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01/05/2017
Delivering an adequate consolidated bill of materials in your proposal
Synopsis
When submitting a proposal in response to a Government solicitation, and assuming the contemplated acquisition is not otherwise exempt from requiring certified cost or pricing data per Federal Acquisition Regulation (FAR) 15.403, Obtaining Certified Cost or Pricing Data, an adequate Consolidated Bill of Materials (CBOM) is required for estimating proposed materials and services. The CBOM is a consolidated priced summary of individual material quantities included in the tasks or contract line items (CLINs) being proposed and provides the basis for pricing (vendor quotes, invoice prices, etc.).Issue
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.
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.
Subject matter expertise
Kristen Soles
CPA, Partner - Managing Partner, Advisory - Global Consulting Solutions and Government Contracting Industry Leader
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