Under noncompetitive contract awards exceeding $100,000 and totaling $50 million or more per year, agencies shall use a structured approach for determining the profit objective, may prescribe exemptions, and may also use another agency's structured approach.

• A. Shall use a structured approach for determining the profit objective in those cost analysis acquisitions, may prescribe exemptions, and agencies may also use another agency's structured approach
• B. Must always rely on the lowest possible price
• C. Cannot use another agency's structured approach
• D. Is optional for noncompetitive awards

Answer: (A)

When a noncompetitive award meets the threshold of exceeding $100,000 and totals $50 million or more per year, the purchase is treated as a cost analysis situation rather than a simple price reasonableness check. In these cases, agencies are required to apply a structured approach to determine the profit objective. This structured approach provides a disciplined, standardized method to establish a reasonable contractor profit based on factors like risk, complexity, and market realities, rather than negotiating for the lowest possible price alone.

The rule also allows some flexibility: agencies may prescribe exemptions when appropriate, recognizing that there are circumstances where the structured approach may not fit perfectly. Additionally, agencies may use another agency’s structured approach if it’s suitable, promoting consistency and leveraging established interagency practices.

That is why the correct statement reflects that agencies shall use a structured approach for determining the profit objective in those cost analysis acquisitions, may prescribe exemptions, and may also use another agency’s structured approach. The other choices misstate the policy by implying price alone governs noncompetitive awards, suggesting the requirement is optional, or prohibiting use of other agencies’ approaches.