Question

What is the difference between a contractor and the government’s definition of a reasonable cost?

Answer 1

Contractor: Contractor is an individual or vendor that has entered into an agreement to provide goods or services to an agency. General contractors get paid by taking a percentage of the overall cost of the completed project. Some will charge a flat fee, but in most cases, a general contractor will charge between 10 and 20 percent of the total cost of the job. This includes the cost of all materials, permits and subcontractors

Government: A fair and reasonable price determination is an assessment by the Government that an offeror's proposed price for a supply or service can be considered “fair and reasonable” on the basis of applying one or more price analysis techniques.The Federal Acquisition Streamlining Act (FASA) of 1994 established a preference for the types of information used to assess price reasonableness Fair and reasonable price determinations are used for evaluating quotations, bids, and proposals for the source selection decision. They are also used during sole-source negotiations. The policy of the U.S. Government is to contract for supplies and services at fair and reasonable prices. While buyers in the private sector are also interested in paying fair and reasonable prices, it is particularly important in Government procurement because of the scrutiny that Congress and the general public places on Government procurement. The Government is also interested in fair and reasonable price determinations to promote a healthy and efficient competitive sourcing environment.