When are Prime contractors required to obtain Certified Cost or

Midas, (that name sounds appropriate) have you read the clauses 52.215-12 and -13? Don't they answer your questions?

Midas, (that name sounds appropriate) have you read the clauses 52.215-12 and -13? Don't they answer your questions?

Thanks for the feedback - let me rephrase the question. In the clause 52.215-12, is "the date of agreement on price or the date of award" referring to the relationship between the Government and the Prime or between the Prime and the Subcontractor?

Thanks for the feedback - let me rephrase the question. In the clause 52.215-12, is "the date of agreement on price or the date of award" referring to the relationship between the Government and the Prime or between the Prime and the Subcontractor?

Are you asking when is the relevant date to have the sub certify its cost or pricing data?

It may be required more than once.

To anaswer your question, check out the NCMA Headquarters website, for a presentation entitled "Managing Subcontract Defective Pricing" that was presented on April 27, 2005. The presentation can be found at the below URL

www.ncmahq.org/files/FileDownloads/PPTs/809\_Masiello.ppt

Thanks for the feedback - let me rephrase the question. In the clause 52.215-12, is "the date of agreement on price or the date of award" referring to the relationship between the Government and the Prime or between the Prime and the Subcontractor?

The date refers to the relationship between the Prime and its Sub.

Are you asking when is the relevant date to have the sub certify its cost or pricing data?

It may be required more than once.

To anaswer your question, check out the NCMA Headquarters website, for a presentation entitled "Managing Subcontract Defective Pricing" that was presented on April 27, 2005. The presentation can be found at the below URL

www.ncmahq.org/files/FileDownloads/PPTs/809\_Masiello.ppt

Thanks to all for your help!!! Here is a scenario:

1. Prime contractor has been awared a FFP contract to perform work and work has begun

2. One of the original subcontractors is failling to perfrom or Prime decides to offload work

3. Prime contractor enters into negotiations with new subcontractor as a contingency plan

4. Value of this proposal exceeds the $650,000 threshold and it is not commercial or competitive

5. Prime contractor is requiring new subcontractor to provide certified cost and pricing data

In the above situation, does the FAR require the Prime to request and the subcontractor to provide cost and pricing data? If so, doesn't it feel counter-intuitive that, after being awarded a FFP contract, a Prime is required to obtain cost and pricing data from a subcontractor since at the end of the day the government price will be unaffected by any price negotiations between the Prime and the subcontractor?

Thanks again for the support!!

Would the following statment accurately reflect the intent of the FAR:

This is a post award contractor internal problem that doesn't have any affect or bearing on the integrity of the initial negotiated award between the Contractor and the Government. The TINA isnt applicable to this situation. The Contractor must get the work done and is using a replacement subcontractor for one who failed. He didn't know that at the time of price agreement with the Government. The cost or pricing data was supposedly current at the time of the initial award of the work or at the time of agreement with the Government.

This is a post award contractor internal problem that doesn't have any affect or bearing on the integrity of the initial negotiated award between the Contractor and the Government. The TINA isnt applicable to this situation. The Contractor must get the work done and is using a replacement subcontractor for one who failed. He didn't know that at the time of price agreement with the Government. The cost or pricing data was supposedly current at the time of the initial award of the work or at the time of agreement with the Government.

Your assessment of the scenario is correct, however, the open question is whether or not the replacement subcontractor needs to provide cost and pricing data to the Prime? The Prime suggets that it is required to obtain this information because it is a negotiated subcontract exceeding the threshold and the subcontract does not meet any of the other 15.403 exceptions.

Your assessment of the scenario is correct, however, the open question is whether or not the replacement subcontractor needs to provide cost and pricing data to the Prime? The Prime suggets that it is required to obtain this information because it is a negotiated subcontract exceeding the threshold and the subcontract does not meet any of the other 15.403 exceptions.

The prime can require the new sub to submit this information to preserve a private right of action against its sub for defective pricing that causes an increase in its subcontract price.

However, this subcontract has no relationship to the price that the government paid for the work, which is the ultimate purpose of the Truth in Negotiations Act. The contract price was already negotiated and established, prior to this action being taken to replace the defaulted sub. The contract price was or should have been negotiated upon the best information available at that time, not after the original sub defaults and is replaced by a subsequent sub.

The Government would not be able to receive any benefit of a price reduction for defective pricing, unless a subsequent prime contract modification is based upon defective pricing. Then, the modification action might involve TINA cost or pricing data associated with the new action. Plus any false factual information used to price the modification is subject to the False Claims and False Statements Acts, fraud, etc.

The Defective Pricing cases that I've been involved with always examine when the subcontract pricing actions occurred. There may be some cases somewhere, but we would not get involved in a case like this. This data does not meet the definition of cost or pricing data concerning the pricing of the prime contract, as it occurs long after the date of agreement on the price of the CONTRACT between the government and the prime. In a relatively old "BRIEFING PAPERS" article (Federal Publications, July 1993), the author states on page 9 that "Given the DCAA position" (that because a later formation of a subcontract will not affect the price the Government pays under its fixed-price contract with the prime) "there is no need to require a subcontractor to submit a certificate at the time of prime/subcontractor agreement even though the FAR appears to require one." It goes on to say that it "is time consuming, costly and may cause unnecessary litlgation". It also goes onto say that the prime may require it as I mentioned above for its own purposes.

Technically, this information isn't even "cost or pricing data" per the statutory definition, because it has no relationship to the price being paid by the Government.

The actual statutory definition of cost or pricing data in 10 2306 a (h) is:

"(h) Definitions.--In this section:

(1) Cost or pricing data.--The term ``cost or pricing data'' means all facts that, as of the date of agreement on the price of a contract (or the price of a contract modification), or, if applicable consistent with subsection (e)(1)(, another date agreed upon between the parties, a prudent buyer or seller would reasonably expect to affect price negotiations significantly. Such term does not include information that is judgmental, but does include the factual information from which a judgment was derived.

These later facts don't exist as of the time of agreement on the CONTRACT price and indeed have no bearing on the price paid to the prime contractor by the Government.

I'm not a lawyer, so consult one if you want - plus the prime can require it for their own purposes. However, the Federal Government cant do anything with the info, to my knowledge, so it is unnecessary from the Government's legal point of view. That's not to say that some KO wont require it because the FAR appears to require it, even though it serves no purpose from the government's viewpoint or meet the intent of the Truth in Negotiations Act. Indeed, the KO on your contract may require it and the contract language may appear to require it. But it would be a waste of effort and serve no useful Government purpose that I can think of. A follow-on prime contract mod involving the new sub should use its own basis of pricing.

The prime can require the new sub to submit this information to preserve a private right of action against its sub for defective pricing that causes an increase in its subcontract price.

However, this subcontract has no relationship to the price that the government paid for the work, which is the ultimate purpose of the Truth in Negotiations Act. The contract price was already negotiated and established, prior to this action being taken to replace the defaulted sub. The contract price was or should have been negotiated upon the best information available at that time, not after the original sub defaults and is replaced by a subsequent sub.

The Government would not be able to receive any benefit of a price reduction for defective pricing, unless a subsequent prime contract modification is based upon defective pricing. Then, the modification action might involve TINA cost or pricing data associated with the new action. Plus any false factual information used to price the modification is subject to the False Claims and False Statements Acts, fraud, etc.

The Defective Pricing cases that I've been involved with always examine when the subcontract pricing actions occurred. There may be some cases somewhere, but we would not get involved in a case like this. This data does not meet the definition of cost or pricing data concerning the pricing of the prime contract, as it occurs long after the date of agreement on the price of the CONTRACT between the government and the prime. In a relatively old "BRIEFING PAPERS" article (Federal Publications, July 1993), the author states on page 9 that "Given the DCAA position" (that because a later formation of a subcontract will not affect the price the Government pays under its fixed-price contract with the prime) "there is no need to require a subcontractor to submit a certificate at the time of prime/subcontractor agreement even though the FAR appears to require one." It goes on to say that it "is time consuming, costly and may cause unnecessary litlgation". It also goes onto say that the prime may require it as I mentioned above for its own purposes.

Technically, this information isn't even "cost or pricing data" per the statutory definition, because it has no relationship to the price being paid by the Government.

The actual statutory definition of cost or pricing data in 10 2306 a (h) is:

"(h) Definitions.--In this section:

(1) Cost or pricing data.--The term ``cost or pricing data'' means all facts that, as of the date of agreement on the price of a contract (or the price of a contract modification), or, if applicable consistent with subsection (e)(1)(, another date agreed upon between the parties, a prudent buyer or seller would reasonably expect to affect price negotiations significantly. Such term does not include information that is judgmental, but does include the factual information from which a judgment was derived.

These later facts don't exist as of the time of agreement on the CONTRACT price and indeed have no bearing on the price paid to the prime contractor by the Government.

I'm not a lawyer, so consult one if you want - plus the prime can require it for their own purposes. However, the Federal Government cant do anything with the info, to my knowledge, so it is unnecessary from the Government's legal point of view. That's not to say that some KO wont require it because the FAR appears to require it, even though it serves no purpose from the government's viewpoint or meet the intent of the Truth in Negotiations Act. Indeed, the KO on your contract may require it and the contract language may appear to require it. But it would be a waste of effort and serve no useful Government purpose that I can think of. A follow-on prime contract mod involving the new sub should use its own basis of pricing.

Many thanks for the responses and insight that you have provided!!!!

You are welcome. I'm surprised that nobody else jumped in here.

Many thanks for the responses and insight that you have provided!!!!

Joel, here is an extract from 10 USC 2306a. Based on this language, why do you say this is not a TINA issue and that the prime is not required to obtain cost or pricing data from the sub in this case?

An offeror for a subcontract (at any tier) of a contract under this chapter shall be required to submit cost or pricing data before the award of the subcontract if the prime contractor and each higher-tier subcontractor have been required to make available cost or pricing data under this section

Joel, here is an extract from 10 USC 2306a. Based on this language, why do you say this is not a TINA issue and that the prime is not required to obtain cost or pricing data from the sub in this case?

An offeror for a subcontract (at any tier) of a contract under this chapter shall be required to submit cost or pricing data before the award of the subcontract if the prime contractor and each higher-tier subcontractor have been required to make available cost or pricing data under this section

Retread, I already explained that this isn't cost or pricing data as defined by statute:

The term ``cost or pricing data'' means all facts that, as of the date of agreement on the price of a contract (or the price of a contract modification), or, if applicable consistent with subsection (e)(1)((bee) , another date agreed upon between the parties, a prudent buyer or seller would reasonably expect to affect price negotiations significantly. Such term does not include information that is judgmental, but does include the factual information from which a judgment was derived."

This information cant be cost or pricing data related to the agreement on the price of the contract. The circumstances and pricing were developed long after the date of agreement on the price of the contract, thus has no bearing on the price of the contract. i assume that the contract price may have been related to the original subcontractor's cost or pricing data but not this replacement subcontract. And if you re-read the information from "Briefing Papers, you will see why the author says it is a wasted effort. TINA is intended to benefit the Government. This subcontract has no relation to the negotiation of the contract price and doesn't benefit the Government.

Retread, I already explained that this isn't cost or pricing data as defined by statute:

The term ``cost or pricing data'' means all facts that, as of the date of agreement on the price of a contract (or the price of a contract modification), or, if applicable consistent with subsection (e)(1)((bee) , another date agreed upon between the parties, a prudent buyer or seller would reasonably expect to affect price negotiations significantly. Such term does not include information that is judgmental, but does include the factual information from which a judgment was derived."

This information cant be cost or pricing data related to the agreement on the price of the contract. The circumstances and pricing were developed long after the date of agreement on the price of the contract, thus has no bearing on the price of the contract. i assume that the contract price may have been related to the original subcontractor's cost or pricing data but not this replacement subcontract. And if you re-read the information from "Briefing Papers, you will see why the author says it is a wasted effort. TINA is intended to benefit the Government. This subcontract has no relation to the negotiation of the contract price and doesn't benefit the Government.

Joel, I agree that getting cost or pricing data after award of a contract may be wasted effort in some circumstances, e.g. when the prime contract is firm fixed price. However, wasted effort is not an excuse for not following the statute or contract requirements. In regard to the latter point, FAR 52.215-12, which is a contract clause states "efore awarding any subcontract expected to exceed the threshold for submission of cost or pricing data . . . the Contractor shall require the subcontracor to submit cost or pricing data." Obviously, because this is a contract clause it can only apply after the price of the contract has been agreed upon between the prime contractor and government. This clause does not limit its application to certain contract types or subcontracts contemplated at the time of contract award.

FAR 15.407-1(f)(2) also permits a cost disallowance under contracts other than FFP and FP(EPA) where payments to subcontractors are higher than they would have been in the absence of defective subcontractor cost or pricing data, regardless of when the subcontract was awarded. That is because the "Government has a continuing and direct finaicial interest in such payments that is unaffected by the intial agreement on prime contrac price."

Finally, the definition of cost or pricing data does not restrict cost or pricing data to only facts that would affect the price of the prime contract. It simply refers to the "parties" and "buyers and sellers."

Based upon all of this, I don't see how you arrive at the conclusion that cost or pricing data are not required for subcontracts awarded afte agreement on the price of the prime contract.

"Based upon all of this, I don't see how you arrive at the conclusion that cost or pricing data are not required for subcontracts awarded afte agreement on the price of the prime contract."

I never said that no sub proposals obtained or settled after the contract or modification award require the submission of cost or pricing data or that it does or doesn't have to be certified. My opinion pertains to this replacement contract. I am assuming that it is the result of poor performance by the subcontractor initially awarded the work and that performance has been started and is ongoing. It has no bearing upon the price proposed by the prime or its initial sub nor upon the contract price that the government will pay for the work.

Retread, you are entitled to your opinion as am I. I maintain that, in this situation, any basis for pricing the replacement subcontract long after the contract action has no bearing upon the price that the government paid for the contract. Therefore, the information is not "cost or pricing data", as defined in the TINA statutes. The Truth in Negotiations Act has a purpose and intent to help the government in its negotiations. It supposedly provides an administrative means to recover excess costs that were the result of "defective cost or pricing data", without having to prove all the criminal elements of fraud, deceit or false statements/claims under those statutes. For instance, you don't have to prove criminal intent to lie, steal, cheat, etc. I dont see any useful purpose in requiring a prime to require its replacement sub to provide certified cost or pricing data" that doesn't meet the intent or the definition of cost or pricing data as it affects the CONTRACT price. I believe that the referenced "Briefing Papers" article said the same thing.

Technically, even if the contractor decides, after awarding a subcontract, that it can get a better price somewhere else, then somehow just terminates the initial sub and signs a cheaper subcontract, there wouldn't be defective cost or pricing data. The cost or pricing data for both the prime and its initial sub was current as of the date of the agreement of both the contract and subcontract. Generally (there are exceptions), the contractor can look for better deals later (unfortunately for both the government and for the subcontracting community). TINA generally focuses on what the contractor or its subs knew or intended at the time of negotiations, not what they might learn later on how to improve the profit margin.

Now, if you insist on being a faithful government paper pusher, more power to you. But, please don't complain about the workload or why contractors think we are stuffed-shirt, unthinking bureaucrats. What benefit do you think that the Government might obtain from requiring that this information ON THIS PARTICULAR REPLACEMENT CONTRACT be certified as current cost or pricing data?

Incorporated above.

"Based upon all of this, I don't see how you arrive at the conclusion that cost or pricing data are not required for subcontracts awarded afte agreement on the price of the prime contract."

I never said that no sub proposals obtained or settled after the contract or modification award require the submission of cost or pricing data or that it does or doesn't have to be certified. My opinion pertains to this replacement contract. I am assuming that it is the result of poor performance by the subcontractor initially awarded the work and that performance has been started and is ongoing. It has no bearing upon the price proposed by the prime or its initial sub nor upon the contract price that the government will pay for the work.

Retread, you are entitled to your opinion as am I. I maintain that, in this situation, any basis for pricing the replacement subcontract long after the contract action has no bearing upon the price that the government paid for the contract. Therefore, the information is not "cost or pricing data", as defined in the TINA statutes. The Truth in Negotiations Act has a purpose and intent to help the government in its negotiations. It supposedly provides an administrative means to recover excess costs that were the result of "defective cost or pricing data", without having to prove all the criminal elements of fraud, deceit or false statements/claims under those statutes. For instance, you don't have to prove criminal intent to lie, steal, cheat, etc. I dont see any useful purpose in requiring a prime to require its replacement sub to provide certified cost or pricing data" that doesn't meet the intent or the definition of cost or pricing data as it affects the CONTRACT price. I believe that the referenced "Briefing Papers" article said the same thing.

Technically, even if the contractor decides, after awarding a subcontract, that it can get a better price somewhere else, then somehow just terminates the initial sub and signs a cheaper subcontract, there wouldn't be defective cost or pricing data. The cost or pricing data for both the prime and its initial sub was current as of the date of the agreement of both the contract and subcontract. Generally (there are exceptions), the contractor can look for better deals later (unfortunately for both the government and for the subcontracting community). TINA generally focuses on what the contractor or its subs knew or intended at the time of negotiations, not what they might learn later on how to improve the profit margin.

Now, if you insist on being a faithful government paper pusher, more power to you. But, please don't complain about the workload or why contractors think we are stuffed-shirt, unthinking bureaucrats. What benefit do you think that the Government might obtain from requiring that this information ON THIS PARTICULAR REPLACEMENT CONTRACT be certified as current cost or pricing data?

Joel, simply explain why 52.215-12 does not apply to Midas' situation? Why is this situation not covered by the phrase "any subcontract?"

Because it isn't cost or pricing data.

Retread, you didn't answer my question. Suppose you make the Contractor obtain this information. What benefit do you think that the Government might obtain from requiring that this information on this particular contract be certified as current cost or pricing data?

Reading this is a hoot.

midas asked a seemingly simple question:

[T]he open question is whether or not the replacement subcontractor needs to provide cost and pricing data to the Prime?

The answer to that question is no. But midas asked the wrong question. The question should be: Is the prime obligated to obtain cost or pricing data from the replacement sub? The answer depends on (1) whether the prime contract includes the clause at FAR 52.215-12 or 52.215-13, (2) whether the replacement subcontract would exceed the TINA threshold, and (3) whether any of the TINA exceptions apply.

The sub, if asked for the data by the prime, can refuse, in which case the prime must decide what to do. There is no law requiring a sub to provide the data, only a clause requiring the prime to obtain the data.

Joel has caused some confusion because he decided to talk about whether defective pricing by the replacement sub would entitle the government to a price reduction based on the initial prime contract price. I think Joel has answered that question correctly. The problem is that the answer is not responsive to the question. I think Joel is incorrect to say that data from the sub cannot be cost or pricing data. I understand his logic, but his logic isn't valid. It is also incorrect to say that the prime need not obtain the data because the data cannot affect the initial prime contract pricing action. The data could affect subsequent pricing actions between the government and the prime. In any case, as retreadfed has pointed out, it doesn't matter whether it will ever affect a pricing action or not if the prime is contractually obligated to obtain cost or pricing data from subs.

To reiterate: The prime may be obligated by its contract with the government to request cost or pricing data from the prospective replacement sub. The prospective sub is not obligated to provide it, but its refusal to do so may result in the loss of the subcontract.

Vern, I am saying that the information provided to the prime by a prospective in a takeover subcontract is apparently not cost or pricing data, per two Briefing Papers that I have retained over the years.

My information may well be out of date, because of subsequent changes to the statute and to the FAR in this area and/or case law.

The article I cited earlier in support of my opinion was a 1993 Briefing Papers. I looked through my files and also found an 89-11 Briefing Papers 1, by Kent R Morrison and Robert T. Ebert. I realize that there are later revisions to the FAR etc., concerning dates of certification. However, one of the citations used in that article has been used as late as 2005 (see below). They said in the October 1989 article:

"Date of Price Agreement

As for the third element in the definition, the Act provides that a fact is cost or pricing data only if it is significant "as of the date of agreement on the price" of a contract or a contract modification. [FN 86] Pursuant to the FAR, the date of price agreement is the "shake hands" date- the day when the price negotiations are concluded. [FN87] Consequently all significant facts exisiting as of the shake-hands date constitute cost or pricing data, while facts occurring after that date are not cost or pricing data, even if they are available prior to certification or contract award.[FN88]"

Here are the footnotes:

[FN 86] 10 USC 2306a(g)

[FN 87] See FAR 804-4(a) 1996 version: "When cost or pricing data are required, the contracting officer shall require the contractor to execute a Certificate of Current Cost or Pricing Data shown following this paragraph (a), and shall include the executed certificate in the contract file."

(Note: current FAR 15.406-2: "When cost or pricing data are required, the contracting officer shall require the contractor to execute a Certificate of Current Cost or Pricing Data using the format in the paragraph, and shall include the executed certificate in the contract file.")

The Certificate is essentially the same as the 1996 version. The instructions for the certificate used to say to insert the date when the price negotiations were concluded and price agreement was reached or, if applicable, another date (now reads: "...an earlier date") agreed upon by the parties that is as close as practicable to the date of agreement on price.

The date of the signature was (and still is) the date of signing, which should be as close as practicable to the date when the price negotiations were concluded and the contract price was agreed to.

[FN88] See Paceco, Inc, note 78, supra.

[FN 78] Paceco Inc., ASBCA 16458, 73-2 BCA 10119

Unfortunately, I dont have access to 73-2 BCA unless I drive uptown to the Federal Courthouse Law Library. I found this footnote to a 2005 GSBCA Appeal decision 15875 with VIACOM, INC. - SUCCESSOR IN INTEREST

TO WESTINGHOUSE FURNITURE SYSTEMS: "Paceco, Inc., ASBCA 16458, 73-2 BCA ? 10,119 (data created between cost and pricing data certification and award date not cost or pricing data that was required to be submitted) (in TINA context, duty to disclose complete, accurate and current data extends only to the date of price negotiations)."

Vern, I am saying that the information provided to the prime by a prospective in a takeover subcontract is apparently not cost or pricing data, per two Briefing Papers that I have retained over the years.

My information may well be out of date, because of subsequent changes to the statute and to the FAR in this area and/or case law.

The article I cited earlier in support of my opinion was a 1993 Briefing Papers. I looked through my files and also found an 89-11 Briefing Papers 1, by Kent R Morrison and Robert T. Ebert. I realize that there are later revisions to the FAR etc., concerning dates of certification. However, one of the citations used in that article has been used as late as 2005 (see below). They said in the October 1989 article:

"Date of Price Agreement

As for the third element in the definition, the Act provides that a fact is cost or pricing data only if it is significant "as of the date of agreement on the price" of a contract or a contract modification. [FN 86] Pursuant to the FAR, the date of price agreement is the "shake hands" date- the day when the price negotiations are concluded. [FN87] Consequently all significant facts exisiting as of the shake-hands date constitute cost or pricing data, while facts occurring after that date are not cost or pricing data, even if they are available prior to certification or contract award.[FN88]"

Here are the footnotes:

[FN 86] 10 USC 2306a(g)

[FN 87] See FAR 804-4(a) 1996 version: "When cost or pricing data are required, the contracting officer shall require the contractor to execute a Certificate of Current Cost or Pricing Data shown following this paragraph (a), and shall include the executed certificate in the contract file."

(Note: current FAR 15.406-2: "When cost or pricing data are required, the contracting officer shall require the contractor to execute a Certificate of Current Cost or Pricing Data using the format in the paragraph, and shall include the executed certificate in the contract file.")

The Certificate is essentially the same as the 1996 version. The instructions for the certificate used to say to insert the date when the price negotiations were concluded and price agreement was reached or, if applicable, another date (now reads: "...an earlier date") agreed upon by the parties that is as close as practicable to the date of agreement on price.

The date of the signature was (and still is) the date of signing, which should be as close as practicable to the date when the price negotiations were concluded and the contract price was agreed to.

[FN88] See Paceco, Inc, note 78, supra.

[FN 78] Paceco Inc., ASBCA 16458, 73-2 BCA 10119

Unfortunately, I dont have access to 73-2 BCA unless I drive uptown to the Federal Courthouse Law Library. I found this footnote to a 2005 GSBCA Appeal decision 15875 with VIACOM, INC. - SUCCESSOR IN INTEREST

TO WESTINGHOUSE FURNITURE SYSTEMS: "Paceco, Inc., ASBCA 16458, 73-2 BCA ? 10,119 (data created between cost and pricing data certification and award date not cost or pricing data that was required to be submitted) (in TINA context, duty to disclose complete, accurate and current data extends only to the date of price negotiations)."

Joel, I think Vern has addressed this question in the proper context. Your latest reply still is not looking at the question of what is cost or pricing data in the proper way. You appear to assume that data cannot be cost or pricing data because it will not affect the price of a prime contract. However, it appears you have not consdiered 15.407-1(f)(2) in arriving at your conclusion. Further, the defintion of cost or pricing data does not limit such data to only those facts that have an impact on the price of the prime contract.

In this regard, FAR 2.101 defines cost or pricing data as consisting of "all facts that, as of the date of price agreement or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price, prudent buyers and sellers would reasonably expect to affact price negotiations significantly." Note that the date of agreement on price does not mention the prime contract. Additionally, the price negotiations that may be impacted by the "facts" is not limited to negotiations of the prime contract price. There is no indication that the "parties" refers to the government and prime contractor. In short, there is nothing in the definition of cost or pricing data that indicates cost or pricing data are only those facts that would impact the price of the prime contract.

Retread, thanks. I'm going by what I think my sources tell me. In addition, nearly all the articles that I have being reading refer to cost or pricing data "during negotiations" of the prime contract, regardless of what the clause literally says. The purpose of TINA is to aid the government in negotiation of the contract or mod at hand.

It was not intended to provide the government, as Vern hinted, some information later developed that it might be able to use to help price subsequent mods. Those mods will stand on their own as separate contract actions.

If a FFP contractor doesn't solicit and award a negotiated subcontract until several years after the contract date, I'm sure you would read the clause to require the prime to obtain cost or pricing data from the negotiations with the new sub. That subcontract bears no legal relationship on the certified cost or pricing data obtained from the prime contractor back when the contract was awarded and serves no purpose. I provided two case citations and two articles which, I think, discuss that very point, however, you are stuck on reading a literal translation of the contract clause.

Vern, was right. This thread is a hoot. I may well be wrong, but at least I tried to find some material which puts all this into some context. TINA has a purpose. That purpose is not served by forcing a FFP contractor and its late hired subs to provide information with no relationship to its certified cost or pricing data that formed the basis for the original contract action.

Retread, thanks. I'm going by what I think my sources tell me. In addition, nearly all the articles that I have being reading refer to cost or pricing data "during negotiations" of the prime contract, regardless of what the clause literally says. The purpose of TINA is to aid the government in negotiation of the contract or mod at hand.

It was not intended to provide the government, as Vern hinted, some information later developed that it might be able to use to help price subsequent mods. Those mods will stand on their own as separate contract actions.

If a FFP contractor doesn't solicit and award a negotiated subcontract until several years after the contract date, I'm sure you would read the clause to require the prime to obtain cost or pricing data from the negotiations with the new sub. That subcontract bears no legal relationship on the certified cost or pricing data obtained from the prime contractor back when the contract was awarded and serves no purpose. I provided two case citations and two articles which, I think, discuss that very point, however, you are stuck on reading a literal translation of the contract clause.

Vern, was right. This thread is a hoot. I may well be wrong, but at least I tried to find some material which puts all this into some context. TINA has a purpose. That purpose is not served by forcing a FFP contractor and its late hired subs to provide information with no relationship to its certified cost or pricing data that formed the basis for the original contract action.

Joel, so far as I can tell, none of the sources you are relying upon dealt with the issue we are discussing. To the extent they do not, they are irrelvant. Let's test your theory with a hypothetical situation. A prime contractor intends to use a specific subcontractor in performance of a contract. The prime has received a quote from the potential sub prior to agreement on price with the government. The prime discloses cost or pricing data provided by the sub to the government as part of the primes cost or pricing data. After agreement on price between the prime and government, the prime and sub continue to negotiate to definitize the subcontract. The prime and sub reach agreement on the price of the subcontract 30 days after the prime and government reached agreement on price. In this situation, should the prime require the sub to provide cost or pricing data relating to the quote after the prime and government agreed on price? Should the prime require the subcontractor to certify that the cost or pricing data it submitted in regard to the subcontract? If so, what would be the cut-off date by which that data should be current, complete and accurate? Assume the prime contract is FFP.

Retread, you are arguing the wrong point. I don't disagree with you that the prime needas to obtain C or P data from actual or prospective subs during the prime contract award process and that that information is useful and relevant.

This thread concerns a replacement subcontractor who was supposedly neither an actual or prospective sub at the time of negotiations or award of the FFP contract action. In fact, this sub has no relation to the contract action for which the C or P was required. In fact, this decision to replace a non-performing subcontractor isn't a contract action at all..

Now, I answered your question, so please answer mine. Let me make it clearer. If a prime doesn't solicit a subcontract for say - painting, for two years after the FFP construction contract was awarded and he wants to then use a SB painter that he just found out about, does he have to submit cost or pricing data from his negotiations with that sub? The sub was never a prospective sub until now. The prime contract price was based upon an estimate by the prime at the time of award.

I forgot to clarify. The prime contract in my example was negotiated and the prime ws required to certify its cost or pricing data back at the award.

Retread, you are arguing the wrong point. I don't disagree with you that the prime needas to obtain C or P data from actual or prospective subs during the prime contract award process and that that information is useful and relevant.

This thread concerns a replacement subcontractor who was supposedly neither an actual or prospective sub at the time of negotiations or award of the FFP contract action. In fact, this sub has no relation to the contract action for which the C or P was required. In fact, this decision to replace a non-performing subcontractor isn't a contract action at all..

Now, I answered your question, so please answer mine. Let me make it clearer. If a prime doesn't solicit a subcontract for say - painting, for two years after the FFP construction contract was awarded and he wants to then use a SB painter that he just found out about, does he have to submit cost or pricing data from his negotiations with that sub? The sub was never a prospective sub until now. The prime contract price was based upon an estimate by the prime at the time of award.

Joel, you are missing the point. I have never said the prime needs to submit the sub's cost or pricing data to the government in Midas' situation. The issue has always been whether a prime has to obtain cost or pricing data from a subcontractor when the criteria Vern identified are present and the subcontract will be awarded after agreement on price between the prime and government. In the situation described by Midas, and even your painting subcontractor, if the subcontract will exceed $650K, does not fall within one of the three exemptions for disclosure of cost or pricing data, and the prime contract contains 52.215-12, then as a matter of contract and consistent with TINA, the prime must obtain cost or pricing data from the sub. The prime does not have to disclose that cost or pricing data to the government or certify it as its own. If you read 52.215-12 and 13, you can come to no other conclusion. If the prime does not obtain cost or pricing data post award in circumstances similar to Midas', the prime will be in breach of its contractual obligations.

I have already said I don't think it makes much sense to obtain cost or pricing data from a sub after agreement on the price of the prime contract in the case of a FFP prime contract. However, there is some logic to doing so for cost reimbursement and FPI contracts as evidenced by FAR 15.407-1(f)(2). Under this latter section, the government is permitted a cost disallowance if the data submitted by the sub after prime contract award is defective.

This isn't a cost contract, so my commemts are and have been directed to fixed price contracts.

The point made in the articles and by me is that the the replacement subcontract would not be related to the contract action for which the C and P data was required. Therefore the proposal for such replacement subcontract isn't "cost or pricing data" as defined by TINA. Since it isn't C and P data, there is no need to submit it. I understand your argument. If it were C and P data, the prime would have to obtain it per the clause.

Joel:

Here is the text of the contract clause at FAR 52.215-12, Subcontractor Cost or Pricing Data (OCT 1997):

Subcontractor Cost or Pricing Data (Oct 1997)

(a) Before awarding any subcontract expected to exceed the threshold for submission of cost or pricing data at FAR 15.403-4, on the date of agreement on price or the date of award, whichever is later; or before pricing any subcontract modification involving a pricing adjustment expected to exceed the threshold for submission of cost or pricing data at FAR 15.403-4, the Contractor shall require the subcontractor to submit cost or pricing data (actually or by specific identification in writing), unless an exception under FAR 15.403-1 applies.

( The Contractor shall require the subcontractor to certify in substantially the form prescribed in FAR 15.406-2 that, to the best of its knowledge and belief, the data submitted under paragraph (a) of this clause were accurate, complete, and current as of the date of agreement on the negotiated price of the subcontract or subcontract modification.

© In each subcontract that exceeds the threshold for submission of cost or pricing data at FAR 15.403-4, when entered into, the Contractor shall insert either?

(1) The substance of this clause, including this paragraph ©, if paragraph (a) of this clause requires submission of cost or pricing data for the subcontract; or

(2) The substance of the clause at FAR 52.215-13, Subcontractor Cost or Pricing Data?Modifications.

(End of clause)

That clause goes into a government prime contract. As a contract clause, it is effective after award of the prime contract, by which time the government and the contractor will have reached agreement on the prime contract price (unless the contract is a letter contract). The clause thus expressly requires that the prime obtain something called "cost or pricing data" from subs after the pricing and award of the prime contract, and that the prime require such subs to obtain something called "cost or pricing data" from their own subs after the pricing and award of the prime contract.

Now, it should be clear to all that defective data submitted by a subcontractor after the pricing and award of the price contract cannot have affected the pricing of the prime contract and is not cost or pricing data for that purpose. But why would it not be cost or pricing data for the purpose of pricing actions that might take place in the future?

If such data are not cost or pricing data under any circumstances, then why the clause?

This isn't a cost contract, so my commemts are and have been directed to fixed price contracts.

The point made in the articles and by me is that the the replacement subcontract would not be related to the contract action for which the C and P data was required. Therefore the proposal for such replacement subcontract isn't "cost or pricing data" as defined by TINA. Since it isn't C and P data, there is no need to submit it. I understand your argument. If it were C and P data, the prime would have to obtain it per the clause.

Joel, the proposal for the replacement subcontract is not cost or pricing data. What is cost or pricing data are the facts that would relate to negotiating a fair and reasonable price for that subcontract. Your position invalidates FAR 52.215-12 except for cost reimbursement and possible FPI contracts. However, that clause is also required to be inserted in FFP contracts if the contractor was required to submit cost or pricing data. Per that clause and TINA, subcontractors are required to disclose cost or pricing data before award of the subcontract. The clause and TINA do not restrict this obligation only to subcontract actions that could impact the pricing of the prime contract.

I don't understand your logic on this. FAR 52.215-12 requires the prime contractor to obtain cost or pricing data from subcontractors. That clause can only become effective after the prime contractor and government have agreed on price and the prime contract has been awarded. As I understand what you are saying, because pricing data that does not affect the negotiation of the price of the prime contract, that data cannot be considered cost or pricing data. If that is the case, what is a prime contractor required to obtain from subcontractors to be in compliance with 52.215-12 and to give meaning to the clause?

"FAR 52.215-12 requires the prime contractor to obtain cost or pricing data from subcontractors. That clause can only become effective after the prime contractor and government have agreed on price and the prime contract has been awarded. As I understand what you are saying, because pricing data that does not affect the negotiation of the price of the prime contract, that data cannot be considered cost or pricing data. If that is the case, what is a prime contractor required to obtain from subcontractors to be in compliance with 52.215-12 and to give meaning to the clause"

Retreadfed, I cant make a general statement that covers all circumstances. However, the Contractor has to obtain cost or pricing data from its actual or prospective subs for a contract action, where exemptions don't apply. It must be current as of the date in the certification and in some cases, must be updated as of the date of certification of current cost or pricing for the contract or mod. I dont have the FAR with me tonight, but I seem to remember there being a provision covering the contract negotiation, in addition to the clause.

What I'm trying to tell you is that cost data created after award of the prime contract or modification are not always (maybe never) "cost or pricing data" for purposes of that contract action. Cost data created long after the action in this situation is not cost or pricing data for the contract action. If it were, then the prime would have to obtain it and submit it under the appropriate circumstances.

By the way, modifications certainly occur after contract award, so the clause would apply to negotiate mods meeting the applicable TINA thresholds and conditions.

According to at least one case, GSBCA 15871 Viacom, Inc., September 21, 2005:

"The relevant cost or pricing data is that data in existence at the time of price negotiations. McDonnell Aircraft Co., ASBCA 44504, 97-1 BCA 28,977, at 144,315 (contractor has no duty to supply accurate and complete subcontractor cost data created after prime and subcontractor have reached agreement on price); Aydin Monitor Systems, NASA BCA 381-1, 83-1 BCA 16,500 at 81,997 (1983), reconsideration granted on other grounds, 84-2 BCA 17,297; see United States v. Davis, 803 F. Supp. 830, 863 (N.D.N.Y. 1992); aff'd in part, rev'd in part sub nom. United States v. General Dynamics Corp., 19 F.3d 770 (2nd Cir. 1994); Plessey Industries, Inc., ASBCA 16720, 74-1 BCA 10,603, at 50,277 (citing Paceco, Inc., ASBCA 16458, 73-2 BCA 10,119 (data created between cost and pricing data certification and award date not cost or pricing data that was required to be submitted) (in TINA context, duty to disclose complete, accurate and current data extends only to the date of price negotiations). We have found as fact that price negotiations were concluded on December 19, 1984. Finding 27. Thus the relevant ending date for transactions which were to be submitted as cost or pricing data was December 19, 1984, not July 1, 1985. Therefore, any Westinghouse discount data that existed only after December 19, 1984, was not cost or pricing data that Westinghouse was required to submit to the Government."

In our situation, the contractor replaced a subcontractor with a substitute, after performance was underway, supposedly for failure to perform. I am assuming that it was necessary for the contractor to succeed in or least to try to recover satisfactory contract performance. I am assuming here, as the basis of my argument, that neither the "cost data" that the replacement sub submitted to the prime in order for the prime to negotiate the new subcontract or the prime's intent to replace the original sub with a new sub existed at the time of agreement or the prime's certification of current cost or pricing data. So, such data is not "cost or pricing data". This action was unrelated to the price the government paid for the work.

There is no use arguing any further. You keep asking me to generally define what is "cost or pricing data" and to generally define when a contractor has to obtain it.

I'm only trying to tell you that, in this instance, the "cost data" was created (long) after the date of the certification of complete and accurate cost or pricing data, long after the agreement on the contract action, and (supposedly, long) after contract performance. There is no indication that the Contractor intended to replace an actual sub with a new sub at the time of its certification or at the time of agreement on negotiations or even as of contract award.

This specific information, which either supports a subcontractor's proposal or even the negotiated replacement subcontract is not "cost or pricing data" and it certainly isn't related to the price that the government paid for the contract. The Government certainly can't use such late information for a price reduction. There are cases all over the place that the government has lost, because of acts subsequent to the certified cost or pricing data for the contract and subsequent to contract or modification award, not constituting defective cost or pricing data.

If a contractor has quotes for steel for a construction contract that it wont need for a year, it might propose a cost based upon the steel quote with some risk factor applied for future cost escalation, because steel fabricators and suppliers will typically refuse to forward price structural steel that far in advance. When the time comes to purchase the steel, the contractor may go back to its regular supplier or fabricator and the price may be more or less than the originally proposed price, based upon current market conditions. However, the actual steel pricing data is not "cost or pricing data". For that matter, the original proposed pricing information maight not be "cost or pricing data", either - at least the judgmental risk factor placed upon a short term steel quote. There certainly isn't "defective cost or pricing" in either the original daqta or the actual data, if the price comes in less than estimated at the time of contract negotiations.

Joel,

You have muddied up the waters pretty badly, and the more you have explained, the muddier the waters have become. I understand what you're saying, but I think your reasoning has cast you into a deadly definitional spin from which you cannot recover. You are right that there is no use in arguing further. By the way, the problem is not with the Briefing Papers, but with your understanding of them and of the subcontractor cost or pricing data clauses.

If (a) the prime contract contains one of the subcontractor cost or pricing data clauses, ( if the TINA threshold is met, and © if no exception applies, then the prime must obtain "cost or pricing data" from the replacement sub. The data will have no relevance for the original pricing of the prime contract, but they are "cost or pricing data" nonetheless, and may be relevant to future pricing actions.

Poor midas.

The provision is FAR 15.215-20, Requirements for Cost or Pricing Data or Information Other than Cost or Pricing Data.

Joel,

You have muddied up the waters pretty badly, and the more you have explained, the muddier the waters have become. I understand what you're saying, but I think your reasoning has cast you into a deadly definitional spin from which you cannot recover. You are right that there is no use in arguing further. By the way, the problem is not with the Briefing Papers, but with your understanding of them and of the subcontractor cost or pricing data clauses.

If (a) the prime contract contains one of the subcontractor cost or pricing data clauses, ( if the TINA threshold is met, and ? if no exception applies, then the prime must obtain "cost or pricing data" from the replacement sub. The data will have no relevance for the original pricing of the prime contract, but they are "cost or pricing data" nonetheless, and may be relevant to future pricing actions.

Poor midas.

Vern, do you know where I can find guidance on the requirement for the FFP Contractor to furnish subcontractor cost or pricing data to the government for subcontracts or what the government is supposed to do with it, when not part of the contractor's certified cost or pricing submission for a contract action? I could only find instructions in FAR Table 15-2, II A(2) to include data from prospective subcontractors as part of the Contractor's cost or pricing data and submission for a proposal. I looked in FAR and DFARS Parts 15, 42, and 44. Of course, there is guidance on cost reimbursement prime contracts.

I also checked the DCAA Contract Audit Manual. In 9-106.1, it generally states that DCAA wont expend audit resources on such subcontractor pricing proposals, unless the government may benefit from a price reduction.

Joel:

The rules about prime contractor submission to the government of cost or pricing data obtained from subcontractors are at FAR 15.404-3©. The rules are the same for all contract types.

Joel:

The rules about prime contractor submission to the government of cost or pricing data obtained from subcontractors are at FAR 15.404-3?. The rules are the same for all contract types.

Yes, but my question is where is the guidance to the government on what to do with it? 15.404-3 (cee) deals with information used to price the prime contract.

The only guidance I can find for covers what to do with subcontractor pricing as part of the proposal, not for replacement subcontracts or subcontracts that are newly solicited after the contract or mod date.

Plus, the guidance to the contractor on the "how to submit it" is to include it as part of its cost or pricing submission.

I don't know of any guidance about what the government is supposed to do with it. I suppose it depends on the situation. Maybe someone wants the prime to get it in case it becomes significant in light of future events. In any case, if the prime contract includes the -12 or -13 clause, then the contractor has to get it. What the contractor does with it or what the government does with it, if anything, is another matter entirely.

Why are you beating this to death? Do you deny the existence of the -12 and -13 clauses? If not, why can't you accept that they are there and that they call upon the prime to get cost or pricing data from subs after award of the prime contract? What's up? What do you want?

The clauses in question are old. They predate the FAR. They have never posed a problem. Everybody seems to have understood them perfectly. Except you.

Give it a rest.

I don't know of any guidance about what the government is supposed to do with it. I suppose it depends on the situation. Maybe someone wants the prime to get it in case it becomes significant in light of future events. In any case, if the prime contract includes the -12 or -13 clause, then the contractor has to get it. What the contractor does with it or what the government does with it, if anything, is another matter entirely.

Why are you beating this to death? Do you deny the existence of the -12 and -13 clauses? If not, why can't you accept that they are there and that they call upon the prime to get cost or pricing data from subs after award of the prime contract? What's up? What do you want?

The clauses in question are old. They predate the FAR. They have never posed a problem. Everybody seems to have understood them perfectly. Except you.

Give it a rest.

Because, if such subcontract proposals on FFP contracts are really "cost or pricing data", as they are on cost reimbursable or cost rederminable type contracts, there should be guidance on what to do with it or what it can be used for. All I found is where DCAA says - as it said way back at the date of my Briefing Papers article - that it isn't going to audit it because there is no benefit to the government.

Because, if such subcontract proposals on FFP contracts are really "cost or pricing data", as they are on cost reimbursable or cost rederminable type contracts, there should be guidance on what to do with it or what it can be used for. All I found is where DCAA says - as it said way back at the date of my Briefing Papers article - that it isn't going to audit it because there is no benefit to the government.

It's not just cost reimbursable and cost redeterminable type contracts. It's also FFP/EPA, FPI(F), FPI(S), and FP Redeterminable (prospective and retroactive). It's FFP with claims. It's T&M and L-H. It's FFP letter contracts.

Because, if such subcontract proposals on FFP contracts are really "cost or pricing data", as they are on cost reimbursable or cost rederminable type contracts, there should be guidance on what to do with it or what it can be used for. All I found is where DCAA says - as it said way back at the date of my Briefing Papers article - that it isn't going to audit it because there is no benefit to the government.

Joel, you are trying to apply logic to a government contracting question. You have been around long enough to know that logic and government contracting do not always go together. Remember, TINA is a statute. As such, it had to satisfy several constituancies before it was enacted. In this regard, here is what TINA says about this topic under discussion

"The head of an agency shall require offerors, contractors, and subcontractors to make cost or pricing data available as follows:

An offeror for a subcontract (at any tier) of a contract under this chapter shall be required to submit cost or pricing data before the award of the subcontract if the prime contractor and each higher-tier subcontractor have been required to make available cost or pricing data under this section."

This statutory requirement has been implemented in 52.215-12 and 13.

Also, what is in the FAR is the product of committee work. Thus, essentially you have a regulation prepared by a committee that implements a law prepared by committee. The product of all this is not always precise or logical. I am sure you are familiar with the expression that a camel is a horse designed by committee.

I have stated all along, it does not make much sense to obtain cost or pricing data for a subcontract that will be awarded after agreement on price of a FFP prime contract. although I can see some justification for it if there will be a follow on contract and the actual cost of the present contract will be used in determining the reasonableness of the price of the follow on contract. However, that is what congress and the clauses clearly require.

So much for letting sleeping dogs lie.

This has been a very helpful discussion. I have a question though.

Let's say that the contractor in this example -- the one with the FFP contract who's changing subcontractors after award -- does NOT obtain cost or pricing data from its second subcontractor, as Vern and others have asserted must be done. Thus, the contractor has violated contract clause requirements as well as the TINA statute requirements.

My understanding is that the Government's remedy is a unilateral price reduction for the amount of the costs that were defectively priced, plus interested on any overpayments.

In this hypothetical example, how would the Government calculate its damages? What would its remedy be?

If there are no damages, because the Government did not rely on the second subcontractor's cost or pricing data when negotiating the value of the prime contract, and there are no overpayments because the prime contract is FFP, then where do the parties go from here?

Answering those questions would help me understand better what the dynamics are.

The remedy might be termination for default. See, e.g., FAR 52.249-8(a)(1)(iii) or 52.249-9(a)(1)(iii). In lieu of termination for default the government might accept some other consideration.

This has been a very helpful discussion. I have a question though.

Let's say that the contractor in this example -- the one with the FFP contract who's changing subcontractors after award -- does NOT obtain cost or pricing data from its second subcontractor, as Vern and others have asserted must be done. Thus, the contractor has violated contract clause requirements as well as the TINA statute requirements.

My understanding is that the Government's remedy is a unilateral price reduction for the amount of the costs that were defectively priced, plus interested on any overpayments.

In this hypothetical example, how would the Government calculate its damages? What would its remedy be?

If there are no damages, because the Government did not rely on the second subcontractor's cost or pricing data when negotiating the value of the prime contract, and there are no overpayments because the prime contract is FFP, then where do the parties go from here?

Answering those questions would help me understand better what the dynamics are.

The government would not be entitled to a price reduction under the TINA clauses because the prime contract has not been defectively priced. However, you would have to look at the total facts in regard to what is the defective pricing. I have seen circumstances where defective pricing is also a CAS non-compliance. Thus, if the defective pricing in regard to the replacement subcontractor is also a CAS non-compliance, likely by the sub, the government may be entitled to a price reduction for a CAS non-compliance.

Please give us an example of where defective pricing is also a CAS noncompliance.

Retreadfed, you know that we won't agree on this. I had decided to quit arguing aout it. I agree that it says what it says. Ok - in fact I never disagreed or denied that if data is cost or pricing data, then the contractor must obtain it from a sub. You keep repeating the same thing over and over again. I said that if it is "cost or pricing data", as intended by the statute to be used to support a specified negotiated contract action, then the contractor must obtain it.

This effort costs the prime and the sub real money and resourcess. Seemingly stupid as much government requirements are, there is usually some specific purpose for them. "Cost or pricing data" were intended to have a purpose - in order to aid the government in its negotiations on larger contract negotiations or specific modifications for which TINA is applicable. It has to be certified to put some mark of "honesty" on it and to help hold the firms accountable for its content.

The basic question then is this. Is a proposal from a replacement subcontractor, which is the contractor's responsibility in order meet its obligation to the government on the FFP contract "cost or pricing data"? If the proposal isn't related to the cost that the taxpayers are paying or "should have" paid for the contract or a specific applicable mod, then I think that wouldn't be defined as "cost or pricing data". Yes, it is still "data", but in this case, I would argue that it only bears a relation to the FFP contractor's actual cost to get out of the mess that its non-performing sub got it into. It bears no relation to the deal that the government and the contractor struck or to the accuracy or truthfulness of that negotiation.

Your argument appears to be that this is automatically "cost or pricing data" because it is pricing information related to the agreement between the follow-on sub and the prime, regardless of whether or not it has any effect on what the government "should have paid" for the contract price.

My argument is that this reasoning is a stretch.

In trying to apply your reasoning to some possible negotiated FFP construction scenarios, I can't accept the automatic application of your definition of "cost or pricing" data. Say that something unforseen happens on the jobsite that is the risk responsibility of the FFP prime. This would be the same concept as the contractor being responsible to successfully complete the work that it hired the non-performing sub to perform for it .

I can provide a real example from my experience in Saudi Arabia. We had a FFP contract for a large university campus building on one of our project sites. We contracted, via an out of scope supplemental agreement to add an additional similar building. There was cost or pricing data in involved in pricing the mod. One night a fire broke out in the new building and damaged a significant share of the in-progress work on the building. In replacing the damaged work, the prime hired some of the work done by another contractor due to time and resource limitations. The TINA threshold was then $100k, which this subcontract and the increases to its other subcontracts all exceeded. Using your argument, it would seem that the pricing of the new negotiated subcontract and perhaps the mods to the other subcontracts would constitute "cost or pricing data" that the prime must obtain from the subs and perhaps provide to the government, even though this work was strictlty the responsibility of the prime contractor and for the purpose of completing the contract work.

I would say, that like the replacement subcontract in the example in this thread, the government wasn't concerned about didn't decide or really care how the contractor contracted to fix the damage, as long as it met the contract technical requirements. It was not concerned about prices the prime paid to the new sub or the other subs. Those were matters which did not affect the price we paid for the building and quite frankly, on a FFP contract, were internal contractor affairs and were none of the government's business.

My last post was in response to one earlier today from Retreadfed addressed to me which continued the debate that I had decided to quit arguing about.

By the time that I finished my response and posted it using this accursed Blackberry, there were several posts in between.

Joel:

You wrote:

The basic question then is this. Is a proposal from a replacement subcontractor, which is the contractor's responsibility in order meet its obligation to the government on the FFP contract "cost or pricing data"? If the proposal isn't related to the cost that the taxpayers are paying or "should have" paid for the contract or a specific applicable mod, then I think that wouldn't be defined as "cost or pricing data".

Before I post again, I want to make sure that I understand your position.

Suppose that the government has awarded a firm fixed price contract and that the contractor was required to submit and certify cost or pricing data. Suppose further that the contract includes the clause at FAR 52.215-10, Price Reduction for Defective Cost or Pricing Data (OCT 1997), and 52.215-12, Subcontractor Cost or Pricing Data (OCT 1997).

Now suppose that after agreement on price between the government and the prime contractor, and after award of the prime contract, the prime decides to subcontract one part of the work instead of doing it in house. Suppose further that the prospective subcontract is expected to exceed the TINA threshold and that no exception applies.

Two questions:

(1) Are you saying that because the negotiation of the prospective subcontract cannot have affected the price of the prime contract, it follows that no factual data of the prospective subcontractor that could affect the subcontract price can be cost or pricing data, since it "bears no relation to the deal that the government and the contractor struck or to the accuracy or truthfulness of that negotiation"?

(2) Do you thus conclude that, FAR 52.215-12 notwithstanding, the prime need not require the submission or certification of cost or pricing data from the prospective subcontractor, since by definition no data of the prospective subcontractor can be cost or pricing data?

Joel:

You wrote:

Before I post again, I want to make sure that I understand your position.

Suppose that the government has awarded a firm fixed price contract and that the contractor was required to submit and certify cost or pricing data. Suppose further that the contract includes the clause at FAR 52.215-10, Price Reduction for Defective Cost or Pricing Data (OCT 1997), and 52.215-12, Subcontractor Cost or Pricing Data (OCT 1997).

Now suppose that after agreement on price between the government and the prime contractor, and after award of the prime contract, the prime decides to subcontract one part of the work instead of doing it in house. Suppose further that the prospective subcontract is expected to exceed the TINA threshold and that no exception applies.

Two questions:

(1) Are you saying that because the negotiation of the prospective subcontract cannot have affected the price of the prime contract, it follows that no factual data of the prospective subcontractor that could affect the subcontract price can be cost or pricing data, since it "bears no relation to the deal that the government and the contractor struck or to the accuracy or truthfulness of that negotiation"?

(2) Do you thus conclude that, FAR 52.215-12 notwithstanding, the prime need not require the submission or certification of cost or pricing data from the prospective subcontractor, since by definition no data of the prospective subcontractor can be cost or pricing data?

Vern, my position had nothing to do with the type scenario that you described.

Suppose that the government has awarded a firm fixed price contract and that the contractor was required to submit and certify cost or pricing data. Suppose further that the contract includes the clause at FAR 52.215-10, Price Reduction for Defective Cost or Pricing Data (OCT 1997), and 52.215-12, Subcontractor Cost or Pricing Data (OCT 1997).

Now suppose that the Contractor subcontracted a portion of the work to a firm, which submitted cost or pricing data per the clause. The subcontractor has been working, however has failed to meet its obligations; performance was unsatisfactory. In order to meet its contract obligation, the contractor terminates the non-performing subcontractor and replaces it with another subcontractor. I'm saying that the the new sub's proposal information is not cost or pricing data. Since it is not cost or pricing data, it need not be certified as such nor provided as such to the government.

Now, regarding your scenario, it might be cost or pricing data. The Contractor has changed the circumstances of performance by subcontracting, in lieu of self-performing the work. I'd have to research my sources to determine whether or not the government could collect for defective pricing, but that is a separate issue. The government's track record hasn't been too good at recovery for contractor actions initiated after award of the contract. The government might have to show that the prime intended to subcontract the work at the time of negotiations or certification, but I'd have to research further.

How is your scenario substantively different from mine? In both cases a subcontract is awarded after the negotiation and award of the prime contract. In my scenario, the subcontract is awarded because the prime changed its mind about doing the work in house. In yours, the subcontract is awarded because the prime was dissatisfied with the first subcontractor. What does the reason for the subcontract award have to do with anything? What's the connection? Why is the new sub's data not cost or pricing data in your scenario, but might be cost or pricing data in mine?

How is your scenario substantively different from mine? In both cases a subcontract is awarded after the negotiation and award of the prime contract. In my scenario, the subcontract is awarded because the prime changed its mind about doing the work in house. In yours, the subcontract is awarded because the prime was dissatisfied with the first subcontractor. What does the reason for the subcontract award have to do with anything? What's the connection? Why is the new sub's data not cost or pricing data in your scenario, but might be cost or pricing data in mine?

In your scenario, the prime subbed the work when it said in its proposal that it was going to self perform it.

In this case, the prime did exactly what it said it would do in its proposal. However, the sub failed to perform (according to the information provided) and had to be replaced.

In your scenario, the change in strategy may have affected the price that the government should have paid. The government audit might be able to show that the contractor had possession of or had solicited a proposal from the sub before or during negotiations nut failed to disclose it. If such a proposal showed that it should have been less expensive to subcontract the work, but the prime priced it as though it were going to self perform at a higher cost, there might be defective pricing.

The remedy might be termination for default. See, e.g., FAR 52.249-8(a)(1)(iii) or 52.249-9(a)(1)(iii). In lieu of termination for default the government might accept some other consideration.

Vern, I'm not seeing it, unless the Government has suffered some substantive harm in the scenario I posted.

"A default termination is a drastic sanction, which should be imposed and sustained only on ?good grounds and on solid evidence.? E.g., Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987). Government contract provisions authorizing termination of a contract for default are a species of ?forfeiture? and are to be strictly construed. Forfeitures are not favored, and one who asserts that there has been a forfeiture is held to the letter of its authority."

You don't see it? Really? I think that an argument could be made that refusal to comply with a contract clause that implements a statutorily mandated obligation might be considered sufficiently serious to warrant T for D. Prove I'm wrong. See Inter-Continental Equipment, Inc., ASBCA No. 37422, 96-1 BCA 28048, in which the board upheld a termination for default because the contractor failed to comply with FAR 52.247-64, “Preference for Privately Owned U.S.-Flag Commercial Vessels, Alternate I (APR 1984).” According to the board:

[W]e conclude that [the Navy] has established that the default termination rested on “‘good grounds and solid evidence.”’ Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987) quoting J.D. Hedin Constr. Co. v. United States, 408 F.2d 424, 431 (Ct. Cl. 1969). Under paragraph (a)(1)(iii) of the Default clause (see finding 2), respondent may terminate for default if the contractor fails to “[p]erform any of the other provisions of [the] contract” following an unsatisfactory response to a cure notice. See FAR 52.249-8. On this record, there is no doubt that appellant failed to comply with the requirement in paragraph ?(1) of the Cargo Preference clause that it “submit one legible copy of a rated on-board ocean bill of lading for each shipment to both (i) the Contracting Officer and (ii) the . . . Maritime Administration.” See FAR 52.247-64.

Hope this helps you see it.

Joel:

In your scenario, the change in strategy may have affected the price that the government should have paid. The government audit might be able to show that the contractor had possession of or had solicited a proposal from the sub before or during negotiations nut failed to disclose it. If such a proposal showed that it should have been less expensive to subcontract the work, but the prime priced it as though it were going to self perform at a higher cost, there might be defective pricing.

You're avoiding an answer by changing my scenario. Please answer the questions I asked based on the scenario I presented. Are you able to do that? Are you willing?

Joel:

You're avoiding an answer by changing my scenario. Please answer the questions I asked based on the scenario I presented. Are you able to do that? Are you willing?

OOPS. I did misread your scenario. I will answer but not tonight. I just got home from TDY and leave again first thing in the morning. I want to see my wife. I will need to read up on it. I'll be home Friday night and will look after that.

There is a difference though. In the original scenario, the contractor did what it proposed to do. In the second situation, it didn't do what it proposed to do. However, I need to read Nash and Cibinic and the files I have collected.

Whatever. Take your time.

You don't see it? Really? I think that an argument could be made that refusal to comply with a contract clause that implements a statutorily mandated obligation might be considered sufficiently serious to warrant T for D. Prove I'm wrong. See Inter-Continental Equipment, Inc., ASBCA No. 37422, 96-1 BCA 28048, in which the board upheld a termination for default because the contractor failed to comply with FAR 52.247-64, ?Preference for Privately Owned U.S.-Flag Commercial Vessels, Alternate I (APR 1984).? According to the board:

Hope this helps you see it.

Vern, my point was that I would see a TforD as being unwarranted in a situation where the government suffered no harm. I acknowledge it is a possible course of action, but one I would find unlikely, given the circumstances. In the case you cited from, the government could allege actual harm.

As a counter example, I have been part of multiple CPSR reviews, where several failures to comply with clauses that implemented statutorily mandated obligations were encountered. (E.g., failure to obtain EEO clearance when required, failure to flow down CAS admin. clause when required, etc.) In NONE of those instances did the DCMA reviewers ever recommend, consider, discuss, or even mutter under their breath, a TforD as the government's remedy. I would be surprised if the hypothetical situation I posited would be treated differently.

Again, it is a possible course of action, but why? Just as a negotiating tactic to bludgeon the contractor into giving some form of consideration?

I reiterate: I don't see it [happening] -- but I acknowledge that it could happen.

Your "no harm" thinking is unsound. The harm lies in not having certified cost or pricing data from a subcontractor which might be useful in making equitable adjustments and settling claims in the future. Another harm is not obtaining compliance with a federal statute. What would Congress and the public say if it found out that the government isn't enforcing its contracts? Would (further) loss of public confidence in the integrity of the procurement system constitute harm?

In any case, must the government suffer actual damage in order to T for D? Is actual injury a prerequisite to T for D? You seem to suggest that it is, but is that true?

As for your experience with CPSRs, I don't see what bearing that has on this matter. The function of a CPSR team is to evaluate a contractor's purchasing system, not to recommend how to administer particular contracts. As a member of a CPSR I would not recommend that a particular subcontract be terminated for default, but I might recommend denial or withdrawal of purchasing system approval if I found that the contractor was not enforcing its contracts so as to ensure that the government's third party rights are protected.

I probably would not terminate a contract for default because a contractor failed on one occasion to obtain subcontractor cost or pricing data through ignorance or neglect. However, if a contractor refused to obtain it on grounds of a half-baked theory like Joel's, you can bet that I would issue a cure notice and give T for D serious consideration.

In any case, I don't see why you're bringing this up in the present discussion. Does your question have something to do with Joel's theory? If not, why not start a new thread about T for D as a response to contractor failure to comply with contract clauses? That's an interesting topic. What should the government do if a prime fails to flow down the clause at FAR 52.215-2, Audits and Records--Negotiation (JUN 1999)?

I await your new thread with interest and anticipation.

I probably would not terminate a contract for default because a contractor failed on one occasion to obtain subcontractor cost or pricing data through ignorance or neglect. However, if a contractor refused to obtain it on grounds of a half-baked theory like Joel's, you can bet that I would issue a cure notice and give T for D serious consideration.

*****

I await your new thread with interest and anticipation.

Vern,

The point I was trying to make was that, if the government did not have a monetary remedy available under TINA, perhaps it would not be treated as TINA matter. We've discussed that point.

There's no need for another thread.

FAR 52.215-12 requires the contractor to obtain the submission of cost or pricing data before awarding "any" subcontract that exceeds the TINA threshold when no exception applies. As a contract clause, that FAR subsection clearly applies after award of the prime contract. See also FAR 15.403-4(a)(1)(ii) and 15.404-3©. The clause requires the prime to require the sub to flow its terms down to its own subs. There is no case law of which I am aware holding that the clause means anything other than what it says.

I do not buy the argument that subcontractor data cannot be cost or pricing data if it could not affect the original pricing of the prime contract. Such an interpretation of the definition of cost or pricing data would render FAR 52.215-12 meaningless, thus violating a well-known general rule of contract interpretation. See, e.g., Westfed Holdings, Inc. v. U.S., 407 F.3d 1352 (2005):

It is of course firmly established as a general rule of contract interpretation that the “interpretation that gives a reasonable meaning to all parts of the contract will be preferred to one that leaves portions of the contract meaningless.” United States v. Johnson Controls, Inc., 713 F.2d 1541, 1555 (Fed.Cir.1983).