Sign In
  • Question

    For educational purposes as a Program Manager, looking for comparison & contrast analysis on FAR Part 12 (Commercial Pricing) vs FAR Part 15 (Military Pricing). Is an analysis available?


    Answer

     
    For discussion purposes, the assumption is made that the item(s) being acquired are in a sole source environment.  If adequate price competition exists, the Government relies on the marketplace to determine a fair and reasonable price.
    I’ve not been able to find an individual report or quick reference sheet that has a compare/contrast of FAR Part 12 “Acquisition of Commercial Items” and FAR Part 15 “Contracting by Negotiation” analysis for “One stop shopping”.  DAU provides web based Continuous Learning Modules that offer brief tutorials.  Three of those that are germane to your question are cited below:

    CLC 020 Commercial Item Determination, approximately 3.5 hours on line - The Commercial Item Determination module is designed to aid acquisition personnel in developing sound business strategies for procuring commercial items. It provides professionals a clear understanding of the guidance and tools contained in the Commercial Item Determination Handbook, which is a practical reference tool for use in commercial item acquisitions.


    CLC 131 Commercial Item Pricing, approximately 1 hour on line - This training module includes an overview of the new procedures, guidance, and information concerning sole-source commercial items and elaboration on the requirements of FAR Subpart 15.4. It includes links to relevant chapters and parts of the FAR, DFARS and DFARS Procedures, Guidance, and Information (PGI); and Contract Pricing Reference Guide sections and includes examples of applications of the material. The overall learning objective of the module is to identify the various pricing methodologies that can be used to determine fair and reasonable prices for a commercial acquisition.


    CLC 056, Analyzing Contract Costs, approximately 17 hours on line - In this module, the student assumes the role of a contract specialist/intern who has been afforded the opportunity to work with the Contracting Officer of a large complex base operating services contract. The Contracting Officer acts as a mentor, providing guidance and direction as the student performs various cost and price analysis tasks.


    Another fine source of information relevant to your question is provided in a presentation conducted by Ms Leslie Overturf, at that time a senior cost/price analyst with Headquarters Air Force Materiel Command (AFMC).  She is now the Deputy Director of Pricing for HQ AFMC.  Her presentation was given at the AF Acquisition Insight Conference at Wright-Patterson AFB on 24 Mar 14.  The presentation, beginning at Slide 30, provides excellent background on potential difficulties in trying to price sole source commercial items.  The url for her presentation is:

    http://www.dau.mil/Locations/MidWest/MwDocs/2014Mar24BreakoutSession1/Sole Source Commercial Item Pricing.pdf

    From a pricing standpoint, the essential difference between buying under
    FAR Part 12 and buying under FAR Part 15 is availability, access, and reliability of data utilized by the Contracting Officer to make a fair and reasonable price determination – a requirement placed upon Contracting Officers regardless of the method of procurement.  With FAR Part 12 acquisitions the contract specialist is usually limited to performing price analysis, which usually involves comparison of the item being acquired to the same or similar items available in the commercial marketplace.  Please see FAR Subsection 15.404-1(b) for a discussion of and techniques employed for price analysis.  FAR Part 15 acquisitions, in particular those acquisitions which require a contractor to execute a Certificate of Current Cost or Pricing (typically sole source over $750,000), require that contractors provide detailed cost proposals upon which the government is required to perform an in-depth cost analysis.  Please see FAR Subsection 15.404-1(c) for a discussion of and techniques employed for cost analysis.  The significance of a contractor provided Certificate of Current Cost or Pricing is that contractor certification gives the government the right and ability to reduce a negotiated price of a deal if the contractor did not provide data that was current, accurate, and complete as of the date of price agreement. 

    Please be advised, the FY16 National Defense Authorization Act (NDAA) has made some significant changes to the treatment of Commercial Items but we are still awaiting the implementing guidance.  Until the new guidance is implemented, the current guidance remains in play.

     

    Open full Question Details