15.402 Pricing policy
Source: FAR 15.402 on acquisition.gov
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.
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-
(1) 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; or
(2) When certified cost or pricing data are not required by 15.403-4, shall obtain data other than certified cost or pricing data as necessary to establish a fair and reasonable price, generally using the following order of preference in determining the type of data required:
(i) No additional data from the offeror, if the price is based on adequate price competition, except as provided by 15.403-3(b).
(ii) Data other than certified cost or pricing data such as-
(A) Data related to prices (e.g., established catalog or market prices, sales to non-governmental and governmental entities), 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 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.
(B) Cost data to the extent necessary for the contracting officer to determine a fair and reasonable price.
(3) Obtain the type and quantity of data necessary to establish a fair and reasonable price, but not more data than is necessary. Requesting unnecessary data can lead to increased proposal preparation costs, generally extend acquisition lead time, and consume additional contractor and Government resources. Use techniques such as, but not limited to, price analysis, cost analysis, and/or cost realism analysis to establish a fair and reasonable price. If a fair and reasonable price cannot be established by the contracting officer from the analyses of the data obtained or submitted to date, the contracting officer shall require the submission of additional data sufficient for the contracting officer to support the determination of the fair and reasonable price.
(b) Price each contract separately and independently and not-
(1) Use proposed price reductions under other contracts as an evaluation factor; or
(2) Consider losses or profits realized or anticipated under other contracts.
(c) Not include in a contract price any amount for a specified contingency to the extent that the contract provides for a price adjustment based upon the occurrence of that contingency.