The 2018 DOD OTA Guidebook states: “The Government team shall determine price reasonableness. The Government team may need data to establish price reasonableness, including commercial pricing data, market data, parametric data, or cost information. However, the AO should exhaust other means to establish price reasonableness before resorting to requesting cost information.” This document is simply an informational list of elements to consider when evaluating price in an Other Transaction.
That was the intro to the draft document, “Evaluating Price; Other Transactions (OTs),” posted by DAU’s Michelle Currier on LinkedIn. She is asking for comments: “This post is intended to solicit feedback from stakeholders at various levels. Asking that all comments be submitted by 3 April 2020. Feedback, comments, questions or concerns can be sent to me, Ryan.c.Connell.civ@mail.mil.”
This part might scare some who hoped OTs would be treated more commercially:
DCAA established a process to provide customers support to evaluating price in an OT environment. DCAA may be able to provide audit or advisory services to support customer evaluations of price or customer assessments of compliance with solicitation terms.
This was an interesting point:
“Design-to-price” was a distinct departure from traditional acquisition programs, which typically focus on achieving the highest possible performance, which can result in cost increases. We want to focus on choosing the most ADVENTAGEOUS solution; which should include price as a distinguishing factor.
I would say design-to-price is an interesting approach because it makes the price factor non-distinguishing. Indeed, that’s what’s happening with the series of pitch-days going on. Here’s $50K or $1 million. Of all competing offers, who can do the most or has the best technical plan.
Of course, the government might not know what the right ballpark of dollars is to have offerors submit to. But it shouldn’t hurt to low-ball the funding. Offerors who promise the world can be written off as overly optimistic. And under-funding the effort along with shorter schedules allows the government to get quick feedback on a minimally viable product. They can then decide whether to add funds to the contract or cut it loose. But of course, that presumes government can make incremental decisions quickly — and has the funds available to do it when needed.
When funds can’t be managed as a portfolio, the offerors often know in advance what the government has available for the effort. As the document states: “offerors may feel obligated or persuaded to submit a price at or just below the budget constraint.”
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