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Market Based Affordability (MBA)

Regularly since the 2008 Financial Crisis ARDAK has performed dozens of MBA Studies relative to specific Markets. ARDAK has recently provided similar analysis to the three largest Aerospace and Defense (A&D) contractors in the world; inclusive of adjacent and emerging market analysis to the degree necessary where our customers have utilized ARDAK’s Contract Exploitation System (ACES) has been utilized not only to determine the overall market base, but how to access current competitors, standup new BD organizations necessary to capitalize on these markets, and where to set indirect rate targets for current and newly formed organizations relative to their competitors. Custom sectors are available and the major sectors that ARDAK tracks are shown below.

Market Based Affordability (MBA) Rate Derivation (RD) Summary Sector

Based upon the preponderance of contract actions analyzed, each time a Wrap Rate is performed, ARDAK’s Contract Exploitation System (ACES) assigns the cost center analyzed to the associative Sector. The resultant Wrap Rates are then used to update the Sector values in ACES. The parametric based analytics are used in support of Market Based Affordability (MBA) / Portfolio Expansion, Realignment, Optimization, Validation & Affordability Analysis.

Market Based Affordability (MBA) Rate Derivation (RD) High Level (HLD) Decomposition Sector Analysis

Wrap Rate HIGH Level Decomposition (Fringe, Overhead, and G&A) Sector Analysis has been utilized within several Major and Custom Sectors as follows:

Affordability Analysis
Set In-Direct Rate Targets for each Sector
Develop a comparative analysis of a Sector’s Fringe, Overhead, and G&A to other Target Sectors (a sampling of major sectors are shown to the left), Subsectors, or Customer Defined Sectors (Contract(s), Agencies, Place of Performance, PoP, Contractor Type, PSC’s, etc.)
Determine Competitive Range within each Sector
Develop Independent Cost Evaluation (ICE)
Contractor System Purchasing Review (CSPR)
Rate Reasonableness Fair / Reasonable Price Determination

Market Based Affordability (MBA) Rate Derivation (RD) Low Level Decomposition (LLD) Sector Analysis

Professional / Technical Services Sector Wrap Rate Low Level Decomposition Summary Statistics

Low Level Decompositions (LLD’s) Sector Analyses provides an assessment of (Each Element of Fringe, Overhead, and G&A) Wrap Rate buildup within each Sector Analyzed. The analyses has been utilized as follows:

Predictive Analysis for Sector’s out years
Evaluate Relative Competitiveness within each Sector
Set Wrap Rate targets for new or adjacent market sectors
Rate Reasonableness Guidance and Assessment
Developing competitor similarity analysis
Portfolio Expansion, Realignment, Optimization, and Analysis

Market Based Affordability (MBA) Rate Derivation (RD) Low Level Decomposition (LLD) Trending Analysis

ARDAK’s Contract Exploitation System (ACES) Low Level Decomposition Sector Trending of each element of Fringe, Overhead, and G&A Wrap Rates for a competitor and/or each major Sector provides significant visibility into Wrap Rate trends which may be used as follows:

Identify competitor’s strategy for Wrap Rate Reductions
Develop comparative analysis over five (5) years’ and or individual competitor’s decomposed Wrap Rates
As input into internal or external Price To Win (PTW) Cost Models
Establish the validity of Rate Reasonableness IAW FAR 15.404-1(b)(2)
As input into internal and external Independent Cost Evaluation (ICE)

Plant Fringe

Plant Overhead

Plant G&A

Market Based Affordability (MBA) Material Handling (MH) and Fee Analysis

COTS Procurement: 100% Commercial Off The Shelf catalog-type orders.

Custom Procurement: 100% Customer specification-based efforts.

Composite Procurement: A blend of 80% COTS Procurement with 20% Custom Procurement

Subcontractor Handling: A fee representative of administrative costs associated with handling of subcontracts and materials.

Hundreds of contracts are analyzed, wrap rates backed out, and the residual component that remains is the fee:

Market Based Affordability (MBA) IDIQ Analysis – Competitive Range

IDIQ Contract High Level Rate Decomposition (HLD)

Private Equity (PE) Support

While there are numerous Strategy Firms that provide Aerospace and Defense (A&D) PE firms strategic advisory services on individual acquisitions, ARDAK offers A&D PE firms a unique view horizontally across the A&D Industry. As defense budgets continue to grow, sequestration has faded, and the financial crisis is over a decade behind us, it is more important now than ever to evaluate the A&D Industry Parametrically. As Tier I A&D firms divest non-core assets, Tier II A&D firms continue to consolidate, disruptive technology provides opportunity to new entrants

By leveraging ARDAK’s Contract Exploitation System (ACES) PE Firms can formulate and execute strategies that focus on individual A&D Sectors e.g. Professional / Technical Services, Systems Integrators, Maintenance, Repair, Overhaul, and Upgrade (MROU), etc., Custom Subsectors, or any number of candidates aligned by product offering.