1. T. Mackey Rev.
11/08/2014
Position Paper # 5
Actual Payroll-Salary Method
For
Structuring Labor Cost Estimates
For
Grant and Cooperative Agreement Proposals
(Some of these steps will be very familiar to proposal teams. However, they are
included anyway for laying-out an ‘end-to-end’ solution).
Sequential Steps:
1) Develop a SOW for each proposed solution or particular aspect of the FOA that each
proposal team plans to pursue.
2) Develop dollar cost estimates for equipment, travel, consulting, exhaustive supplies,
materials, and obtain dollar cost estimates of lower-tier partners’ contributions that
reflect the level of effort necessary to perform the SOW, broken down by tasks,
subtasks (if necessary), over time, i.e. per month and per calendar year during the
projected period of performance, (12 or 24 months, etc.). This data should look
something like the following example:
Year 1
SOW Task1 SOW Task2 SOW Task3 SOW Task4 . . . . n
a) Equipment $10,000 1,930 --- 50,450 . . . . subtotal
b) Materials $60,000 -- -- 10,250 . . . . subtotal
c) Travel $5,250 -- 5,250 -- . . . . subtotal
d) Subcontracts $100,000 75,000 300,000 25,000 . . . . subtotal
e) Consultant $50,000 25,000 -- -- . . . . subtotal
.
(Dollar Subtotals) $225,250 $101,930 $305,250 $85,700 Grand Total
Dollars for Non-
Labor SOW
3) Develop total time estimates (hours) for each company employee who will be
performing any work on the proposed project SOW tasks. Breakdown the total time
estimates for each employee per each SOW task. Identify each employee by name so
that this data will look like the following example:
Year 1
SOW Task1 SOW Task2 SOW Task3 SOW Task4 . . . . n
a) Employee1 100 30 300 450 . . . . subtotal
b) Employee2 -- 200 35 250 . . . . subtotal
c) Employee3 250 100 -- 350 . . . . subtotal
.
.
.
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2. T. Mackey Rev.
11/08/2014
2
Y (Hour Totals) 350 330 335 1050 Grand Total
Hours for SOW
4) Provide the dollar estimates from 2) and the hour estimates from 3) to the managing
director (MD) of the particular business unit pursuing the engagement. The MD, who
has authorized access to each employee's hourly rate, will have to match the SOW
Task# from 2) with that from 3). The MD will use the actual hourly labor rate from an
employee’s Earning Statement to calculate the cost of the labor content for each SOW
Task. Then, the MD must add the labor cost to the non-labor costs of each SOW Task#
to derive a total cost estimate for each SOW Task. The sum of the cost estimates for all
the SOW Tasks will = the Estimated Total Budget Cost of the proposed project.
5) The MD must collect signed originals of the privacy waivers from each employee
identified in 3) above and provide them to the company’s HR representative. No
salary information for any contributing employee or administrative support person
can be released to any sponsoring Government Agency without a signed
Authorization for Release of Personal Information from that employee being in HR’s
possession.
6) The MD, acting as the honest broker, will have the responsibility for determining the
total cost of the proposed effort. The details of the hourly rates of each of the
employees involved in performing the SOW and the administrative support person(s)
involved with the project can only be provided directly to the Sponsoring Government
Agency upon request to substantiate that the proposed cost, (materials + labor), are
current, accurate, and complete. Such details cannot be provided to any other
company or educational organization that is associated with the proposal effort.
These steps only address the Cost Proposal preparation and submittal. Other issues to be
considered after being chosen for an award may include in the following order:
a) Budget related Govt pre-award fact-finding and discussions related to the labor
cost estimates;
b) Structuring the agreement or grant and the SOW effort within the framework of a
Fixed-Cost, Payable Milestone Schedule type contractual arrangement so that
the company can easily invoice and get paid;
c) Any special reporting requirements such as patent reports
d) Time keeping and record keeping of travel, supplies, materials, and consultant
expenses;
e) Periodic progress reports or milestone reports;
f) Intellectual property rights.
These issues can be discussed at length after the Grant Application package has been
submitted. They have no bearing on preparation and submittal of the Application.