June 07, 2013

Some more comments on price analysis techniques - 15.404-1(b)(2) is an "if/then" decision tree, not a checklist.

15.404-1(b)(3) sets up the list of available price analysis techniques by order of preference, which means that the most preferred method of price analysis - e.g. highest ranked - applicable to the proposal should be used. A "best practice" price analysis documentation technique is to walk the reviewer through available price analysis techniques and stop at the highest ranked technique available to evaluate the proposed pricing. 

If you've had a recent CPSR and the team tore into an ID/IQ team price analysis that used target rates as the basis of analysis, this is a big reason why. Competition was sitting right there; incumbents had past invoices available for review; and GSA Schedules are a click away. Instead, without narrative explanation, the price analysis used an Independent Contractor Estimate - it skipped from 15.404-1(b)(2)(i) to 15.404-1(b)(2)(v) in clear violation of 15.404-1(b)(3). 

An important step to improving enterprise price analyses is correct application of the FAR, which means showing how you arrived at the price analysis technique used for the evaluation. Remember in school when your algebra teacher would give you partial credit for a wrong answer if you "showed your work"? What is a price analysis if not an algorithmic evaluation of numerical data? Make sure you get at least partial credit during your next CPSR.