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Electronic Code of Federal Regulations : Page 24 of 43 (e) [Reserved; (f) Contract cost and price . ( 1 ) Grantees and subgrantees must perform a cost or price analysis in connection with every procurement action including contract modifications . The method and degree of analysis is dependent on the facts surrounding the particular procurement situation , but as a starting point , grantees must make independent estimates before receiving bids or proposals . A cost analysis must be performed when the offeror is required to submit the elements of his estimated cost, e .g „ under professional , consulting , and architectural engineering services contracts . A cost analysis will be necessary when adequate price competition is lacking , and for sole source procurements , including contract modifications or change orders , unless price resonableness can be established on the basis of a catalog or market price of a commercial product sold in substantial quantities to the general public or based on prices set by law or regulation . A price analysis will be used in all other instances to determine the reasonableness of the proposed contract price . (2 ) Grantees and subgrantees wilt negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed . To establish a fair and reasonable profit , consideration will be given to the complexity of the work to be performed , the risk borne by the contractor , the contractor's investment , the amount of subcontracting , the quality of its record of past performance , and industry profit rates in the surrounding geographical area for similar work. (3 ) Costs or prices based on estimated costs for contracts under grants will be allowable only to the extent that costs incurred or cost estimates inciuded in negotiated prices are consistent with Federal cost principles (see § 31 .22) . Grantees may reference their own cost principles that comply with the applicable Federal cost principles . (4 ) The cost plus a percentage of cost and percentage of construction cost methods of contracting shall not be used . (g ) Awarding agency review. ( 1 ) Grantees and subgrantees must make available , upon request of the awarding agency , technical specifications on proposed procurements where the awarding agency believes such review is needed to ensure that the item and/or service specified is the one being proposed for purchase . This review generally will take place prior to the time the specification is incorporated into a solicitation document. However, if the grantee or subgrantee desires to have the review accomplished after a solicitation has been developed , the awarding agency may still review the specifications , with such review usually limited to the technical aspects of the proposed purchase . (2 ) Grantees and subgrantees must on request make available for awarding agency pre-award review procurement documents , such as requests for proposals or Invitations for bids , independent cost estimates , etc. when : (1) A grantee' s or subgrantee's procurement procedures or operation falls to comply with the procurement standards in this section ; or (li) The procurement is expected to exceed the simplified acquisition threshold and is to be awarded without competition or only one bid or offer is received in response to a solicitation ; or (iii ) The procurement , which is expected to exceed the simplified acquisition threshold , specifies a "brand name" product ; or ( iv ) The proposed award is more than the simplified acquisition threshold and is to be awarded to other than the apparent low bidder under a sealed bld procurement ; or (v) A proposed contract modification changes the scope of a contract or increases the contract amount by more than the simplified acquisition threshold . (3) A grantee or subgrantee will be exempt from the pre-award review in paragraph (g )(2 ) of this section if the awarding agency determines that its procurement systems comply with the standards of this section . ( i ) A grantee or subgrantee may request that its procurement system be reviewed by the awarding agency to determine whether its system meets these standards in order for its system to be certified . Generally , these reviews shall occur where there is a continuous high-dollar funding , and third-party contracts are awarded on a regular basis , http : //ecfr. at)oaccess . �y,ov/cLi/t/text/text-idx ? c=ecfr&sid=b65eO2ac51 c4d9 ,9h42h4f619eArf'4 7 /16r) om