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How does a contracting officer determine if a price is fair and reasonable?

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Hey everyone,

I'm still pretty new to federal contracting. My company just submitted a quote for an RFQ for grounds maintenance at a federal building near Jacksonville, under NAICS code 561730. It was a total small business set-aside, and we put in what we thought was a competitive price based on our crew of 9 people, our equipment costs, and what we know about the local market. The deadline was last Friday. I've heard the term "fair and reasonable price" a lot, but I'm not sure how a contracting officer actually figures that out. Do they have a specific formula or a database they look at? What criteria do they use to decide if a price is fair and reasonable?

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asked Jordan P. First-year bidder, landscaping and grounds · Jacksonville, FL · 391 rep

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A contracting officer determines if a price is fair and reasonable by analyzing a variety of factors, as outlined in FAR Part 15.4. For a grounds maintenance RFQ like yours, the contracting officer will primarily compare your quote to other offers received for the same requirement. They might also look at historical pricing for similar services, commercial market prices for the services, or an independent government estimate.

Since this was a total small business set-aside under the simplified acquisition threshold, the focus is often on competition. The more competitive quotes they receive, the stronger their basis for determining a fair and reasonable price. They are not looking for the lowest price, but a price that is fair to both the government and the contractor, reflecting the value of the work.

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answered Dave H. Verified vendorParts distributor, DLA and DIBBS · Dayton, OH · 568 rep

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Sign up to answerCite the FAR clause or procurement code where you can.

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