15.407-5
Estimating systems
Contractors must maintain reliable estimating systems, as deficiencies can impact proposal evaluations and negotiations.
Overview
FAR 15.407-5 addresses the importance of contractors maintaining acceptable estimating systems for proposal preparation. The regulation emphasizes that reliable estimating systems benefit both the Government and contractors by improving the accuracy and dependability of cost proposals. Cognizant audit activities are tasked with establishing regular review programs for contractors’ estimating systems, which helps streamline proposal reviews and negotiations. The findings from these reviews must be documented in survey reports.
Key Rules
- Use of Acceptable Estimating Systems
- Contractors are expected to use reliable estimating systems to prepare proposals, enhancing proposal accuracy and negotiation efficiency.
- Audit and Review Programs
- Cognizant audit activities must establish regular review programs for selected contractors’ estimating systems and document results in survey reports.
- Distribution of Survey Reports
- Auditors must send copies of survey reports and corrective action notices to all relevant contracting and contract administration offices.
- Consideration of Deficiencies
- Uncorrected significant deficiencies in a contractor’s estimating system must be considered in future proposal analyses and negotiations.
Responsibilities
- Contracting Officers: Consider survey reports and unresolved deficiencies during proposal evaluation and negotiations.
- Contractors: Maintain an acceptable estimating system and address any deficiencies identified in audit reports.
- Agencies/Auditors: Conduct regular reviews, document findings, and distribute reports and corrective action notices to relevant offices.
Practical Implications
- This section ensures that contractors’ cost proposals are based on sound estimating practices, reducing negotiation delays and increasing proposal reliability. Contractors with deficient estimating systems may face increased scrutiny and potential negotiation disadvantages. Timely correction of deficiencies is critical to maintaining favorable business relationships and proposal credibility.