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

Heading: The Cost Realism Analysis

Text: The solicitation stated that DISA would “perform a cost realism analysis on the proposed CR labor rates in accordance with [Federal Acquisition Regulation (“FAR”)] 15.404- 1(d) to determine the Most Probable Cost for each Offeror.” A. 1280. It further provided that: The cost/price team will develop an average for each CR labor rate utilizing the proposed CR rates on the ‘CR Labor Rate Table’ tab from ALL com- plete proposals within each suite (Full and Open and Small Business). The team will then calculate the standard deviation of the average for each CR Case: 19-1954 Document: 48 Page: 4 Filed: 06/02/2020 4 AGILE DEFENSE, INC. v. UNITED STATES labor rate. The Defense Procurement Acquisition Policy Contract Pricing Reference Guidelines (Volume 2) detail the use of statistical analysis, including standard deviation, to organize, summarize, analyze, and interpret data for contract pricing. Standard deviation quantifies the amount of variation amongst a set of data. In a normal distribu- tion, 1 standard deviation will include the data that is 34.1% below or above the average. Therefore, with normal distribution, 68.2% of the data will be within 1 standard deviation of the average. The Government considers a rate that is 1 standard de- viation below the average to be a realistic rate, subject to cost analysis techniques in accordance with FAR 15.404. The initial calculations for [the] Average and Standard Deviation will be utilized for the entirety of the evaluation and will not be recalculated if a competitive range is set. If an offeror’s proposed CR labor rate is more than 1 standard deviation below the average for that labor rate, the Cost/Price Team will review the submitted supporting documentation at the component level for that rate. If it is determined that the supporting documentation supports the realism of the proposed rate, no adjustment will be made to the offeror’s rate. If inadequate or no justification is provided by the offeror for any component of that rate . . . the Government will adjust the fully bur- dened CR Labor rate to be equal to the average for purposes of calculating the Most Probable Cost for that offeror. A. 1280 (emphasis omitted).