Contract Administration and Pricing
Administration and pricing
Administration covers performance management and the reasonableness of price. Price analysis compares prices without examining cost elements (catalog prices, prior prices, competition, market research). Cost analysis examines cost elements and requires contractor data, often certified cost or pricing data above the current TINA threshold unless an exception applies (commercial items, adequate competition, modification of a prior certified action, and similar exceptions). Cost principles ask whether a cost is allowable, reasonable, and allocable; unallowable costs include entertainment, fines, and certain lobbying. CAS applies to covered contracts and can create cost-accounting-change adjustments. Profit or fee is negotiated separately and must be reasonable.
Traps: using cost analysis when price analysis is sufficient; demanding certified data when an exception applies; confusing audit findings with final determinations; treating DCAA as the decision-maker (the CO decides); and ignoring limitations on pass-through charges or subcontractor cost. Invoicing, acceptance, inspection, GFP, and liquidated damages are administrative issues that often appear as scenario questions.
Worked example: a CO receives a $5 million proposal for a noncommercial service with only one offeror. Competition is inadequate, the item is not commercial, and no exception fits, so certified cost or pricing data are required; the CO performs cost analysis, uses DCAA audit support, negotiates profit, and documents the negotiation. Rule of thumb: price analysis first; cost analysis only when price alone is not sufficient.