(Editor’s Note.  The following indicates the government’s interest in using this estimating tool for pricing proposals and it may be worth your review.)

DCAA is asking its offices to report on progress they are experiencing in contractor’s use of parametric cost estimating techniques (Parametrics).  Parametrics involves statistical analysis and manipulation of historical data to reflect current quantity requirements, often using computer models.  For example, previous raw material requirements on a price-per-pound basis can be used to project current proposal amounts.  When parametric estimates are properly validated, for example, voluminous bills of material and “grass roots” engineering estimates requiring extensive audits can be eliminated.  

DOD has been promoting use of parametrics for many years because of their potential to reduce proposal preparation and evaluation, negotiation time and cost and cycle time.  The results of its pilot program on these techniques are cited as evidence these benefits are being realized citing examples where proposal preparation, evaluation and negotiation costs have been reduced 50%-80% and estimating accuracy has been improved.  The program results also demonstrate that when parametrics is used properly, it complies with all government accounting requirements in FAR, the Truth in Negotiations Act and the Cost Accounting Standards.

DCAA has noted use of parametrics have not increased since publication of DID Parametric Estimating Handbook (found online at www:ispa-cost.org) citing (1) contractor may lack the necessary historical data to support parametrics and (2) contractors and government personnel may be uncertain or unfamiliar with the validity of parametrics.

{TAG_FORM_TITLE}