Date Submitted: 1/06/2020
My somewhat limited experience (mostly government agencies as final consumer) would lead me to ask the following: Is the report based on existing research or would it require additional research on your part? The latter would certainly drive up the hours demanded. It sounds as if this might be a review of existing research findings that you could compose without a large commitment of time. A second consideration: would drafting the report have any additional value for your research or future publications? Will you be allowed to publish the report (or a revised version of it) or is it the sole property of the contractor? (Usually it is the latter.) Will you present the report to a group who might provide an interesting audience or valuable feedback--or networking opportunities? Or will you simply submit the report, which will then be passed on to the ultimate consumer? For me, the value added in such contexts has often been a conversation with an audience that may have an interesting perspective on the issues dealt with in the memo/paper. My bottom line is usually to ask whether this is simply an income-producing distraction or whether the exercise could mean reaching an audience that would not typically turn to my academic work. Apart from the first consideration--new research or repackaging existing research--I do not find calculations using hourly rates particularly useful.
In my experience, it's quite typical for bodies like this to offer a flat rate, and it's also fine to ask for more if you think the time you'll spend on the project is worth it. I compute my hourly consulting rate by dividing my annual gross salary into 52 weeks and dividing that number by 40, which is hours per week one is expected to work full-time. Then I estimate the number of hours including prep, reading, research and writing that will take me to complete the project, and that's how much I ask for. Something to be aware of, however, is that universities may set limits on how many hours per week you can devote to outside consulting. So also be sure to negotiate your timeline for a finished project such that you don't exceed that amount of outside-effort-per-week that your university allows - or, be prepared to do this on your own time