Fair and reasonable price
Also called: fair and reasonable, price reasonableness, price analysis, cost analysis, reasonableness determination
A fair and reasonable price is the price a contracting officer determines, before award, to be fair to both the government and the contractor, based on price analysis, cost analysis, or both.
FAR 15.402 requires the contracting officer to buy at fair and reasonable prices, and FAR 15.404-1 describes the techniques: price analysis compares the offered price to other offers, catalog or market prices, prior prices, independent government estimates and parametric data without looking at the offeror's costs; cost analysis examines the elements of a proposed cost when price analysis is not enough. FAR 13.106-3 applies the same requirement to simplified acquisitions, where a single quote with a documented comparison often satisfies it. Adequate competition is the usual basis for the finding, which is why a sole-source buyer asks for far more price support than a competed one.
What to check: what price support the solicitation asks for (a breakdown, a commercial price list, prior invoices), whether an independent government estimate exists, and how your price compares to award data in FPDS. A price the contracting officer cannot document as reasonable delays or kills an award.
What it is not: the lowest price, and not cost realism, which asks whether a price is too low.
See also: Cost realism, Certified cost or pricing data, Sole source award, FPDS and USAspending
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