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. 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.
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