The government’s overall objective when pricing a contract is to obtain a price that is fair and reasonable to both parties. A fair and reasonable price does not mean the lowest price the government can obtain. The Federal Acquisition Regulation (“FAR”) does not define what is a fair and reasonable price. However, FAR 15.405 provides some general considerations and various sections of the FAR provide guidance on how contracting officers are to determine if an offered price is fair and reasonable.
It is important for you to understand how the government should evaluate your proposal under different acquisitions to ensure it is fairly considered. Furthermore, knowing how the government should evaluate price proposals will help you in developing a pricing strategy when responding to a solicitation.
Cherry Bekaert’s Government Contractor Services Group discussed the pricing objective in government procurement and determining price reasonableness. Discussion topics included:
Determining Price Reasonableness