What Is Certified Cost or Pricing Data?

Certified cost or pricing data plays a fundamental role in government contracting. This data is essential for establishing fair and reasonable prices when the government negotiates contracts. It ensures transparency and accountability in the use of taxpayer funds. Understanding this data is significant for businesses engaging with federal agencies.

What is Certified Cost or Pricing Data

Certified cost or pricing data refers to factual, verifiable information expected to influence price negotiations between a knowledgeable buyer and seller. This data is mandated by the Truthful Cost and Pricing statute (TINA). Its primary objective is to ensure the government acquires goods and services at fair and reasonable prices, preventing overpayment in negotiated procurements.

It includes various elements contributing to a contractor’s proposed price:
Vendor quotes for material costs.
Non-recurring costs (e.g., setup, tooling).
Manufacturing costs.
Labor rates.
Overhead expenses (indirect costs).
Profit elements.

Certification signifies a formal attestation by the contractor. A responsible company official signs a statement affirming its accuracy, completeness, and currency. This assures the government the information is up-to-date and truthful at the time of price agreement. It differs from general “cost data” or “pricing data,” which do not require formal certification or carry the same legal weight. This distinction ensures the government receives a reliable basis for pricing decisions in significant negotiated contracts.

When Certification Becomes Necessary

Certified cost or pricing data is primarily required for negotiated government contracts lacking adequate price competition. Federal regulations require this data if the contract value exceeds a specific monetary threshold. Currently, this threshold is $2 million for prime contracts awarded on or after July 1, 2018. It also applies to subcontracts and contract modifications exceeding this amount, if the original prime contract required certified data.

Exceptions exist even if the contract value surpasses the threshold. One exception is for prices based on adequate price competition (multiple independent offers). Another is for prices set by law or regulation. Acquisition of commercial products or services also typically exempts contractors. This applies when the contracting officer determines the item or service is commercial. Waivers can be granted by the head of the contracting activity in exceptional cases. Even when certified data is not required, the government may request “data other than certified cost or pricing data” to determine a fair and reasonable price. This non-certified data must be sufficient for the contracting officer to perform a thorough price analysis.

The Certification Statement and Process

The “Certificate of Current Cost or Pricing Data” embodies the formal commitment to data integrity. This document affirms the accuracy, completeness, and currency of the financial information. It states that, to the best of the signee’s knowledge, the data is truthful as of a specific date. This is a formal declaration that all relevant information affecting the contract price has been disclosed.

Procedural steps for submission are defined in federal acquisition regulations. An authorized company official, with knowledge of financial records and proposed costs, must sign. Submission timing is crucial: it must be provided after price agreement but before contract award. This ensures the government has current information at price finalization.

The data must be current up to the date of the price agreement, not just the signing date. New, pertinent information available between data submission and price agreement must be disclosed. This formal statement carries substantial legal weight. It establishes a benchmark for negotiation data and forms the basis for government remedies if data is found defective.

Addressing Defective Certified Data

Defective pricing occurs when inaccurate, incomplete, or non-current data leads to a significant contract price increase. This undermines the government’s ability to ensure fair pricing. The government has a right to price adjustment. This is secured through federal contract clauses, allowing price reduction.

Upon discovery, the government is entitled to a price adjustment, including profit or fee, for any significant price increase due to faulty information. The “effect on price” test is central; the government must demonstrate the defective data directly caused a higher contract price. The term “significant amount” implies a material impact on cost.

Government audits, often by the Defense Contract Audit Agency (DCAA), identify potential defective pricing. Audits scrutinize submitted data against contractor records and market conditions to verify accuracy, completeness, and currency. If identified, the government may seek recovery of overpayment and interest. While no single statute of limitations exists, the government generally has up to three years after final payment to pursue adjustments.