Md. Code Regs. 21.09.01.04

Current through Register Vol. 52, No. 1, January 10, 2025

Section 21.09.01.04 - Reasonable Costs

A. Any cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by an ordinarily prudent person in the conduct of competitive business in that industry.

B. In determining the reasonableness of a given cost, consideration shall be given to:

(1) Requirements imposed by the contract terms and conditions;

(2) Whether the cost is of a type generally recognized as ordinary and necessary for the conduct of the contractor's business or the performance of the contract;

(3) The restraints inherent in, and the requirements imposed by, these factors as generally accepted sound business practices, arms' length bargaining, and federal and State laws and regulations;

(4) The action that a prudent business manager would take under the circumstances, including general public policy and considering responsibilities to the owners of the business, employees, customers, and the State;

(5) Significant deviations from the contractor's established practices which may unjustifiably increase the contract costs; and

(6) Any other relevant circumstances.

Md. Code Regs. 21.09.01.04