**M.2.2.3 Factor 3 - Cost**

> The SEB will not utilize weighting and scoring in the cost area. The
> Government will perform a cost realism analysis of the Offeror's
> proposed rates, prices and resources. Each cost proposal will be
> evaluated for cost realism.
>
> Cost realism analysis is the process of independently reviewing and
> evaluating specific elements of each Offeror's proposed cost estimate
> to determine whether the estimated proposed cost elements are
> realistic for the work to be performed. Realistic cost elements
> indicate a clear understanding of the requirements and are consistent
> with the unique technical and management approach described in each
> Offeror's proposal. When elements of an Offeror's proposal are judged
> by the SEB to be unrealistic, probable cost adjustments will be made
> to the Offeror's cost proposal.
>
> Probable cost is the SEB's estimate of the anticipated cost to NASA of
> contract performance in accordance with each Offeror's specific
> technical and management approach described in the Offeror's proposal.
>
> The delta between the total proposed cost and fee and the total
> probable cost and fee will be calculated to determine the difference
> between proposed and probable cost. However, if and to the extent that
> an offeror realistically proposes to hire some or all of the incumbent
> workforce, and if an offeror clearly states in the total compensation
> template (e) their intent to maintain current incumbent direct labor
> rates and seniority rights, the results of any differences arising
> from probable cost adjustments related to incumbent direct labor rates
> (including direct labor cost and associated expenses such as overhead,
> G&A and fee) will be subtracted from the delta between proposed and
> probable cost. This cost delta, excluding any labor rate adjustments
> for incumbency assumptions, will be used in accordance with the NFS
> 1815.305(a)(3)(B), and a Mission Suitability point adjustment will be
> made using the Cost Realism Table below:

Table M-2: Cost Realism Table

  ----------------------------------------------- -----------------------
  Proposed and Probable Cost Difference           Point Adjustment

  +/-0 to 5 percent                               0

  +/-6 to 10 percent                              -50

  +/-11 to 15 percent                             -100

  +/-16 to 20 percent                             -150

  +/-21 to 30 percent                             -200

  +/-more than 30 percent                         -300
  ----------------------------------------------- -----------------------

> The results of the Government's cost evaluation will be presented to
> the SSA for consideration in making the source selection.
>
> Cost and Fee Evaluation of Completion Form will be evaluated for cost
> realism. All proposed resources will be assessed for validity,
> realism, and adequacy. Proposed cost will also be compared to the
> Government's estimated probable cost based on the offeror's management
> and technical approach. The resources listed in both the cost and
> Technical Volumes will be evaluated. The evaluation of the cost factor
> will result in a probable cost which will include an evaluation of the
> cost of doing business with each offeror, including the anticipated
> growth in cost during the contract period of performance, and the
> features of each offeror's proposal that would cause its actual cost
> to be more or less than the proposed cost. The proposed and probable
> cost for the complete period of performance \[(Contract Years 1-5)\]
> will be evaluated.
>
> [Efficiencies and Innovations, as defined in Section L, are considered
> part of the proposed technical and management approach and to the
> extent possible will be factored into the probable cost for selection
> purposes.]{.mark}
>
> Probable cost for selection purposes -- The probable cost (including
> any probable cost adjustments resulting from your proposal to pay
> current incumbent labor rates) will be used for selection purposes and
> will include the cost of the \[basic and option periods\]. It
> specifically excludes the cost/price associated with Phase-In.
>
> Phase-In - The price of the Phase-In will be considered under the
> Cost/Price factor but will not be included in the probable cost for
> selection purposes.
>
> The Government will also perform a price analysis of your entire
> proposal. The phase-in cost will be evaluated but will not be included
> in the Cost Factor for selection purposes.