base.
• Why should NISH CRPs be limited or excluded from
  consideration?

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Negative Impact of QuarterlyDemand and Funding

• The current cash flow demands on DSCP is
  requiring CRPs to place smaller orders with their
  suppliers. Clearly this reduction in volume is
  causing a ripple effect and prices are being
  quoted higher.
• Will DSCP make appropriate allowances for these
  increases that it has caused for future cost and
  price analysis?
• Will DSCP allow for re-negotiation of pricing
  where these constraints have caused higher prices
  for existing contracts?

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Economic Price Adjustments for Shipping Charges
on FOB Destination Contracts

• Our CRPs are performing against a number of out
  year options on FOB Destination contracts. Since
  they were awarded, there has been significant
  escalation in fuel prices that in turn, have
  forced our carriers to impose freight fuel
  surcharges.
• For existing contracts, how can we recoup these
  costs that could have never been envisioned by
  either side as option prices were being
  established?
• For future contracts, what is the best way to
  approach this problem?

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Our Fearless Presenters(The DSCP Dynamic Duo)

• Bill Zane
• William.zane_at_dla.mil
• 215-737-3096
• Walter Bright
• Walter.bright_at_dla.mil
• 215-737-5858