Determining the Probable Cost

Your organization has just issued a Request for Proposal (RFP), and, in response, you have received several proposals. In your RFP, you stated that the government was contemplating the award of a cost-reimbursement contract. You are preparing to perform your analysis. Before starting, you go to the Federal Acquisition Regulation (FAR), specifically FAR Part 15.404-1(d), and realize that the FAR requires you to perform cost realism analysis to determine the probable cost of performance for each offeror. You start asking yourself a series of questions such as: What is cost realism analysis? When does cost realism need to be done? How do I determine the probable cost? What resources are available to assist me in developing a probable cost? Does the government get many protests regarding cost realism analysis? It is hoped that this article will help answer these questions and more. Published in the Journal of Defense AT&L, p19-21, May-June 2013.