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  • Question

    Who can we compare s/b prices against? Can you compare a small businesses pricing with large business historical pricing to determine the price fair and reasonable. Another words see the percentage higher the prices are from the small business versus the large business. For example, if the price is 30% higher than th elarge business then it is no tin th ebest interest of the government to do a samll business set aside. Can this be done?


    Answer

    Rule of 2 is:  A contracting officer shall set aside requirements for small business concerns when there is a reasonable expectation that:  (1) Offers will be obtained from at least two responsible small business concerns offering the products of different small business concerns (but see paragraph (c) of this section); and (2) Award will be made at fair market prices.

    FAR 19.001 defines fair market prices: ""Fair market price” means a price based on reasonable costs under normal competitive conditions and not on lowest possible cost (see 19.202-6)." 

    FAR19.202-6  leads you to FAR 15.404-1(b).  You can use numerous methods to survey the market to determine if you will get a "fair market price".  The following website:   http://www.wifcon.com/pd19_202.htm lists numerous GAO cases that describe different circumstances where the contracting officer has leeway in determining what is a fair market price.  Yes, you can compare small business prices to large business prices in helping to determine the fair market price.  Note that premium pricing does not mean that it is not fair market price. 

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