Does FAR 15.404-1 require "probable cost' for T&M contract types?

[govt2310]

 

If a solicitation states that the agency will perform a "cost/price realism analysis," and the contract type is a combination of T&M and FFP CLINs, does that mean the agency has a duty to figure out the FAR 15.404-1 "probable cost" of each offeror's proposal?  

For the FFP portion, I believe a price realism analysis is limited to the purpose of assessing whether the offeror has a clear understanding of the work involved, so the offeror's total price cannot be adjusted.  

But for the T&M portion, it seems similar to cost-reimbursement, so that makes me believe the agency does have a duty to figure out the "probable cost" when doing the cost realism analysis.

Does anyone have experience with this?

 

[ji20874]

FAR 15.404-1( d )( 2 ) requires a cost realism analysis and determination of a probable cost for a cost-reimbursement contract.

FAR 15.404-1( d )( 3 ) allows, but does not require, a cost realism analysis on a fixed-price contract.  In such a case, a probable cost adjustment is not made.

Nothing in the FAR requires a cost realism analysis for a time-and-materials contract.

The GAO has opined, "Where . . . a solicitation anticipates award of a time-and-materials contract with fixed-price, fully-burdened labor rates, there is no requirement that an agency conduct a price or cost realism analysis, in the absence of a solicitation provision requiring such an analysis. . . .  An agency may, however, at its discretion, provide for the use of a price realism analysis in a solicitation for the award of a fixed-price contract, or a fixed-price portion of a contract, to assess the risk inherent in an offeror’s proposal."  See GAO Bid Protest Decision B-409015, Iron Vine Security LLC, January 22, 2014.