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  • Question

    FAR 13.106-3(a)(2) states, "If only one response is received, include a statement of price reasonableness in the contract file. The contracting office may base the statement on "(i) through (vii). a) Can "(i) through (vii)" only be used as a result of competition and only one source responds? b) Can "(i) through (vii) be used to determine price fair and reasonable in a sole source environment regardless of the results of competition. c) If you are procuring a follow-on sole source contract to the same vendor, can you use pricing from their previous contract as a basis for price fair and reasonableness?


    Answer

    1. The FAR references quoted below in pertinent part are applicable to this response.

    FAR 6.303 -- Justifications
    FAR 6.303-2 -- Content
    (b) As a minimum, each justification … shall include the following information:
      (7) A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

    FAR 13.003 -- Policy
    (a) Agencies shall use simplified acquisition procedures to the maximum extent practicable for all purchases of supplies or services not exceeding the simplified acquisition threshold [i.e., $150,000].

    FAR 13.106 -- Soliciting Competition, Evaluation of Quotations or Offers, Award and Documentation
    FAR 13.106-3 -- Award and Documentation
    (a) Basis for award. Before making award, the contracting officer must determine that the proposed price is fair and reasonable.
      (1) Whenever possible, base price reasonableness on competitive quotations or offers.
      (2) If only one response is received, include a statement of price reasonableness in the contract file. The contracting officer may base the statement on – (techniques listed in subdivisions (i) through (vii).

    FAR subpart 13.5 – Simplified Procedures for Certain Commercial Items
    FAR 13.501 -- Special Documentation Requirements
    (a) Sole source (including brand name) acquisitions.
      (1) Acquisitions conducted under simplified acquisition procedures are exempt from the requirements in Part 6. However, contracting officers must -- (ii) Prepare sole source … justifications using the format at 6.303-2, modified to reflect that the procedures in FAR subpart 13.5 were used.

    2. In response to the first two questions of this inquiry, based on Government policy stated in FAR 13.003 as that policy is implemented under FAR 13.106, it is our opinion that the guidance set forth in FAR 13.106-3(a) permitting justification of a sole source can only be used as a result of competition where the contracting officer had a reasonable expectation that two or more firms would submit quotes, but only one source responds to the solicitation, and cannot be used in the case where only one source is solicited at the outset.

    3. However, because simplified acquisition procedures are being used for this sole source acquisition that exceeds the simplified acquisition threshold, it appears that this acquisition is being conducted under the authority of FAR subpart 13.5. Assuming this to be the case, then the justification for using a sole source for this acquisition would be governed by the procedures set forth in FAR 13.501(a)(1)(ii) which require that the justification use the format at FAR 6.303-2. FAR 6.303-2(b)(7) simply requires a determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable. There are a number of acceptable price evaluation techniques that can be used to justify a fair and reasonable price in this case. Accordingly, we suggest that you consult the Contract Pricing Reference Guides, Volume 1 – Price Analysis, Chapter 6 – Comparing Prices at the following web link to determine which price evaluation technique best fits this acquisition situation.
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