Fair and Reasonable (F&R) Acquisition Method Purchases - 1510

(Revised: 05/2025)

Policy

Fair and Reasonable Acquisition Method

State agencies may conduct acquisitions and execute contracts using the Fair and Reasonable (F&R) Acquisition Method for transactions valued less than $10,000.00. An NCB is not required when using the F&R acquisition method.

When using this acquisition method, it is required that the pricing be evaluated and determined fair and reasonable by following one of the techniques outlined in the technique table provided below.

Procedure

Techniques to Determine Fair and Reasonable Pricing

Technique	Description
Price Comparison	A buyer has obtained and documented quotes or offers within the prior 18-month period from other responsible suppliers, which provides evidence that a price obtained is deemed fair and reasonable.
Catalog or market pricing	The price offered is supported by an established and verifiable catalog or market pricing media issued by a responsible supplier and/or through an established reputable forum.  In addition, the pricing structure provided is one that a prudent buyer would accept as a reasonable representation of existing market value.
Controlled pricing	The price offered is set by law or regulation; competitively bid master agreement or statewide contracts, etc.
Historical pricing	A buyer is able to demonstrate that other transactions occurring within a prior 18-month period, which shows historical prices for similar acquisitions have yielded no material change in cost. Note:  The definition of “material change” for this technique is deemed greater than a 15% increased difference between current and historical pricing.
Cost/benefit analysis	A buyer can demonstrate that their level of experience in the procurement field provides a sufficient knowledge base, which clearly indicates that the acquisition cost is low. The cost to the state of verifying the pricing fairness would most likely be more than any potential benefit that could be reasonably gained from searching the marketplace for lower price comparable acquisitions.

Compare Identical Situations

When evaluating fair and reasonable pricing using price comparisons, catalog/market price and/or historical pricing, buyers must base the comparisons on identical situations or those with small variations that do not affect pricing.

Exceptions

State agencies shall not use the F&R Acquisition Method to purchase customized non-IT goods and/or IT goods requiring detailed specifications. Below are examples:

Non-IT Goods:

1. Vending Machines
2. Woodchippers

IT Goods:

1. Customized Servers
2. Customized Workstations

Contracting with California Certified Small Businesses (SB), Microbusiness (Micro), and Disabled Veteran Business Enterprise (DVBE) Firms

When possible, use this acquisition method to contract with SB, Micro, DVBE.  

Expand the pool of California certified Small Business (SB), Microbusiness (Micros) and Disabled Veteran Business Enterprise (DVBE) firms participating in state contracts by regularly seeking out and identifying certified firms that have not previously done business with, or that are not regularly used by the awarding department and other state agencies, and include those SBs, Micros and DVBEs when using this acquisition method.

File Documentation

By using the F&R Acquisition Method, state agencies shall document the technique used to support the F&R pricing. Documentation shall be maintained within the procurement file. Click here to access the F&R Checklist for transactions under $10,000.00.

Legal Reference

Assembly Bill No 1574, Chapter 756

Government Contract Code, Section 14838(f)

Government Contract Code, Section 14838.5(a) and (b)

Related Policy, Procedures & Resources

Broadcast Bulletin, P-11-22, NEW Requirement to Expand the Pool of Small Businesses and Microbusinesses in State Contracts/Procurements

State Contracting Manual (SCM), vol. 2, Section 1405.3, SB/DVBE Option

State Contracting Manual (SCM), vol. 2, Section 1602, Leveraged Procurement Agreement (LPA) Basics

State Contracting Manual (SCM), vol. 2, Section 1510, Fair and Reasonable (F&R) Acquisition Method Purchases

Attachments

None.