Overview
This section prescribes the policies and procedures for obtaining certified cost or pricing data, establishing the "Truth in Negotiations" framework to ensure the Government pays fair and reasonable prices when competition is absent. It defines the mandatory thresholds for certification, specific prohibitions on requesting such data, and the criteria for granting exceptions.
Key Rules
- Threshold for Submission: Certified cost or pricing data is generally required for negotiated actions (contracts, subcontracts, or modifications) exceeding $2.5 million for actions awarded on or after July 1, 2018.
- Mandatory Exceptions: Contracting officers shall not require certified cost or pricing data when:
- Prices are based on adequate price competition (typically two or more responsible, independent offerors).
- Prices are set by law or regulation.
- A commercial product or commercial service is being acquired.
- A waiver is granted by the Head of the Contracting Activity (HCA).
- The Absolute Value Rule: For modifications, the threshold applies to the sum of the absolute value of increases and decreases (e.g., a modification with a $1.5M increase and a $1.1M decrease totals $2.6M and requires certified data).
- Prohibition Below SAT: Certified cost or pricing data must never be obtained for acquisitions at or below the Simplified Acquisition Threshold (SAT).
- Data Other Than Certified Cost or Pricing Data: If an exception to certification applies, the Contracting Officer is still required to obtain "data other than certified cost or pricing data" to the extent necessary to determine price reasonableness.
- Certification Requirement: When required, the contractor must submit a "Certificate of Current Cost or Pricing Data" certifying that the data is accurate, complete, and current as of the date of agreement on price.
Practical Implications
- Compliance Risk: Contractors must maintain sophisticated accounting systems to ensure the data supporting a proposal is "accurate, complete, and current," as failure to do so can lead to "defective pricing" claims and subsequent contract price reductions.
- Strategic Disclosure: Even when exempt from certification (such as in commercial item acquisitions), contractors must be prepared to provide uncertified "other than" data, including sales history and labor/material breakdowns, to satisfy the Government’s price reasonableness mandate.