A joint venture or SBU commonly purchases materials, supplies, and services from its co-venturers/parent and such recovery is limited by the "Materials" costs regulation. The cost principle allows transfers at price (including profit) rather than cost only when (1) it is the established practice of the transferring organization to price its interorganizational transfers at other than cost (2) the item being transferred qualifies for an exemption under FAR 15.804-1 (e.g. established catalog or market prices, commercial item) and (3) the CO has not determined the price to be unreasonable.
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