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Performing an independent cost estimate (ICE) allows the purchase⁄SCM team to compare proposed prices with independent Postal Service cost estimates to establish a reasonable price. An ICE is an assessment of the total cost of ownership (TCO) to be incurred by the supplier if the contract is to be awarded. TCO refers to the total cost incurred over the life cycle of an item, encompassing purchase, use, maintenance, support, and disposal. Here, TCO has been further refined through the Conduct Should-Cost Analysis activity of the Collect Ideas and Build Fact Base task of Process Step 2, Evaluate Sources. The most recent TCO is consulted to determine the reasonableness and completeness of the proposals and to detect buy-ins, unbalanced pricing, or other gaming techniques. Whenever adequate price competition has been obtained, comparing proposed prices with Postal Service ICEs may suffice to meet price-analysis requirements. These estimates can be a valid standard for comparison if they are based on a realistic analysis that accounts for past purchase prices, quantities, physical inspection of the product, and analysis of similar work. To determine whether the basis of the ICE is reliable and can be used as a standard for comparison, the pricing analyst must account for the following factors:
The pricing analyst must consider whether the requirements or the assumptions of the RFP have changed since the ICE was performed. Often, an ICE is prepared early in the purchase process; by the time the RFP is issued and offers are received, specifications and requirements have changed. This may cause the price or the nature of the product or service to change significantly, rendering a direct comparison with the ICE invalid. A new ICE will have to be developed based on the new information.
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