Does an IGCE have to be revised after receipt of proposals to reflect the offeror's proposal or be within a certain percentage of the proposal amount?
The 10% rule must be a local contracting policy. It is not in any regulations that we are aware of, but I understand why the contracting activity is concerned if the IGCE and the proposals are different by a margin of 100%! Your bigger problem is that the Government has not done appropriate market research, or has not clearly defined the requirements, or has a single requirement such as a unlimited data rights that is causing the company to raise their prices , or something else that is causing the huge gap. The pricing organization, the program manager and the contracting activity should be very concerned about this gap.
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Does the pricing organization agree with the program office explanation? Is the difference clearly documented so that the contracting office can make a determination of a "fair and reasonable price" when they complete the negotiation? If I was a contracting officer doing a sole source negotiation (no benefit of competitive sources) I would not begin negotiations without some acknowledgement by the pricing community of the reasonableness of the gaps and the explanation provided by the technical evaluation. I would need this explanation in order to do my fair and reasonable determination. If I thought the requirements were obviously unclear, I would modify the Gov't RFP and ask for a new proposal. Regarding the 10% policy. This is something you must work internally.