This paper will address which price analysis tool I would use if I was only allowed to use one for the duration of my career. I will provide a brief overview of the method chosen, and explain the rationalization for that choice.
Keywords: price analysis, rationalization
Government contracting officers are required to purchase services and supplies at reasonable prices from responsible sources (Federal Publication Seminars, 2013), and in order to do so, they must perform both a cost analysis and a price analysis in order to determine both the reasonableness of the costs of individual elements and in order to determine that the overall price is reasonable (Federal Publication Seminars, 2013). There are many different price analysis techniques that may be used, including comparison of competitive bids, comparison of prior quotes, comparison of published price lists, prices set by law, similar item comparison, and rough yardstick comparisons (Woods Hole Oceanographic Institution, 2011).
If I was forced to use only one type of price comparison throughout the remainder of my career, I would opt to use comparison of competitive bids. Of all the possible choices available for price analysis, this is considered to be one of the best means for validating pricing (Woods Hole Oceanographic Institute, 2011). This particular method involves asking three or more suppliers for their price regarding a specific item, and then comparing those prices in order to determine whether or not a price provided is reasonable. As this requires the use of three separate parties in order to gain information, and this information is current each time it is requested, it ensures that the government contracting officer will be able to get the best possible value for the product itself. Once the price analysis is complete, the cost analysis will need to be done, but this serves as a means of getting one step closer to determining what the best and most valid price is for a particular good or service. It is for these reasons that I would select this specific option as the preferred price analysis tool, should I be required to only use one for the duration of my career.
- Federal Publication Seminars. (2013). Cost and price analysis in government contracts. Retrieved from http://www.fedpubseminars.com/Accounting-Costs-and-Pricing/Cost-and-Price-Analysis-in-Government-Contracts/
- Woods Hole Oceanographic Institute. (2011, March 07). rice analysis techniques. Retrieved from http://www.whoi.edu/procurement/page.do?pid=14500