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Monday, January 4, 2010

Cost or Pricing Data

Various procurement reforms over the past several years have added a variety of methods by which the Government can award contracts. The preferred method is to utilize competition whenever possible. Negotiations based on cost or pricing data is now a last resort. However, quite a few contract awards are still made on the basis of cost or pricing data. At the "handshake" date, contractors are required to certify that the cost or pricing data submitted to the Government was current, complete, and accurate.

The definition of cost or pricing data is found in FAR 2.101. FAR states that cost or pricing data means all facts that, as of the date of price agreement, prudent buyers and sellers would reasonably expect to significantly affect price negotiations. Cost or pricing data are factual, not judgmental, and are verifable. While they do not indicate the accuracy of the prospective contractor's judgment about estimated future costs or projections, they do include the data forming the basis for that judgment.

Cost or pricing data are more than historical accounting data; they are all the facts that can be reasonably expected to contribute to the souondness of estimates of future costs and to the validity of determinations of costs already incurred. Thy can include such factors as
  • vendor quotations
  • nonrecurring costs
  • changes in productions methods
  • data supporting projections of business prospects
  • unit cost trends
  • mank/buy decisions
  • management decisions that could have a significant bearing on costs.

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