FPDS questions

[Vern Edwards]

@joel hoffmanYou don't have to "yield" and agree to anything. I wasn't arguing with you.

I'm involved in a running debate with two colleagues and thought I'd share one of the points of view. I haven't taken a position against anything you've said. At least, I don't think I have.

My back and forth with my colleagues is a reflection of the utter incompetence of the people who wrote the FAR implementation of what used to be called the "Truth in Negotiations Act" and is now called something else. (I won't say what it's called. It's bad karma to write or speak it.) They mucked up the requirements of the law, and the three of us are trying to sort it out. I thought I'd share one of the takes. We haven't settled yet.

A very old friend of mine was on one of the two FAR councils before she retired. One day some years ago we met for lunch in Crystal City. She was at the restaurant when I arrived, and before I could even say hello she said, "There aren't two people on those councils who can write a decent English sentence." The FAR coverage of cost or pricing data, certification, and defective pricing is the proof or her assertion. Any close reading of the defective pricing clause at FAR 52.215-10 by a literate person would be enough to give them fits.

[Don Mansfield]

7 hours ago, ji20874 said:

You are, in my opinion and according to my practice.  Certified cost or pricing data is needed to support "the award of any negotiated contract..." based on the contract price (FAR 15.403-4(a)(1)(i) rather than the negotiation of said contract based on a proposal amount.

I'm confused. I thought the argument posted by @Vern Edwards concluded that the certification would be required even though the award would be less than $2 million. Are you saying the certification wouldn't be required?

If so, I thought you were right. But take a look at what precedes the language you quoted:

Quote

 

Unless an exception applies, certified cost or pricing data are required before accomplishing any of the following actions expected to exceed the current threshold or, in the case of existing contracts, the threshold specified in the contract:

                (i) The award of any negotiated contract

 

If the bolded language said "exceeding", then I think no certificate would be required because the award would be less than $2 million. But the "expected to exceed" implies that the threshold is to be applied prior to negotiation. After negotiation, you don't have an expectation of the negotiated amount--you have knowledge of it. 

[Vern Edwards]

According to FAR 15.402(a)(1), contracting officers "Shall obtain certified cost or pricing data when required by 15.403-4, along with data other than certified cost or pricing data as necessary to establish a fair and reasonable price[.]" Emphasis added. Congress felt that COs would need accurate, complete and current cost or pricing data (C/PD) in order to determine whether a proposed cost or price is fair and reasonable when adequate price competition is not present or when prices are not set by law or regulation. That purpose is very well documented in hearings leading to enactment of Pub. L. 87-653.

The statute does not require contractors to submit cost or pricing data. it requires agency heads to require contractors to submit it under specified circumstances. There is a dollar threshold for submission, but there is no dollar threshold for certification. Both statute and regulation state that when a CO requires submission of cost or pricing data he or she must require certification, unless one of the exceptions (listed in FAR 15.403-1) is found to apply. They say nothing about the effect of negotiated price on certification.

[Vern Edwards]

10 hours ago, Don Mansfield said:

But the "expected to exceed" implies that the threshold is to be applied prior to negotiation.

Of course. Because the CO needs cost or pricing data in order to prepare for negotiation. Why the heck would a CO negotiate to agreement first and then ask for certified cost or pricing data? In order to revisit the negotiation?

Edited February 9, 2021 by Vern Edwards
to clarify by replacing "it" with "certified cost or pricing data"

[joel hoffman]

6 hours ago, Vern Edwards said:

Of course. Because the CO needs cost or pricing data in order to prepare for negotiation. Why the heck would a CO negotiate to agreement first and then ask for it? In order to revisit the negotiation?

Agreed

[joel hoffman]

On 2/8/2021 at 6:02 PM, Don Mansfield said:

If the bolded language said "exceeding", then I think no certificate would be required because the award would be less than $2 million. But the "expected to exceed" implies that the threshold is to be applied prior to negotiation. After negotiation, you don't have an expectation of the negotiated amount--you have knowledge of it. 

I agree

EDIT - CLARIFICATION ADDED: 

To clarify, if the KO required submission of cost or pricing data and the proposal exceeded the threshold, it would be considered cost or pricing data. It would (should)  have been used to establish a fair and reasonable price.  

According to the Statute at 10 USC 2306(a) (and presumably the corresponding Statute at  41 USC, which I didn’t look up),  such cost or pricing data would have to be certified upon agreement and dated per the requirements.  

At least the Statutes differentiate between “submission of cost or pricing data” and the “certification” of such cost or pricing data as two separate actions.

BUT: If the initial proposal was less than the threshold for submission of cost or pricing data and the action was settled for less than the threshold amount, I think that it would not be cost or pricing data but would be data other than cost or pricing data. It would not have to be certified. 

I don’t think that a proposal for less than the threshold is “expected to exceed the  threshold for submission of cost or pricing data” unless and until it exceeds the threshold before agreement.

How might that happen? For example, during proposal evaluation, the government might find or sense a mistake in the proposal which could lead it to believe that the pre-negotiation objective exceeds or the  settlement or during negotiation would likely exceed the threshold. 

I have actually been involved in at least two construction contract modification negotiations where we found during evaluation or we learned/agreed during negotiations that the initial proposal was too low, either through mistakes and/or missing some required activity  - rare but it can happen.

Edited February 10, 2021 by joel hoffman
Clarified my agreement.

[joel hoffman]

Deleted 

[Gov Researcher]

Hi everyone,

Thank you all for your outstanding perspectives related to the FPDS database's "cost or pricing data" field. Just to check my understanding of the main takeaways from this thread, I have summarized my understanding below. Please let me know if I seem to have misinterpreted anything:

Based on these Wifcon discussions, cost or pricing data may indeed be provided for a contract but not certified. However, if the FPDS' "cost or pricing data" field indicates that cost or pricing data was provided for a contract with a negotiated price below the TINA threshold, then based on Vern's belief that there is a threshold for submission of cost or pricing data but not a threshold for certification (quoted below), that cost or pricing data by regulation/statute should have been certified whenever (a) none of the exceptions from 15.403-1(b) apply AND either (b) the KO expected the price to exceed the TINA threshold (and thus certified cost or pricing data was obtained) but the agreed-upon price fell below the threshold or (c) the agency head required the KO to request certification even though the contract price was likely to fall below the TINA threshold. If the negotiated price is above the TINA threshold, then if the field indicates cost or pricing data was provided that data should have been certified (AND none of the exceptions from 15.403-1(b) should have applied). If there was a mistake on behalf of the KO and certified cost or pricing data was provided even though an exception at 15.403-1(b) applied, then it should remedied as soon as exception is found to apply by becoming retroactively uncertified at the moment it was provided. This paragraph can be true since the DFARS 253.204-70(c)(4)(xi) along with the entire DFARS 253.204 has been removed by the DAR Council (if the spirit of DFARS 253.204-70(c)(4)(xi) were still followed by defense agencies' KO's then for those agencies the cost or pricing data field should instead always indicate whether certified cost or pricing data was obtained).

On 2/8/2021 at 6:42 PM, Vern Edwards said:

There is a dollar threshold for submission, but there is no dollar threshold for certification. Both statute and regulation state that when a CO requires submission of cost or pricing data he or she must require certification, unless one of the exceptions (listed in FAR 15.403-1) is found to apply. They say nothing about the effect of negotiated price on certification.

 

[Vern Edwards]

Why are you conducting this "research"? What's up?