Price analysis is used when:

• A. The certified costs or pricing data are not required
• B. The certified costs or pricing data are required
• C. The procurement is for a commercial item
• D. The price is fixed by law

Answer: (A)

Price analysis examines the proposed price itself, comparing it to known market prices, catalogs, prior contract prices, and other external data, without digging into the contractor’s detailed cost elements. This approach is used when certified costs or pricing data are not required, because you can assess reasonableness based on market information rather than cost detail. If certified cost or pricing data are required, cost analysis becomes necessary to verify the validity of the cost elements and the overall price. While commercial-item procurements and prices fixed by law can influence how price analysis is applied, the key trigger for using price analysis is the absence of a requirement for certified cost data.