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Patrick Mathern

Price Analysis in accordance with FAR 15.404-1(b)(2)(ii)

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We conduct cost/price analysis on behalf of federal primes and subs and have never flinched in using prior price history as a basis for price analysis (assuming, of course, that the historical price can be substantiated as fair and reasonable as well as a suitable basis in and of itself, a whole other topic of conversation...)

Recently, we took a closer look at FAR 15.404-1( B)(2), which reads as follows:

The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include, but are not limited to, the following:

(ii) Comparison of the proposed prices to historical prices paid, whether by the Government or other than the Government, for the same or similar items. This method may be used for commercial items including those “of a type” or requiring minor modifications.

Am I reading this wrong or does this say analysis based on historical pricing is only valid for commercial items? Let's say the contractor purchases items which required cost analysis (subject to TINA). Three months later, a new requirement pops up (under TINA threshold but over simplified acquisition). Since these are not commercial items, would this prior procurement and cost analysis not be a suitable basis for determining price reasonableness (of course after adjusting for quantity and passage of time)?

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Patrick,

You are reading it wrong. The sentence that you bolded is not meant to limit the stated price analysis method. It's merely clarifying that the stated price analysis method may also be used in a particular circumstance. Comparison of proposed prices with historical prices has long been a valid method of price analysis for both commercial and noncommercial items.

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Patrick, take a look at FAR Case 2005-36, located at https://www.federalregister.gov/articles/2010/08/30/2010-21026/federal-acquisition-regulation-definition-of-cost-or-pricing-data

I think that the sentence that you highlighted was added to to the existing description to emphasize the use and availability of this price evaluation technique when dealing with commercial items of a type or those requiring minor modifications.

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Thanks guys - this reinforces the way we've operated in the past. Appreciate the feedback.

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