Cost and Price Collaboration

Abstract

This paper examines how collaboration between the cost analysis and price analysis functions can achieve program efficiencies. Collaboration is defined along two dimensions: (1) as interactions between analysts from the two functions and (2) as exchange of relevant data and information between the functions. This study facilitated an exchange of financial data common to all programs, namely, the Cost and Software Data Reports and Price Negotiation Memorandums, between the two functions. Interviews with subject-matter experts provided the basis of estimates of the effects of the information exchange on the respective functions. The effects estimated were improvements in price negotiations by price analysts and improvements in program cost estimates by cost analysts. In addition to the common reports outlined above, the paper also identified other sources of information used by price and cost analysts to perform their functions and realize improvements. Based on the results, the paper proposes an information environment to systemically improve and institutionalize collaboration.