Why is a CBOM important? It provides certainty to the Government that the prices proposed for materials and services are fair and reasonable at a consolidated level.
For example, a proposal contains two separate CLINs and Part Number 12345ABC is a required item for both CLINs. However, the part description for CLIN 0001 is “Red Widget” and for CLIN 0002 “Blue Widget” despite the fact that both descriptions refer to the same item. This can result in unnecessary duplicative efforts in evaluating both the “Red Widget” and “Blue Widget” if the descriptions are not uniform and if the quantities in the individual CLIN bills of material are not subsequently combined in the CBOM for the entire proposal. In addition, this can distort the quantities actually needed for the entire acquisition and any potential pricing discounts from bulk quantity buys can be lost.
An adequate CBOM is an essential tool in determining a fair and reasonable price for proposed materials and services.
The CBOM serves to:
- aggregate quantities to determine if there are bulk quantity discounts that can result in cost savings to the Government
- eliminate duplicate efforts to evaluate the aggregate quantity requirements for the entire acquisition
- determine pricing reasonableness if the same material item is used in multiple proposed tasks, orders, or CLINs
- ensure proposal uniformity and consistency
Proposed materials, services, and subcontracts generally comprise a large portion of proposals. Therefore, they receive significant scrutiny from the Contracting Officer (CO) and/or the Contracting Officer’s Representative (COR) in determining a fair and reasonable price for the acquisition.
When evaluating an offeror’s proposal, one of the first steps taken by the CO/COR is to review the proposal for adequacy by following an adequacy checklist such as the Defense FAR Supplement (DFARS) proposal adequacy checklist found in DFARS Clause 252.215-7009. One of the many requirements in the checklist is a CBOM as specified in FAR 15.408 Table 15-2 Section II.A, which must:
In the Government contract acquisition industry, proposals are often determined to be deficient because of an inadequate CBOM. This can occur whether the offeror is a smaller, inexperienced, non-major subcontractor or a multi-billion dollar, major Government contractor with a history of Government contracting experience. An inadequate CBOM may result from simple oversight, lack of training, lack of awareness of FAR solicitation requirements, misinterpretation of FAR requirements, turnover in staff, or a combination of these and other factors.
A proposal may be returned to the offeror at the discretion of the CO for revision to address and inadequacies. The determination of an inadequate proposal due to an inadequate CBOM is one of many potential proposal deficiencies that can be cited by the CO. Adverse consequences may include inviting further scrutiny of the adequacy of other cost elements in the proposal, unsupported costs, cost concerns, and questions about the offeror’s internal controls over the estimating process that can result in an estimating system deficiency.
For over 40 years, CohnReznick has provided comprehensive services to assist government contractors with a full life cycle approach to winning and managing contracts. We ensure your financial and procurement processes are compliant, efficient and effective - so you can focus on what matters most, profitable growth.
InsightBusiness of Construction – March 2021CohnReznick will be featuring several topics important to the construction industry in a series of listen-in-style conversations, webinars, best-practice insights, and other helpful tools.
InsightEmerging risk area for government contractors: Labor category job qualifications in time and materials contractsJeffrey WittGovCons may face false claims assertions if an audit finds inadequate support for labor category qualifications in T&M billings. Learn more.
InsightContribute to the 2021 GAUGE surveyCohnReznick and Unanet invite you to take part in our fifth annual benchmarking survey for government contractors and other organizations that do business with the federal government.
InsightBusiness of Construction – February 2021CohnReznick will be featuring several topics important to the construction industry in a series of listen-in-style conversations, webinars, best-practice insights, and other helpful tools.
InsightStart preparing now to earn points on GSA’s Polaris contract opportunityJeff Shapiro, Bhavesh VadhaniLearn what self-assessments, certifications, and other potential requirements to consider now for this upcoming IT services government contracting opportunity.