Price analysis is used when:

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 looks at the price itself and uses market data, catalogs, prior purchases, and other price sources to judge whether the price is reasonable, without examining the underlying cost details. It is used when certified costs or pricing data are not required, because you can determine fairness from the price and external market information alone. If certified cost or pricing data are required, the government typically conducts cost analysis to examine each cost element and how they add up to the proposed price. The other scenarios either involve situations where price data aren’t enough to establish reasonableness (needing cost data) or are governed by statutory pricing where negotiation and analysis aren’t the mechanism for setting price.