15.404-3
Subcontract pricing considerations
Contractors and subcontractors must conduct and document cost or price analyses for subcontracts, and submit certified cost or pricing data for high-value subcontracts to ensure fair and reasonable pricing in government contracts.
Overview
FAR 15.404-3 outlines the requirements and procedures for evaluating subcontract pricing in government contracts. It establishes the responsibilities of contracting officers and contractors to ensure that subcontract costs included in a prime contract are fair and reasonable. The regulation details when and how cost or price analyses must be conducted, the submission of certified cost or pricing data, and the thresholds that trigger these requirements. It also clarifies the documentation and data submission obligations for both prime contractors and their subcontractors, ensuring transparency and accuracy in pricing throughout the acquisition process.
Key Rules
- Contracting Officer's Responsibility
- The contracting officer must determine the fairness and reasonableness of the total contract price, including subcontract costs, regardless of the contractor’s purchasing system or prior analyses.
- Contractor/Subcontractor Analysis
- Prime contractors and subcontractors must conduct cost or price analyses for proposed subcontracts and include the results in their proposals.
- Certified Cost or Pricing Data Submission
- Contractors must obtain and analyze certified cost or pricing data for subcontracts exceeding the threshold, and submit this data to the government as required.
- Thresholds for Data Submission
- Certified cost or pricing data must be submitted for subcontracts at or above $15 million, or those exceeding both the threshold and 10% of the prime contract price, unless waived by the contracting officer.
- Data Format and Currency
- Data must be submitted in the required format, be current, accurate, and complete as of the price agreement date, and updated as necessary.
Responsibilities
- Contracting Officers: Must independently analyze and determine price reasonableness, review contractor analyses, and request additional data as needed.
- Contractors: Must perform and document cost/price analyses, obtain and submit required certified cost or pricing data, and ensure data accuracy and timeliness.
- Agencies: Oversee compliance and ensure proper documentation and data submission.
Practical Implications
- Ensures transparency and fairness in subcontract pricing.
- Requires rigorous documentation and analysis, especially for high-value subcontracts.
- Non-compliance can delay contract awards or result in disallowed costs.