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Desk reference

Price reasonableness, cost realism, and tradeoff premiums

Terms for reading technical, staffing, and price volumes as one offer — and for , unbalanced pricing, and value analysis.

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Price reasonableness and cost realism

Price reasonableness asks whether the price is too high. Cost realism (typically on cost-reimbursement work) asks whether proposed costs are realistic for the work and may support a probable-cost adjustment. Professional-compensation evaluation under FAR 52.222-46 separately probes whether compensation undermines the staffing story you sold. Run an integrated green-team/pricing review that reads solution, labor, compensation, and allocation as one model before final production. If the staffing narrative cannot survive the compensation and hours in the price volume, change one of them — do not hope evaluators miss the seam.

Watch for

Don't confuse reasonableness with realism — they are not synonyms. "Technical importance" does not compel the agency to accept any premium under a tradeoff. The trap is hiding cash-flow preferences through materially unbalanced CLIN pricing and calling it a pricing strategy.

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Tradeoff premium

Under a tradeoff, a premium belongs in the offer only when it maps to strengths the 's factors can credit and the decision can document. Under , extras that raise price without reducing the risk of unacceptability are usually dead weight. Tie every dollar of premium to an M-factor benefit someone can defend in the narrative.

Watch for

Don't confuse front-loading transition to improve cash flow — while underpricing uncertain later work — with "aggressive pricing." The trap is imbalance the solicitation and FAR 15.404-1(g) can treat as unacceptable risk.

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