§ 7-2-3. Procurement Guiding Principle Three—Price reasonableness.

Subject to certain exceptions set forth in this section of the regulation, a determination of price reasonableness must be made in all procurements awarded in any source selection scheme, other than best price. The methods by which to determine price reasonableness are as follows:

A.

Prices or costs set by law or regulation —When the prices or costs included within a proposal are set by law or regulation of a governmental entity having the requisite jurisdiction and authority to set those prices or costs, then the prices or costs so set by law or regulation are deemed to meet the standard of price reasonableness.

B.

Prices or costs derived by adequate price competition —When a procurement is conducted that requires a finding of price reasonableness as a condition to the award of a contract, a finding of price reasonableness may be made if at least two (2) offers are received from offerors competing independently and the award is made to the offeror that proposes the lowest price or the award is made to the offeror that does not propose the lowest price but the difference between the awardee's price and the lowest price proposed for the procurement can be reasonably explained and justified based on other factors. "Other factors" should normally consist of the evaluation factors included within the procurement. If only one (1) offer is received, a price reasonableness determination may still be made if:

1.

The director of procurement has no reason to believe that the price or cost proposed is not reasonable; and

2.

It was anticipated that more than one (1) offer would be received.

C.

Procurement participant's history of sales at the proposed prices or costs —The potentially successful procurement participant may be asked to provide data on either the prior sales it has made of the product, service, or project at the prices or costs included in the proposal or prior sales it has made of the product, service, or project based on the prices or costs included in the proposal. In order to justify a finding of price reasonableness using the procurement participant's history of sales method, a substantial number of prior sales must have been made at the same or based on the same prices or costs included within the proposal to the procurement participant's public and/or private sector customers.

D.

Horry County experience with prior acquisitions —Horry County may use the prices or costs for which it has awarded past contracts or agreements as the basis for a determination of price reasonableness so long as:

1.

The time between the prior awarded contracts or agreements is not so great as to render such price comparisons unreasonable; and

2.

The contract or agreements being used for comparison to the offer are sufficiently similar in contract or agreement type, scope of work, and obligations of the parties that a comparison is meaningful and any differences in the prices and costs between the offer and the comparison contracts or agreements can be reasonably justified based on the similarities in the contract or agreement type, scope of work, and the obligations of the parties.

E.

Market research —In order to make a finding of price reasonableness, Horry County may use market research methods, as set forth in Chapter Five of this regulation, "Preparing for an Acquisition," to determine the prices or costs that are currently being paid in the public or private sector markets for the same or similar goods or services that are the subject of the procurement. It then may base a finding of price reasonableness on this market research information.

F.

Waiver —Based on the best interest of Horry County, the chief procurement officials may issue a written waiver of the requirement for a determination of price reasonableness in a particular procurement.

G.

Cost information —If all of the previously listed methods of determining price reasonableness cannot be used, or, when used cannot justify a finding of price reasonableness, Horry County may require that the potentially successful procurement participant submit cost information. In the event that it is necessary to use this method for determining price reasonableness, Horry County shall follow the process and require the potentially successful procurement participant to submit the cost information as set forth in Part 15 of the Federal Acquisition Regulation.

H.

[Determining price reasonableness] —The particular technique or techniques for determining price reasonableness when utilizing a specific procurement method are set forth in the regulatory structure that applies to each of the procurement methods established in this regulation.

I.

Exception —The preceding price reasonableness methods do not apply in any acquisition in which the total value of the acquisition is five thousand dollars ($5,000.00) or less, unless the Horry County official conducting the procurement reasonably believes that the price Horry County is to pay in the acquisition is unreasonable. Should such a belief arise during a transaction, the Horry County official shall use any of the price reasonableness techniques to determine the price reasonableness status of the price that Horry County is to pay in the acquisition. Further, the Horry County official involved in such an acquisition shall follow the documentation requirements set forth in the subsequent subsection of this regulation entitled, "Documentation."

J.

Documentation —In all procurements in which a finding of price reasonableness is required, the procurement file shall include a written finding of price reasonableness and a written justification for that finding. The form, nature, content, and extent of the written justification shall be determined by the director of procurement.