Price Analysis on Commercial Items Purchases Within the Department of Defense

Abstract

Recent reviews by the Department of Defense, Office of the Inspector General (DoDIG,2001-2011) concluded that new pricing skill sets have not always been present in the purchase of commercial items. The current research focuses on (1) collecting and interpreting price analysis data and (2) using that data to determine the appropriateness of current pricing memorandums and the proper use of price analysis and the use of pricing memorandums to improve acquisition pricing payoffs. This research presents an analysis of contract files from U.S. DoD installations to determine whether the price reasonableness determination was completed and documented in accordance with procedures outlined in the Federal Acquisition Regulation (FAR). The research also includes the results of a survey, with the same purpose, of contract specialists, contracting officers, and other personnel, such as price analysts. The data collected from the personnel survey was used to make comparisons with the data from the analysis of the contract files. This will then contrast contracting personnel perception of their ability to complete price reasonableness determinations and the actual documentation contained within the contract files. The authors also identified key areas of weakness in the price reasonableness determination documents and offer recommendations which could potentially reduce the price of commercial goods and services.