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  • Question

    How should you analyze/evaluate a bill of material that incudes all quotes, but does not take into consideration any negotiation price reductions? The contractor is not providing purchase order history for the quotes. The contractor is also stating that they do not track quotes to invoice and therefore they don't have any history. What type of decrement should be taken, if any?


    Answer

    This response is based on the information provided.  We suggest you discuss with your contracting and finance team, program manager and/or legal department as appropriate.

     

    We would suggest you speak with the appropriate DCMA unit assigned the responsibility of that company.  They might have an idea of an expected decrement of the bill of materials (BoM).  We suggest you do some market research/analysis of the top cost items in the BoM (equaling 40-55% of total BoM cost) enlisting DCMA to help and random sample 8-10% of the remaining items.  Adjust these numbers/percentages as appropriate to your situation.

    If DCMA is unable to help you, you can make an assessment (of say 10%) and put the burden on the contractor to justify why that is not a good decrement number.

    We suggest you ask for invoices of previous work similar to the work you will be doing.  If the completed work invoice was with your organization, you could possibly compare it with the BoM of that completed work.

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