52.222-46 / Cost Realism

There are commonalities and overlaps.  The evaluation of several offerors' total compensation plans can be part of the agency's cost realism analysis.

On 12/7/2022 at 10:36 AM, Chip13 said:

In the event that an RFP for a competitive cost-reimbursement type contract includes 52.222-46, isn’t the the evaluation of professional compensation somewhat duplicative to the cost realism analysis specified in 15.404-1(d) that is already looking at the realism of the specific elements of cost like direct labor and fringe.

There is a relationship, but evaluation of professional employee compensation (PEC) and cost realism analysis (CRA) have different specific purposes. PEC Is done to determine whether an offeror will pay its professional employees enough to retain a competent professional workforce. CRA is done to determine whether an offeror's proposed estimated cost reflects the costs that the offeror is likely to incur to do what it proposes to do the way it proposes to do it.

CRA is generally based on a broader data set. For instance, it should consider indirect costs, while PEC is based primarily on direct labor costs and should consider professional labor indices.

CRA determines what costs the offeror is likely to incur (most likely cost, most probable cost) given what it says it will do and how it says it will do it. 

PEC is a nonprice factor. It determines whether (yes or no) the amount the offeror plans to pay its professionals will be enough to maintain a competent professional staff.

Analyses developed for one may be applied to the other, but report the evaluation results separately in order to comply with FAR.

For an interesting discussion, see Guidehouse LLP; Jacobs Technology, Inc., GAO B-420860.1, October 13, 2022.