Price Reasonableness v Fair and Reasonable

[Jamaal Valentine]

On 2/5/2021 at 6:49 AM, Neurotic said:

Is "Reasonableness" the same as "Fair and Reasonable Price"? 

The subject came up in a conversation about how a cost/price analyst should document findings and conclusions of its price analysis since the Fair and Reasonable determination is made by the CO or KO.   

Admittedly, I haven’t read the other posts in this thread. I know some attempt to distinguish reasonableness as a cost analysis activity and fair and reasonableness as a price analysis activity. The Air Force’s Contracting Officer Study Group goes over it in week 3.

[general_correspondence]

The analyst words should be assertive regardless if the analyst organization has final word on the subject.  It should always say....and therefore the price has been determined to be fair and reasonable.

The contracting officers in this branch of the Air Force we get our RFP from, state unequivocally that the subcontracts price/cost reasonableness responsibility is on the Prime.  In other words, just as someone else already said, the government is using the prime (who may eventually win the award)  to do the analysis. They want to see a write up that leads them to same conclusion so not much questioning or investigating is needed.  All the large Primes outsource ~40% in subcontracts/procurement every year, just to clarify I know this thread is not about subcontracts, nonetheless subcontracts can be a significant amount of the Primed Bid. 

[Vern Edwards]

19 hours ago, general_correspondence said:

The analyst words should be assertive regardless if the analyst organization has final word on the subject.  It should always say....and therefore the price has been determined to be fair and reasonable.

I disagree with the assertion that some "analyst" must (or should) assert that price has been "determined" to be fair and reasonable.

The term analyst does not appear anywhere in FAR---Title 48 of the CFR, Chapter 1. It appears in the sense of price or cost analysis only in the Department of Energy and the Department of the Interior FAR supplements. My point is that nothing in the FAR System gives any cost or price analyst any power of determination when it comes to fairness and reasonableness of price.

As a CO, I would reject and return any report from any cost or price analyst stating that he or she has determined a price to be fair and reasonable, and I would send a memo to his or her boss stating that absent official delegation, only COs have the responsibility and authority to make such a determination. Analysts may opine, but not "determine."

Perhaps I misunderstand the point that general_correspondence is trying to make.

[formerfed]

More agencies seem to use cost or price analysts now.  They prepare reports for COs to use in negotiations or award documentation.  I’ve only seen analysts use the term “recommended” in their conclusions and nothing more.

[Vern Edwards]

25 minutes ago, formerfed said:

More agencies seem to use cost or price analysts now.  They prepare reports for COs to use in negotiations or award documentation.

I agree, but price analysts, as  distinct from auditors, have been around for a very long time. The Armed Services Procurement Manual for Contract Pricing (ASPM No. 1) (February 1969) mentions them in several places.

Essentially, they are consultants. That is not to belittle them. They are necessary and important. But, absent some local or agency-specific policy, they do not have the power of determination. Auditors, on the other hand, sometimes do.

[joel hoffman]

I think that GC is referring to prime contractor cost and price analysis of subcontract proposals in the above post.

Regardless of what the prime determines, the government can review subs proposals and primes’ reviews of them. 

[Vern Edwards]

1 hour ago, joel hoffman said:

I think that GC is referring to prime contractor cost and price analysis of subcontract proposals in the above post.

 

Oh, well, if that's the case---Never mind.