e.  Cost or Price Factor

(1)  The offeror's Cost/Price proposal will be evaluated...

..., for award purposes, based upon the total price proposed for basic requirements (basic award) and all options. (NOTE: There could be situations that affect the bottom line evaluated price. These should be addressed as appropriate for your effort.  An example is rental value for Government Furnished Property.)

... at price(s) proposed for the best-estimated quantities (BEQs) or evaluation quantities.

… at prices proposed for the initial delivery/task order plus sample delivery/task orders, as applicable.

... based upon the applicable hourly rate multiplied by the corresponding quantity of labor hours specified in Section M of the solicitation for evaluation purposes. (NOTE: for T&M CLINs, it may be appropriate to evaluate add-ons for material handling if significant contractor furnished material is contemplated.)

... by, (and the Government shall consider, for source selection purposes,) the offeror's proposed target price, ceiling price, and share ratio for the basic requirements (basic award) and all options in the evaluation of the Cost/Price Factor.

... by the Most Probable Cost (MPC) computed by the Government for the basic requirements (basic award) (if options are priced and reasonably expected to be exercised, add) and all options.  The offeror's proposed estimated costs shall not be controlling for source selection purposes.  MPC shall be measured as follows: (insert as appropriate)

-  Government estimate of anticipated performance costs and proposed fee.

-  Government estimate of anticipated performance costs plus any fee anticipated to be earned under the cost incentive.

-  Government estimate of anticipated performance costs plus any base fee proposed plus any fee anticipated to be awarded.

(2)  Evaluation of options shall not obligate the Government to exercise such options.

(3)  The offeror's Cost/Price proposal will be evaluated, using one or more of the techniques defined in FAR 15.404, in order to determine if it is reasonable and realistic.  For a price to be reasonable, it must represent a price to the Government that a prudent person would pay in the conduct of competitive business.  Normally, price reasonableness is established through cost and price analysis techniques as described in FAR 15.404.  For additional information see FAR 31.201-3.

(4)  The Government will evaluate the realism of each offerors' proposed costs.  This will include an evaluation of the extent to which proposed costs are sufficient for the work to be performed, reflective of a clear understanding of the requirements, and consistent with the unique methods of performance and materials described in the offeror's technical proposal (FAR 15.404-1(d)(1) and 2.101).  The Cost/Price Realism Assessment (CPRA) will consider technical/management risks (weaknesses) identified during the evaluation of the proposal.  Per AFFARS MP5315.3, paragraph 5.5.3, the CPRA will quantify (dollarize) the impact of any weakness identified that may disrupt schedule, increase cost, or degrade performance, and where applicable, adjust the cost/price (most probable cost).  In addition, cost information supporting a cost judged to be unrealistically low will be quantified by the Government evaluators and included in the CPRA for each offeror.

When the Government evaluates an offer as unrealistically low compared to the anticipated costs of performance and offeror fails to explain these underestimated costs, the Government will consider, under the proposal risk rating, the offerors lack of understanding of the technical requirements of the applicable Mission Capability subfactor.

(5)  The Government will evaluate the affordability of each offeror's Cost/Price proposal by comparing the total proposed price (or for FPI contracts the maximum contract Government liability) to the budgetary information included in the solicitation.  The evaluation shall be made on the basis of a separate comparison for each fiscal year of the contract as well as a comparison between the total price (or proposed maximum contract Government liability) and the total budgetary information included in the solicitation.