When is it appropriate for a contracting officer to de-embed a contractor’s proposed price?

The appropriate situation for a contracting officer to de-embed a contractor’s proposed price occurs when it is determined that the price is unreasonably high or lacks justification. This process allows the contracting officer to analyze and break down the components of the proposed price to better understand each element's validity in relation to the market and the requirements of the contract.

De-embedding is a critical tool for ensuring that the proposed costs align with fair market values and that any assumptions or methodology used in developing the price are sound. By conducting this analysis, the contracting officer can identify excessive profit margins, unnecessary costs, or areas where the contractor failed to provide adequate justification. Thus, this action safeguards the interests of the government and ensures that taxpayer money is spent wisely, maintaining accountability in the procurement process.

In contrast, while negotiating bulk discounts, addressing exceptionally low prices, or dealing with new vendors may raise important considerations, they do not specifically warrant the de-embedding process like a lack of justification for high prices does. De-embedding focuses particularly on cost realism and justification to maintain a fair and transparent contracting process.