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Bluewave

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  1. Thanks for your response! I further clarified the question by editing my original post. We completely understand that we must review the individual line items for cost realism also addressing FAR part 31 for allowing costs. Revised Question: What we are not clear about is whether or not we need to conduct a "cost reasonableness analysis" when we have adequate competition? The FAR triggers "cost analysis" for for certified cost and pricing 15.404-1 (a)(3) for reasonableness. The FAR triggers "cost analysis" again when price cannot be determined through price analysis alone (15.404-1(a)(4). We are concluding that "cost reasonableness" may be established through adequate competition. Yes?
  2. One of the main concerns that has surfaced is that negotiators are expending too much time and energy on cost analysis on competitive cost reimbursement/CPFF type contracts vs. cost realism. The attached table developed by NIH provides a quick reference of the requirement for cost analysis and cost realism. The table clearly distinguishes on the first line, "Analysis Must be performed on all cost reimbursement contracts" and marks "YES" for cost realism and "NO" for cost analysis. We completely understand that we must review the individual line items and that this is necessary for realism. Question: What we are not clear about is whether or not we need to conduct a "cost reasonableness analysis" when we have adequate competition? Perhaps this is what NIH was trying to communicate? The FAR triggers "cost analysis" for for certified cost and pricing 15.404-1 (a)(3) for reasonableness. The FAR triggers "cost analysis" again when price cannot be determined through price analysis alone (15.404-1(a)(4). We frequently have cases where we have adequate cost competition without the need for certified cost and pricing data and negotiators are trying do "cost reasonableness" with cost analysis method for memory sticks on a $100 million program. The competition alone should take care of cost reasonableness without the need for cost analysis? Yes? Excerpts from research: The Government Accountability Office (GAO) refers to cost analysis for the purpose of determining a fair and reasonable price as “cost reasonableness analysis”. However, in a competitive environment, cost reasonableness analysis is seldom needed to determine a fair and reasonable price-this can be accomplished through price analysis alone if adequate price competition has been obtained per FAR 15.403-1©(1), by merely comparing the overall proposed prices received in response to the solicitation pursuant to FAR 15.404-1(a)(2)(i). Question: While we have labor, other direct costs, and fee; it's just a comparison of the overall price and not these individual cost line items -- correct with a competitive situation? Thanks!
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