Blog Tags - Competitive price analysis

CPSR Teams consider an offeror "technically qualified" when the procurement professional has a reasonable expectation that the offeror can submit a technically sufficient proposal. 

This isn't a high bar at the end of the day - the offeror has to be technically able to respond to the RFQ and the procurement professional cannot possess reliable evidence to the contrary. Here are a some points: 

First, make sure that the procurement itself is eligible for a technical trade-off analysis. If technical capabilities required for a responsive bid are fungible (e.g. commercial items without expedited delivery requirements), the performance of a technical trade-off evaluation will likely appear to a reviewer to be a price justification (since assumedly the lowest priced proposal isn't the winner).

Make Sure Your ID/IQ Teams Are TRULY Evaluated Competitively To Get Credit In Your CPSR Metrics!

If you're sending out target rates, or using target rates as your negotiation basis, you're actually performing a price analysis using an Independent Contractor Estimate (ICE). That's a 15.404-1(b)(2)(v) type analysis, and all subcontracts analyzed using this technique will NOT count towards competitive percentages.

First, don't use prices you paid for these items or services. If you use past POs as the basis of comparison, you're "opening the door" and allowing DCMA to review those files for the basis upon which those prices were found to be fair and reasonable. If that file harkens back to older files, or worse doesn't have a price analysis in it, you've opened a bad door.

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. 

During file reviews with various clients over the past month I've gotten A LOT of questions (and seen a lot of errors) regarding the successful documentation of competition. Here are two rules to help: 

1. Competition is documented via adequate price competition conducted in accordance with FAR 15.403-1(c)(1); and 

2. Competition can't occur when only one offeror quote is obtained via RFQ. 

Up front I wanted to clarify - all competitive procurements are "Best Value" procurements [see 15.403-1(c)(1)(i)]. Because it sort of sticks in my craw a bit, but understand the need for a shorthand, the term "Best Value" is typically used to describe "Technical Trade Off" evaluations, or a price analysis where price is a significant, but not determinative, factor in the award decision.

Parametric pricing doesn't seem to come up often (unless you're buying a lot of fuel or digging lots of wells), but you can actually use it for things like software maintenance fees!

What's less reliable than uncertified (e.g. could be a complete fabrication) data provided by the entity you're buying the item or service from to support fair and reasonable pricing? Nothing really. This is the catch-all net that I would strongly advise you don't fall into. I can't really think of a situation that screams "necessity" for this technique - it's in the FAR as a drip pan and not much more. 

You can use this technique for prices obtained via market research that do not meet the criteria of any other listed technique.  

If the price wasn't determined via competitive procurement; isn't documented as a price previously paid by a third party to the present transaction; doesn't serve as a parametric; wasn't found in a competitively published price list (a list or catalog containing validity dates available to the general buying public); and wasn't the result of an Independent Contractor or Government Estimate; it can be used in a 15.404-1(b)(2)(vi) analysis.