52.215-11
Price Reduction for Defective Certified Cost or Pricing Data-Modifications
Contractors must ensure all certified cost or pricing data for contract modifications are complete, accurate, and current, or risk mandatory price reductions, interest, and penalties.
Overview
FAR 52.215-11 establishes the requirements and procedures for reducing contract prices when defective certified cost or pricing data are discovered in connection with contract modifications. This clause applies to modifications exceeding the certified cost or pricing data threshold, unless an exception under FAR 15.403-1(b) applies. Its purpose is to ensure the government does not overpay due to incomplete, inaccurate, or noncurrent data provided by contractors or their subcontractors during negotiations for contract modifications.
Key Rules
- Applicability
- The clause applies to contract modifications exceeding the certified cost or pricing data threshold, unless an exception applies.
- Price Reduction Obligation
- If contract prices or costs were increased due to defective data, the contract price must be reduced accordingly, and the contract modified to reflect the reduction.
- Subcontractor Data
- Reductions for defective data from prospective subcontractors are limited to the difference between the estimated and actual subcontract costs, plus overhead and profit, unless the actual subcontract price was also affected by defective data.
- Defenses Not Allowed
- Contractors cannot use certain defenses (e.g., sole source status, lack of itemized agreement, or lack of certificate) to avoid price reductions.
- Offsets
- Contractors may claim offsets for data not previously submitted, with restrictions if data was knowingly understated or would not have affected the price.
- Interest and Penalties
- Contractors must pay interest on overpayments and may be liable for penalties if defective data was knowingly submitted.
Responsibilities
- Contracting Officers: Must enforce price reductions, determine offsets, and ensure compliance with interest and penalty provisions.
- Contractors: Must provide complete, accurate, and current certified cost or pricing data, repay overpayments with interest, and avoid knowingly submitting defective data.
- Agencies: Oversee compliance and ensure proper application of price reductions and penalties.
Practical Implications
- This clause protects the government from overpaying due to defective cost or pricing data in contract modifications.
- Contractors must maintain rigorous data accuracy and documentation practices to avoid financial penalties and interest.
- Common pitfalls include failing to update data, misunderstanding offset eligibility, or neglecting to repay overpayments promptly.