Price Reasonableness2.doc

The document outlines methods to determine price reasonableness through price and cost analysis. Price analysis involves reviewing proposed prices for fairness, considering quality and other factors, without examining individual cost elements. Common methods for price analysis include price competition, catalog prices, contracts, prior competition, comparison to similar items, sales to other purchasers, market prices, historical prices, and independent estimates. Cost analysis, on the other hand, involves examining individual cost elements like labor rates, material costs, overhead, and profit. Documentation of each analysis is essential.