Price Analysis on Defense Logistics Agency (DLA) Contracts

Over the last decade, the federal acquisition workforce has had to adapt to the need for new skill sets. Procurement reforms in the late 1990s required contracting specialists to have a greater knowledge of market conditions, industry trends, and market prices. Using market forces to determine reasonable prices has required an increase in both market research and price analysis methods. Most contracts pricing of acquisitions required cost analysis before these reforms became part of contracting regulations. These new regulations dictate a skill set for conducting price analysis that is largely missing from both the workplace and Defense Acquisitions University (DAU) existing curriculum. Since 2001, the Department of Defense Inspector General (DoDIG) and the Government Accountability Office (GAO) have issued several reviews of selected agencies discussing concerns about commercial and noncommercial prices of spare parts and services. Most of these reports have identified situations in which contracting officers failed to obtain adequate pricing information for justifying price reasonableness. In conclusion, both the DoDIG and the GAO have found that the contracting officers need improved expertise in both understanding and conducting price/cost analysis. The current gap in knowledge contributes to agencies missing cost saving opportunities as well as ventures to improve acquisition outcomes. Exercising appropriate price analysis methods that come from adequate price analysis guidance and training would address this gap.Naval Postgraduate School Acquisition Research Progra