An Investigation of Problems in Analyzing Prices in State-Of-The-Art Commercial Items

This research explored whether techniques described in the Armed Services Pricing Manual are sufficient for evaluating prices of leading-edge and modified commercial items. The research was sparked by the Federal Acquisition Streamlining Act of 1994, which encourages contracting officers to rely on information other than certified cost or pricing data when buying commercial products. Pricing techniques used in five recent acquisitions were investigated through a case-study methodology. The research concludes that current guidance is sufficiently broad to enable the contracting officer to tailor the tools to an acquisition at hand. Research findings, however, indicate that the Department of Defense should consider expanding guidance and systems for use in secondary and auxiliary price comparisons. Findings indicate that contracting officers may not have the expertise or availability of data necessary to obtain pricing information from the preferred sources ranked in proposed regulations implementing the streamlining act. The research also uncovered evidence of the culture shock that contracting officers will experience as acquisition reforms are implemented. Contracting officers indicated that prices evaluated through price analysis techniques were the best obtainable given the circumstances. They believed that better prices could have been established through analysis of detailed cost or pricing data.