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4 hours ago, Retreadfed said:

If you look at 15-2, you will see that it really does not provide instructions for most of the data that would be considered cost or pricing data.  For example, this is what 15-2 says about the submission of cost or pricing data in regard to indirect cost rates "Indicate how you have computed and applied your indirect costs, including cost breakdowns. Show trends and budgetary data to provide a basis for evaluating the reasonableness of proposed rates. Indicate the rates used and provide an appropriate explanation."  Obviously, this would not come close to covering all data that would be considered cost or pricing data relating to the indirect costs a contractor may incur.

Similarly, in regard to direct labor, 15-2 says "Provide a time-phased (e.g., monthly, quarterly, etc.) breakdown of labor hours, rates, and cost by appropriate category, and furnish bases for estimates."  Again, this clearly does not encompass most of the cost or pricing data that relates to direct labor.

My observation is that paragraph II Cost Elements requires a "breakdown" of your indirect cost rate and direct labor examples. Paragraph I General requires that cost or pricing data (see 2.101 definition) be submitted. Could it be that this fills in the apparent gap?

Edited by Neil Roberts
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16 hours ago, Neil Roberts said:

My observation is that paragraph II Cost Elements requires a "breakdown" of your indirect cost rate and direct labor examples. Paragraph I General requires that cost or pricing data (see 2.101 definition) be submitted. Could it be that this fills in the apparent gap?

I would say that the cost breakdown called for by Table 15-2 would require disclosure of individual rates, and possibly the total pools and bases.  However, these would generally be estimates of costs to be incurred, not factual data.  Factual data would primarily be actual costs incurred in the past.  Indirect cost pools consist of several cost elements, where each transaction regarding that cost element has to be examined to determine if it is cost or pricing data.  Also, the bases for indirect costs must include unallowable costs as well as allowable costs.  The factual records relating to these unallowable costs can be cost or pricing data.

In reality, if a contractor has a provisional billing rate, a Forward Pricing Rate Recommendation or a Forward Pricing Rate Agreement, that will be the  data the contractor submits in regard to a specific proposal and will be accepted by the government.  Note that cost or pricing data already submitted in regard to the FPRA does not need to be resubmitted in regard to a proposal where the FPRA applies.  Instead, all the contractor has to do is identify the data.  When the contractor certifies cost or pricing data submitted in regard to a proposal, that is when the contractor certifies the data submitted in regard to the FPRA.

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Neil said: I do not agree. Per FAR 15.406-2, the Certificate is required from a subcontractor as close as practicable to the date when your company reached price agreement with the subcontractor,

I don't disagree with this either.

We haven't reached an agreement on price until the assist audit is completed, in which case if not completed by time of award if we should be that fortunate - a reopener clause has already been communicated to the subcontractor.

 

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  • 4 weeks later...
On 11/12/2020 at 11:51 AM, Retreadfed said:

I largely agree with Neil here.  A certificate is not required when a proposal is submitted.  For subcontractor submission of certified cost or pricing data and certifications see, FAR 52.215-12.  If the prime and sub agree on the price of the subcontract before the prime and government agree on price.  The prime is required to get the certificate from the sub at that time.  If  the prime and sub have not reached agreement on price before the prime and government have reached agreement on price, the prime is to obtain a certificate from the sub and submit it along with the certificate from the prime.  In the latter case, the prime is required to get another certificate from the sub when the prime and sub reach agreement on price.  

Very long time reader, 1st time poster.

I respectfully disagree with the statement, “If the prime and sub have not reached agreement on price before the prime and government have reached agreement on price, the prime is to obtain a certificate from the sub and submit it along with the certificate from the prime.  In the latter case, the prime is required to get another certificate from the sub when the prime and sub reach agreement on price.”

There should only be one certificate per pricing action, it comes whenever two parties complete a negotiation over the threshold (and no exception exists).  If the prime and sub have not agreed on the price at the time the prime and government agree on price, the prime should ensure they have provided all information they have as of the date of price agreement (regarding the sub in this example) to the Government.  They should not ask the sub to provide a certificate until they are negotiated with the prime.  

This understanding is evidenced in a few places:

FAR clause 52.215-12, Subcontractor Certified Cost or Pricing Data directs the prime contractor, prior to the award of a subcontract expected to exceed the threshold for submission of certified cost or pricing data, to require the subcontractor to submit cost or pricing data. The clause further directs the prime contractor to require the subcontractor to certify that, to the best of the subcontractor's knowledge and belief, the data submitted were accurate, complete and current as of the date of agreement on the negotiated price of the subcontract. Nothing in this clause requires or even suggests that the subcontract has to be negotiated or the subcontractor's certificate of current cost or pricing data has to be executed prior to or concurrent with the prime contractor's certification of cost or pricing data.

 FAR clause 52.215-10, Price Reduction for Defective Certified Cost or Pricing Data, provides for a reduction in contract price if (1) a contractor or subcontractor furnished cost or pricing data that were not complete, accurate, and current as certified in its Certificate of Current Cost or pricing Data or (2) a subcontractor or prospective contractor furnished the contractor cost or pricing data that were not complete, accurate, and current as certified in the contractor’s Certificate of Current Cost or Pricing Data.  The latter provision contemplates the circumstance where the prime contractor has executed a Certificate of Current Cost or Pricing Data and the subcontractor or prospective subcontractor has not.

 The Armed Services Board of Contract Appeals has recognized that the Truth In Negotiations Act requires the submission of subcontractor cost or pricing data and the certification of such data as accurate, complete, and current upon two occasions: (1) as of the date of final price agreement between the prime contractor and the government; and (2) when the subcontractor and prime contractor agree on a negotiated subcontract price, which can occur months after agreement on the government's and prime contractor's price. McDonnell Aircraft Co., ASBCA No. 44504, 03-01 BCA 32154. In McDonnell, the prime contractor signed a Certificate of Current Cost or Pricing Data on August 16, 1988, certifying that its cost or pricing data was complete, accurate, and current as of June 24, 1988. Almost a year later, on August 2, 1989, the subcontractor executed a Certificate of Current Cost or pricing Data, certifying that the subcontractor's cost or pricing data was complete, accurate, and current as of January 16, 1989.

Far Clause 15.404-3, Subcontract pricing considerations

      (b) The prime contractor or subcontractor shall-

           (3) When required by paragraph (c) of this subsection, submit subcontractor certified cost or pricing data to the Government as part of its own certified cost or pricing data.

      (c) Any contractor or subcontractor that is required to submit certified cost or pricing data also shall obtain and analyze certified cost or pricing data before awarding any subcontract

            (3) Subcontractor certified cost or pricing data shall be submitted in the format provided in Table  15-2 of 15.408

           (4) Subcontractor certified cost or pricing data shall be current, accurate, and complete as of the date of price agreement.… The contractor shall update subcontractor’s data, as appropriate, during source selection and negotiations.

           (5) If there is more than one prospective subcontractor for any given work, the contractor need only submit to the Government certified cost or pricing data for the prospective subcontractor most likely to receive the award.

The quoted portions or 15.404-3 are consistent with 15.403-4.  The subcontractor certificate must precede award of the subcontract.  Where there is not yet an agreement on price, there is no requirement for subcontract certification.

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1 hour ago, Intrepid411 said:

I respectfully disagree with the statement, “If the prime and sub have not reached agreement on price before the prime and government have reached agreement on price, the prime is to obtain a certificate from the sub and submit it along with the certificate from the prime.  In the latter case, the prime is required to get another certificate from the sub when the prime and sub reach agreement on price.”

Agreed. In a previous post I suggested a way to placate a contracting officer that insisted there was no negotiated contract deal between the contractor and the government unless the prime obtained such a certificate from the subcontractor. The statement above that we both disagree with was not supported by any reference to a FAR requirement, but apparently some contracting officers practice it. 

Edited by Neil Roberts
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