Federal glossary · Metric
Price Reasonableness (FAR 15.404-1(b)) determines whether a proposed price is fair and reasonable. Established through adequate price competition, comparison to historical prices, market research, or independent government cost estimates. Does NOT require cost data — focuses on the total price, not individual cost elements.
Example: The Simplified Acquisition Threshold or a fiscal-year budget measure.
Reference record · Sources: OMB budget guidance · Verified Jul 2, 2026 · Covers definition, governing source
Also known as
Price Reasonableness (FAR 15.404-1(b)) determines whether a proposed price is fair and reasonable. Established through adequate price competition, comparison to historical prices, market research, or independent government cost estimates. Does NOT require cost data — focuses on the total price, not individual cost elements.
is a metric concept federal contractors and grant writers run into across solicitations, regulations, and award filings
Price Reasonableness is a measurement used in federal contract evaluation, source selection, oversight, or performance management. For example: Example: The Simplified Acquisition Threshold or a fiscal-year budget measure. Understanding Price Reasonableness matters because evaluators use metrics like it to compare proposals quantitatively, score past performance, set award-fee outcomes, and decide who gets the next option year. Contractors who track how Price Reasonableness is calculated — and what target values look like in their NAICS or service area — write proposals that are concrete and defensible instead of generic and easily dismissed. Price Reasonableness also has implications for contract administration: getting the calculation methodology wrong post-award is a common source of disputes and contracting-officer modifications. Pair Price Reasonableness with the related metrics above to see how the federal government composes evaluation criteria into source-selection narratives.
Example: The Simplified Acquisition Threshold or a fiscal-year budget measure.
Meaning in practice
Price Reasonableness is a measure used to score, compare, or track government activity.
Where you’ll see it
You will see it in evaluation criteria, dashboards, scorecards, reports, and oversight reviews. Example: Example: The Simplified Acquisition Threshold or a fiscal-year budget measure..
Common confusion
People often confuse the metric with the threshold or decision rule attached to it.
What to do next
Check how the metric is calculated before you compare records or opportunities.
No entity links are available yet.
No related questions are available yet.
Get notified when usage of Price Reasonableness changes in contracts or guidance.
Search active federal contracts and solicitations related to Price Reasonableness on Bureauify.
100M+ government records · 110+ gov/news sources · Sourced from official federal systems
