Commercial bids must be at least __ % below in-house costs?

Commercial bids must be at least __ % below in-house costs?

• A. 5%
• B. 10%
• C. 15%
• D. 20%

Answer: (B)

The key idea is that outsourcing should deliver real cost savings, not just a small difference. The standard rule is that a commercial bid must come in at least 10% below in-house costs to be considered cost-effective. This 10% threshold provides a guardrail, reflecting the need to account for transition costs, risk, and ongoing expenses, so the outsourcing decision actually saves money. A bid only 5% below in-house costs wouldn’t meet this minimum and wouldn’t demonstrate meaningful savings. Bids at 15% or 20% below would exceed the requirement, offering a comfortable margin of savings and thus satisfy the criterion.

The key idea is that outsourcing should deliver real cost savings, not just a small difference. The standard rule is that a commercial bid must come in at least 10% below in-house costs to be considered cost-effective. This 10% threshold provides a guardrail, reflecting the need to account for transition costs, risk, and ongoing expenses, so the outsourcing decision actually saves money.

A bid only 5% below in-house costs wouldn’t meet this minimum and wouldn’t demonstrate meaningful savings. Bids at 15% or 20% below would exceed the requirement, offering a comfortable margin of savings and thus satisfy the criterion.