Cost Realism Law and Legal Definition

According to 48 CFR 2.101 (Title 48 - Federal Acquisition Regulations System, Chapter 1 - Federal Acquisition Regulation; Subchapter A – General; Part 2 - Definitions Of Words And Terms; Subpart 2.1 – Definitions), Cost realism means that the costs in an offeror's proposal

(1) Are realistic for the work to be performed;

(2) Reflect a clear understanding of the requirements; and

(3) Are consistent with the various elements of the offeror's technical proposal.