Price Enumeration and Probabilistic Evaluation in System Acquisition

Abstract

A number of environmental uncertainties in system acquisition can lead to situations where exact requirements are difficult to estimate. The uncertainties are often disregarded in favor of a simple point estimate. This point estimate, or Best Estimated Quantity (BEQ), is then used in the Request for Proposals (RFP) and subsequent source selection, with the evaluation conducted at the BEQ price using deterministic techniques. An alternative approach is presented for BEQ and deterministic price evaluation. The approach involves the solicitation of a range of bid prices for all potential quantities in lieu of a BEQ, with a complementary probabilistic analysis technique in lieu of a deterministic price evaluation. The probabilistic approach is then used to evaluate the range of bid prices and make an award decision. The methodology is presented in the context of an actual case study in which it was implemented in 1996.

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Document Details

Document Type
Technical Report
Publication Date
Jan 01, 2002
Accession Number
ADA487645

Entities

People

  • Kevin Gaudette
  • Kevin Sweeney

Tags

Communities of Interest

  • C4I
  • Human Systems
  • Materials and Manufacturing Processes
  • Weapons Technologies

DTIC Thesaurus Topics

  • Acquisition
  • Air Force
  • Airborne Warning And Control System
  • Budgets
  • Business Administration
  • Case Studies
  • Command And Control
  • Contracts
  • Cost Analysis
  • Cost Estimates
  • Costs
  • Economic Analysis
  • Governments
  • Probability
  • Probability Distributions
  • Procurement
  • Test And Evaluation

Readers

  • Adaptive Control and Estimation with Uncertainty in Dynamic Systems.
  • Government Contracting/Procurement.
  • Life Cycle Cost Analysis