What determines if a cost is considered reasonable according to the December 2014 OMB Uniform Guidance?

The determination of whether a cost is considered reasonable according to the December 2014 OMB Uniform Guidance hinges on the alignment with a prudent person's decision-making standards. This means that for a cost to be seen as reasonable, it should reflect the judgment and actions that a sensible individual would exhibit in a similar situation. This includes evaluating the necessity and appropriateness of the expense in relation to the overall project or purpose being funded.

Reasonable costs are measured by how they would compare in the eyes of a rational decision-maker making choices with their own funds. This takes into account factors such as market conditions, the nature of the goods or services, and any unique circumstances surrounding the expenditure. In essence, costs should not be exorbitant or excessive relative to the context in which they are incurred but should instead be defensible and justifiable in their necessity.

In this sense, the focus on prudent decision-making ensures that funds are used effectively and efficiently, aligning with the principles of good public sector financial management.