52.216-6
Price Redetermination-Retroactive
FAR 52.216-6 requires contractors to submit detailed cost data after performance for retroactive price negotiation, with strict deadlines and payment limits to ensure fair and accurate final pricing.
Overview
FAR 52.216-6, Price Redetermination-Retroactive, establishes the procedures for retroactively redetermining contract prices after performance, within a ceiling price. This clause is used in contracts where the final price cannot be determined at the outset and must be negotiated based on actual costs incurred, as defined by FAR Part 31. It outlines data submission requirements, negotiation procedures, billing adjustments, quarterly reporting, and restrictions on subcontracting methods.
Key Rules
- Ceiling Price
- The total amount paid under the contract cannot exceed a specified ceiling price.
- Allowable Costs
- Only costs allowable under FAR Part 31 are considered in price redetermination.
- Data Submission
- Contractors must submit proposed prices, cost statements, and other relevant data within a set period after contract completion.
- Negotiation and Modification
- Contracting Officer and Contractor must negotiate final prices based on submitted data, formalized by contract modification.
- Billing Adjustments
- Interim billing prices may be adjusted if they differ significantly from estimated final prices, with all changes reflected in contract modifications.
- Quarterly Reporting
- Contractors must submit quarterly statements detailing costs, profits, and payments until final price redetermination.
- Subcontracting Restriction
- Subcontracts cannot be cost-plus-a-percentage-of-cost.
- Disputes and Termination
- Disagreements are resolved per the Disputes clause; special rules apply if the contract is terminated before redetermination.
Responsibilities
- Contracting Officers: Set the ceiling price, review and negotiate submitted data, issue contract modifications, and enforce compliance.
- Contractors: Submit required data and quarterly statements on time, negotiate in good faith, adjust billings as needed, and comply with subcontracting restrictions.
- Agencies: Oversee reporting, ensure timely negotiation, and monitor for overpayments or noncompliance.
Practical Implications
- This clause ensures that final contract prices reflect actual, allowable costs, protecting both government and contractor interests. It requires rigorous documentation, timely reporting, and proactive negotiation. Common pitfalls include late data submission, inadequate cost documentation, and failure to adjust billings or refund overpayments, all of which can result in payment suspensions or interest penalties.