Federal Acquisition Regulation; FAR Case 2005-036, Definition of Cost or Pricing Data, 20092-20104 [07-1927]

Agencies

• General Services Administration
• National Aeronautics and Space Administration
• DEPARTMENT OF DEFENSE

[Federal Register Volume 72, Number 77 (Monday, April 23, 2007)]
[Proposed Rules]
[Pages 20092-20104]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-1927]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 4, 12, 14, 15, 16, 19, 27, 30, 31, 32, 42, 44, 49, 
and 52

[FAR Case 2005-036; Docket 2007-001, Sequence 7]
RIN: 9000-AK74


Federal Acquisition Regulation; FAR Case 2005-036, Definition of 
Cost or Pricing Data

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to revise the definition of ``cost 
or pricing data''; change the term ``information other than cost or 
pricing data'' to ``data other than certified cost or pricing data''; 
add a definition of ``certified cost or pricing data'' to make the 
terms and definitions consistent with 10 U.S.C. 2306a and 41 U.S.C. 
254b and more understandable to the general reader; change terminology 
throughout the FAR; and clarify the need to obtain data other than 
certified cost or pricing data when there is no other means to 
determine fair and reasonable pricing during price analysis.

DATES: Interested parties should submit written comments to the FAR 
Secretariat on or before June 22, 2007 to be considered in the 
formulation of a final rule.

ADDRESSES: Submit comments identified by FAR case 2005-036 by any of 
the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Search for any document by first selecting the proper document types 
and selecting ``Federal Acquisition Regulation'' as the agency of 
choice. At the ``Keyword'' prompt, type in FAR Case number Case 2005-
036 and click on the ``Submit'' button. Please include any personal 
and/or

[[Page 20093]]

business information inside the document. You may also search for any 
document by clicking on the ``Advanced search/document search'' tab at 
the top of the screen, selecting from the agency field ``Federal 
Acquisition Regulation'', and typing the FAR case number in the keyword 
field. Select the ``Submit'' button.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR case 2005-
036 in all correspondence related to this case. All comments received 
will be posted without change to https://www.regulations.gov, including 
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT: Patrick Conley at (202) 501-4770 for 
clarification of content. For information pertaining to status or 
publication schedules, contact the FAR Secretariat at (202) 501-4755. 
Please cite FAR case 2005-036.

SUPPLEMENTARY INFORMATION:

A. Background

    The Defense Acquisition Regulatory Council and the Civilian Agency 
Acquisition Council (the Councils) reviewed FAR 15.4 for needed 
clarification based on several events and an initial Defense 
Acquisition Regulation Supplement (DFARS) Case (2004-D019) that 
identified confusion concerning when cost or pricing data can and 
should be obtained. Several events identified confusion over the 
difference between ``cost or pricing data'' and ``information other 
than cost or pricing data,'' the requirement to obtain ``information 
other than cost or pricing data,'' and the requirement to submit ``cost 
or pricing data'' in accordance with the instructions at Table 15-2 at 
FAR 15.408.
    On May 30, 2001 the Department of Defense Inspector General (DoD 
IG) issued Report No. D2001-129 that identified a situation in which 
contracting officers did not obtain adequate pricing information or 
information other than cost or pricing data for justifying price 
reasonableness. As a result of the Inspector General report, in March 
2002, the Director of Defense Procurement issued a memorandum, titled 
``Price Analysis and Price Reasonableness Determinations When Cost or 
Pricing Data are not Obtained,'' to Defense agencies and military 
departments to reiterate the need to obtain sufficient pricing or cost 
data to justify that prices are fair and reasonable.
    A Defense Acquisition University (DAU) study on the ``Tanker Lease 
Program: Acquisition Lessons Learned'' questioned the consistency of 
the definition and usage of the term ``cost or pricing data'' in the 
FAR, DFARS and the statute. The study indicated that clarification is 
needed to show that both terms are referring to the same information/
data. The study pointed out that the statutory language indicates that 
the distinguishing characteristic of certified cost or pricing data is 
certification, and not the level of detail of the cost or pricing data.
    In 2005, Congress expressed concern regarding an Air Force 
defective pricing case related to judgmental factors as cost or pricing 
data. Based on the legal issues raised in the case, Congress is 
concerned that FAR regulations are ambiguous, especially in the 
definition of cost or pricing data in FAR 2.101 and the discussion of 
cost or pricing data in Table 15-2.
    In its supplemental report dated October 24, 2005 for DFARS Case 
2004-D019, Commercial Item Acquisition, the DFARS Pricing Committee 
concluded that there appears to be a misunderstanding with the use of 
the terminology that is currently contained in the FAR and carried 
forward into the DFARS with regard to ``cost or pricing data'' and 
``information other than cost or pricing data.'' The apparent 
misunderstanding leads to confusion over what information can be 
obtained under ``information other than cost or pricing data.'' The 
Councils believe that the terminology should be changed because they 
believe that it should be clear that the contracting officer should be 
free to ask for any information necessary to determine the price to be 
fair and reasonable. This could include any cost data or pricing data 
that would support price reasonableness even though certification is 
not required. The Councils believe it to be extremely important to 
resolve any misunderstanding amongst Government and contractor 
acquisition professionals by ensuring that the definition is fully 
clarified.
    The Councils researched the information identified, met with the 
Air Force General Counsel to discuss its findings and concerns about 
the defective pricing cases, obtained input from field personnel, and 
researched the Truth In Negotiations Act (TINA). The DoD IG also made a 
presentation to the Councils about recent findings and concerns.
    The Air Force General Counsel briefed the Councils on issues that 
arose during defective pricing cases related to the information that is 
required to be submitted by contractors, specifically related to Table 
15-2 at FAR 15.408 and referenced at 52.215-20(b). They recommended 
that the Councils revise the clause to make it clear that the data in 
Table 15-2 are required to be submitted when TINA applies.
    The DoD IG briefed the Councils on recent findings related to 
reviews of sole source commercial item pricing and specifically about 
confusion over the contracting officer's ability to obtain cost or 
pricing data (uncertified), sales information, and other data necessary 
to determine prices to be fair and reasonable. The DoD IG expressed a 
concern that current FAR language does not point out that 10 U.S.C. 
2306a(d)(1) requires contracting officers to obtain ``at a minimum, 
appropriate information on the prices at which the same item or similar 
items have previously been sold, adequate for determining the 
reasonableness of the price.'' The DoD IG also suggested a need to have 
a separate section in the FAR for the pricing of sole source commercial 
items (not based on adequate price competition). The DoD IG believes 
that the wording in the clause at 52.215.20 for obtaining information 
other than cost or pricing data should be part of the terms and 
conditions for contracts awarded under Part 12. The DoD IG also stated 
that during its reviews it encountered confusion about the 
determination of price reasonableness for ``of a type'' commercial 
items and the process for obtaining sufficient information to determine 
that the prices for those items are fair and reasonable.
    The Councils determined that the current definitions at FAR 2.101 
for ``cost or pricing data'' and ``information other than cost or 
pricing data'' need to be revised to be consistent with the 
requirements at 10 U.S.C. 2306a and 41 U.S.C. 254b and should be better 
defined so it is clear that the underlying information is the same, but 
the requirement to certify that data distinguishes the TINA 
requirements. The Councils also concluded that FAR 15.4 needs to be 
revised to clarify the need and authority to obtain a detailed cost 
estimate, including cost or pricing data, when there is no other means 
to determine fair and reasonable pricing during price analysis even 
though the cost or pricing data will not be certified. As part of this 
clarification, the Councils revised the provisions at 52.215-20 and 
52.215-21 to clarify the use of Table 15-2 at FAR 15.408. However, the 
Councils

[[Page 20094]]

did not find that there should be a separate section for pricing 
commercial sole source (non-competitive) items. With these 
clarifications, the Councils believe the hierarchy at 15.402 applies 
and clearly provides the contracting officer with the authority to 
obtain whatever data is necessary to determine whether the proposed 
prices are fair and reasonable, up to and including a detailed cost 
estimate and cost or pricing data (but excluding a certificate) - 
whether a sole source or other situation is involved.
    The Councils decided to revise the definition of ``cost or pricing 
data'' to remove the sentence ``Cost or pricing data are data requiring 
certification in accordance with 15.406-2,'' as it makes the definition 
inconsistent with 10 U.S.C. 2306a and 41 U.S.C. 254b, and replace this 
with a definition of ``certified cost or pricing data.'' A definition 
of ``cost or pricing data'' that is consistent with 10 U.S.C. 2306a and 
41 U.S.C. 254b is added.
    The Councils also changed the term ``information other than cost or 
pricing data'' to ``data other than certified cost or pricing data'' to 
be consistent with 10 U.S.C. 2306a and 41 U.S.C. 254b. In addition, the 
Councils revised the definition to clarify that contracting officers 
are to obtain whatever information is necessary to determine that 
prices are fair and reasonable. This change clearly establishes that 
the underlying data can be the same (detailed cost estimates and cost 
or pricing data). The difference occurs when the pricing action meets 
the requirements at 10 U.S.C. 2306a(a)(1) and 41 U.S.C. 254b(a)(1); 
that data must be certified. Likewise, when the certification 
requirements at 10 U.S.C. 2306a(a)(2) and 41 U.S.C. 254b(a)(2) do not 
apply, the contracting officer can obtain the same information 
(detailed cost estimates and cost or pricing data) when there are no 
other means to determine prices fair and reasonable, but that data 
cannot be certified. The contracting officer may also obtain only 
specified portions of this information, depending on the contracting 
officer's needs. This clarification is especially important when 
purchasing noncompetitive commercial items.
    The Councils added a definition for ``certified cost or pricing 
data'' to clarify the distinction that certified cost or pricing data 
is a two-step process consisting of (1) the offeror/contractor 
submitting cost or pricing data, and (2) the offeror/contractor 
providing a certificate of current cost or pricing data at a certain 
date prior to agreement on price. This term also distinguishes that, 
when exceptions apply, it is only the certificate that shall not be 
required, consistent with 10 U.S.C. 2306a(b) and 41 U.S.C. 254b(b). 
This is further clarified in 10 U.S.C. 2306(d) and 41 U.S.C. 254b, 
which require that contracting officers obtain data ``...other than 
CERTIFIED cost or pricing data to the extent necessary to determine the 
reasonableness of the price...'' (emphasis added).
    To bring the FAR into closer compliance with 10 U.S.C. 2306a(d)(1) 
and 41 U.S.C. 254b(d)(1), the Councils also added the following 
language in 15.403-3(c):
    Unless an exception under 15.403-1(b)(1) or (2) applies, the 
contracting officer must require that the information submitted by 
the offeror include, at a minimum, appropriate information on the 
prices at which the same item or similar items have previously been 
sold, adequate for determining the reasonableness of the price.
    Other clarifying changes for obtaining certified cost or pricing 
data or data other than certified cost or pricing data are contained in 
the proposed FAR changes. These changes clarify that contracting 
officers must require the submission of whatever information is 
necessary to document a valid basis for determining prices to be fair 
and reasonable, using the hierarchy at FAR 15.402, without requesting 
anymore information than is necessary to adequately document the 
determination.
    The Councils considered revising the terms to: ``certified cost or 
pricing data'' and ``non-certified pricing and cost data.'' However, 
the Councils determined that the terms need to be consistent with 10 
U.S.C. 2306a and 41 U.S.C. 254b. Most importantly though, if the FAR 
authorized the contracting officer only to obtain ``noncertified cost 
or pricing data'' when a certificate is not required, the FAR would not 
contain authority to obtain detailed cost estimates plus the 
noncertified cost or pricing data; it would only contain authority to 
obtain ``cost or pricing'' that is not certified. The distinction 
between detailed cost estimates and ``cost or pricing data'' is that 
``cost or pricing data'' are defined in TINA, and they are limited to a 
subset of the information that Table 15-2 requires. The 10 U.S.C. 
2306a(h)(1) definition of cost or pricing data states ``the term does 
not include information that is judgmental, but does include the 
factual information from which a judgment was derived.'' Therefore, if 
a contracting officer needs a complete cost estimate and supporting 
judgments, the contracting officer needs more than just the 
noncertified cost or pricing data.
    The proposed changes are expected to resolve confusion and to 
provide contracting officers and contractors the necessary 
clarification that the contracting officer has the authority (and 
requirement) to request, obtain, and evaluate whatever pricing or cost 
information is needed to make a determination that prices are fair and 
reasonable - using the hierarchy at FAR 15.402.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Councils do not expect this proposed rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because this proposed rule is clarifying existing statutory and 
regulatory authorities. It is not establishing new authorities or 
procedures. An Initial Regulatory Flexibility Analysis has, therefore, 
not been performed. We invite comments from small businesses and other 
interested parties. The Councils will consider comments from small 
entities concerning the affected FAR Part 2, 4, 12, 14, 15, 16, 19, 27, 
30, 31, 32, 42, 44, 49, and 52 in accordance with 5 U.S.C. 610. 
Interested parties must submit such comments separately and should cite 
5 U.S.C. 601, et seq. (FAR case 2005-036), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
changes to the FAR do not impose additional information collection 
requirements to the paperwork burden previously approved under OMB 
Control Number 9000-0013.

List of Subjects in 48 CFR Parts 2, 4, 12, 14, 15, 16, 19, 27, 30, 
31, 32, 42, 44, 49, and 52

    Government procurement.

    Dated: April 12, 2007.
Al Matera,
Acting Director, Contract Policy Division.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 4, 
12, 14, 15, 16, 19, 27, 30, 31, 32, 42, 44, 49, and 52 as set forth 
below:
    1. The authority citation for 48 CFR parts 2, 4, 12, 14, 15, 16, 
19, 27, 30, 31, 32, 42, 44, 49, and 52 continues to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

[[Page 20095]]

PART 2--DEFINITIONS OF WORDS AND TERMS

    2. Amend section 2.101 in paragraph (b)(2) by--
    a. Adding, in alphabetical order, the definition ``Certified cost 
or pricing data'';
    b. Revising the introductory text of the definition ``Cost or 
pricing data'';
    c. Adding, in alphabetical order, the definition ``Data other than 
certified cost or pricing data''; and
    d. Removing the definition ``Information other than cost or pricing 
data''.
    The added and revised text reads as follows:


2.101  Definitions.

* * * * *
    (b) * * *
    (2) * * *
    Certified cost or pricing data means ``cost or pricing data'' that 
has been required to be submitted and has been certified, or is 
required to be certified, in accordance with 15.406-2. This 
certification states that, to the best of the person's knowledge and 
belief, the cost or pricing data is accurate, complete, and current as 
of a date certain before contract award. Cost or pricing data is 
required to be certified in certain procurements (10 U.S.C. 2306a and 
41 U.S.C. 254b). See FAR 15.403-4.
* * * * *
    Cost or pricing data (10 U.S.C. 2306a(h)(1) and 41 U.S.C. 254b) 
means all facts that, as of the date of price agreement, or, if 
applicable, an earlier date agreed upon between the parties that is as 
close as practicable to the date of agreement on price, prudent buyers 
and sellers would reasonably expect to affect price negotiations 
significantly. Cost or pricing data are factual, not judgmental; and 
are verifiable. While they do not indicate the accuracy of the 
prospective contractor's judgment about estimated future costs or 
projections, they do include the data forming the basis for that 
judgment. Cost or pricing data are more than historical accounting 
data; they are all the facts that can be reasonably expected to 
contribute to the soundness of estimates of future costs and to the 
validity of determinations of costs already incurred. They also 
include, but are not limited to, such factors as--
* * * * *
    Data other than certified cost or pricing data means any data, 
including cost or pricing data and judgmental information necessary for 
the contracting officer to determine a fair and reasonable price or 
cost realism, where certification is not required in accordance with 
15.406-2. For example, such data may include pricing, sales, or cost 
data, and includes cost or pricing data for which certification is 
determined inapplicable after submission.
* * * * *

PART 4--ADMINISTRATIVE MATTERS


4.704  [Amended]

    3. Amend section 4.704 in paragraph (b) by removing ``for cost'' 
and adding ``for certified cost'' in its place.
    4. Amend section 4.803 by revising paragraphs (a)(17) and (b)(4) to 
read as follows:


4.803  Contents of contract files.

* * * * *
    (a) * * *
    (17) Data and information related to the Contracting Officer's 
determination of a fair and reasonable price. This may include--
    (i) Cost or pricing data;
    (ii) Data other than certified cost or pricing data;
    (iii) Certified cost or pricing data;
    (iv) Justification for waiver from the requirement to submit 
certified cost or pricing data; or
    (v) Certificates of Current Cost or Pricing Data.
* * * * *
    (b) * * *
    (4) Certified cost or pricing data, Certificates of Current Cost or 
Pricing Data, or data other than certified cost or pricing data; cost 
or price analysis; and other documentation supporting contractual 
actions executed by the contract administration office.
* * * * *

PART 12--ACQUISITON OF COMMERCIAL ITEMS


12.102  [Amended]

    5. Amend section 12.102 in paragraph (f)(2)(ii) by removing ``Cost 
or pricing'' and adding ``Certified cost or pricing'' in its place.


12.504  [Amended]

    6. Amend section 12.504 in paragraph (a)(7) by removing ``provide 
cost'' and adding ``provide certified cost'' in its place.

PART 14--SEALED BIDDING

    7. Amend section 14.201-7 by removing from paragraph (a) ``of 
cost'' and adding ``of certified cost'' in its place; and by revising 
paragraphs (b)(1) and (c)(1) to read as follows:


14.201-7  Contract clauses.

* * * * *
    (b) * * *
    (1) When contracting by sealed bidding, the contracting officer 
shall insert the clause at 52.214-27, Price Reduction for Defective 
Certified Cost or Pricing Data--Modifications--Sealed Bidding, in 
solicitations and contracts if the contract amount is expected to 
exceed the threshold for submission of certified cost or pricing data 
at 15.403-4(a)(1).
* * * * *
    (c) * * *
    (1) When contracting by sealed bidding, the contracting officer 
shall insert the clause at 52.214-28, Subcontractor Certified Cost or 
Pricing Data--Modifications--Sealed Bidding, in solicitations and 
contracts if the contract amount is expected to exceed the threshold 
for submission of certified cost or pricing data at 15.403-4(a)(1).
* * * * *

PART 15--CONTRACTING BY NEGOTIATION

    8. Amend section 15.204-5 by revising paragraph (b)(5) to read as 
follows:


15.204-5  Part IV--Representations and Instructions.

* * * * *
    (b) * * *
    (5) Certified cost or pricing data (see Table 15-2 of 15.408) or 
data other than certified cost or pricing data.
* * * * *
    9. Amend section 15.402 by revising the introductory text and 
paragraph (a) to read as follows:


15.402  Pricing policy.

    Contracting officers shall--
    (a) Purchase supplies and services from responsible sources at fair 
and reasonable prices. In establishing the reasonableness of the 
offered prices, the contracting officer shall not obtain more data or 
information than is necessary. The contracting officer shall generally 
use the following order of preference in determining the type of data 
required:
    (1) No additional data from the offeror, if the price is based on 
adequate price competition, except as provided by 15.403-3(b).
    (2) Data other than certified cost or pricing data:
    (i) Data related to prices (e.g., established catalog or market 
prices, sales, or previous contract prices), relying first on data 
available within the Government; second, on data obtained from sources 
other than the offeror; and, if necessary, on data obtained from the 
offeror. When obtaining data from the offeror is necessary, unless an 
exception

[[Page 20096]]

under 15.403-1(b)(1) or (2) applies, such data submitted by the offeror 
shall include, at a minimum, appropriate data on the prices at which 
the same or similar items have been sold previously, adequate for 
evaluating the reasonableness of the price.
    (ii) Cost data necessary for the contracting officer to determine a 
fair and reasonable price.
    (3) Certified cost or pricing data. When required by 15.403-4.
* * * * *
    10. Amend section 15.403 by revising the section heading to read as 
follows:


15.403  Obtaining certified cost or pricing data.

* * * * *
    11. Amend section 15.403-1 by--
    a. Revising the section heading, paragraph (a), the introductory 
text of paragraphs (b) and (c), and paragraph (c)(3)(i);
    b. Removing from paragraphs (c)(3)(ii)(A), (B), and (C) ``of cost'' 
and adding ``of certified cost'' in its place;
    c. Removing from paragraph (c)(3)(iii) ``for cost'' and adding 
``for certified cost'' in its place; and
    d. Revising the introductory text of paragraph (c)(4).
    The revised text reads as follows:


15.403-1  Prohibition on obtaining certified cost or pricing data (10 
U.S.C. 2306a and 41 U.S.C. 254b).

    (a) Certified cost or pricing data shall not be obtained for 
acquisitions at or below the simplified acquisition threshold.
    (b) Exceptions to certified cost or pricing data requirements. The 
contracting officer shall not require certified cost or pricing data to 
support any action (contracts, subcontracts, or modifications) (but may 
require data other than certified cost or pricing data as defined in 
FAR 2.101 to support a determination of a fair and reasonable price or 
cost realism)--
* * * * *
    (c) Standards for exceptions from certified cost or pricing data 
requirements--
* * * * *
    (3) * * *
    (i) Any acquisition of an item that meets the commercial item 
definition in 2.101, or any modification, as defined in paragraph 
(3)(i) of that definition, that does not change the item from a 
commercial item to a noncommercial item, is exempt from the requirement 
for certified cost or pricing data. If the contracting officer 
determines that an item claimed to be commercial is, in fact, not 
commercial and that no other exception or waiver applies, the 
contracting officer shall require submission of certified cost or 
pricing data.
* * * * *
    (4) Waivers. The head of the contracting activity (HCA) may, 
without power of delegation, waive the requirement for submission of 
certified cost or pricing data in exceptional cases. The authorization 
for the waiver and the supporting rationale shall be in writing. The 
HCA may consider waiving the requirement if the price can be determined 
to be fair and reasonable without submission of certified cost or 
pricing data. For example, if certified cost or pricing data were 
furnished on previous production buys and the contracting officer 
determines such data are sufficient, when combined with updated data, a 
waiver may be granted. If the HCA has waived the requirement for 
submission of certified cost or pricing data, the contractor or higher-
tier subcontractor to whom the waiver relates shall be considered as 
having been required to provide certified cost or pricing data. 
Consequently, award of any lower-tier subcontract expected to exceed 
the certified cost or pricing data threshold requires the submission of 
certified cost or pricing data unless--
* * * * *
    12. Revise section 15.403-2 to read as follows:


15.403-2  Other circumstances where certified cost or pricing data are 
not required.

    (a) The exercise of an option at the price established at contract 
award or initial negotiation does not require submission of certified 
cost or pricing data.
    (b) Certified cost or pricing data are not required for proposals 
used solely for overrun funding or interim billing price adjustments.
    13. Revise section 15.403-3 to read as follows:


15.403-3  Requiring data other than certified cost or pricing data.

    (a)(1) In those acquisition situations that do not require 
certified cost or pricing data, the contracting officer shall--
    (i) Obtain whatever data is available from Government or other 
secondary sources and use that data in determining a fair and 
reasonable price.
    (ii) If the contracting officer cannot obtain adequate data from 
sources other than the offeror, the contracting officer shall require 
submission of data other than certified cost or pricing data, as 
defined in 2.101, from the offeror that is adequate to determine a fair 
and reasonable price (10 U.S.C. 2306a(d)(1) and 41 U.S.C. 254b(d)(1)). 
This includes data from an offeror to support a cost realism analysis.
    (iii) In situations where there is not adequate price competition, 
the contracting officer shall consider whether cost data are necessary 
to determine a fair and reasonable price.
    (iv) Unless an exception under 15.403-1(b)(1) or (2) applies, the 
contracting officer shall require that the data submitted by the 
offeror include, at a minimum, appropriate data on the prices at which 
the same item or similar items have previously been sold, adequate for 
determining the reasonableness of the price.
    (v) To determine the data an offeror shall be required to submit, 
the contracting officer shall consider the guidance in Section 3.3, 
Chapter 3, Volume I, of the Contract Pricing Reference Guide cited at 
15.404-1(a)(7).
    (2) The contractor's format for submitting the data should be used 
(see 15.403-5(b)(2)).
    (3) The contracting officer shall ensure that data used to support 
price negotiations is sufficiently current to permit negotiation of a 
fair and reasonable price. Requests for updated offeror data should be 
limited to data that affects the adequacy of the proposal for 
negotiations, such as changes in price lists.
    (4) As specified in Section 808 of Public Law 105-261, an offeror 
who does not comply with a requirement to submit data for a contract or 
subcontract in accordance with paragraph (a)(1) of this section is 
ineligible for award unless the HCA determines that it is in the best 
interest of the Government to make the award to that offeror, based on 
consideration of the following:
    (i) The effort made to obtain the data.
    (ii) The need for the item or service.
    (iii) Increased cost or significant harm to the Government if award 
is not made.
    (b) Adequate price competition. When adequate price competition 
exists (see 15.403-1(c)(1)), generally no additional data is necessary 
to determine the reasonableness of price. However, if there are unusual 
circumstances where it is concluded that additional data is necessary 
to determine the reasonableness of price, the contracting officer 
shall, to the maximum extent practicable, obtain the additional data 
from sources other than the offeror. In addition, the contracting 
officer should, request data to determine the cost realism of competing 
offers or to evaluate competing approaches.
    (c) Commercial items. (1) At a minimum, the contracting officer 
must use price analysis to determine whether the price is fair and 
reasonable

[[Page 20097]]

whenever the contracting officer acquires a commercial item (see 
15.404-1(b)). The fact that a price is included in a catalog does not, 
in and of itself, make it fair and reasonable. If the contracting 
officer cannot determine whether an offered price is fair and 
reasonable, even after obtaining additional data from sources other 
than the offeror, then the contracting officer shall require the 
offeror to submit data other than certified cost or pricing data to 
support further analysis (see 15.404-1). This data may include sales 
history, cost data, or any other information the contracting officer 
requires to determine the price is fair and reasonable. Unless an 
exception under 15.403-1(b)(1) or (2) applies, the contracting officer 
shall require that the data submitted by the offeror include, at a 
minimum, appropriate data on the prices at which the same item or 
similar items have previously been sold, adequate for determining the 
reasonableness of the price.
    (2) Limitations relating to commercial items (10 U.S.C. 2306a(d)(2) 
and 41 U.S.C. 254b(d)).
    (i) The contracting officer shall limit requests for sales data 
relating to commercial items to data for the same or similar items 
during a relevant time period.
    (ii) The contracting officer shall, to the maximum extent 
practicable, limit the scope of the request for data relating to 
commercial items to include only data that is in the form regularly 
maintained by the offeror as part of its commercial operations.
    (iii) The Government shall not disclose outside the Government data 
obtained relating to commercial items that is exempt from disclosure 
under 24.202(a) or the Freedom of Information Act (5 U.S.C. 552(b)).
    14. Amend section 15.403-4 by revising the section heading, the 
introductory text of paragraphs (a)(1), (a)(1)(iii), and (b) and 
paragraphs (a)(1)(ii), (a)(2), (b)(1), and (c) to read as follows:


15.403-4  Requiring certified cost or pricing data (10 U.S.C. 2306a and 
41 U.S.C. 254b).

    (a)(1) The contracting officer shall obtain certified cost or 
pricing data only if the contracting officer concludes that none of the 
exceptions in 15.403-1(b) applies. However, if the contracting officer 
has reason to believe exceptional circumstances exist and has 
sufficient data available to determine a fair and reasonable price, 
then the contracting officer should consider requesting a waiver under 
the exception at 15.403-1(b)(4). The threshold for obtaining certified 
cost or pricing data is $650,000. 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, for 
existing contracts, the threshold specified in the contract:
* * * * *
    (ii) The award of a subcontract at any tier, if the contractor and 
each higher-tier subcontractor were required to submit certified cost 
or pricing data (but see waivers at 15.403-1(c)(4)).
    (iii) The modification of any sealed bid or negotiated contract 
(whether or not certified cost or pricing data were initially required) 
or any subcontract covered by paragraph (a)(1)(ii) of this subsection. 
Price adjustment amounts must consider both increases and decreases 
(e.g., a $200,000 modification resulting from a reduction of $500,000 
and an increase of $300,000 is a pricing adjustment exceeding 
$650,000). This requirement does not apply when unrelated and 
separately priced changes for which certified cost or pricing data 
would not otherwise be required are included for administrative 
convenience in the same modification. Negotiated final pricing actions 
(such as termination settlements and total final price agreements for 
fixed-price incentive and redeterminable contracts) are contract 
modifications requiring certified cost or pricing data if--
* * * * *
    (2) Unless prohibited because an exception at 15.403-1(b) applies, 
the head of the contracting activity, without power of delegation, may 
authorize the contracting officer to obtain certified cost or pricing 
data for pricing actions below the pertinent threshold in paragraph 
(a)(1) of this section, provided the action exceeds the simplified 
acquisition threshold. The head of the contracting activity shall 
justify the requirement for certified cost or pricing data. The 
documentation shall include a written finding that certified cost or 
pricing data are necessary to determine whether the price is fair and 
reasonable and the facts supporting that finding.
    (b) When certified cost or pricing data are required, the 
contracting officer shall require the contractor or prospective 
contractor to submit to the contracting officer (and to have any 
subcontractor or prospective subcontractor submit to the prime 
contractor or appropriate subcontractor tier) the following in support 
of any proposal:
    (1) The certified cost or pricing data and data other than 
certified cost or pricing data.
* * * * *
    (c) If certified cost or pricing data are requested and submitted 
by an offeror, but an exception is later found to apply, the data must 
not be considered certified cost or pricing data as defined in 2.101 
and must not be certified in accordance with 15.406-2.
* * * * *
    15. Amend section 15.403-5 by revising the section heading, 
paragraphs (a)(1), (a)(2), (a)(3), (b)(1), and (b)(2) to read as 
follows:


15.403-5  Instructions for submission of certified cost or pricing data 
and data other than certified cost or pricing data.

    (a) * * *
    (1) Whether certified cost or pricing data are required;
    (2) That, in lieu of submitting certified cost or pricing data, the 
offeror may submit a request for exception from the requirement to 
submit certified cost or pricing data;
    (3) Any data other than certified cost or pricing data that is 
required; and
* * * * *
    (b) * * *
    (1) Unless required to be submitted on one of the termination forms 
specified in Subpart 49.6, the contracting officer may require 
submission of certified cost or pricing data in the format indicated in 
Table 15-2 of 15.408, specify an alternative format, or permit 
submission in the contractor's format.
    (2) Data other than certified cost or pricing data may be submitted 
in the offeror's own format unless the contracting officer decides that 
use of a specific format is essential for evaluating and determining 
the price is fair and reasonable and the format has been described in 
the solicitation.
* * * * *
    16. Amend section 15.404-1 by:
    a. Removing from paragraphs (a)(2) and (a)(3) ``when cost'' and 
adding ``when certified cost'' in its place;
    b. Revising paragraph (a)(4) and the second sentence of paragraph 
(a)(6);
    c. Revising the heading of paragraph (b);
    d. Adding three sentences to the end of paragraph (b)(1);
    e. Revising the second sentence of paragraph (b)(2)(i), and 
paragraphs (b)(2)(ii) and (b)(2)(vii);
    f. Revising paragraph (c)(1);
    g. Removing from paragraph (e)(1) ``may'' and adding ``should'' in 
its place;
    h. Adding paragraph (e)(3); and
    i. Removing from the third sentence of paragraph (f)(2) ``may'' and 
adding ``should'' in its place.

[[Page 20098]]

    The revised and added text reads as follows:


15.404-1  Proposal analysis techniques.

    (a) * * *
    (4) Cost analysis may also be used to evaluate data other than 
certified cost or pricing data to determine cost reasonableness or cost 
realism when a fair and reasonable price cannot be determined through 
price analysis alone for commercial or non-commercial items.
* * * * *
    (6) * * * Any discrepancy or mistake of fact (such as duplications, 
omissions, and errors in computation) contained in the certified cost 
or pricing data or data other than certified cost or pricing data 
submitted in support of a proposal shall be brought to the contracting 
officer's attention for appropriate action.
* * * * *
    (b) Price analysis for commercial and non-commercial items. (1) * * 
* Unless an exception under 15.403-1(b)(1) or (2) applies, at a 
minimum, the contracting officer shall obtain appropriate data on the 
prices at which the same item or similar items have previously been 
sold and determine if the data is adequate for evaluating the 
reasonableness of the price. Price analysis may include evaluating data 
other than certified cost or pricing data obtained from the offeror or 
contractor when there is no other means for determining a fair and 
reasonable price - see paragraph (c) of this section. Contracting 
officers shall obtain price or cost data from the offeror or contractor 
if that is the only means to determine the price to be fair and 
reasonable--including commercial item price analysis.
    (2) * * *
    (i) * * * Normally, adequate price competition establishes a fair 
and reasonable price (see 15.403-1(c)(1)).
    (ii) Comparison of proposed prices to prior Government buys and 
sales prices to other than the Government of the same or similar items, 
including commercial items that are ``of a type'' or requiring minor 
modifications, or other available data;
    (A) The prior price must be a valid basis for comparison. If there 
has been a significant time lapse between the last acquisition and the 
present one or if the terms and conditions of the acquisition are 
significantly different, or if the reasonableness of the prior price is 
uncertain, then the prior price may not be a valid basis for 
comparison.
    (B) The prior price must be adjusted to account for differing terms 
and conditions, quantities and market and economic factors. For similar 
items, the contracting officer must also adjust the prior price to 
account for the differences between the similar item and the item being 
procured.
    (C) Expert technical advice should be obtained when analyzing 
similar items or commercial items that are ``of a type'' or requiring 
minor modifications to ascertain the magnitude of changes required and 
to assist in pricing the required changes.
* * * * *
    (vii) Analysis of data other than certified cost or pricing data 
(as defined at 2.101) provided by the offeror.
* * * * *
    (c) * * *
    (1) Cost analysis is the review and evaluation of the separate cost 
elements and profit or fee in an offeror's or contractor's proposal 
(including certified cost or pricing data and data other than certified 
cost or pricing data, which are defined at 2.101, needed to determine a 
fair and reasonable price or cost realism), and the application of 
judgment to determine how well the proposed costs represent what the 
cost of the contract should be, assuming reasonable economy and 
efficiency.
* * * * *
    (e) * * *
    (3) The contracting officer should request technical assistance in 
evaluating pricing related to items that are ``similar to'' items being 
purchased or commercial items that are ``of a type'' or requiring minor 
modifications to ascertain the magnitude of changes required and to 
assist in pricing the required changes.
* * * * *
    17. Amend section 15.404-2 by--
    a. Revising the section heading;
    b. Removing from the second sentence of paragraph (a)(1) and the 
first sentence of the introductory text of paragraph (a)(2) ``must'' 
and adding ``shall'' in its place; and
    c. Revising the introductory text of paragraph (a)(2)(iii) and 
paragraph (a)(2)(iii)(F).
    The revised text reads as follows:


15.404-2  Data to support proposal analysis.

    (a) * * *
    (2) * * *
    (iii) Information to help contracting officers determine 
commerciality and a fair and reasonable price, including--
* * * * *
    (F) Identifying general market conditions affecting determinations 
of commerciality and a fair and reasonable price.
* * * * *
    18. Amend section 15.404-3 by--
    a. Revising paragraphs (a) and (b)(3);
    b. Revising the introductory text of paragraph (c);
    c. Removing from the introductory text of paragraph (c)(1) 
``subcontractor(s), cost'' and adding ``subcontractor(s), certified 
cost'' in its place;
    d. Removing from paragraph (c)(1)(ii) ``pertinent cost'' and adding 
``pertinent certified cost'' in its place;
    e. Revising paragraph (c)(2);
    f. Removing from paragraph (c)(3) and the first sentence of 
paragraph (c)(4) ``Subcontractor cost'' and adding ``Subcontractor 
certified cost'' in its place;
    g. Removing from paragraph (c)(5) ``Government cost'' and adding 
``Government certified cost'' in its place.
    The revised text reads as follows:


15.404-3  Subcontract pricing considerations.

    (a) The contracting officer is responsible for the determination of 
a fair and reasonable price for the prime contract, including 
subcontracting costs. The contracting officer should consider whether a 
contractor or subcontractor has an approved purchasing system, has 
performed cost or price analysis of proposed subcontractor prices, or 
has negotiated the subcontract prices before negotiation of the prime 
contract, in determining the reasonableness of the prime contract 
price. This does not relieve the contracting officer from the 
responsibility to analyze the contractor's submission, including 
subcontractor's certified cost or pricing data.
    (b) * * *
    (3) When required by paragraph (c) of this section, 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, purchase order, 
or modification expected to exceed the certified cost or pricing data 
threshold, unless an exception in 15.403-1(b) applies to that action.
* * * * *
    (2) The contracting officer should require the contractor or 
subcontractor to submit to the Government (or cause submission of) 
subcontractor certified cost or pricing data below the thresholds in 
paragraph (c)(1) of this section and data other than certified cost or 
pricing data that the contracting officer considers necessary for 
adequately pricing the prime contract.
* * * * *

[[Page 20099]]

    19. Amend section 15.406-2 by--
    a. Revising the introductory text of paragraph (a);
    b. Removing from the second sentence of the certificate in 
paragraph (a) ``the cost'' and adding ``the certified cost'' in its 
place;
    c. Revising paragraph (e).
    The revised text reads as follows:


15.406-2  Certificate of Current Cost or Pricing Data.

    (a) When certified cost or pricing data are required, the 
contracting officer shall require the contractor to execute a 
Certificate of Current Cost or Pricing Data, using the format in this 
paragraph, and must include the executed certificate in the contract 
file.
* * * * *
    (e) If certified cost or pricing data are requested by the 
Government and submitted by an offeror, but an exception is later found 
to apply, the data shall not be considered certified cost or pricing 
data and shall not be certified in accordance with this subsection.
    20. Amend section 15.406-3 by revising paragraphs (a)(5) and 
(a)(6), and the second and third sentences of paragraph (a)(7) to read 
as follows:


15.406-3  Documenting the negotiation.

    (a) * * *
    (5) If certified cost or pricing data were not required in the case 
of any price negotiation exceeding the certified cost or pricing data 
threshold, the exception used and the basis for it.
    (6) If certified cost or pricing data were required, the extent to 
which the contracting officer--
    (i) Relied on the certified cost or pricing data submitted and used 
them in negotiating the price;
    (ii) Recognized as inaccurate, incomplete, or noncurrent any 
certified cost or pricing data submitted; the action taken by the 
contracting officer and the contractor as a result; and the effect of 
the defective data on the price negotiated; or
    (iii) Determined that an exception applied after the data were 
submitted and, therefore, considered not to be certified cost or 
pricing data.
    (7) * * * Where the determination of a fair and reasonable price is 
based on cost analysis, the summary shall address each major cost 
element. When determination of a fair and reasonable price is based on 
price analysis, the summary shall include the source and type of data 
used to support the determination.
* * * * *
    21. Amend section 15.407-1 by--
    a. Revising the section heading;
    b. Removing from the first sentence of paragraph (a) ``any cost'' 
and adding ``any certified cost'' in its place;
    c. Revising paragraph (b)(1);
    d. Removing from paragraphs (b)(2) and (b)(3)(ii) ``the cost'' and 
adding ``the certified cost'' in its place;
    e. Revising paragraph (b)(3)(iv);
    f. Removing from paragraph (b)(4) ``understated cost'' and adding 
``understated certified cost'' in its place;
    g. Removing from the first sentence of paragraph (b)(5)(ii) ``the 
cost'' and adding ``the certified cost'' in its place;
    h. Removing from the first sentence of paragraph (b)(7)(iii) 
``defective cost'' and adding ``defective certified cost'' in its 
place;
    i. Removing from the first sentence of paragraph (e) ``Defective 
Cost'' each time it appears (twice) and adding ``Defective Certified 
Cost'' in its place;
    j. Removing from the first sentence of the introductory text of 
paragraph (f) ``subcontractor cost'' and adding ``subcontractor 
certified cost'' in its place;
    k. Removing from the first sentence of paragraph (f)(2) 
``subcontractor cost'' and adding ``subcontractor certified cost'' in 
its place.
    The revised text reads as follows:


15.407-1  Defective certified cost or pricing data.

* * * * *
    (b) * * *
    (1) If, after award, certified cost or pricing data are found to be 
inaccurate, incomplete, or noncurrent as of the date of final agreement 
on price or an earlier date agreed upon by the parties given on the 
contractor's or subcontractor's Certificate of Current Cost or Pricing 
Data, the Government is entitled to a price adjustment, including 
profit or fee, of any significant amount by which the price was 
increased because of the defective data. This entitlement is ensured by 
including in the contract one of the clauses prescribed in 15.408 (b) 
and (c) and is set forth in 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. 
The clauses give the Government the right to a price adjustment for 
defects in certified cost or pricing data submitted by the contractor, 
a prospective subcontractor, or an actual subcontractor.
* * * * *
    (3) * * *
    (iv) Certified cost or pricing data were required; however, the 
contractor or subcontractor did not submit a Certificate of Current 
Cost or Pricing Data relating to the contract.
* * * * *


15.407-2  [Amended]

    22. Amend section 15.407-2 in paragraph (c)(1) by removing 
``requiring cost'' and adding ``requiring certified cost'' in its 
place.
    23. Amend section 15.407-3 by revising the first sentence of 
paragraph (a) to read as follows:


15.407-3  Forward pricing rate agreements.

    (a) When certified cost or pricing data are required, offerors are 
required to describe any forward pricing rate agreements (FPRA's) in 
each specific pricing proposal to which the rates apply and to identify 
the latest certified cost or pricing data already submitted in 
accordance with the agreement. * * *
* * * * *
    24. Amend section 15.408 by--
    a. Revising paragraphs (b), (c), (d), and (e);
    b. Removing from paragraphs (g), (j), and (k) ``that cost'' and 
adding ``that certified cost'' in its place;
    c. Revising the introductory text of paragraph (l), (l)(1), (l)(4), 
and (m); and
    d. In Table 15-2, which follows paragraph (m)(3), by--
    1. Revising the table title, the introductory text, and Notes 1 and 
2;
    2. Revising the first sentence of paragraph B. and the introductory 
text of paragraph C. of the General Instructions; and
    3. Revising the introductory text of paragraph A. and paragraph 
A.(2) of the Cost Elements.
    The revised text reads as follows:


15.408  Solicitation provisions and contract clauses.

* * * * *
    (b) Price Reduction for Defective Certified Cost or Pricing Data. 
The contracting officer shall, when contracting by negotiation, insert 
the clause at 52.215-10, Price Reduction for Defective Certified Cost 
or Pricing Data, in solicitations and contracts when it is contemplated 
that certified cost or pricing data will be required from the 
contractor or any subcontractor (see 15.403-4).
    (c) Price Reduction for Defective Certified Cost or Pricing Data--
Modifications. The contracting officer shall, when contracting by 
negotiation, insert the clause at 52.215-11, Price Reduction for 
Defective Certified Cost or Pricing Data--Modifications, in 
solicitations and contracts when it is contemplated that certified cost 
or pricing data will be required from the contractor or any 
subcontractor (see

[[Page 20100]]

15.403-4) for the pricing of contract modifications, and the clause 
prescribed in paragraph (b) of this section has not been included.
    (d) Subcontractor Certified Cost or Pricing Data. The contracting 
officer shall insert the clause at 52.215-12, Subcontractor Certified 
Cost or Pricing Data, in solicitations and contracts when the clause 
prescribed in paragraph (b) of this section is included.
    (e) Subcontractor Certified Cost or Pricing Data--Modifications. 
The contracting officer shall insert the clause at 52.215-13, 
Subcontractor Certified Cost or Pricing Data--Modifications, in 
solicitations and contracts when the clause prescribed in paragraph (c) 
of this section is included.
* * * * *
    (l) Requirements for Certified Cost or Pricing Data and Data Other 
Than Certified Cost or Pricing Data. Considering the hierarchy at 
15.402, the contracting officer shall insert the provision at 52.215-
20, Requirements for Certified Cost or Pricing Data or Data Other Than 
Certified Cost and Pricing Data, in solicitations if it is reasonably 
certain that certified cost or pricing data or data other than 
certified cost or pricing data will be required. This provision also 
provides instructions to offerors on how to request an exception. The 
contracting officer shall--
    (1) Use the provision with its Alternate I to specify a format for 
certified cost or pricing data or data other than certified cost or 
pricing data other than the format required by Table 15-2 of this 
section;
* * * * *
    (4) Replace the basic provision with its Alternate IV if certified 
cost or pricing data are not expected to be required because an 
exception may apply, but data other than certified cost or pricing data 
is required as described in 15.403-3.
    (m) Requirements for Certified Cost or Pricing Data and Data Other 
Than Certified Cost or Pricing Data--Modifications. Considering the 
hierarchy at 15.402, the contracting officer shall insert the clause at 
52.215-21, Requirements for Certified Cost or Pricing Data or Data 
Other Than Certified Cost or Pricing Data--Modifications, in 
solicitations and contracts if it is reasonably certain that certified 
cost or pricing data or data other than certified cost or pricing data 
will be required for modifications. This clause also provides 
instructions to contractors on how to request an exception. The 
contracting officer shall--
    (1) Use the clause with its Alternate II if copies of the proposal 
are to be sent to the ACO and contract auditor;
    (2) Use the clause with its Alternate III if submission via 
electronic media is required; and
    (3) Replace the basic clause with its Alternate IV if certified 
cost or pricing data are not expected to be required because an 
exception may apply, but data other than certified cost or pricing data 
is required as described in 15.403-3.

TABLE 15-2--INSTRUCTIONS FOR SUBMITTING COST/PRICE PROPOSALS WHEN 
CERTIFIED COST OR PRICING DATA ARE REQUIRED

    This document provides instructions for preparing a contract 
pricing proposal when certified cost or pricing data are required.
    Note 1: There is a clear distinction between submitting 
certified cost or pricing data and merely making available books, 
records, and other documents without identification. The requirement 
for submission of certified cost or pricing data is met when all 
accurate certified cost or pricing data reasonably available to the 
offeror have been submitted, either actually or by specific 
identification, to the Contracting Officer or an authorized 
representative. As later data comes into your possession, it should 
be submitted promptly to the Contracting Officer in a manner that 
clearly shows how the data relates to the offeror's price proposal. 
The requirement for submission of certified cost or pricing data 
continues up to the time of agreement on price, or an earlier date 
agreed upon between the parties if applicable.
    Note 2: By submitting your proposal, you grant the Contracting 
Officer or an authorized representative the right to examine records 
that formed the basis for the pricing proposal. That examination can 
take place at any time before award. It may include those books, 
records, documents, and other types of factual data (regardless of 
form or whether the data is specifically referenced or included in 
the proposal as the basis for pricing) that will permit an adequate 
evaluation of the proposed price.

I. General Instructions

* * * * *
    B. In submitting your proposal, you must include an index, 
appropriately referenced, of all the certified cost or pricing data 
and data other than certified cost or pricing data accompanying or 
identified in the proposal. * * *
    C. As part of the specific information required, you must 
submit, with your proposal, certified cost or pricing data (as 
defined at FAR 2.101). You must clearly identify on your cover sheet 
that certified cost or pricing data are included as part of the 
proposal. In addition, you must submit with your proposal any data 
other than certified cost or pricing data reasonably required to 
explain your estimating process, including--
* * * * *

II. Cost Elements

* * * * *
    A. Materials and services. Provide a consolidated priced summary 
of individual material quantities included in the various tasks, 
orders, or contract line items being proposed and the basis for 
pricing (vendor quotes, invoice prices, etc.). Include raw 
materials, parts, components, assemblies, and services to be 
produced or performed by others. For all items proposed, identify 
the item and show the source, quantity, and price. Conduct price 
analyses of all subcontractor proposals. Conduct cost analyses for 
all subcontracts when certified cost or pricing data are submitted 
by the subcontractor. Include these analyses as part of your own 
certified cost or pricing data submissions for subcontracts expected 
to exceed the appropriate threshold in FAR 15.403-4. Submit the 
subcontractor certified cost or pricing data as part of your own 
certified cost or pricing data as required in paragraph IIA(2) of 
this table. These requirements also apply to all subcontractors if 
required to submit certified cost or pricing data.
* * * * *
    (2) All Other. Obtain certified cost or pricing data and data 
other than certified cost or pricing data from prospective sources 
for those acquisitions (such as subcontracts, purchase orders, 
material order, etc.) exceeding the threshold set forth in FAR 
15.403-4 and not otherwise exempt, in accordance with FAR 15.403-
1(b) (i.e., adequate price competition, commercial items, prices set 
by law or regulation or waiver). Also provide data showing the basis 
for establishing source and reasonableness of price. In addition, 
provide a summary of your cost analysis and a copy of certified cost 
or pricing data and data other than certified cost or pricing data 
submitted by the prospective source in support of each subcontract, 
or purchase order that is the lower of either $11,500,000 or more, 
or both more than the pertinent certified cost or pricing data 
threshold and more than 10 percent of the prime contractor's 
proposed price. The Contracting Officer may require you to submit 
certified cost or pricing data and data other than certified cost or 
pricing data in support of proposals in lower amounts. Subcontractor 
certified cost or pricing data must be accurate, complete and 
current as of the date of final price agreement, or an earlier date 
agreed upon by the parties, given on the prime contractor's 
Certificate of Current Cost or Pricing Data. The prime contractor is 
responsible for updating a prospective subcontractor's data. For 
standard commercial items fabricated by the offeror that are 
generally stocked in inventory, provide a separate cost breakdown, 
if priced based on cost. For interorganizational transfers priced at 
cost, provide a separate breakdown of cost elements. Analyze the 
certified cost or pricing data and data other than certified cost or 
pricing data and submit the results of your analysis of the 
prospective source's proposal. When submission of a prospective 
source's certified cost or pricing data is required as described in 
this paragraph, it must be included as part of your own certified 
cost or pricing data. You must also submit any data other than 
certified cost or pricing data obtained from a

[[Page 20101]]

subcontractor, either actually or by specific identification, along 
with the results of any analysis performed on that data.
* * * * *

PART 16--TYPES OF CONTRACTS


16.202-2  [Amended]

    25. Amend section 16.202-2 by removing from paragraph (b) ``valid 
cost'' and adding ``valid certified cost'' in its place.
    26. Amend section 16.203-2 by revising paragraph (b) to read as 
follows:


16.203-2  Application.

* * * * *
    (b) In contracts that do not require submission of certified cost 
or pricing data, the contracting officer shall obtain adequate data to 
establish the base level from which adjustment will be made and may 
require verification of data submitted.
    27. Amend section 16.603-2 by revising the first sentence of 
paragraph (c) to read as follows:


16.603-2  Application.

* * * * *
    (c) Each letter contract shall, as required by the clause at 
52.216-25, Contract Definitization, contain a negotiated definitization 
schedule including (1) dates for submission of the contractor's price 
proposal, required certified cost or pricing data and data other than 
certified cost or pricing data, and, if required, make-or-buy and 
subcontracting plans, (2) a date for the start of negotiations, and (3) 
a target date for definitization, which shall be the earliest 
practicable date for definitization. * * *
* * * * *
    28. Amend section 16.603-4 by revising the second sentence of 
paragraph (b)(3) to read as follows:


16.603-4  Contract clauses.

    (b) * * *
    (3) * * * If at the time of entering into the letter contract, the 
contracting officer knows that the definitive contract will be based on 
adequate price competition or will otherwise meet the criteria of 
15.403-1 for not requiring submission of certified cost or pricing 
data, the words ``and certified cost or pricing data'' may be deleted 
from paragraph (a) of the clause. * * *
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

    29. Amend paragraph 19.705-4 by--
    a. Removing from the introductory paragraph and paragraph (a) 
``must'' and adding ``shall'' in its place; and
    b. Revising paragraph (d)(3) to read as follows:


19.705-4  Reviewing the subcontracting plan.

* * * * *
    (d) * * *
    (3) Ensure that the subcontracting goals are consistent with the 
offeror's certified cost or pricing data or data other than certified 
cost or pricing data.
* * * * *
    30. Amend section 19.806 by revising the second and third sentences 
of paragraph (a) to read as follows:


19.806  Pricing the 8(a) contract.

    (a) * * * If required by Subpart 15.4, the SBA shall obtain 
certified cost or pricing data and data other than certified cost or 
pricing data from the 8(a) contractor. If the SBA requests audit 
assistance to determine proposed price to be fair and reasonable in a 
sole source acquisition, the contracting activity shall furnish it to 
the extent it is available.
* * * * *

PART 27--PATENTS, DATA, AND COPYRIGHTS


27.204-1  [Amended]

    31. Amend section 27.204-1 in the first sentence of paragraph (b) 
by removing ``which cost'' and adding ``which certified cost'' in its 
place.


27.204-2  [Amended]

    32. Amend section 27.204-2 in the first sentence by removing 
``which cost'' and adding ``which certified cost'' in its place.

PART 30--COST ACCOUNTING STANDARDS ADMINISTRATION


30.201-5  [Amended]

    33. Amend section 30.201-5 in paragraph (c)(6) by removing 
``Whether cost'' and adding ``Whether certified cost'' in its place.

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES


31.205-6  [Amended]

    34. Amend section 31.205-6 in paragraph (j)(3)(i)(B), the second 
sentence of paragraph (j)(3)(ii), and the second sentence of paragraph 
(o)(5) by removing ``which cost'' and adding ``which certified cost'' 
in its place.

PART 32--CONTRACT FINANCING


32.613  [Amended]

    35. Amend section 32.613 in paragraph (h)(3) by removing 
``Defective Cost'' and adding ``Defective Certified Cost'' in its 
place.

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES


42.705-1  [Amended]

    36. Amend section 42.705-1 in paragraph (b)(5)(iii)(D) by removing 
``of cost'' and adding ``of certified cost'' in its place.
    37. Amend section 42.1304 by revising paragraph (d) to read as 
follows:


42.1304  Government delay of work.

* * * * *
    (d) The contracting officer shall retain in the file a record of 
all negotiations leading to any adjustment made under the clause, and 
related certified cost or pricing data, or data other than certified 
cost or pricing data.
    38. Amend section 42.1701 by--
    a. Removing from the first sentence of paragraph (b) ``include 
cost'' and adding ``include certified cost'' in its place, and adding a 
new second sentence; and
    b. Revising t