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Would you perform a cost realism analysis on a non-competitive proposal or modification to a cost contract? The far language on cost realism at FAR 15.404-1 lends itself to a competitive acquisition with terminology like "best value" and "The probable cost is determined by adjusting each offeror’s proposed cost". The DoD guide also states "When evaluating competitive offers" Just wondering if cost realism analysis is required in a non-competitive environment such as a modification to a cost contract (increased effort).
This is my first post, but I've read with interest a number of threads discussing similar issues. I'm excited to hear your feedback on this. I understand that 52.222-43 requires the contractor to warrant that wage escalations in the proposal do not include an allowance for adjustments that would automatically be made under -43 to compensate for revised Wage Determinations. 1. My general question is: under this FAR, when would I be allowed to escalate wages, and when would I be allowed to submit a proposal with flat wages? I'm thinking the answer turns on whether or not the wages proposed are at the minimum allowed under the Wage Determinations. For example, if I submit a proposal where my fully burdened wages are based on minimum wages under WDs, then I could submit flat rates for option years, and rely on the automatic adjustment scheme in -43 to increase wages if/as they rise due to DOL revisions to WDs. If I submit a proposal where filling a position will require a premium over the minimum allowed under DOL WDs, then I would need to escalate wages if I anticipate it becoming more expensive to fill the position each year. If I do not escalate wages in my proposal, and my base year wages are above any new revisions to the WDs, then -43 doesn't provide me with an automatic adjustment each year. Does this conform to your views on the way -43 operates? A few follow-up questions. 2a. If I submit flat wages for the option years, and rely on -43 to compensate for rising labor costs, could an agency have any basis for rejecting my proposal on "realism"? Is it unrealistic to rely on revisions to WDs for price adjustments necessary to fill positions? Maybe I need to note that reliance in the bid to be clear? 2b. If the answer to 2a is "yes", then do you interpret -43 differently? For example, would it be allowable to base my fully burdened rates on the minimum wages allowed under DOL WDs, and still escalate wages, knowing that since I'm already at minimum wages, they would need to be revised each year? Such escalations would seem to include an allowance for the adjustments provided for in -43, but maybe we could warrant that our escalations aren't based on expected changes in the WDs, per se, but instead, we promise the escalations are based on "realism" or some other need to escalate wages, like for general retention purposes, for performance incentives, etc.? It seems to me that even if I have alternative explanations for my wage escalations, if I'm already working from the minimum wages allowed under WDs, my escalations are necessarily including some allowance for revisions to the WDs, and would therefore contravene the purpose of -43, or perhaps violate it altogether. 3. If I am above the minimum WDs amount, and I do not escalate, I imagine there could be a basis for rejecting my proposal based on realism. But if it weren't rejected for realism, would I have an alternative means for adjusting wages annually on renewals? Would equitable or economic price adjustments only be available if specifically allowed in the contract, or in your experience, does this depend on the Contract Officer, to be determined on a case-by-case basis? Thank you in advance for your contributions. I've read a number of different interpretations of -43. Some departments seem to believe this doesn't allow for any wage escalations at all (although it clearly does) and some departments seem to think it's unrealistic to not escalate wages (even though FAR -43 provides an automatic scheme for adjusting wages).