Overview
FAR 12.209 requires contracting officers to establish price reasonableness for commercial acquisitions by integrating standard pricing procedures with an understanding of specific commercial market factors and terms.
Key Rules
- Procedural Compliance: Price reasonableness must be established using the applicable procedures found in FAR 13.106-3 (Simplified Acquisition), 14.408-2 (Sealed Bidding), or Subpart 15.4 (Contract Pricing).
- Market Awareness: Contracting officers (COs) must consider customary commercial practices, conditions, and product/service characteristics when evaluating price.
- Pricing Factors: The regulation identifies specific variables that affect commercial pricing, including delivery speed, warranty extent, liability limitations, quantity discounts, performance periods, and unique requirements.
- Commensurate Value: The CO is responsible for ensuring that the final contract terms, conditions, and prices are proportional to the Government’s actual needs.
Practical Implications
- COs must look beyond the "sticker price" and conduct a nuanced analysis of how commercial terms—such as an expedited delivery schedule or an extended warranty—justify a higher or lower price point.
- To ensure a fair deal, the Government must avoid paying for high-end commercial features or restrictive liability protections that exceed the agency’s minimum mission requirements.