52.215-10
Price Reduction for Defective Certified Cost or Pricing Data
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.