XL EagleCost Realism
Cost Realism. Cost realism is a review of each cost element in a proposal for a cost-reimbursement contract. The government checks whether the costs fit the work, the approach and the company's real rates.
Evaluators then calculate a probable cost, which can be higher or lower than proposed. The probable cost, not the proposed cost, is used in the evaluation.
Why it matters to a small contractor
Lowballing a cost-type proposal rarely works, because evaluators can adjust it up. If you sub on one, your rates may be part of that review.
Example
A firm proposes $800,000 with labor rates far below its payroll history. Evaluators adjust the probable cost to $910,000, and the firm loses its price edge.
Cost Realism: common questions
Does cost realism change what I get paid?
No. It changes the evaluated cost for award decisions. Payment follows the contract.
Is cost realism used on fixed-price bids?
Generally no. Fixed-price bids may get a price realism review instead.
Want the contract without the paperwork? Send XL Eagle your price on an open government job. We write and submit the bid under our registrations, free to you. Find open jobs →