A Benefit Analysis and Determination (FAR 7.103) is primarily used in DoD acquisition to choose between utilizing small business or not and is required by DoD Instruction 5000.02. The purpose is to determine the relative benefit to the government among two or more alternative procurement strategies. The analysis provides Program Managers (PM), the Milestone Decision Authority (MDA), Program Contracting Office (PCO), and others the necessary information to evaluate potential small business approaches. A Benefit Analysis and Determination is part of the Acquisition Strategy (AS) and is required at Milestone B.
Office of Small Business Benefit Analysis Guidebook
A basic benefit analysis should provide the estimated costs of developing and operating each feasible alternative and the benefits to be derived from each. It’s not simply a method of determining the least cost alternative, but a means of determining the most cost-effective alternative.
Federal Acquisition Regulation (FAR) 7.103(s)
FAR requires that acquisition planners, to the maximum extent practicable, avoid unnecessary and unjustified bundling that precludes small business participation as contractors. As a result of this direction, a Benefit Analysis and Determination is required.
Bundling of Contract Requirements
The term “bundling of contract requirements” means consolidating 2 or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small business.
Benefit Analysis for Bundling Requirements 
A benefit analysis is a document that makes the case for an acquisition strategy that consolidates and/or bundles requirements by identifying, quantifying, and comparing the benefits arising from its implementation to the benefits resulting from alternative strategies. The benefits may include cost savings, quality improvements, reductions in acquisition cycle times, better terms and conditions, and any other identifiable benefits.
If the acquisition strategy involves consolidation, the benefit analysis must demonstrate that the benefits accruing from the proposed acquisition strategy substantially exceed the benefits of each of the alternative strategies. This is the threshold for a benefit analysis involving a consolidation. “Substantially exceed” is not de-fined in statute or regulation. This leaves your team with the challenge of using the benefit analysis to prove that the acquisition strategy’s benefits are much greater than the benefits of the alternative approaches.
If the acquisition strategy involves bundling, the benefit analysis must demonstrate that the dollar value of the benefits accruing from the proposed acquisition strategy is measurably substantial. This is the threshold for a benefit analysis involving a bundle. Measurably substantial benefits equal or exceeds.
- 10 percent of the estimated contract value (including options) if the value is $86 million or less, or
- 5 percent of the estimated contract value (including options) or $8.6 million, whichever is greater, if the value exceeds $86 million.
AcqLinks and References:
- Defense Acquisition Guidebook (DAG) – Chapter 2.3
- Office of Small Business Benefit Analysis Guidebook
- Website: DAU – Benefit Analysis and Determination