Proposed Exceptions to Cost or Pricing Data

Over the past few weeks, we have been providing periodic updates to provisions included in the respective Senate and House versions of the fiscal year 2016 NDAA (National Defense Authorization Act). The House passed its version of the 2016 National Defense Authorization Act late last week. After the Senate passes their version, its on to conference committee to iron out the differences.

10 U.S. Code 2306a, also known as "truth in negotiations" sets forth the requirement for certified cost or pricing data. Section (b) of that statute lists the exceptions to the requirement including adequate price competition, prices set by law or regulation, commercial items, and certain contract modifications.

The House-passed fiscal year 2016 NDAA adds two additional exceptions to the requirement for certified cost or pricing data.

Section 804 adds the following:

(4) Commercial Item Determination - For purposes of applying the commercial item exception under paragraph (1)(B) to the required submission of certified cost or pricing data, the contracting officer may presume that a prior commercial item determination made by a military department, a Defense Agency, or another component of the Department of Defense shall serve as a determination for subsequent procurements of such item.

 Section 852 adds the following:

(5) Use of Recent Prices Paid by the Government - A contracting officer shall consider evidence provided by an offeror of recent purchase prices paid by the Government for the same or similar commercial items in establishing price reasonableness on a subsequent purchase if the contracting officer is satisfied that the prices previously paid remain a valid reference for c comparison after considering the totality of other relevant factors such as the time elapsed since the prior purchase and any differences in the quantities purchased or applicable terms and conditions.

Both provisions are generally good for contractors in that it may lessen the situations where expensive preparation of cost or pricing data is necessary. The provision in Section 852 will require offerors to do a bit of homework to provide evidence of recent purchases to the Government for the same or similar items.