What is the review and evaluation of separate cost elements and profit or fee in an offeror's or contractor's proposal called?

The term that describes the review and evaluation of separate cost elements and profit or fee in an offeror's or contractor's proposal is known as cost analysis. This process involves breaking down the components of a proposal to assess their validity, reasonableness, and compliance with applicable guidelines and regulations. During cost analysis, contract administrators examine each cost element distinctly, which enables them to determine if costs are realistic and if the proposed profit or fee aligns with the scope of work and risks involved.

Cost analysis is crucial in ensuring that government contracts are awarded based on fair and competitive pricing. This practice allows for thorough scrutiny, which is essential in identifying any potential discrepancies or overly inflated costs. By conducting a cost analysis, decision-makers can justify selecting one proposal over another based on the strength of the financial details presented.

Price analysis, on the other hand, typically involves comparing the overall proposed prices among different bids without delving into the individual cost elements. Cost evaluation generally encompasses the broader review of a proposal's entire layout rather than focusing strictly on cost breakdowns. Proposal review is a more general term that might encompass various aspects of the proposal assessment process but does not specifically relate to the detailed examination of cost elements. Choosing cost analysis, therefore, accurately reflects the specific activity being