COEFFICIENT: A numerical factor that represents costs (generally indirect costs) not considered to be included in JOC Unit Price Book (UPB) unit prices, e.g. general and administrative and other overhead costs, insurance costs, bonding and alternative payment protection costs, protective clothing, equipment rental, sales tax and compliance with tax laws and contractor’s profit.
Contingent costs, such as labor rate changes and inflation in option years sometimes are handled using the coefficient, however a more transparent method is updating the UPB on an annual basis.
Coefficients proposed are multiplied times the established unit prices in the unit price book to price a job or project on individual task orders. The Coefficient(s) proposed & accepted by the Government are incorporated in the JOC. The contractor’s price coefficient typically included, but is not limited to the following:
o Contractor’s overhead and profit
o Subcontractors’ overhead and profit
o Insurance
o All costs associated with bonding (specifically including bond premiums)
o Employee payroll taxes, insurance, and fringe benefits
o Business taxes, contributions, memberships, corporate headquarters support (legal, financial, etc.)
o All waste and excess material
o Sales tax on material and equipment costs
o Clean up
o Mobilization and close out for the total contract and each task order
o Compliance with environmental laws (overhead [indirect] costs associated with performing work in compliance with EPA/OSHA regulations, including obtaining any necessary licenses and permits, reporting requirements, etc.)
o Traffic and work site signs and barriers
o Project management and supervision
o Quality control
o Office management and equipment
o Depreciation of mobile office(s)
o Interest associated with funding of equipment and payroll
o Submittal preparation
o As built drawings
o Permits, licenses, and fees
o Other risks of doing business (i.e. risk of a lower than expected contract dollar value,, risk of poor subcontractor performance)
(Source: FBO Solicitation – Army, – edited)
