Pricing policy
Contracting officers must ensure each contract is independently priced at a fair and reasonable rate using only the necessary data, avoiding unnecessary requests and improper consideration of other contracts.
Overview
FAR 15.402 establishes the fundamental pricing policy for federal contracts, requiring contracting officers to ensure that supplies and services are purchased from responsible sources at fair and reasonable prices. The section outlines the procedures for obtaining and evaluating pricing data, including when to require certified cost or pricing data, and the preferred order for seeking other data types. It also emphasizes minimizing unnecessary data requests to avoid increasing costs and acquisition lead times. Additionally, it mandates that each contract be priced independently, without considering price reductions, profits, or losses from other contracts, and prohibits including amounts for contingencies already covered by contract price adjustments.
Key Rules
- Fair and Reasonable Pricing
- Contracting officers must ensure all purchases are made at fair and reasonable prices from responsible sources.
- Data Requirements
- Certified cost or pricing data must be obtained when required by FAR 15.403-4; otherwise, other relevant data should be used, following a specific order of preference.
- Order of Data Preference
- Prefer adequate price competition, then data on established prices, and finally cost data if necessary.
- Minimize Data Requests
- Only request the data necessary to establish price reasonableness to avoid unnecessary costs and delays.
- Independent Pricing
- Each contract must be priced on its own merits, without considering other contracts’ pricing or financial outcomes.
- Contingency Pricing
- Do not include amounts for contingencies already addressed by contract price adjustment clauses.
Responsibilities
- Contracting Officers: Must obtain appropriate pricing data, analyze it, and ensure independent, fair, and reasonable pricing for each contract.
- Contractors: Must provide requested pricing or cost data as required and ensure data is accurate and sufficient for evaluation.
- Agencies: Should oversee compliance with pricing policies and ensure contracting officers follow proper procedures.
Practical Implications
- This section ensures transparency and fairness in government contract pricing, protecting taxpayer funds and promoting competition.
- Contractors should be prepared to provide relevant pricing data and understand that excessive data requests can be challenged.
- Common pitfalls include requesting unnecessary data, failing to justify price reasonableness, or improperly considering unrelated contract pricing.