Navigating DLA Price Reasonableness for Non-Commercial Items

In the realm of Defense Logistics Agency (DLA) contracting, the concept of "price reasonableness" is a cornerstone of the procurement process. While commercial off-the-shelf (COTS) items have established market prices, "non-commercial" items—often specialized industrial components—require a more nuanced evaluation. Understanding how the DLA determines a fair price for these items is critical for any contractor aiming for long-term success.

The Determination Process

When an item lack a clear commercial market, the DLA contracting officer must rely on alternative methods to ensure the government is receiving a fair deal. This process is governed by the Federal Acquisition Regulation (FAR) and involves several layers of analysis:

• Adequate Price Competition: The most straightforward method. If two or more responsible bidders submit competitive offers, the price is generally considered reasonable.
• Historical Pricing: The DLA frequently looks at past purchases of the same or similar National Stock Numbers (NSNs). However, they adjust for inflation, quantity differences, and time elapsed since the last buy.
• Cost Analysis: In some cases, the DLA may request a breakdown of your labor, materials, and overhead. This "certified cost or pricing data" is typically required for higher-threshold contracts.

Strategic Positioning for Contractors

To succeed, contractors must proactively justify their pricing. Simply submitting a number is rarely enough for complex industrial parts. Providing supporting documentation—such as invoices for raw materials or records of previous sales to non-government entities—can significantly smooth the path to an award.

Accuracy in your bid is not just about being low; it’s about being defensible. If the DLA cannot find a basis for your price, they may issue a "Price Challenge," which can delay the award or lead to a rejection of the bid regardless of your technical capability.