Independent Cost Estimate Under 2 CFR 200.324: What, When and How

A deadline, a file, and one missing date

A finance manager at a grant-funded nonprofit is preparing for a funder monitoring visit. She pulls the file for a building-systems contract awarded eight months ago, funded in part by a federal award. The proposals are there, the scoresheets are there, and the award memo is there. The monitor asks a simple question: where is the independent estimate, and when was it made?

She finds a spreadsheet tab labeled "budget" with no date and no author. Its numbers sit suspiciously close to the winning price. She cannot show whether it came before the proposals or after them, and that distinction is exactly what the rule turns on.

This guide walks through what 2 CFR 200.324 asks for, when it applies, what an independent estimate should rest on, and how to record it so the file shows its own timing. By the end you should be able to document an estimate that was clearly made before bids arrived.

What 2 CFR 200.324 requires above the simplified acquisition threshold

Under 2 CFR 200.324(a), the recipient or subrecipient "must perform a cost or price analysis for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold." The same paragraph adds that, "as a starting point, the recipient or subrecipient must make independent estimates before receiving bids or proposals." That timing is the center of the requirement.

Two ideas sit inside that sentence, and they are easy to blur.

• The cost or price analysis is the evaluation of what the price should be and whether the offered price is reasonable. It is the broader obligation.
• The independent estimate is your own figure for what the work should cost, built before any offer is in hand. It gives the analysis something to compare against.

The quotations above are from the current text of 2 CFR 200.324 on eCFR, as revised effective October 1, 2024. If you quote the rule in a written policy, cite the section and keep the date you checked it.

The estimate is part of the record, not a side document. 2 CFR 200.318(i) requires records detailed enough to show the history of each procurement, including the basis for the contract price. An estimate that is dated, attributed and sourced is one of the clearest ways to show that basis.

When the requirement applies: the $350,000 threshold

The requirement attaches above the simplified acquisition threshold (SAT). The FAR Council raised that threshold from $250,000 to $350,000 effective October 1, 2025 (FAR Case 2024-001, published August 27, 2025 at 90 FR 41872). The micro-purchase threshold moved from $10,000 to $15,000 in the same rule.

A procurement under an older award may be governed by the earlier $250,000 figure, depending on the award's terms. Record which threshold you applied and why, because a file that does not show which rule it followed at the time cannot demonstrate it applied the right one.

Three cautions matter here.

• Your own SAT may be lower. An entity sets its own simplified acquisition threshold based on internal controls, risk and documented procedures. Under 2 CFR 200.320 it "may be lower than, but must not exceed, the threshold established in the FAR."
• State and local rules may be stricter. When both apply, the stricter rule governs.
• Confirm how a change applies to your award. Ask the awarding agency or pass-through entity how the October 1, 2025 adjustment applies to your specific award.

For more on how the threshold interacts with the procurement methods, see the guide to the simplified acquisition threshold of $350,000 and the overview of 2 CFR 200.320 procurement methods.

OMB published a proposed rule on May 29, 2026 (91 FR 32198) that would revise the federal financial assistance guidance again. As of October 2026 it is proposed, not final. Confirm current status with the awarding agency before you change a policy.

What makes an estimate "independent"

Many readers assume independence means hiring an outside firm. The rule does not say so: 2 CFR 200.324(a) places the duty on the recipient or subrecipient itself to make the estimate. What makes an estimate worth having is that it was formed without the influence of anyone with a financial stake in the award, and that it does not rest only on prospective vendors' pricing.

That approach has practical consequences for how you build the file.

• Preparer. Record who prepared the estimate and confirm that person has no financial stake in the award. This connects to the conflict-of-interest rule in 2 CFR 200.318(c), which bars anyone with a real or apparent conflict from taking part in selecting or awarding the contract.
• Sources. If the only source is a vendor's budgetary quote, the estimate leans on a party with a stake in the outcome. Vendor input can inform the picture, but record what else supports the figure.
• Separation from the solicitation team's expectations. An estimate reverse-engineered from a number someone already wants to pay is not formulated independently.

If an engineering or construction consultant helped write the specifications, check whether that consultant may also compete. Under 2 CFR 200.319(b), "contractors that develop or draft specifications, requirements, statements of work, or invitations for bids must be excluded from competing on those procurements."

Why the estimate must predate the bids

The timing rule exists because an estimate made after offers are opened is no longer a test of anything. If the figure can be adjusted once the prices are known, it will tend to drift toward them. A reviewer cannot then tell whether the price was reasonable or whether the estimate was fitted to the price.

A dated record solves this. The file should let a reader reconstruct this order:

1. The estimate is prepared and dated.
2. The estimate is saved in a form that is not edited afterward, or any revision is logged with a reason.
3. The solicitation closes and offers are received.
4. Offers are compared to the estimate and the comparison is documented.

The weak points are usually mundane. A spreadsheet saved over the original, a file whose modified date reflects a later cleanup, or an email thread that does not show when the number was set can all leave the sequence unprovable. Whatever tool you use, keep a version that shows the estimate as it stood before the solicitation closed.

What to record in the estimate itself

The estimate should be a short, reviewable document, not a bare number. The aim is that someone who was not in the room can follow how you arrived at the figure. Record at least the following.

• Scope reference. The solicitation, the scope of work and any assumptions about quantity, duration or location.
• Method. Whether you built it from unit prices, labor and materials, comparable past purchases, published price lists, or a mix.
• Sources. Each source named and dated, so the reader can see where each input came from.
• Preparer and date. Who prepared it, who reviewed it, and when.
• Treatment of alternates and options. State whether the estimate covers the base scope only. If alternates or options exist, say how they were handled so the later comparison is like for like.
• Contingency or allowances. If you included any, show them separately rather than burying them in totals.

Keep the guidance qualitative. This guide does not offer market rates or benchmark prices, and neither should your template supply them. The inputs are yours to document from your own research, and the awarding agency or pass-through entity can tell you what it expects to see.

A worked example of the structure follows, using round numbers for illustration only. Suppose a facilities scope is estimated at $200,000 for labor, $90,000 for materials and $20,000 for mobilization and permits, for a total of $310,000. The estimate file would record each line, the source behind it, the preparer and the date. Those figures are invented to show the layout, not as a statement about what such work costs.

Comparing bids to the estimate, and recording the result

Once offers arrive, the estimate becomes a reference point. The 2 CFR 200.324 analysis asks whether the offered price is reasonable, and the estimate is one input to that judgment. It is not a ceiling, and a bid above it does not automatically fail. A bid well below it may also deserve a look at responsiveness and scope.

Record the comparison in a way that reads clearly.

• List each offer's evaluated price beside the estimate.
• Show the difference in dollars and as a share of the estimate, using your own arithmetic.
• Note any alternates or options excluded from the evaluated price so the comparison is like for like.
• Write down what you concluded and why, including any follow-up with an offeror about scope or assumptions.

This comparison sits alongside the tabulation itself. The bid tabulation guide covers how to lay out received bids, and the piece on price analysis versus cost analysis explains how the two analyses differ and when each fits.

Where a proposal method uses points for price, the common formula is the lowest evaluated price divided by this offer's evaluated price, multiplied by the maximum price points. As a worked example with round inputs, offers of $80,000, $100,000 and $125,000 with 30 price points yield 30, 24 and 19.2 points. The estimate does not drive those points. It supports the separate finding that the price is reasonable.

One scope note. Qualifications-based selection for architectural and engineering services under 2 CFR 200.320(b)(2)(iv) is the one case where price is not a selection factor. The recipient selects the most qualified offeror and then negotiates fair and reasonable compensation. Even there, a record of how the compensation was judged reasonable remains useful. See the guide to qualifications-based selection for architects and engineers, and confirm with the awarding agency how the cost or price analysis applies to your negotiation.

Keeping the estimate in the file and what a monitor will look for

Records connect to retention. Under 2 CFR 200.334, records are generally kept for three years from the date the final financial report is submitted, longer if litigation, a claim or an audit is started before that period ends, and local public-records rules may require longer. The estimate belongs in the procurement file with the rest of the record.

The stakes of procurement documentation are real, even if no figure here is a prediction about your own file. DHS OIG reported that, over the six years ended September 30, 2014, its audits questioned $352.3 million in FEMA Public Assistance grant costs because subgrantees, including local governments and nonprofits, did not follow federal procurement rules (OIG-16-126-D). That figure covers FEMA Public Assistance over that period only, and it describes a different program from yours. It shows that procurement files get tested.

A monitor or auditor reading your file will tend to ask a short list of questions.

• Was an estimate made, and was it made before the offers came in?
• Who prepared it, and did that person have a stake in the award?
• What did it rest on besides vendor pricing?
• How did the winning price compare, and what did the issuer conclude?

If the file answers those four questions from its own contents, the estimate has done its job.

A practical routine

• Prepare and date the estimate before the solicitation is released, or at least before any offers are received.
• Save a locked copy, and log any later revision with a reason.
• Attach the sources and the preparer's name.
• Document the comparison and your conclusion after the offers are in.
• Check your written procedures against the awarding agency's and pass-through entity's expectations.

Using a workbook to hold the estimate

A structured workbook can keep the fields above in the same place every time, so the file does not drift from one solicitation to the next. The Independent Cost Estimate Workbook is designed to record the estimate's scope, method, sources, preparer and date, and to set received bids against it in a like-for-like comparison. It is available now; see the workbook page. See pricing for plans; no prices are stated here.

A tool of this kind records and computes. It does not decide what the estimate should be, and it does not tell you whether a price is reasonable. Your staff make those judgments and document them.

RFPManagement records and computes. It does not give legal or procurement advice. The award decision stays with your organization.