Cost of Administering a Government Contract: $907

A May 12, 2016, proposed rule issued by the Department of Defense, General Services Administration, and National Aeronautics and Space Administration estimates that it costs the government $907 to award and administer a contract.

The rule proposes to amend the Federal Acquisition Regulation to revise, for the purpose of evaluating bids for multiple awards, the estimated administrative cost to award and administer a contract.

The rule would make a monetary adjustment to FAR 14.201-8, Price related factors, and the solicitation provision at FAR 52.214-22, Evaluation of Bids for Multiple Awards.

FAR 14.201-8(c) provides that advantages or disadvantages to the government that might result from making more than one award is one of the factors that may be considered in evaluating bids. FAR 52.214-22 currently reflects an estimated administrative cost of $500, but that amount was last adjusted in 1990 (see 55 FR 3878).

According to the rule, an adjustment from $500 to $1,000 is a realistic reflection of the actual cost to the government.

The government’s Consumer Price Index calculator showed $907 as the proper adjustment, but the rule rounds up the figure to $1,000. The agencies will review the cost periodically and update it as deemed appropriate.

Comments on the proposed rule referencing FAR Case 2016-003 are due July 11, 2016. For the text of the rule, see 81 FR 29514

About William Van Huis

Bill Van Huis is a Senior Writer/Analyst for Wolters Kluwer Law & Business who tracks and analyzes new regulations impacting federal government contracting. He also follows court decisions involving bid protests and contract disputes. You can find his work in WK publications like Government Contract Reports and the FAR and DFARS Matrix Tools. Bill is a Certified Professional Contracts Manager, and he has a law degree from Southern Illinois University, where he graduated summa cum laude. Prior to joining WK, Bill worked both inside and outside state and local government in the areas of procurement and municipal finance. Bill also worked as a staff attorney for the Illinois Supreme Court.
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