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Sunstrider

Christian Doctrine for defective pricing actions?

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Assume:

  • The Government relied upon certified cost or pricing data to award a particular contract and/or mod.
  • The conditions under which the Government is entitled to a price adjustment for a sum certain are met.
  • The clauses at 52.215-10 Price Reduction for Defective Certified Cost or Pricing Data and 52.215-11 Price Reduction for Defective Certified Cost or Pricing Data - Modifications were both missing due to negligence of the CO.

FAR 15.407-1(b)(1) emphasizes that the above clauses entitle the Government to demand a contractual price reduction. Therefore, in the absence of these clauses, there is no remedy available in such circumstances.

My question is, wouldn't the courts read in clauses 52.215-10/52.215-11 into the contract? Is the right to price reduction not always effective by operation of sovereign Government law regarding certified cost or pricing data?

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51 minutes ago, Sunstrider said:
  • My question is, wouldn't the courts read in clauses 52.215-10/52.215-11 into the contract? Is the right to price reduction not always effective by operation of sovereign Government law regarding certified cost or pricing data? 

 My recollection is that Courts and Boards have generally indicated the answer to your 1st question is "yes" it should. Not sure what you are asking in your 2nd question. Are you asking whether a Court, Board, arbitrator, auditor, Contracting Officer or similar body or person may say or think otherwise? Sometimes making this effective may require significant time and money to litigate. There is no magic wand out there that you waive at everyone to change their mind immediately. One hopes that Courts and Boards and others would follow legal precedent. DCAA Contract Audit Manual 14.112-1 indicates the the answer to your 1st question is "yes." Not sure I answered your question.

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FAR 15.408-(b) and (c) prescribe the inclusion of one or the other clause but not both.

In addition, there is some discretion in whether the Price Reduction for Defection Pricing - Modifications clause would be included.  It would be included when the -10 clause is not in the contract - I.e., when cost or pricing data were not required for establishing the initial price of the contract AND there was contemplation that modification might require cost or pricing data. 

The -10 clause would have been required if the initial price of the contract negotiated and if cost or pricing data were required for that action. In that case, I think that the Christian Doctrine might be applicable but I didn’t research case law...

I think it depends upon whether the -10 clause was required to be included.

 If the initial contract award required cost or pricing data, then the -10 clause was required . If the initial award was exempt from cost or pricing data, then the -10 clause wasn’t required .

Then the -11 clause should have been included —- if the KO contemplated that mods subject to cost or pricing would be required. I don’t think that the -11 clause was “required” if the KO didn’t contemplate mods subject to cost or pricing data. 

Some research of case law would seem to be necessary. 

I found this note on slide 5 of a DoDIG briefing on DefectivePricing Material Pricing Deficiencies at http://www.dodig.mil/Portals/48/Documents/Components/PO/APO/Fraud-Resources/CAFraudScenarios/MaterialPricingDeficiencies.pdf

“2.  Absence of a price reduction clause in a contract does not prevent an auditor from performing a postaward audit for defective pricing. Under the “Christian doctrine” a contractor is bound by a required clause even when the clause is omitted from the contract. The auditor should contact the contracting officer to verify that the contract is a negotiated procurement and subject to a defective pricing clause.”

 

 

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