Market Based Affordability (MBA)

For well over a decade ago and 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 analysis to not only 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) IP: Rate Derivation (RD) Summary Sector

Average In-Direct Rates (Wrap Rates) for each Major Sector as defined by the USG are shown above. Parametric based resultant analytics used in support of Market Based Affordability (MBA) / Portfolio Expansion, Realignment, Optimization, Validation & Analysis

MBA IP: Rate Derivation (RD) High Level (HLD) Decomposition Sector Analysis

Wrap Rate High Level Decomposition Plant Summary Statistics are shown as follows:

  • Decomposed (Fringe, Overhead, and G&A) In-Direct Rates within each major Sector (Logistics, Prof / Tech Services., MROU, etc.)
  • May be leveraged to:
    • Develop comparative analysis of competitor’s decomposed cost basis In-Direct Rates by Sector (Logistics, Prof /Tech Services, MROU, etc.) or Customer Defined Sector (Contract(s), Place of Performance, PoP, Contractor Type, PSC’s, etc.)
    • Determine Competitive Range
    • Develop Independent Cost Evaluation (ICE)
    • Contractor System Purchasing Review (CSPR)
    • Rate Reasonableness Fair / Reasonable Price Determination

MBA IP: Rate Derivation (RD) Low Level Decomposition (LLD) Sector Analysis

Sector Wrap Rate (In-Directs) LLD Summary Statistics

Low level decompositions (LLD’s) provide an assessment of (Each Element of Fringe, Overhead, and G&A) In-Direct Rate buildup within each major Sector (Logistics Prof / Tech Services, MROU, etc.) or Customer Defined Sector and may be used as follows:

Develop comparative analysis of the Sector’s In-Direct LLD’s (at the element level) to that of your Organization’s, Competitors’, and Standard Deviation

Establish the validity of fair and reasonableness pricing guidance (IAW FAR 15.404-1(b)(2)(ii))

As input into Independent Cost Evaluation (ICE) and PTW

MBA IP: Rate Derivation (RD) Low Level Decomposition (LLD) Trending Analysis

ARDAK’s low level decomposition trending of each element of Fringe, Overhead, and G&A In-Direct Rates for a competitor and/or within each major Sector (Logistics, Prof /Tech Services., MROU, etc.) or Customer defined Sector provides significant visibility into In-Direct trends

Plant G&A
Plant Overhead
Plant Fringe

May be used as follows:

  • Identify competitor’s strategy for In-Direct Rate Reductions
  • Develop comparative analysis over five (5) years’ sector and or individual competitor’s decomposed trended In-Direct rates
  • Provides significant visibility into competitor’s cost reduction strategy
  • Establish the validity of fair reasonableness of pricing guidance (IAW FAR 15.404-1(b)(2)) annually
  • As input into Independent Cost Evaluation (ICE), and PTW

MBA IP: 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:

MBA IP: 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 IP A&D 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.

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