Need advice Unique Situation

There is risk involved,they will be working with limited funds.Ask and consider what their budget would be to complete the project and then give them a counter proposal.Submit your proposal and inquire about the possibilities of completeing the project on a consulting basis in which they may have already considered doing,then talk to someone in the human resources department and submit a written propsal of your services and salary demands.

I sympathize with your situation. I had kind of a similiar experience except the company I work for had me on contract to another contracting company. In my situation the ultimate client made an agreemet with the consulting company to pick me up instead of paying the consulting company on top of my company... Confused... Yeah so was everyone else...

In any case, general rule of thumb or so I've been told is 2:1. Meaning the comapany you work for generally pays you half of what they are charging for you. However I've found that 2:1 is a low number in alot of cases because some consulting comapnies have alot of high paid management that the client can't be billed for, so guess what they up your rate to cover that as well... Also do some research on general salary range for the type of work your doing, and be sure to check local area wages as well... You'll probably notice they are alot different from the national averages... Remember with this aggreement your going to haveto use some of that

ThinkPad DR.
Your first 2 responses cover good ground. You are vague as to who you worked for b4 the downsize. A 3rd party contractor, or independent contractor directly to the belly up company? You didn't sign a non-compete clause (if you work for a 3rd party contractor) did you? If not, and you strongly feel that what you do, will continue to need done (even while the company is re-org'ing) then you put together a compelling package. SELL YOURSELF! Undercut the previous bid. If you weremaking $50k b4, then 3rd party was getting $100k or better. Offer to do the job for $75k and convince them you have the companies best interest in mind. Know their business better than they do. Worst that will happen is they say no ... and you find another company that Isn't having $$ probs.
Good Luck!
mlv//Mark LeVeck, computer system support http://www.chm.net mark460@trdesk.com 314.495.8296

ThinkPad DR.
Couple other items: This is no consolation in your current position, but what you are going thru is not that unique. A lot of organizations are realizing they can shake alot of $$ out of the tree by downsizing long-term/tenured/hi-cost direct employees, replacing them with independent contractors, who as you aptly note: do not have the benifit packages as overhead baggage. At least from the companies point of view.
Finally, don't put all your eggs in this basket. Dust off & upgrade your resume. Take some classes to round out your training. Set up a Sole Proprietorship consulting company if need be. Talk to other contractors. Surf the IT-JobWeb links. Plenty out there! Stay positive. If all else fails; take upfishing. You won't be rich, but you won't go hungry
Enjoy :)mlv//Mark L