The Theta Company Spares Contract Analyze the following cost proposal submitted by the Theta Company for 25 landing gear systems. Answer the...

The Theta Company Spares Contract 

Analyze the following cost proposal submitted by the Theta Company for 25 landing gear systems. Answer the questions that follow The Theta Company cost proposal.

The Theta Company was the prime contractor for production of an Army aircraft which was currently being procured in a C-model configuration. To support the various models of the aircraft, the government had negotiated a basic ordering agreement (BOA) with the prime contractor for spares. On 5 February 2017, an unpriced delivery order was issued unilaterally under the BOA for a quantity of 25 ship sets of landing gears from Theta. The delivery order specified Level A packaging and shipment using a government bill of lading (GBL) to a specified Army Depot. Final source inspection and acceptance by the government for both the flyaway production aircraft and the landing gear spares was at the prime contractor's facility.

On 12 August 2017, the prime contractor submitted a firm fixed price proposal in the amount of $725,611.00 for the 25 ship sets. The proposal included the following cost breakdown.

​Subcontracted material $479,425.00

Mfg. labor-receiving inspection

   800 hrs. @ $15.00 12,000.00

Mfg. labor overhead 149% 17,880.00

Packaging and shipping 7.5% 36,810.00*

Program coordination 2.7% 14,246.00

   Subtotal direct costs $560,361.00

G&A 12.6% 70,605.00

Profit 15% 94,605.00

Total price $725,611.00

Unit price: $29,024.00 per ship set

*Level A packaging. Not applicable to production units.                      

An evaluation of the proposal and review of prices for previous procurements revealed the following:

(a)