In a forward pricing proposal situation, the purpose of a walk-through of the proposal is to gain an understanding of the basis of the proposal and related supporting documentation. As part of the walk-through, a contractor might be asked to
- explain the basis of estimate for significant costs, indirect rate pools and allocation bases, and cost elements
- explain the process used to develop estimates and the internal controls/policies and procedures related to those areas
- demonstrate how the number/amounts for the significant areas of costs are derived
- demonstrate how historical trend data was considered
- demonstrate the homogeneity of pool costs and allocation bases used are appropriate
Prospective contractors should plan on putting a fair amount of effort into these walk-throughs for the simple reason that it should help expedite the audit process. Listen carefully to auditor questions and any feedback they might provide. These might indicate potential weaknesses in your proposal or in the level of supporting detail that might need to be addressed.
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