How is price reasonableness determined in DoD contracting?

• A. Random sampling and guesswork.
• B. Only vendor quotes without comparison.
• C. Market analysis, competition, and historical data.
• D. Guesses based on supplier reputation.

Answer: (C)

Price reasonableness in DoD contracting is established through objective market data rather than guesswork or single-source judgments. This means looking at what the market actually offers for similar items today (market analysis), considering whether there is real competition that tends to push prices toward fair levels (competition), and using what has been paid in the past for comparable purchases to benchmark current offers (historical data). Together, these sources provide an evidence-based baseline to determine if a proposed price is fair and reasonable, and to identify any outliers that warrant further negotiation or justification.

Random sampling and guesswork don’t provide the needed data to judge fairness; they lack market context. Relying only on vendor quotes without comparing them to market or historical benchmarks ignores what price levels are typical. Basing judgments on supplier reputation alone is subjective and unreliable for price reasonableness, since reputation doesn’t guarantee that the price is fair or competitive.