When Does Cost or Pricing Data need to be Certified, and What does that Mean?
January 19, 2024
At a glance:
- The main takeaway: Most FAR Part 15 procurements require the submission of accurate cost or pricing data, but many contractors aren’t aware of what that entails or why it’s so important to the process.
- The impact on your business: Government contractors seeking bigger, more valuable contracts need to understand the importance of cost or pricing data and how to produce it in a timely and FAR-compliant way.
- Next steps: Get an overview of this part of the procurement process, then reach out to Aprio’s Government Contract Compliance team for more information, answers and help with FAR and CAS compliance.
Schedule a consultation with Aprio’s Government Contract Compliance team today.
The full story:
Almost all FAR Part 15 procurements require the contractor to submit cost or pricing data, defined in the FAR as all factual and verifiable factors that prudent buyers would expect to significantly affect price negotiations as of the date of the price agreement.
If the proposal is for $2 million or more, the Truthful Cost or Pricing Data Act, more commonly known by its former name, the Truth in Negotiation Act or TINA, requires the contractor to certify the cost or pricing data as accurate, current and complete, unless an exception to the requirement applies. The most common exception is adequate price competition, which includes best-value awards if price is a substantial evaluation factor. Cost or pricing data that does not need to be certified is officially known as “other than cost or pricing data.”
If the contracting officer believes certified cost or pricing will be required, the provision at FAR 52.215-20 will be included in the solicitation, requiring the contractor to certify their cost or pricing data unless they can show an exemption applies. The cost and pricing data must be submitted per the instructions on Table 15-2 of FAR 15.408, unless the solicitation requires a different format. The certification should be submitted as close to the final agreement on price as possible.
While the format for submitting cost or pricing data may vary, the wording of the certification is set in FAR Subpart 15.406-2 and copied below.
Certificate of Current Cost or Pricing Data
This is to certify that, to the best of my knowledge and belief, the cost or pricing data (as defined in section 2.101 of the Federal Acquisition Regulation (FAR) and required under FAR subsection 15.403-4) submitted, either actually or by specific identification in writing, to the Contracting Officer or to the Contracting Officer’s representative in support of ________* are accurate, complete, and current as of ________**. This certification includes the cost or pricing data supporting any advance agreements and forward pricing rate agreements between the offeror and the Government that are part of the proposal.
Firm _____________________________________________
Signature _________________________________________
Name ____________________________________________
Title _____________________________________________
Date of execution***________________________________
* Identify the proposal, request for price adjustment, or other submission involved, giving the appropriate identifying number (e.g., RFP No.).
** Insert the day, month, and year when price negotiations were concluded and price agreement was reached or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price.
***Insert the day, month, and year of signing, which should be as close as practicable to the date when the price negotiations were concluded, and the contract price was agreed to.
(End of certificate)
The requirement to submit certified cost or pricing data increases the compliance risk in two ways. Initially, filing a false certification is always a bad idea and will likely result in legal liability, contract loss or penalty. Most contractors implement a “sweep” process prior to signing a certificate of current cost or pricing data to ensure that all pertinent employees agree that all cost or pricing data has been disclosed.
The second risk area is known as “defective pricing.” Contracts awarded based on the submission of certified cost or pricing data will contain FAR 52.215-10. Per this clause, if the contract price significantly increased because the cost or pricing data was not complete, accurate and current, then the contracting officer can unilaterally reduce the contract price. Please note, prime contractors must obtain certified cost or pricing data from their subcontractors unless an exception applies and flow down FAR 52.215-20.
Navigating the complexities of Government contracting can be challenging and time-consuming without the right partner. Aprio helps Government contractors comply with cost account standards (CAS), maintain eligibility for Government contracts and ensure accurate and reliable financial reporting.
Connect with our dedicated Government Contract Compliance team today for help with all your CAS compliance-related needs.
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