Jump to content
The Wifcon Forums and Blogs

Recommended Posts

Under 10 U.S.C. 2306A(a)(A) an offeror for a prime contract is required to submit cost or pricing data if the price of the contract is expected to exceed the threshold amount. Under 10 U.S.C. 2306a(D)(2) a person required to submit cost or pricing data shall be required to certify that data as being accurated, complet, and current.

What if the proposal for a modification was above the threshold and cost and pricing data was submitted, but the negotiated amount was below the threshold? Would certication be required? The literal wording of the statute would seem to so require.

Link to comment
Share on other sites

Guest Vern Edwards

The literal wording of FAR 15.406-2(a) could be read to either (1) require the certificate anyway or (2) to permit the contracting officer to not require the certificate. FAR 15.406-2(e) seems to say that the CO must get the certificate unless one of the exceptions (see FAR 15.403-1) has been found to apply.

I don't think you can sort this out by reading the statute or regulation. The CO can do what he or she wants, consistent with the agency's policy. Keep in mind, however, that the CO can't go wrong by requiring the certificate.

Link to comment
Share on other sites

Under 10 U.S.C. 2306A(a)(A) an offeror for a prime contract is required to submit cost or pricing data if the price of the contract is expected to exceed the threshold amount. Under 10 U.S.C. 2306a(D)(2) a person required to submit cost or pricing data shall be required to certify that data as being accurated, complet, and current.

What if the proposal for a modification was above the threshold and cost and pricing data was submitted, but the negotiated amount was below the threshold? Would certication be required? The literal wording of the statute would seem to so require.

Look at 15.406-2(e) and see if that helps. Also, if the pricing action turns out to be less than the TINA threshold and you do require a certificate, do you think the certificate would entitle you to a price adjustment if the data turn out to be defective?

Link to comment
Share on other sites

Guest Vern Edwards
f the pricing action turns out to be less than the TINA threshold and you do require a certificate, do you think the certificate would entitle you to a price adjustment if the data turn out to be defective?

Yes.

Link to comment
Share on other sites

Guest Vern Edwards

I know of no regulation, contract clause, board of contract appeals decision, or court decision to the effect that the government is not entitled to a price reduction for defective pricing if the negotiated price ends up being lower than the TINA threshold. Do you? The defective pricing clause says nothing to that effect.

The requirement to submit cost or pricing data turns on an expectation. That expectation must be formed prior to negotiations, because the purpose of TINA is to ensure that the CO has certain information during negotiations. If a CO expects that the contract value will exceed the threshold, and if no exception applies, then he must ask for it and, presumably, he will rely upon it during negotiations. It does not matter that the CO ultimately agrees to a price that is lower than the threshold. Neither the statute nor the regulation says that the contractor need not certify the data if the negotiated price ends up being less than the TINA threshold, and neither the statute nor the FAR says that the government is not entitled to a price reduction for defective pricing in that case.

If (a) the CO properly asked for cost or pricing data based on his initial expectation, (B) the contractor submits a proposal priced in excess of the TINA threshold, ( c) the CO relied on the data in order to reach an agreement priced below the threshold, (d) the contractor certifies the data, (e) the data turn out to have been defective, and (f) relying on the data, the CO negotiated a higher price than he otherwise would have, even though it is below the threshold, then the government was still the victim of defective pricing and should get a price reduction. If, on the other hand, an exception is found to have applied, then the CO cannot ask for certification, because the exceptions are statutorily mandatory. But failure to realize an expectation is not one of the exceptions. As for FAR 1.108( c), I do not interpret "final anticipated dollar value" to mean actual realized dollar value or the last anticipation in a series of anticipations. I interpret it to mean the amount thai is anticipated to be the final value of the contract when all pending actions have been completed, including the issuance of all orders and the exercise of all options.

I think that if a CO requires submission of cost or pricing data and then gets a proposal priced below the TINA threshold, including options, etc., then he should withdraw the requirement and treat any cost or pricing data submitted as other than cost or pricing data.

Link to comment
Share on other sites

Every place I've worked as a contractor, the practice has been to certify cost or pricing data after, and as of the date of, the handshake on price. Actual submittal of the certificate then follows a sweep.

I'm wondering what the purpose of performing a sweep AFTER the date of price agreement would be?

H2H

Link to comment
Share on other sites

Guest Vern Edwards

I think it's fairly common practice to conduct or complete a sweep AFTER price agreement but before certification. Actually, a sweep could be effective even if completed after certification, as long as its done before the contract is signed. For a discussion, see Bodenheimer, Defective Pricing Handbook, 2010 - 2011 ed. (West 2010), p. 145.

The purpose of the sweep is to ensure that all data available as of the date of agreement have been identified and submitted. That being the goal, it's best to wait until agreement has been reached before conducting the sweep.

Link to comment
Share on other sites

I think it's fairly common practice to conduct or complete a sweep AFTER price agreement but before certification. Actually, a sweep could be effective even if completed after certification, as long as its done before the contract is signed. For a discussion, see Bodenheimer, Defective Pricing Handbook, 2010 - 2011 ed. (West 2010), p. 145.

The purpose of the sweep is to ensure that all data available as of the date of agreement have been identified and submitted. That being the goal, it's best to wait until agreement has been reached before conducting the sweep.

Vern,

I take your points. My concern was in considering what would happen if the sweep (performed after agreement on price) found that certain certified cost or pricing data were not accurate, complete, or current? The price was already agreed to. All the contractor would be doing would be documenting its own defective pricing. Whereas, were the sweep performed prior to the handshake, the risk of defective pricing would be reduced, because any new information could be disclosed prior to the handshake.

That was (and still is) my thinking, anyway.

H2H

Link to comment
Share on other sites

Guest Vern Edwards

There can be no defective pricing until the contract is signed and the defective pricing clause takes effect. The signing of the contract will take place some time after agreement has been reached on price, perhaps as long as a month or two, depending on the dollar value. If the contractor discovers that the data it submitted were not accurate, complete, or current as of the date of price agreement, but prior to certification and/or signing of the contract, it notifies the contracting officer and lets the CO decide if negotiations must be reopened. It would be an inconvenience, to be sure, but not defective pricing.

Since the obligation to submit continues up to the date of price agreement, a sweep completed prior to agreement might not disclose all data that were not submitted, but should have been. In any case, it appears to be standard procedure to do the sweep after price agreement but before certification.

Link to comment
Share on other sites

Even in these days of sophisticated automation, there are times when it takes days for an incurred cost to hit the system and become visible to more than the few who are directly involved with it, so the timing of the sweep has to allow for such trailing costs.

Hi Cajuncharlie,

Not sure if your post was directed at me or not, but I'm not clear on the linkage between incurred costs and TINA disclosures. Could you please elaborate?

Thanks

H2H

Link to comment
Share on other sites

Guest Vern Edwards

Well, an invoice from a supplier received the day before price agreement indicating that the prospective contractor had reached a purchase level that entitled it to a quantity price discount for future purchases of a material item to be used on the prospective contract being negotiated would be cost or pricing data.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...