FAR 14.408-2—Responsible bidder-reasonableness of price.
Plain-English Summary
FAR 14.408-2 explains two core conditions that must be satisfied before award in sealed bidding: the prospective contractor must be responsible, and the bid price must be reasonable. It also tells contracting officers they may use the price analysis techniques in FAR 15.404-1(b) as guidance when evaluating bid prices, but they must make the decision based on all prevailing circumstances rather than a rigid formula. The section places special emphasis on single-bid situations, where the contracting officer must exercise particular care because there is no competitive price comparison from multiple bids. It also requires the price analysis to address whether bids are materially unbalanced, tying the award decision to the risk that front-loaded or otherwise skewed pricing could create problems for the Government. In practice, this section is about protecting the Government from awarding to a bidder that cannot perform, or at a price that is not fair and reasonable, or under a pricing structure that could distort the value of the award over time.
Key Rules
Responsibility before award
The contracting officer must determine that the prospective contractor is responsible under FAR subpart 9.1 before making award. This means the bidder must have the capability, integrity, and reliability needed to perform the contract.
Price must be reasonable
The contracting officer must also determine that the offered price is reasonable before award. A low bid is not automatically reasonable, and a high bid may be unreasonable even if otherwise acceptable.
Use price analysis guidance
The price analysis techniques in FAR 15.404-1(b) may be used as guidelines in evaluating bid prices. These techniques are advisory here, but they provide a recognized framework for comparing prices and assessing reasonableness.
Consider all prevailing circumstances
The determination must be made in light of all prevailing circumstances. The contracting officer must use judgment and the facts of the procurement, rather than rely on a single test or mechanical rule.
Extra care with one bid
Particular care is required when only one bid is received. Without competition, the contracting officer must be especially careful to support the price reasonableness determination with other available information.
Check for material unbalancing
The price analysis must consider whether bids are materially unbalanced under FAR 15.404-1(g). A materially unbalanced bid can create risk if some line items are overstated and others understated in a way that may not be in the Government’s best interest.
Responsibilities
Contracting Officer
Determine that the bidder is responsible and that the price is reasonable before award. Use appropriate price analysis methods, consider all prevailing circumstances, give special scrutiny to single-bid procurements, and evaluate whether the bid is materially unbalanced.
Prospective Contractor / Bidder
Submit a bid that reflects a reasonable price structure and demonstrate responsibility if questioned. The bidder may need to provide information supporting its capability, financial resources, performance history, or pricing basis.
Agency
Support contracting officers with policies, market information, and acquisition oversight that help ensure responsibility and price reasonableness determinations are well documented and defensible.
Practical Implications
A low bid is not enough by itself; the contracting officer still has to confirm responsibility and price reasonableness before award.
Single-bid procurements require stronger documentation because there is no competitive benchmark to validate the price.
Material unbalancing can be a hidden risk in sealed bidding, especially when line-item pricing is uneven across the schedule.
Contracting officers should document the facts and analysis used, since the rule depends on judgment under prevailing circumstances.
Bidders should expect scrutiny not only of total price, but also of how prices are distributed across line items or CLINs.
Official Regulatory Text
(a) The contracting officer shall determine that a prospective contractor is responsible (see subpart 9.1 ) and that the prices offered are reasonable before awarding the contract. The price analysis techniques in 15.404-1 (b) may be used as guidelines. In each case the determination shall be made in the light of all prevailing circumstances. Particular care must be taken in cases where only a single bid is received. (b) The price analysis shall consider whether bids are materially unbalanced (see 15.404-1 (g)).