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Cost-Based Pricing by Darrell J. Oyer

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CHAPTER 11

Commercial and Market-Based Pricing

This chapter addresses what the Federal Acquisition Regulation (FAR) terms commercial, catalog, and market prices. The purpose of this chapter is to compare and contrast cost-based pricing with pricing based on other than estimated costs. Cost-based pricing is subject to detailed FAR provisions that govern all Federal government contracts, whereas market pricing is dominant in the commercial marketplace. When a market price exists, the need for price reasonableness evaluations is greatly reduced, because the market (i.e., the price willing buyers and sellers agree to) establishes that the price is fair and reasonable. Existence of a valid market price renders cost-based pricing irrelevant. Various ...

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