Purchasing and Business Services Manual (PUR)

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Effective: 7/30/1976

Revised: 7/1/2018

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PUR 303–04: Cost Analysis

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Purpose

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To ensure that prices paid for goods and services are reasonable

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Source

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University policy

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Policy

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Purchasing and Business Services is responsible for determining that prices paid for goods and services are reasonable. Purchasing and Business Services procurement officers will review each procurement to ensure that the prices paid are reasonable.


Cost Analysis

Procurements of Less than $50,000

For procurements of less than $50,000, the procurement officer will use professional judgment as to whether or not the prices to be paid are reasonable. The procurement officer’s signature on the purchase document is the only evidence required that this determination has been made.

Procurements of at Least $50,000 but Less than $100,000

For procurements of at least $50,000 but less than $100,000, the procurement officer will compare quoted prices. In the event of a sole source or single bid received, the procurement officer will justify why the price is reasonable on the Informal Quote Summary Sheet.

Procurements of $100,000 or More

For procurements of $100,000 or more, the procurement officer will compare competitive bid or proposal prices. In the event of a sole source, the procurement officer may request from the sole source supplier a written quotation and a price warranty form. The procurement officer also may compare the price lists of similar suppliers, or compare the quoted price to the previously determined target price. If the procurement officer determines that the price is not reasonable, the procurement officer will request detailed cost and/or price data from the proposed supplier.

Single Bid Received in Procurements of $100,000 or More

For those formal solicitations where only a single bid is received, the procurement officer may review:

  1. current market prices
  2. General Services Administration (GSA) price schedules
  3. prices previously paid
  4. price lists of manufacturers of similar equipment

    and

  5. a previously established target price, if applicable.

If the procurement officer does not consider the quoted price reasonable, he or she will request detailed cost and pricing data from the proposed supplier.


Documentation

The contract file for procurements costing more than $100,000 that require a cost analysis must contain a statement that the procurement officer has reviewed the quoted prices and considers the price reasonable. The statement should contain the comparable prices used to make this determination.

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Cross-References

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For information on sole source procurements, see PUR 303–02, “Sole Source Procurement/Justification.”

For information on small dollar value procurements, see the policies under PUR 304, “Small Dollar Orders.”

For cost analysis information on used equipment purchases, see PUR 401–05, “Used Equipment.”

For authoritative references, see the Research and Sponsored Projects Policies and Procedures ManualRSP 101, “General Research Policy.”


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