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Definition of Cost or Pricing Data
The definition of cost or pricing data (10 U.S.C. 2306a(h)(1)) and the distinction between “certified cost or pricing data” and “data other than certified cost or pricing data” may be found at Federal Acquisition Regulation (FAR) 2.101.
Certified Cost or Pricing Data Threshold
The threshold for obtaining certified cost or pricing data are provided in FAR 15.403-4. See also FAR 15.403-4(a)(1)(ii) for subcontractor certified cost or pricing data requirements.
History of Certified Cost or Pricing Data
In parallel with the DoD Contract Finance Study, DoD examined certified cost or pricing data from several angles including the genesis of the Truth in Negotiations Act (TINA) and commercial buying and selling practices. The Department provided a report to Congress on this topic and included a detailed university report as an attachment.
Click Hereto see the DoD report (11 pps.).
Click Hereto see the university report (317 pps.).
Pilot Program to Accelerate Contracting and Pricing Processes (“TINA Lite”)
Section 890 of the National Defense Authorization Act for FY 2019, as amended, authorizes DoD to conduct a pilot program through January 2, 2028 for contract actions exceeding $50 million. Pilot program authority is implemented in DFARS Class Deviation 2024-O0007, dated February 8, 2024. Subject to approval by the Director, DPCAP, Price, Cost and Finance, the contracting officer may strategically establish the extent, structure, and level of detail of the historical actual cost data the contractor will be required to submit in lieu of providing complete certified cost or pricing data.
Click Hereto contact PCF for more information.
Inflation
In 2022, DPCAP has partnered with DAU to provide training for acquisition professionals to address the impact of inflation based on contract type, and the proper use of the Economic Price Adjustment (EPA) clause to address inflation-related concerns. This training consists of a DAU online training course, CON 7470 Inflation and Economic Price Adjustments, and a Striking the Balance webinar series course entitled "Striking the Balance: Constructing Fair Economic Price Adjustment Clauses". Click here to access the training and the policy guidance can be found here and here.
The Contracting Incentive Guidebook also addresses the appropriate use of EPA clauses and it is located here.
Section 822 of the 2023 NDAA increased the dollar limits at 50 U.S.C 1431 applicable to entering into contracts or into amendments or modifications of contracts without regard to other provisions of law relating to the making, performance, amendment, or modification of contracts, and provided temporary authority to modify eligible contracts and subcontracts when cost exceeds price due solely to economic inflation; however, the temporary authority was contingent upon the availability of specifically appropriated funds and to-date no such funds have been appropriated. Section 824 of the 2024 NDAA recently extended the temporary authority through 31 Dec 2024, but relief under the temporary authority of this statute is not authorized until Congress identifies a specific appropriation for this purpose, per statutory requirements. FAR case 2023-007 is implementing updates to dollar limits reflected at 50 U.S.C. 1431, but DPCAP will not issue implementing guidance for the temporary authority unless a specific appropriation is made.
Public Law 85-804, as implemented by FAR and DFARS Part 50, is currently the only authority available for Contracting Officers to afford Extraordinary Contractual Relief when contractors have sought or may seek an upward adjustment to the price of an existing firm-fixed-price contract to account for current economic conditions. This authority is discussed in greater detail in the policy guidance here. In addition, in January 2023, DAU deployed a training course for DoD Contracting personnel and contractors to better understand FAR 50 requirements. Additional details are located here and training is available here.
Commercial Acquisition
See the Resources & Training page.
Commercial Acquisition Resources
DCMA Commercial Item Group Website
Department of Defense Guidebook for Acquiring Commercial Items
Contracting Officers are responsible for ensuring that negotiated prices are fair and reasonable. When contractors fail to comply with a contracting officer’s request to provide data other than certified cost or pricing data, it can have a detrimental impact on the Government’s ability to determine a fair and reasonable price as well as the ability to award contracts in a timely manner. To resolve this problem, DFARS PGI 215.404-1 provides a sequence of steps for contracting officers to take to fulfill their responsibility.
If the contractor still refuses to provide data, the issue is elevated to the Head of the Contracting Activity (HCA) to determine that contract award is still in the best interest of the Government subject to the criteria in FAR 15.403-3(a)(4).
HCAs across the Department of Defense are required to submit to DPCAP, on a quarterly basis, all contractor refusals to provide data that nonetheless resulted in a contract award. The reporting of data denials is essential in providing DPCAP with a holistic view of the extent of the problem across the Department. These reports are consolidated, validated, and submitted to Congress on an annual basis.
The requirement for reporting contractor data denials is implemented in DFARS PGI 215.403-3(6), and components are reminded to download the most current report template referenced in the PGI each quarter.
Performance Based Payments Training
It is imperative that acquisition professionals have a solid understanding of how to develop a PBP contract financing arrangement that is beneficial for both Government and Industry. This course covers six key steps in how to develop an adequate PBP agreement.
Click Herefor the August 2020 training.
Performance Based Payments Tool
The amount and timing of contract financing has a direct impact on the cost to the Government and the financial outcome to the contractor as measured by the Internal Rate of Return (IRR) and Net Present Value (NPV) of the contract cash flows. The purpose of this tool is to demonstrate the financial impact to both the Government and the contractor of using PBPs versus customary progress payments. For a PCF training demonstration on how to use the PBP tool, click here.
Click Hereto access the tool.
Performance Based Payment Guidebook
The purpose of the Guide is to provide assistance to users based on lessons learned over the past fifteen years. It is important for users to read the entire guide because of the inter-relationship of the topics covered.
Click Hereto access the PBP Guidebook.
Contract Incentives Training
Contract Incentives Tools
Contract Incentive Guidebook
Incentive-type contracts are proven vehicles for DoD and industry to share equitably in cost savings or risks. When structured correctly, an incentive contract aligns industry motivations with the Government’s desired outcomes. DFARS 216.104 requires contracting officers to follow the principles and procedures in the DoD Guidebook locatedhere.
Pricing variable quantities can be one of the most challenging aspects of contract pricing. While pricing a range of possible quantities provides flexibility, it also adds complexity with respect to the analysis, and requires careful thought in choosing the most appropriate variation in quantity methodology. It is imperative that acquisition professionals understand the various methodologies prior to selecting the one that is most appropriate for your acquisition. The “Pricing Variable Quantities” webinar, which is part of the Striking the Balance Series, covers the 3 common methodologies and their application. This training can be found here.
There are also two tools available to acquisition professionals who are considering the utilization of variation in quantity pricing curves. These tools can be found here.
The Sole Source Peer Review program provides expert pricing advice, improves the quality of the business deal, and facilitates the sharing of best practices and lessons learned. For more information about the program, click here.
Below are the Defense Contract Audit Agency summary reports on Independent Research and Development costs incurred by major defense contractors since 1985.