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Patrick Mathern

Directed source - automatically fair and reasonable?

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In general terms, what does having a "directed source" do for a Prime with a certified procurement system other than relieve them of justifying the decision not to compete?

I have a case where the Prime is considering using "directed source" as rationale for saying that a review of price reasonableness is not required (cost or price analysis). The logic here is that since the CO directed the source, the Prime has no option and therefore has to purchase at the offeror's price.

I wholeheartedly disagree with this - source direction has nothing to do with price reasonableness. Has anybody experienced a case where source direction was successfully linked to price reasonableness?

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The prime contractor is responsible for evaluating subcontractor proposals and negotiating a fair and reasonable subcontract price. But if a prime contractor agrees to contract with a Government-specified source, conducts a price or cost analysis, and engages in good faith negotiations, and if the specified source insists on a price that the prime considers to be unreasonable, the prime should refer the matter to the contractor officer for disposition and cite FAR 15.405(d). Although that rule is addressed to COs, the same principle applies to primes in the case of specified sources seeking unreasonable prices.

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