Cost and Price Analysis

Cost and Price Analysis for Government Contracts

Federal Acquisition Regulation (FAR) 15.402 requires government contracting officers to purchase supplies and services from “responsible sources at fair and reasonable prices.”

Contracting officers use cost and/or price analysis to determine that prices are fair and reasonable. The method and extent of the analysis depends on several factors, including the dollar value and urgency of the contract.

For many contracts, price analysis will establish that prices are fair and reasonable. Informal price analysis must be performed on all procurements over $3,000. Contracts over $30,000 require formal, written price analysis.

If price analysis and negotiation fail to achieve fair and reasonable prices, cost analysis with documentation of expenses may be required. Contracts over $700,000 also trigger cost analysis requirements of The Truthful Cost or Pricing Data Act (often referred to by its historical name, the Truth in Negotiations Act or TINA).

How We Can Help

Contractors are required to support the cost and/or price analysis of the government. While the government may ask you to provide any data they’d like, you are only required to submit data permissible per FAR 15.403. Many small contractors divulge more information than they should, which can lead to a drawn out award process and the blurring of contract operational activities such as reporting requirements.

As experienced government contract professionals we will guide you through what you must do, what you may want to consider, and what you do not want to do during this process.

Additional Resources

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Contact us now or schedule one-on-one time to further discuss cost and price analysis for your government proposals and contracts.

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