Determination of fair market price
Contracting officers must use FAR 15.404-1(b) guidelines to determine fair market price for all small business set-asides and preferences, ensuring fair and consistent pricing.
Overview
FAR 19.202-6 outlines how contracting officers must determine the fair market price for various types of small business set-asides and preference programs. The section directs that fair market price should be established using the reasonable price guidelines found in FAR 15.404-1(b), ensuring consistency and fairness across different small business programs. It specifically applies to total and partial small business set-asides, HUBZone set-asides and preferences, SDVOSB set-asides, and WOSB/EDWOSB set-asides. For 8(a) contracts, contracting officers must follow the procedures in FAR 19.807 to meet both the requirements of 19.806(b) and to accurately estimate the current fair market price. This ensures that awards under these programs are made at prices that are fair to both the government and the contractor, supporting competition and value.
Key Rules
- Use of Reasonable Price Guidelines
- Fair market price for set-asides and preference programs must be determined using FAR 15.404-1(b) guidelines.
- Applicability to Multiple Programs
- Applies to small business, HUBZone, SDVOSB, and WOSB/EDWOSB set-asides and preferences.
- Special Procedures for 8(a) Contracts
- Contracting officers must use FAR 19.807 procedures for 8(a) contracts to ensure compliance and accurate pricing.
Responsibilities
- Contracting Officers: Must determine fair market price using specified guidelines and procedures for each applicable program.
- Contractors: Should be aware that their pricing will be evaluated against these standards.
- Agencies: Must ensure oversight and compliance with pricing determination procedures.
Practical Implications
- Ensures that small business set-asides and preference contracts are awarded at fair and reasonable prices.
- Promotes consistency in pricing determinations across various small business programs.
- Common pitfalls include failing to use the correct guidelines or procedures, which can result in noncompliance or protest.