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  • Question

    Is it realistic to require cost realism of all proposals received or should this analysis be performed on only the firms reaching the comp range or the final firm recommended for award?


    Answer

    That's an interesting question. As you state, cost realism analysis is required for all cost reimbursement contracts to help ensure that the offeror: 1) understands the Government's requirement; 2) properly coordinated proposal preparation between the cost and technical teams; and 3) did not low-ball the bid in order to "buy in" to the award. Many times, "cost realism" is included as an evaluation factor in the solicitation. It is also mentioned in the clause at FAR 52.215-1 as a means to evaluate a proposal's technical and schedule risks.

    In order to establish a competitive range, proposals are ranked based on evaluation of the factors for award stated in the solicitation. It is important to evaluate all factors for all offerors. To not do so can open the door to a protest. If cost realism is listed among the evaluation factors for award, then it should be performed to avoid a legal challenge. However, if the only mention of cost realism is in FAR clause 52.215-1 ("...cost realism may be considered by the source selection authority in evaluating performance or schedule risk.), then cost realism analysis could be delayed until the competitive range is established.

    As this topic raises the issue of contract protest, I would also run your question by your agency's Legal Counsel.

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