CONTRACT MANAGEMENT: DoD Pricing of Commercial Items Needs Continued Emphasis.
GENERAL ACCOUNTING OFFICE WASHINGTON DC NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIV
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The Department of Defense DOD, with the support of the Congress, is increasing its purchases of commercially available products and services. while the current level of commercial purchasing is relatively small and sole-source commercial purchases even smaller, DOD expects commercial purchases to increase in the future and believes determining fair and reasonable prices for commercial sole-source items will continue to be challenging. The Federal Acquisition Regulation FAR cautions DOD contracting officers not to obtain more information than is necessary for determining price reasonableness and it emphasizes the need to limit information requests of the contractor. However, when needed, contracting officers may ask contractors to provide sales prices for the same or similar items, an explanation of the contractors discount policy, or cost data. The FAR defines price analysis as the process of examining and evaluating a proposed price without evaluating its separate cost elements or profit. Price analysis techniques include 1 comparing proposed prices in response to a competitive solicitation 2 comparing a currently offered price to previously paid prices if both the validity of the comparison and the reasonableness of the previous prices can be established 3 using parametric methods such as dollars per pound or other measurement units 4 comparing offers to competitive published price lists, published market prices, and discount or rebate arrangements 5 comparing proposed prices with independent government cost estimates and 6 comparing proposed prices with prices obtained through market research for the same or similar items.
- Economics and Cost Analysis
- Administration and Management