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I am looking for suggestions on when fair and reasonable pricing cannot be determined on a $100k commercial acquisition that was sole sourced.  What have you all done when you can't find any catalog pricing or previous purchase orders for similar products.  The vendor stated that the combination of components that make up the procurement is specialized to the sole source and is not a typical standard COTS that they have commercial pricing for.  Is issuing the PR as the IGCE acceptable for fair and reasonableness?  Problem is that the PRs in these type situations are sometimes based on the price quoted from the vendor.

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Based on your post, as-is, I offer the following (won't give you any direct answer, but could lead to you finding your own answer):

Sounds like you are using SAP under FAR 13.106-3(a)(2). FAR 13.106-3(a)(2)(vii) allows you to use any reasonable basis for a price fair and reasonableness determination ... If you can't think of any, FAR 15 offers some methods for consideration.

How familiar are you with FAR 15.404-1, and 15.403-3?

FAR 15.404-1(a)(7) cites the Contract Pricing Reference Guides that you should become familiar with.


Since its relatively low dollar how much effort do you want to invest?

Are the components commercial items with a pricing history? If so, maybe that will give you some insight into the pricing.

I don't know what PR is to you, but you should know or be able to determine if you have a government estimate that is a valid IGCE ... 

What does your contracting officer or trainer suggest?

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In some agencies, the quest to create metrics is strong and they've used the purchase request (PR) as a government estimate so they can calculate savings between the estimated price and contracted price.  The number is garbage, but they don't care.

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Hello TheContractingGuy,

Do not write anything that states that $100K is a relatively low dollar amount or you'll be eaten alive...

Have you asked the offeror to explain how it came up with the price? (other than certified pricing data)

     From what you wrote, it appears that this is a matter of solving a problem using current supplies in a different way the supplies were intended to be used.  If that is the case, then the price of the individual components is part of the answer and the other part is the technical expertise that solved the problem.  (Think of the classic example of the technician who fixes a machine by hitting it with a hammer and charges the customer $2K. Whe asked to explain he answers that hitting with a hammer costs $10 and knowing where to hit and how hard costs $1,990.00.)  Other question to ask yourself (and your customer) is "Is the Government getting value worth at least the $100K?" and "What would the cost be of not implementing the proposed solution?"

     If you feel (yes, this may be a gut check) the purchase if fair and reasonable, make sure you document your market research, the matters discussed in the prior paragraphs, your determination that, based on the information you have available, you consider the price to be fair (to both the Government and Contractor) and reasonable (as you became as educated a buyer you could be).

     Do not buy if you still have doubts that the Government will receive a fair and reasonable deal until your questions are satisfied.


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Guest Vern Edwards
On May 2, 2016 at 5:41 PM, thecontractingguy said:

Is issuing the PR as the IGCE acceptable for fair and reasonableness? Problem is that the PRs in these type situations are sometimes based on the price quoted from the vendor.

That's not the problem. The problem is that "purchase request" is not a synonym for "independent government cost estimate." The (obvious) answer to your question is: No.

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