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   <concept id="DFARS_215.404-4"
            ditaarch:DITAArchVersion="1.3"
            class="- topic/topic concept/concept ">
      <title class="- topic/title ">
         <ph props="autonumber" class="- topic/ph ">215.404-4</ph> Profit.</title>
      <conbody class="- topic/body  concept/conbody ">
         <p outputclass="List1" class="- topic/p ">(b)  <i class="+ topic/ph hi-d/i ">Policy.</i>
         </p>
         <p outputclass="List2" class="- topic/p ">(1)  Contracting officers shall use a structured approach for developing a prenegotiation profit or fee objective on any negotiated contract action when certified cost or pricing data is obtained, except for cost-plus-award-fee contracts (see 
               <xref outputclass="fm:ParaNumOnly"
                  class="- topic/xref "
                  base="i1378298"
                  href="215.404-74.dita#DFARS_215.404-74">215.404-74</xref>
            , 
               <xref outputclass="fm:ParaNumOnly"
                  class="- topic/xref "
                  base="i1378423"
                  href="216.405-2.dita#DFARS_216.405-2">216.405-2</xref>
            , and FAR 16.405-2) or contracts with Federally Funded Research and Development Centers (FFRDCs) (see 
               <xref outputclass="fm:ParaNumOnly"
                  class="- topic/xref "
                  base="i1378303"
                  href="215.404-75.dita#DFARS_215.404-75">215.404-75</xref>
            ).  There are three structured approaches—</p>
         <p outputclass="List4" class="- topic/p ">(A)  The weighted guidelines method;</p>
         <p outputclass="List4" class="- topic/p ">(B)  The modified weighted guidelines method; and</p>
         <p outputclass="List4" class="- topic/p ">(C)  An alternate structured approach.</p>
         <p outputclass="List1" class="- topic/p ">(c)  <i class="+ topic/ph hi-d/i ">Contracting officer responsibilities.</i>
         </p>
         <p outputclass="List2" class="- topic/p ">(1)  Also, do not perform a profit analysis when assessing cost realism in competitive acquisitions.</p>
         <p outputclass="List2" class="- topic/p ">(2)  When using a structured approach, the contracting officer—</p>
         <p outputclass="List4" class="- topic/p ">(A)  Shall use the weighted guidelines method (see 
               <xref outputclass="fm:ParaNumOnly"
                  class="- topic/xref "
                  base="i1378203"
                  href="215.404-71.dita#DFARS_215.404-71">215.404-71</xref>
            ), except as provided in paragraphs (c)(2)(B) and (c)(2)(C) of this subsection.</p>
         <p outputclass="List4" class="- topic/p ">(B)  Shall use the modified weighted guidelines method (see 
               <xref outputclass="fm:ParaNumOnly"
                  class="- topic/xref "
                  base="i1378283"
                  href="215.404-72.dita#DFARS_215.404-72">215.404-72</xref>
            ) on contract actions with nonprofit organizations other than FFRDCs.</p>
         <p outputclass="List4" class="- topic/p ">(C)  May use an alternate structured approach (see 
               <xref outputclass="fm:ParaNumOnly"
                  class="- topic/xref "
                  base="i1378293"
                  href="215.404-73.dita#DFARS_215.404-73">215.404-73</xref>
            ) when—</p>
         <p outputclass="List6" class="- topic/p ">
            <i class="+ topic/ph hi-d/i ">(1)</i>  The contract action is—</p>
         <p outputclass="List7" class="- topic/p ">
            <i class="+ topic/ph hi-d/i ">(i)</i>  At or below the certified cost or pricing data threshold (see FAR 15.403-4(a)(1));</p>
         <p outputclass="List3" class="- topic/p ">
            <i class="+ topic/ph hi-d/i ">(ii)</i>  For architect-engineer or construction work;</p>
         <p outputclass="List3" class="- topic/p ">
            <i class="+ topic/ph hi-d/i ">(iii)</i>  Primarily for delivery of material from subcontractors; or</p>
         <p outputclass="List3" class="- topic/p ">
            <i class="+ topic/ph hi-d/i ">(iv)</i>  A termination settlement; or</p>
         <p outputclass="List6" class="- topic/p ">
            <i class="+ topic/ph hi-d/i ">(2)</i>  The weighted guidelines method does not produce a reasonable overall profit objective and the head of the contracting activity approves use of the alternate approach in writing.</p>
         <p outputclass="List4" class="- topic/p ">(D)  Shall use the weighted guidelines method to establish a basic profit rate under a formula-type pricing agreement, and may then use the basic rate on all actions under the agreement, provided that conditions affecting profit do not change.</p>
         <p outputclass="List4" class="- topic/p ">(E)  Shall document the profit analysis in the contract file.</p>
         <p outputclass="List2" class="- topic/p ">(5)  Although specific agreement on the applied weights or values for individual profit factors shall not be attempted, the contracting officer may encourage the contractor to—</p>
         <p outputclass="List4" class="- topic/p ">(A)  Present the details of its proposed profit amounts in the weighted guidelines format or similar structured approach; and</p>
         <p outputclass="List4" class="- topic/p ">(B)  Use the weighted guidelines method in developing profit objectives for negotiated subcontracts.</p>
         <p outputclass="List2" class="- topic/p ">(6)  The contracting officer must also verify that relevant variables have not materially changed (e.g., performance risk, interest rates, progress payment rates, distribution of facilities capital).</p>
         <p outputclass="List1" class="- topic/p ">(d)  <i class="+ topic/ph hi-d/i ">Profit-analysis factors.</i>
         </p>
         <p outputclass="List2" class="- topic/p ">(1)  <i class="+ topic/ph hi-d/i ">Common factors.</i>  The common factors are embodied in the DoD structured approaches and need not be further considered by the contracting officer.</p>
      </conbody>
   </concept>
</dita>
