Acquisition

Running Head: COST ESTIMATE

The Independent Government Cost Estimate and the Statement of Work

BUS 501

July 20, 2014

The Independent Government Cost Estimate (IGCE) is a document designed to help determine whether prices offered by vendors are fair and reasonable. Cost estimates have three primary purposes. They are used to reserve funds for the contract during the acquisition planning phase, to compare prices and costs proposed by prospective vendors and to determine whether proposed prices are reasonable if there is only one vendor soliciting for a government contract action. New contracts, delivery and task orders, and any modifications that result in a monetary change to the contract should have a cost estimate done. The estimate should represent the maximum probable cost for the supplies or services being procured. This action, though not mandated by the FAR, is generally used for acquisitions over the simplified acquisition threshold of $150,000.

In preparing an IGCE, consideration should be taken to ensure that all costs elements for goods and services for each task or developmental outcome is included in the IGCE. Make sure that there is a way to collect data and estimating methodologies. The sources for data, assumptions, constraints, methodology, and subject matter expert inputs should be documented. The use of salient characteristics should be used opposed to brand name to obtain quotes. This document should only be revised based on price or cost change information and new requirements.

In acquisition planning, documentation of estimated costs of goods and services ensures that contracting officials can understand the basis for the estimate and how to use the estimate in later steps of the acquisition process. Not fully documenting cost estimates limits information sharing. The acquisition field is constantly having employment turnovers and thus if no documented estimates are in place, then the incoming may not be aware of...