52.215-10 Price Reduction for Defective Certified Cost or Pricing Data
Source: FAR 52.215-10 on acquisition.gov
Contractors must ensure all certified cost or pricing data submitted is complete, accurate, and current, or risk mandatory price reductions, interest, and penalties if defects are discovered.
Overview
FAR 52.215-10 establishes the requirements and procedures for reducing contract prices when it is determined that certified cost or pricing data provided by the contractor or subcontractors were defective (i.e., not complete, accurate, or current) at the time of certification. This clause is designed to protect the government from overpaying due to inaccurate or incomplete data used in contract price negotiations or cost reimbursements.
Key Rules
- Price Reduction for Defective Data
- If contract prices or reimbursable costs were increased due to defective certified cost or pricing data, the contract price must be reduced accordingly, and the contract modified to reflect the reduction.
- Subcontractor Data
- Reductions also apply if defective data came from subcontractors or prospective subcontractors, with limits based on actual subcontract costs.
- Defenses Not Allowed
- Contractors cannot defend against price reductions by claiming sole source status, superior bargaining position, government knowledge of defects, lack of itemized cost agreements, or failure to submit a certificate.
- Offsets
- Contractors may request offsets for understated data if certain conditions are met, but offsets are prohibited if the contractor knowingly understated data or if the government proves the price would not have increased.
- Interest and Penalties
- If overpayments occurred, contractors must repay with interest, and if defective data was knowingly submitted, a penalty equal to the overpayment applies.
Responsibilities
- Contracting Officers: Must enforce price reductions, determine offsets, and ensure contract modifications.
- Contractors: Must provide accurate, complete, and current certified cost or pricing data, repay overpayments with interest, and pay penalties if data was knowingly defective.
- Agencies: Oversee compliance and ensure proper application of price reductions and penalties.
Practical Implications
- This clause ensures the government pays fair and reasonable prices based on accurate data.
- Contractors must maintain rigorous data integrity and documentation practices.
- Failure to comply can result in significant financial penalties and reputational harm.
As prescribed in 15.408(b), insert the following clause:
Price Reduction for Defective Certified Cost or Pricing Data (Aug 2011)
(a) If any price, including profit or fee, negotiated in connection with this contract, or any cost reimbursable under this contract, was increased by any significant amount because—
(1) The Contractor or a subcontractor furnished certified cost or pricing data that were not complete, accurate, and current as certified in its Certificate of Current Cost or Pricing Data;
(2) A subcontractor or prospective subcontractor furnished the Contractor certified cost or pricing data that were not complete, accurate, and current as certified in the Contractor’s Certificate of Current Cost or Pricing Data; or
(3) Any of these parties furnished data of any description that were not accurate, the price or cost shall be reduced accordingly and the contract shall be modified to reflect the reduction.
(b) Any reduction in the contract price under paragraph (a) of this clause due to defective data from a prospective subcontractor that was not subsequently awarded the subcontract shall be limited to the amount, plus applicable overhead and profit markup, by which (1) the actual subcontract or (2) the actual cost to the Contractor, if there was no subcontract, was less than the prospective subcontract cost estimate submitted by the Contractor; provided, that the actual subcontract price was not itself affected by defective certified cost or pricing data.
(c)
(1) If the Contracting Officer determines under paragraph (a) of this clause that a price or cost reduction should be made, the Contractor agrees not to raise the following matters as a defense:
(i) The Contractor or subcontractor was a sole source supplier or otherwise was in a superior bargaining position and thus the price of the contract would not have been modified even if accurate, complete, and current certified cost or pricing data had been submitted.
(ii) The Contracting Officer should have known that the certified cost or pricing data in issue were defective even though the Contractor or subcontractor took no affirmative action to bring the character of the data to the attention of the Contracting Officer.
(iii) The contract was based on an agreement about the total cost of the contract and there was no agreement about the cost of each item procured under the contract.
(iv) The Contractor or subcontractor did not submit a Certificate of Current Cost or Pricing Data.
(2)
(i) Except as prohibited by subdivision (c)(2)(ii) of this clause, an offset in an amount determined appropriate by the Contracting Officer based upon the facts shall be allowed against the amount of a contract price reduction if-
(A) The Contractor certifies to the Contracting Officer that, to the best of the Contractor’s knowledge and belief, the Contractor is entitled to the offset in the amount requested; and
(B) The Contractor proves that the certified cost or pricing data were available before the "as of" date specified on its Certificate of Current Cost or Pricing Data, and that the data were not submitted before such date.
(ii) An offset shall not be allowed if—
(A) The understated data were known by the Contractor to be understated before the "as of" date specified on its Certificate of Current Cost or Pricing Data; or
(B) The Government proves that the facts demonstrate that the contract price would not have increased in the amount to be offset even if the available data had been submitted before the "as of" date specified on its Certificate of Current Cost or Pricing Data.
(d) If any reduction in the contract price under this clause reduces the price of items for which payment was made prior to the date of the modification reflecting the price reduction, the Contractor shall be liable to and shall pay the United States at the time such overpayment is repaid-
(1) Interest compounded daily, as required by http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section6622&num=0&edition=prelim" target="_blank">26 U.S.C.6622, on the amount of such overpayment to be computed from the date(s) of overpayment to the Contractor to the date the Government is repaid by the Contractor at the applicable underpayment rate effective for each quarter prescribed by the Secretary of the Treasury under http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section6621(a)(2)&num=0&edition=prelim" target="_blank">26 U.S.C. 6621(a)(2); and
(2) A penalty equal to the amount of the overpayment, if the Contractor or subcontractor knowingly submitted certified cost or pricing data that were incomplete, inaccurate, or noncurrent.
(End of clause)