Tuesday, March 26, 2013

What is a Consolidated Bill of Materials

When preparing cost or price proposals where certified cost or pricing data are required, contractors must submit their proposals in a manner consistent with the guidelines laid out in FAR 15.408, Table 2. The instructions for that Table are detailed in Section II, Instructions. Part A of the instructions, Materials and Services, contains the following requirement for a consolidated bill of material (CBOM) or service items:

Provide a consolidated priced summary of individual material quantities included in the various tasks, orders or contract line items being proposed and the basis for pricing.

Most solicitations require pricing by contract line items. Contract Line Items (or CLINs) often contain common material items or service items. So, for example, CLIN number 001 requires 2 units of Part Number ABC, CLIN 002 requires 10 units of Part No. ABC and CLIN No. 003 requires 6 units of Part Number ABC. For purchasing purposes, the contractor will purchase 18 units and the pricing of those units should reflect prices for that quantity. In theory, unit prices drop as quantities increase. If contractors were to price each CLIN separately, the proposed cost might be higher than it would for a consolidated purchase.

Failing to estimate prices for combined quantity would probably qualify as an estimating system deficiency and potential billing withhold. It would also result in a lead for a future audit of compliance with the Truth in Negotiations Act (TINA). Neither of these are good.

For further information, refer to the DCAA Contract Audit Manual, Chapter 9, Section 9-400 and DoD's Contract Pricing Reference Guide, Vol 3, Chapter 6.

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