Under a solicitation for a cost-reimbursable contract, an offeror’s proposed costs are not controlling, because the government is on the hook for the contractor’s actual and allowable incurred costs. Before making an award decision, the government must consider whether the proposed costs should be upwardly adjusted.
A recent GAO bid protest decision highlights the need for offerors bidding on cost-reimbursable work to make sure that their proposed costs are realistic and substantiated—including the proposed costs of major subcontractors.