1.4  Cost/Price Risk (If Used)

For programs requiring a most probable cost/price evaluation (mandatory for ACAT SDD acquisitions utilizing an MPC), the Source Selection Evaluation team must describe the components that make up the aggregate government most probable cost. The cost/price risk evaluation assesses the degree to which an offerors' cost proposal for the contract line items to be included in the intended contract and associated options, if evaluated, compares with the government MPC for the same items.  Cost/Price Risk shall be rated Low, Moderate, or High using the risk descriptions found in Table 4 of MP5315.3.

Note:  MPC referred to in the mandatory procedures is the same thing as the probable costs referred to in the FAR.  A draft program office estimate (POE) with the cost estimating data and methodology should be established before the intense and extensive up-front communications with prospective offerors.  The POE may be altered due to methodologies and data acquired during these discussions.  The MPC developed for each offeror may use some of the estimating techniques from the POE depending on the proposed solution when compared to the assumptions for the POE.  Many times the estimating techniques will be adjusted for the offeror's unique characteristics.  The proposals are then compared and contrasted with the MPC.  However, the Cost/Price risk evaluation is the result of comparing the MPC (and its associated uncertainty analysis) with each individual proposal (and its associated uncertainty analysis).  The contractor will provide both their proposed cost and their analysis of uncertainty as part of their proposal.  The uncertainty analysis is required for ACAT I programs and the AF Cost and Risk Uncertainty Handbook can be used as a guide.  This handbook and related information is located on the FM Knowledge Now Website (https://afkn.wpafb.af.mil/afcruh).  Uncertainty analysis is highly recommended but not required for programs smaller than ACAT I.

The offeror's final proposed costs or prices were evaluated against the criteria of (realism as applicable). Describe the cost/price analysis techniques and or models used and appropriateness in determining cost/price realism. Describe realism analysis techniques as well as the assessment of balanced pricing and any associated risks. The contract type is (insert contract type) for (insert type of acquisition).