Monday, July 26, 2010

"Submission" of Cost or Pricing Data

We are continuing our series on Defective Pricing today. Last week, we discussed the responsibilities of contractors to furnish current, complete, and accurate cost or pricing data, the five things the Government must show in order to sustain a contract price adjustment if the contractor did not disclose all the facts, and the importance in distinguishing between factual matters and judgment. Facts must be disclosed, judgment does not necessarily need to be disclosed, but sometimes,information mixes facts with judgment.

Today we will discuss the the meaning of the term "submitted" in the context of the five elements of defective pricing. Recall from Wednesday's post that the third element the Government must show is that accurate, complete, and current data were not submitted or disclosed to the contracting officer or one of the authorized representatives of the contracting officer and that these individuals did not have actual knowledge of such data or its significance to the proposal.

Contractors have an affirmative duty to submit current, complete, and accurate cost or pricing data. Contractors must generally submit cost or pricing data to the contracting officer or the contracting officer's authorized representative. Often times, the boards and courts will look at whether the person to whom the disclosure was made participated in the negotiation of the contract. In one case, it was held that disclosure to the auditor was not sufficient where the auditor was not involved in the negotiation (Singer). On the other hand, it was once held that disclosure to the auditor based on established practice was sufficient disclosure though the auditor did not participate in negotiation (Litton). The difference here is that the second example was based on "established practice" and it was presumed that the auditor would forward the information to the negotiators.

The ACOs are similar to the auditors when it comes to adequately submitting cost or pricing data - sometimes submission to an ACO is adequate, sometimes not. In one case it was held that disclosure to the ACO was not sufficient where the ACO had no connection to the negotiation and the contractor did not ask the ACO to forward the data to the PCO (Sylvania). On the other hand, it was held that disclosure to the ACO was sufficient where the ACO knew that the contract was being negotiated (TI).

Contractors should not presume that submission to auditors or ACOs is the same as submission to the PCO or negotiator. Be cautious and copy the negotiator on all cost or pricing data furnished to other parties.

Cost or pricing data must also be "adequately" submitted. A contractor can meet its obligation if it physically provides the data to the Government and also (this is important) discloses the significance of the data to the negotiating process. The contractor must advise Government representatives of the kind and content of the data and their bearing on the prospective proposal. Merely making records available to the Government may or may not be adequate. Knowledge by the other party of the data's existence is no defense to a failure to provide data.

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