Source Selection and Price Reasonableness
The purpose of this document is to provide guidance on purchasing best practices in use at UC Berkeley
and to help faculty and staff understand the meaning of Source Selection, Source Justification, and Price
Reasonableness.
The University's Procurement policies ensure that the expenditures of public funds support the
University’s core mission: teaching, research and public service. As a public institution, the University
must document that it spends funds prudently.
What is Source Selection?
The process of selecting a supplier of goods and/or services is called “Source Selection”. A fair and open
competition is one method of Source Selection.
What is Source Justification?
“Source Justification” is the method by which faculty and staff document that they have exercised
prudence and due care in recommending Source Selection. Source justification is required for all orders
of $5,000 or greater.
How do I provide Source Justification?
The request preparer should use the BearBuy comments feature to provide any supporting
documentation that:
i.
ii.
Define the minimum requirements for the purchase.
Explain why the supplier on the Requisition was selected.
 Lists all other potential supplier(s) who were solicited including their prices.
 Explain why they were not selected
 If multiple suppliers were not solicited, explain why.
o Do not allow suppliers to write source selection justifications. They are written to
exclude real competition and are usually considered to be evidence that competing
products do exist.
What is a Reasonable Price?
A Reasonable Price is a price that does not exceed what a prudent person would incur in the conduct of
business. A reasonable price need not be the lowest price available but it is one which offers the highest
total value to the University according to the UCOP Material Management policy, BFB-BUS-43, located
here.
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Soliciting competitive bids or quotes from qualified suppliers is the preferred method to establish a
Reasonable Price. According to State Public Contract Code and University Policy, purchase requests over
$100,000.00 must be competitively bid when competition is possible.
How do I provide evidence of a Reasonable Price?
Solicit quotations from more than one responsible supplier to demonstrate adequate market competition.
This process may be as simple as checking prices from multiple suppliers or as complex as a formal Request
for Proposal (RFP) to all known suppliers. The method will depend on the value and risk involved in the
purchase. The comments and “add attachments” features in BearBuy should be used to include
documentation of price reasonableness in the BearBuy purchase requisition. For assistance obtaining
quotations or providing other evidence of a reasonable price, please contact your department’s assigned
buyer. Your buyer can obtain quotations, develop RFPs or research sources for your projects. You are not
required to have a purchase requisition in BearBuy before you contact your buyer. You can find your
assigned buyer here.
If the department has not provided evidence of a Reasonable Price, Procurement Services will investigate
available sources and may recommend the purchase be made from another supplier.
For all purchases over $5,000.00, Procurement Services has the delegated authority to make a final
determination of Source and Price after consulting with the department.
What if there is only one supplier for this specific good or service?
When competition is not available to establish Source Selection or Price Reasonableness, other methods
may be used to determine price reasonableness including:




Market Comparison
Price Analysis or Cost Analysis
Price set by applicable law or regulation.
Experience and Judgment of the Materiel Manager or Campus Buyers.
California State Public Contract Code and the University of California Policy require competition for
purchases equal to or over $100,000.00. There is a statutory exception allowed when competition does
not exist which is detailed in the Sole Source process. A job aid on Sole Source requests can be found
here. Please use the Sole Source form and process for all orders equal to or over $100,000.00 if
competition is not available.
Resources
University of California Policy, BUSINESS AND FINANCE BULLETIN-43 Material Management
California State Public Contract Code (Section 10507 et seq).
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