Free webinar to explore procurement pricing

From the Hawaii Procurement Institute

The Hawaii Procurement Institute presents a webinar, which nonprofits with or seeking government contracts may find useful. The program, Contract Pricing II, compares and contrasts government contract cost and pricing analyses. By analyzing contract cost and pricing, government procurement officials are able to determine whether funds are maximized to meet the needs of contracting agencies.

Two methods can be used to evaluate bids: price realism and cost realism. Market-based, or price realism analysis, involves forecasting the offeror’s end price, and can be effective in healthy, competitive markets with high experience with contract requirements. It relies on the assumption that a market is established and will be a fair and accurate indicator of an appropriate bid price, and is the favored approach as it is quick to evaluate. However, exclusive use of price realism analysis risks manipulation and oversight in the bidding process.

Cost realism analysis involves evaluating each bid element for realism and provides detailed cost estimates. It should be used when there is insufficient fair market competition or historical pricing data, or when contract performance and/or resources are unpredictable. Cost realism must be used when dealing with single source fixed price contracts. Although the method may be lengthier, it is a better safeguard against under- or over- compensation and noncompliance with relevant regulations, for example, labor rates.

Using one method does not preclude the other. Understanding government contract cost and pricing is necessary to ensuring that contractors and procurement officials use solid data to negotiate the right solution for the right price. You can find the entire webinar here.