Running head: Independent
The Independent Government Cost Estimate and the Statement of Work
Regina M. Grant
Overpayment, poorly written cost estimates, unreliable cost estimate, inadequate or no IGCE, and inadequate payments for goods and services contracted seems to be the theme throughout recent Department of Veterans Affairs (VA) Office of Inspector General Audits of its various VA departments’ acquisition program offices (VA OIG AUDITS 2009). These audits found major problems with its acquisition process due to unauthorized, wasteful or questionable costs resulting in the government losing millions of dollars on bad contracts. This ...view middle of the document...
The Federal Acquisition Regulation requires that Contracting Officers ensure that the final contract cost and price is fair and reasonable (FAR 15.404-1a) which suggests that cost estimates for procurements must be conducted. According to Compton, the IGCE is the estimated cost or price of supplies or services to be purchased for the federal government and it is an essential step in the federal government’s acquisition process (Compton, 2010). It serves as a best estimate of what the cost of a project will be based on a series of assumptions and provides a structured method promoting a full understanding of the statement of work. The IGCE is a tool that the government uses to determine reasonableness which is the key to the entire procurement process. Properly developed IGCEs provide managers with a tool to defend make trade off decisions and manage acquisition requirements throughout the life cycle of the contract (Ipsaro).
Why is the IGCE important? The IGCE is essential to the government acquisition process for many reasons to include to making program funding prioritization decisions; evaluating resource requirements; developing performance measurement baselines; and developing annual budget requests (GAO-09-3SP 2009). In accordance with the FAR 2.101, the IGCE is a required element of a proper contract processed for supplies or services over the simplified acquisition threshold ($100,000.00). The IGCE is the government’s estimated cost or price of the anticipated acquisitions to include the resources and projected cost of the resources a contractor will incur in the performance of a contract. It serves as the basis for reserving funds for the contract as part of acquisition planning; comparing costs or prices proposed by contractors; and determining price reasonableness in bid responses to solicitations (Department of State,14 FAH-2 H-351.
A well-prepared IGCE equals success in the acquisition planning process ultimately achieving reasonable contracts with cost saving benefits to the government. It establishes a good foundation that allows Contracting Officers and Program Offices to award sound contracts. This effort will ensure that the bona fide need rule is met; appropriated funding is available; cost estimates are based on the requirements/statement of work; and due diligence in preparing through research of industry data, appropriate pricing tools and methodology, and various economic considerations (Compton).
The Confidentiality of the IGCE
There are many reasons why the IGCE must remain confidential, such as, it’s the law as cited in the FAR; it protects the government from fraud, waste, and abuse; and primarily it is a fiduciary responsibility of every federal employee engaged in the federal acquisition process. Protecting procurement sensitive data, such as an IGCE, is done on several levels and there are many ways to maintain IGCE confidentiality. For purposes of this paper, I will highlight...