Cost_Price_analysis.docx

Solicitation, Contract and Change Order Independent Estimate Grant Funded Procurements (Mandatory) Click Here to view Regulation §200.323

Solicitation/Contract Title

ANALYSIS TYPE

PRICE ANALYSIS will be the usual procedure followed in a competitive situation and in situations where items are being procured which are sold in the commercial marketplace to the general public. A “price analysis” is an evaluation of the budgeted price relative to the prices being offered by other vendors and being paid by the general public for the same or similar items. The essential factors, which must be present in order to make a “price analysis,” are as follows:

The product must be a “commercial product” (i.e., one for which there is a basis of comparison in the commercial marketplace). Price analysis would not be suitable, for example, for research and development items, or for one-of-a-kind items for which there was no basis of comparison.

It is not necessary that competing products be exactly identical to the product being offered, but you must be able to compare the products’ capabilities and their respective price differences in light of those varying capabilities. By such comparisons one is able to make value judgments that a particular product’s performance capabilities warrant a higher or lower price than a competing product.

COST ANALYSIS will be required whenever a price analysis cannot be performed. A cost analysis entails the review and evaluation of the separate cost elements and the proposed profit of an offeror’s cost proposal. A cost analysis is conducted to perform an opinion on the degree to which the acceptable cost, including profit, represents what the performance of the contract ‘should cost’, assuming reasonable economy and efficiency. A cost analysis will be appropriate in the following situations:

The product or service being offered is not susceptible to being evaluated against other commercially available items of similar products or services. Examples would include a procurement for professional services where no competing price proposals are submitted or a sole-source procurement for other types of services.

When change orders are issued to contracts requiring the contractor to do work whose cost can only be evaluated by examining the various cost elements, such as labor, materials, travel, etc.

NOTE: The non-Federal entity must negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration must be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work.

PRICE ANALYSIS

NOTE: The independent estimate cannot be based on the budget. However, budgets shall be sufficiently funded to support the amount of the Independent Estimate.

Independent estimate based on a quote submitted by a local food bank in March 2018.

Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.

51,562.50

117,187.50

117,187.50

23,437.50

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