15.407-1
Defective certified cost or pricing data
FAR 15.407-1 ensures the government can recover overpayments and adjust contract prices when defective certified cost or pricing data is discovered, holding contractors accountable for data accuracy.
Overview
FAR 15.407-1 addresses the procedures and remedies related to defective certified cost or pricing data in government contracting. It outlines the responsibilities of contracting officers and contractors when such data is found to be inaccurate, incomplete, or noncurrent, both before and after contract award. The regulation ensures that the government can adjust contract prices and recover overpayments, including interest and penalties, when defective data has led to inflated contract prices. It also provides guidance on offsets, audit procedures, reporting requirements, and the handling of defective subcontractor data.
Key Rules
- Pre-Award Discovery of Defective Data
- If defective data is found before price agreement, the contracting officer must address it with the contractor and adjust negotiations accordingly.
- Post-Award Discovery and Price Adjustments
- If defective data is found after award, the government is entitled to a price reduction, including profit or fee, and may recover overpayments with interest and penalties.
- Offsets
- Contractors may offset understated data against overstated data under strict conditions, but only up to the government’s claim and with proper certification and proof.
- Audit and Determination Procedures
- Contracting officers must request audits when defective data is suspected post-award and document findings, giving contractors a chance to respond.
- Reporting and Notifications
- Determinations of defective data must be reported in CPARS/FAPIIS, and contractors must be notified of findings and corrective actions.
- Subcontractor Data
- The government can reduce the prime contract price if defective subcontractor data caused a price increase, and must share relevant audit information with the prime contractor as needed.
Responsibilities
- Contracting Officers: Must identify, address, and document defective data issues, request audits, adjust prices, recover overpayments, and report determinations.
- Contractors: Must submit accurate, complete, and current certified cost or pricing data, respond to audit findings, and certify offsets when applicable.
- Agencies: Must ensure proper reporting in CPARS/FAPIIS and protect sensitive information during disclosures.
Practical Implications
- This section protects the government from overpaying due to inaccurate cost or pricing data and enforces contractor accountability. Contractors must maintain rigorous data integrity and be prepared for audits and potential price adjustments. Common pitfalls include failing to update data, inadequate documentation, and misunderstanding offset eligibility.