Understanding Pricing Government Contracts
Pricing contracts for billing and revenue is the process of establishing a total contract price for billing and a total contract price for revenue and then allocating that price across contract lines. A contract may require separate maintenance of billing and revenue or billing and revenue may be managed as one value. This distinction is made when a contract is added.
Pricing government contracts is similar to the pricing of standard contracts with some exceptions. More specifically, government contracts include functionality to assign cost-plus fee types to rate-based contract lines. See Understanding Pricing Contracts.
This section discusses:
Amount-based pricing.
Rate-based pricing.
Contract line changes on a pending contract.
Total Contract Price for Billing and Total Contract Price for Revenue
Once you define the contract and add products to the contract, the next step is to identify the total contract price for billing and revenue. The Billing Allocation page is used to identify the total contract price for billing and the Revenue Allocation page is used to identify the total contract price for revenue. Total Billing and Total Revenue should be net of any discounts/surcharges applied.
For more details see Understanding Pricing Contracts
Amount based pricing for government contracts is similar to amount based pricing for standard contracts. See Understanding Pricing Contracts (ADD LINK HERE). This includes the use of Order Management and the Enterprise Pricer to define list prices for billing and standalone sales prices for revenue. This also includes an allocation the contract's fixed price amount across amount-based contract lines. A contract cannot be set to an active processing status until the fixed price amount has been properly allocated on the Billing and Revenue Allocation pages. For revenue allocation, government contracts can use functionality to automate the allocation of total revenue across contract lines including amount and rate based lines that separate billing and revenue.
After the contract is in an active processing status, any changes to the fixed price amount must be completed using amendment processing.
See Amending a Contract.
Rate-based pricing for government contracts is similar to rate-based pricing for standard contracts with the exception of cost-plus fees which are applicable for government contracts only. See Understanding Pricing Contracts.
This section discusses:
Defining rate sets for rate-based contract lines.
Defining rate sets and rate plans for cost-plus contract lines.
Rate-based contract lines are priced using PeopleSoft Project Costing rate sets and rate plans. Rate sets and rate plans can be defined for general use or for a specific contract. Once defined, you assign the rate set or rate plan to the rate-based contract using the Related Projects page.
When defining a rate set, you assign a rate definition type of Billing, Cost, Cost/Billing, or Revenue. This determines the type of pricing that is performed for the contract line transactions. When transactions are priced, indirect costs are calculated using the costing rate set, billable rows are created using the billing rate set, and if separate revenue rates are defined, then revenue rows are created using the revenue rate set.
Defining Rate Sets and Rate Plans for Rate-Based Contract Lines
After you define the rate set, you assign the rate set to the contract line on the Related Projects page. Source transactions (such as cost transactions) are priced creating billing and revenue rows based on the criteria and target analysis type defined in the rate set. To use multiple rate sets on a contract line, you must first define your rate sets, and then combine them onto a rate plan. The order that the rate sets are entered onto the rate plan is the same order that the system uses to perform pricing, enabling you to create rate stacking in situations where it is needed. The rate plan is assigned to the contract line on the Related Projects page, and enables you to implement as complex a pricing structure as you require.
Defining Rate Sets and Rate Plans for Cost-Plus Contracts Lines
Pricing rate-based contract lines with a cost plus fee type (Fixed,Award,Incentive or Other ) is similar to pricing non-cost-plus rate-based contract lines. Cost-plus contract lines often require a more complex rate structure with greater likelihood that you will need to define rate sets with rate definition types of Billing,Cost,Cost/Billing, and Revenue too if the contract separates as-incurred billing and revenue.
See Understanding Variance Pricing.
See Defining Rate Set Categories, Rate Sets, and Rate Plans.
Changing contract lines for a government contract is similar to that for a standard contract. Your ability to make changes to the pricing structure is controlled by the processing status of the contract.
If the contract is in a Pending processing status, you can delete or add contract lines, change your Billing and Revenue Allocation and assign different rate sets or rate plans to your rate-based contract lines.
Once the contract is in an Active processing status, most contract changes are made using amendment processing. Changes to rate sets and rate plans for rate- based contract lines can be made outside of amendment processing.