Eleven (11) Examples of Deficiencies in Cost or Pricing Data - What to Avoid!

Deficiencies to look for in your Cost or Pricing Data

INQUIRY:

How do I determine if my cost or pricing data is adequate, or not deficient?

RESPONSE:

There is no set formula for determining when cost or pricing data is deficient enough to be reported to the contracting officer by an auditor.  However, the following are some examples of cost or pricing deficiencies that should be checked prior to submitting data:

(1) Significant amounts of unsupported costs.

(2) Significant differences between the proposal and supporting data resulting from the proposal being out of date or available historical data for the same or similar items not being used.

(3) Significant differences between the detailed amounts and the summary totals (e.g., the bill of material total does not reconcile with the proposal summary).

(4) Materials are a significant portion of the proposal, but the contractor provides no bill of materials or other consolidated listing of the individual material items and quantities being proposed.

(5) Failure to list parts, components, assemblies or services that will be performed by subcontractors when significant amounts are involved.

(6) Significant differences resulting from unit prices proposed being based on quantities substantially different from the quantities required.

(7) Subcontract assist audit reports indicate significant problems with access to records, unsupported costs, and indirect expense rate projections.

(8) No explanation or basis for the pricing method used to propose significant inter-organizational costs.

(9) No time-phased breakdown of labor hours, rates or basis of proposal for significant labor costs.

(10) No indication of basis for indirect cost rates when significant costs are involved.

(11) The contractor does not have budgets beyond the current year to support indirect expense rates proposed for future years.

If the cost or pricing data are so deficient that an examination cannot be performed, the auditor will consider recommending that the contracting officer return the proposal to the contractor.