Scenario: Buyer is working on a sole source award that is a repeat buy of a previous sole source award. Why can't the Buyer perform a historical price analysis despite not having a previous competition or cost analysis?
Answer: Pursuant to FAR 15.404-1(b)(2)(ii), the historical analysis method is the comparison of the proposed prices to historical prices paid, whether by the Government or other than the Government, for the same or similar items.
Most readers stop reading there. HOWEVER, FAR 15.404-1(b)(2)(ii)(A) states: [t]he prior price must be a valid basis for comparison. If there has been a significant time lapse between the last acquisition and the present one, if the terms and conditions of the acquisition are significantly different, or if the reasonableness of the prior price is uncertain, then the prior price may not be a valid basis for comparison.
When conducting a historical price analysis, think about the following:
- Is the historical price a valid basis for comparison? Was that historical price based on another historical price analysis or was it based on a previous competition or cost analysis? If your analysis is history on history on history, this is not a valid basis for comparison and expect to receive a finding during CPSR.
- Although undefined in the FAR, SpendLogic has learned through experience and history in assisting clients through CPSR, DCMA analysts use 12 months between purchases as the "significant time lapse". Some companies' policies may state otherwise.
- If the analysis methodology for the historical price you want to use as a basis for comparison was market comparable, published price list, or parametric, merely repeat that process for the current analysis. If you were able to accomplish any one of these three (3) methodologies previously, you should be able to obtain current pricing and repeat the methodology.
If you have any questions, reach out to us at help@spendlogic.com.
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