Wednesday, August 16, 2017

Bid Protests Involving Government Cost Analysis "Alleged" Deficiencies

Cost analysis is the review and evaluation of any separate cost elements and profit or fee in an offeror's or contractor's proposal, as needed to determine a fair and reasonable price or to determine cost realism, and the application of judgment to determine how well the proposed costs represent what the cost of the contract should be, assuming reasonable economy and efficiency.

There are many bid protests filed each year with the Comptroller General's office (i.e. the GAO or Government Accountability Office) that are premised on the idea that the Government did not perform an adequate cost analysis - that the Government missed or misinterpreted a key element forming the basis for proposed costs. Many times - perhaps most of the time - these protests fail.

Here are several factors the GAO considers when deciding on bid protest cases alleging deficient cost analysis.

  • A Governmental agency is not required to conduct an in-depth cost analysis.
  • A Governmental agency is not required to verify each and every item is assessing cost realism
  • A Governmental agency is required to exercise informed judgment.
  • A Governmental agency's cost realism analysis need not achieve scientific certainty
  • The methodology employed must be reasonably adequate and provide some measure of confidence that the rates proposed are reasonable and realistic in view of other cost information reasonably available to the agency as of the time of its evaluation
  • A Governmental agency may reasonably rely on statements in an offeror's proposal which demonstrate the realism of its proposed costs without independently verifying each item of the proposed costs.
Consider these factors before protesting a bid. You might think that the Government did something it should not have done or failed to do something it should have done. But, unless you are able to establish these points, you probably won't win your case.

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