Opinion ID: 4538247
Heading Depth: 2
Heading Rank: 2

Heading: Cost Realism

Text: The FAR defines a “[c]ost realism analysis” as “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; reflect a clear understanding of the requirements; and are consistent with the unique methods of performance and materials described in the offeror’s technical proposal.” 48 C.F.R. § 15.404-1(d)(1); see also id. § 2.101. An agency is required to conduct a cost realism analysis on all CR contracts in order “to determine the probable cost of performance for each offeror.” 48 C.F.R. § 15.404-1(d)(2). As the Court of Federal Claims has correctly recognized, “[p]rice reasonableness generally addresses whether a price is too high, whereas cost realism generally addresses whether a cost estimate is too low.” First Enter. v. United States, 61 Fed. Cl. 109, 123 (2004); see 48 C.F.R. § 15.404-1.