PGI 215.404-70: Cost and/or price analysis.

(a)(1) General.

(i) The objective of proposal analysis is to ensure that the final agreed-to price is fair and reasonable.

(ii) In some cases, supplies or services that are not subject to TINA may require a cost analysis (see PGI 215.404-2). This will occur when a price analysis is not sufficient for determining prices to be fair and reasonable. In such cases, the contracting officer should consider the need for a Defense Contract Audit Agency audit of the cost data.

(iii) Particular attention should be paid to sole source commercial products or commercial services. While the order of preference at FAR 15.403-1(a) must be followed, if the contracting officer cannot determine price reasonableness without obtaining data other than cost or pricing data from the offeror, at a minimum, the contracting officer must obtain appropriate data on the prices at which the same or similar items have been sold previously (often previous sales data was the basis of the commercial product or commercial service determination and must be requested during price analysis of the data provided by the offeror). If previous sales data is not sufficient to determine price reasonableness, the contracting officer must obtain “data other than certified cost or pricing data” and should perform a cost analysis.

(iv) Analysis of termination proposals, including termination of any contract scope, should not rely solely on earned value management budgets or estimates for estimating the costs of all work deleted, or the cost of deleted work already performed (reference FAR 15.408-2, Table 15-1—Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data are Required, columns (2) and (3) of section III.B., Change Orders, Modifications, and Claims).