§ 200.324 - Contract cost and price.

§ 200.324 Contract cost and price.

(a) The non-Federal entity recipient or subrecipient must perform a cost or price analysis in connection with for every procurement action transaction, including contract modifications, in excess of the Simplified Acquisition Threshold including contract modificationssimplified acquisition threshold. The method and degree of analysis is dependent conducted depend on the facts surrounding the particular procurement situation, but transaction. For example, the recipient or subrecipient should consider potential workforce impacts in their analysis if the procurement transaction will displace public sector employees. However, as a starting point, the non-Federal entity recipient or subrecipient must make independent estimates before receiving bids or proposals.

(b) The non-Federal entity must negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration must be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work.

(c)

Costs or prices based on estimated costs for contracts under the Federal award are allowable only to the extent that the costs incurred or cost estimates included in negotiated prices would be allowable for the

non-Federal entity

recipient or subrecipient under subpart E of this part. The

non-Federal entity

recipient or subrecipient may reference its own cost principles

that

as long as they comply with

the Federal cost principles

subpart E of this part.

(

d

c) The

cost

recipient or subrecipient must not use the “cost plus a percentage of

cost

cost” and

percentage

“percentage of construction

cost

costs” methods of contracting

must not be used

.