INVESTIGATING THE RELATIONSHIP BETWEEN THE INDEPENDENT GOVERNMENT COST ESTIMATE AND ACTUAL CONTRACT COSTS FOR KNOWLEDGE-BASED SERVICE CONTRACTS
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Authors
Wilson, Charles B.
Buck, Nathaniel T.
Subjects
Independent Government Cost Estimate
IGCE
performance variables
actual contract costs
IGCE
performance variables
actual contract costs
Advisors
Rendon, Rene G.
Ballard, Marcus A.
Date of Issue
2020-12
Date
Publisher
Monterey, CA; Naval Postgraduate School
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Abstract
The DoD remains on the Government Accountability Office’s (GAO) High-Risk List for contract management, and the DoD Inspector General (DoD IG) declared that DoD contract management is a top ten management challenge. One of the significant causes to acquisition program risks is cost overruns, which can be mitigated by establishing an accurate and reliable independent government cost estimate (IGCE). Although the IGCE provides a baseline for contract cost, many DoD acquisition professionals believe that the IGCE has little to no value in determining the actual contract cost. However, per the DoD’s Independent Government Cost Estimate Handbook for Services Acquisitions, the IGCE serves as the best estimate of a contract’s potential costs and is an essential factor in awarding and administering service contracts. Using multiple linear regression and correlation techniques, this study aimed to identify the relationship between IGCE and actual contract costs and how other procurement variables affect that relationship. One of the key findings was IGCE has a strong relationship to and is a good predictor of actual contract costs. Additionally, this relationship is affected when additional explanatory variables are introduced to the model. Overall, this study deepened our understanding of the relationship between the IGCE and actual contract costs, providing insight into the need for accurate and reliable cost estimates for government contracting.
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Distribution Statement
Approved for public release. distribution is unlimited
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This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.