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Certification of Cost or Pricing Data under IDIQ Contracts

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Hypothetical Situation.

A contractor has an IDIQ contract spanning 10 years. The customer has requested a change to one of the pieces of hardware that can be ordered off the IDIQ table. The negotiated price for the change is $100K. The customer could potentially (at the highest quantity on the IDIQ table) order 10 of the changed items. What is the requirement for certification of the $100K change?

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It appears that the more appropriate question for you would be "What is the price of the change?"

Regardless, I believe that Navy has provided the source of the answer to your original question.

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Thank you. A follow-up question:

FAR 108.1© reads:

© Dollar thresholds. Unless otherwise specified, a specific dollar threshold for the purpose of applicability is the final anticipated dollar value of the action, including the dollar value of all options. If the action establishes a maximum quantity of supplies or services to be acquired or establishes a ceiling price or establishes the final price to be based on future events, the final anticipated dollar value must be the highest final priced alternative to the Government, including the dollar value of all options.Regarding when certification of current cost or pricing data is required paragraph (a) of FAR 52.215-11--Price Reduction for Defective Certified Cost or Pricing Data - Modifications reads:

(a) This clause shall become operative only for any modification to this contract involving a pricing adjustment expected to exceed the threshold for submission of certified cost or pricing data at FAR 15.403-4, except that this clause does not apply to any modification if an exception under FAR 15.403-1 applies.

Is it correct that for an ECP negotiated at a price of $100K (doesn't meet the threshold for certification) under an IDIQ contract with the highest quantity that may be ordered of 15, that you have to look at 15 x $100K (or $1.5M) when determining the threshold for providing a certification of current cost or pricing data?

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Thank you. A follow-up question:

FAR 108.1( c) reads:

( c) Dollar thresholds. Unless otherwise specified, a specific dollar threshold for the purpose of applicability is the final anticipated dollar value of the action, including the dollar value of all options. If the action establishes a maximum quantity of supplies or services to be acquired or establishes a ceiling price or establishes the final price to be based on future events, the final anticipated dollar value must be the highest final priced alternative to the Government, including the dollar value of all options.

Regarding when certification of current cost or pricing data is required paragraph (a) of FAR 52.215-11--Price Reduction for Defective Certified Cost or Pricing Data - Modifications reads:

(a) This clause shall become operative only for any modification to this contract involving a pricing adjustment expected to exceed the threshold for submission of certified cost or pricing data at FAR 15.403-4, except that this clause does not apply to any modification if an exception under FAR 15.403-1 applies.

Is it correct that for an ECP negotiated at a price of $100K (doesn't meet the threshold for certification) under an IDIQ contract with the highest quantity that may be ordered of 15, that you have to look at 15 x $100K (or $1.5M) when determining the threshold for providing a certification of current cost or pricing data?

You said that the ID/IQ contract provides for the government to be able to purchase up to 15 pieces of some hardware and that the price of each piece has been changed by $100k. Was the change for only 1 unit or does it apply to the entire "ID/IQ table" quantity (whatever that means)?

It would appear that the actual change would affect up to 15 units for a $1.5 effect in increased cost, "If the action establishes a maximum quantity of supplies or services to be acquired or establishes a ceiling price or establishes the final price to be based on future events". In this case, "future events" would appear to occur if the government purchases additional units, assuming that the "Table" price has changed for each one.

I suppose I should also ask if some exception under FAR 15.403-1 applies (e.g., if these are commercial items)...

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There is not an exception under FAR 15.403-1.

An ECP has been negotiated, for a price of $100K, that affects one of the items (item XYZ) the govenrment can purchase under the IDIQ contract. There are numerous other items the government can purchase under the IDIQ contract

The range pricing for Item XYZ is:

1-5

6-10

11-15

A formula determines the pricing of the $100K ECP for the range quanties of 1-5, 6-10 and 11-15.

Question is: How is the threshold for certifying cost or pricing data determined in the above scenario? You won't know the ultimate price until the government places an order.

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There is not an exception under FAR 15.403-1.

An ECP has been negotiated, for a price of $100K, that affects one of the items (item XYZ) the govenrment can purchase under the IDIQ contract. There are numerous other items the government can purchase under the IDIQ contract

The range pricing for Item XYZ is:

1-5

6-10

11-15

A formula determines the pricing of the $100K ECP for the range quanties of 1-5, 6-10 and 11-15.

Question is: How is the threshold for certifying cost or pricing data determined in the above scenario? You won't know the ultimate price until the government places an order.

Per FAR 1.108, I would calculate "the highest final priced alternative to the Government." Unless your pricing arrangement provides for cumulative pricing, I would assume the 15 units all might be ordered in lots of 1-5. Then I would multiply 15 x the unit price adjustment for 1-5 units, and compare the result to the CC/PD threshhold. If the contract provides for cumulative pricing, then I would multiply 15 x the unit price adjustment for 11-15 units.

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There is not an exception under FAR 15.403-1.

An ECP has been negotiated, for a price of $100K, that affects one of the items (item XYZ) the govenrment can purchase under the IDIQ contract. There are numerous other items the government can purchase under the IDIQ contract

The range pricing for Item XYZ is:

1-5

6-10

11-15

A formula determines the pricing of the $100K ECP for the range quanties of 1-5, 6-10 and 11-15.

Question is: How is the threshold for certifying cost or pricing data determined in the above scenario? You won't know the ultimate price until the government places an order.

Researching,

You said above that each item was affected by $100k. Now, you've introduced price ranges. I think you still mean that each unit will cost $100k more or $100k less or the absolute value of increases and decreases due to the change in the hardware item is $100k per unit.

You dribble out additional information. Either you haven't told us everything or it may simply be that you don't understand the expression "If the action establishes a maximum quantity of supplies or services to be acquired or establishes a ceiling price or establishes the final price to be based on future events".

You won't know the ultimate price until the government places an order or multiple orders ("the final price to be based on future event(s)"). There could be order(s) for up to ("a maximum quantity of") 15 units. Therefore, this seems to fit the criteria described above for "a dollar threshold" in FAR 108.1( c).

I am assuming that the government can make multiple orders under an Indefinite Delivery/Indefinite Quantity contract.

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