June 05, 2013

Competitive Price Analysis: the Preferred Technique. There are FOUR (4) types of Competitive Price Analysis.

First things first - 15.404-1(b)(2) lists the seven (7) acceptable price analysis techniques for the evaluation of offeror proposals. The list is organized by order of preference, with the preferred technique (competition) listed first and the least reliable technique (other than cost and pricing days submitted by the offeror) listed last. When you dip below (b)(2)(i) or (ii), your price analysis narrative should succinctly explain why a higher analysis technique is not available. I'll provide some examples of how to do this down the road. 

And yes, there are four types of competitive price analysis. The first type is Lowest Cost Competitive Analysis - two (not three) or more technically qualified offerors submitting quotes with the expectation of competition and an award made to the vendor submitting the quote that represents the Best Value to the government, here defined as the lowest cost proposal. 

Lowest Cost is most appropriate for fungible (non-specialized) goods and/or services where delivery is predictable and non-prioritized. In other words, cost is a more important evaluation factor than technical subtleties or fast shipping. 

"Technically qualified" doesn't mean that the vendor submits a technically sufficient proposal. It does mean that the Buyer has a reasonable expectation (based on market research or ordinary course of dealings) that the Seller is able to submit a technically sufficient proposal. More on that in a couple of posts. 

"Expectation of Competition" means the vendor knows (or should know) that they are submitting their proposal in a competitive environment. 

Back-up documentation required: (a) written bid list; (b) solicitation submitted to all offerors (or RFQ template and email cover sheets to offerors); (c) bids from ALL offerors; (d) company price analysis template completed, signed, and dated prior to award; and (e) bid matrix.