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    Do we have to perform a complete cost realism analysis on each offeror before determining the competitive range, or can we decide the range purely based upon technical ratings of the most highly rated offerors? If we need to incorporate costs, is there a way we can provide an overall cost bench mark rather than perform a complete cost realism analysis for each offeror? I also recall reading something in the regulations to the effect that the depth of the cost realism analysis performed for each offeror should be congruent with the chance that offeror has of receiving award. I wish I could find the reference. Please advise other than, "Please consult with your PCO and legal." :) Thanks!


    Answer

    You must do analysis of all proposals before setting the competitive range or the government risks damaging the integrity of the source selection process.
     
    "15.306 -- Exchanges With Offerors After Receipt of Proposals.
    (c) Competitive range.
      (1) Agencies shall evaluate all proposals in accordance with 15.305(a), and, if discussions are to be conducted, establish the competitive range. Based on the ratings of each proposal against all evaluation criteria, the contracting officer shall establish a competitive range comprised of all of the most highly rated proposals, unless the range is further reduced for purposes of efficiency pursuant to paragraph (c)(2) of this section." 
     
    FAR 15.306(c)(1) states we must evaluate and then establish competitive range
     
    "15.305 -- Proposal Evaluation.
    (a) (1) .... When contracting on a cost-reimbursement basis, evaluations shall include a cost realism analysis to determine what the Government should realistically expect to pay for the proposed effort, the offeror’s understanding of the work, and the offeror’s ability to perform the contract."
     
    "15.304 -- Evaluation Factors and Significant Subfactors.
       (c) (1) Price or cost to the Government shall be evaluated in every source selection.
      (2) The quality of the product or service shall be addressed in every source selection through consideration of one or more non-cost evaluation factors such as past performance, compliance with solicitation requirements, technical excellence, management capability, personnel qualifications, and prior experience." 
     
    FAR 15.404 alludes to the reference you were seeking.  As you will note, it refers complexity of the effort--not likelihood of award.  To presume likelihood of award at this point would be to compare proposals inappropriately and bring the integrity of the process into question. 
     
    "15.404 -- Proposal Analysis.
    15.404-1 -- Proposal Analysis Techniques.
    (a) General. The objective of proposal analysis is to ensure that the final agreed-to price is fair and reasonable.
      (1) The contracting officer is responsible for evaluating the reasonableness of the offered prices. The analytical techniques and procedures described in this section may be used, singly or in combination with others, to ensure that the final price is fair and reasonable. The complexity and circumstances of each acquisition should determine the level of detail of the analysis required." 
     
    FAR 15.404 goes on to address cost realism more specifically.
    "15.404-1 -- Proposal Analysis Techniques.
    (d) Cost realism analysis.
      (1) Cost realism analysis is the process of independently reviewing and evaluating specific elements of each offeror’s proposed cost estimate to determine whether the estimated proposed cost elements are realistic for the work to be performed; reflect a clear understanding of the requirements; and are consistent with the unique methods of performance and materials described in the offeror’s technical proposal.
      (2) Cost realism analyses shall be performed on cost-reimbursement contracts to determine the probable cost of performance for each offeror."
     
    As you see in FAR 15.404-1(d)(2), cost realism is required and this in conjunction with the other citations indicate the cost realism analysis must be conducted as part of the process of determining who should be brought into the competitive range.

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