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  • Question

    Can I conduct CRA on small businesses? Can I use CRA results in my Source Selection Decision Document (SSDD)? How do I use this data for my evaluation?


    Answer

    Per FAR 15.404-1(d):
     
    "(2) Cost realism analyses shall be performed on cost-reimbursement contracts to determine the probable cost of performance for each offeror.
     
      (i) The probable cost may differ from the proposed cost and should reflect the Government's best estimate of the cost of any contract that is most likely to result from the offeror's proposal. The probable cost shall be used for purposes of evaluation to determine the best value.
     
      (ii) The probable cost is determined by adjusting each offeror's proposed cost, and fee when appropriate, to reflect any additions or reductions in cost elements to realistic levels based on the results of the cost realism analysis.
     
    (3) Cost realism analyses may also be used on competitive fixed-price incentive contracts or, in exceptional cases, on other competitive fixed-price-type contracts when new requirements may not be fully understood by competing offerors, there are quality concerns, or past experience indicates that contractors' proposed costs have resulted in quality or service shortfalls. Results of the analysis may be used in performance risk assessments and responsibility determinations. However, proposals shall be evaluated using the criteria in the solicitation, and the offered prices shall
    not be adjusted as a result of the analysis."
     
    You are asking about performing a Cost Realism Analysis on a Fixed Price EPA. This comes under FAR 15.404-1(d)(3) above, where it states "Cost realism may also be used.., in exceptional cases, on other competitive fixed-price-type
    contracts when new requirements may not be fully understood..."
     
    Assuming nothing else but the facts provided, if you're using Fixed Price EPA, one would think the only significant risk is to fluctuations in price that are controllable by use of the EPA provision.  When performing cost realism in a
    fixed price environment, as opposed to a cost reimbursement environment, you are using the analysis primarily as a risk reducer (ensuring contractor understands requirements by checking alignment of effort with proposed pricing).  You do NOT adjust prices.
     
    It is only in cost reimbursement contracts where you may adjust proposed prices to probable costs and use those costs for evaluation purposes [FAR 15.404-1(d)(2)(i) and (ii)].

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