Certified Cost or Pricing Data & TINA Sweep

TNT1 said:

Are we, the prime contractor, at risk of defective certified cost or pricing data?

Yes.

TNT1 said:

IDIQ is never placed.

TNT1 said:

we pick the IDIQ back up

Ok, I’ll bite here… TNT, please clarify what you meant. What is the IDIQ for and between which parties? You and a supplier? You and the government? 

Are you saying you never issued (“placed”) an IDIQ subcontract? Or never issued (placed) an order against an IDIQ subcontract? Who never “placed  the IDIQ”- the government or you, as the prime to a sub? 

What do you you mean by “we pick the IDIQ back up”? 

Are the prices you negotiated two years ago already reflected in your prime contract price? Is your prime contract fixed price?

Sorry, I don’t understand the context of your question.

@joel hoffman IDIQ between the prime and a sub for pricing for units to be procured in 2024-2025. Pricing was agreed upon 2 years ago, but reasons that are unclear the IDIQ was never formally placed with the supplier. "Pick back up" refers to the prime contractor now formally issuing the IDIQ to the sub.

TNT1 said:

@joel hoffman IDIQ between the prime and a sub for pricing for units to be procured in 2024-2025. Pricing was agreed upon 2 years ago, but reasons that are unclear the IDIQ was never formally placed with the supplier. "Pick back up" refers to the prime contractor now formally issuing the IDIQ to the sub.

Thanks, TNT.  How does that relate to the price of the prime contract for those units? Was the price included in your contract back then?

TNT1 said:

Are we, the prime contractor, at risk of defective certified cost or pricing data?

Are you asking are you at risk of the sub having submitted defective certified cost or pricing data, or are you asking if you the prime are at risk of having submitted defective certified cost or pricing data to the government when you received the prime contract?

Thanks all - let me clarify: we are a prime contractor and the IDIQ is going to be placed to the prime's (our) sub. As the prime, is our sub's CCPD (now 2 years old, but was certified at time of price agreement) at risk of being identified in a later Government audit as not current, accurate, and complete? The price agreement was reached 2 years ago, but the IDIQ was never released. The FAR speaks to the data needed to be certified at time of price agreement, but in this situation, price agreement was reached 2 years ago through negotiation but the IDIQ was never issued to the sub.

@joel hoffmanLook at the OP:

TNT1 said:

2 years later, we pick the IDIQ back up and look to issue to the supplier as was negotiated and agreed upon in 2020. No new documentation. Are we, the prime contractor, at risk of defective certified cost or pricing data?

What he wants to know is whether he should get new (updated) certified cost or pricing data. The answer is yes.

TNT1 said:

As the prime, is our sub's CCPD (now 2 years old, but was certified at time of price agreement) at risk of being identified in a later Government audit as not current, accurate, and complete?

What do you think the consequences to you would be if an auditor makes such a finding?  Is your prime contract an FFP contract?  If not, how is the prime contract priced?

Just for my understanding, if the IDIQ is awarded at the prices that were negotiated and agreed in 2020, as the OP stated, why would updated data be needed? I can see needing new data if you want to negotiate different prices, but why if they agree to the same prices? The requirement is to certify to the accuracy and completeness as of the date of agreement on price. They are now using the agreed-upon prices.

True, some of the underlying data may have changed, but again, the award was at the agreed price. It is very likely that costs have gone up, but why force a change if the seller is willing to honor the old prices?

@Fara FasatThe OP is with a prime contractor. Presumably, the prime is negotiating prices with a supplier for something that will go into something it is going to sell to the government. If the prime must provide certified cost or pricing data (CCPD) to the government, and if it must provide subcontractor (CCPD) to the government as part of its proposal, then it must certify that the subcontractor data are accurate, complete, and current as of the date of price agreement with the government. It doesn't matter when the prime reached a price agreement with the sub.

Do you think the prime should certify that two year old subcontractor data are accurate, complete, and current as of today, or do you think the prime should ask the sub to update those data?

Thanks Fara & Vern. We might consider that the future releases against the IDIQ are likely to be tied to a future prime contract, but at this time, not tied to the Prime contractor's proposal to the Government. In the event that the IDIQ pricing is incorporated on a future proposal to the Government, then the CCPD would still be "outdated" in the sense that it is from 2020 (or 2022 if we get it refreshed), which one might assume is why the FAR references that the data needs to be current at time of agreement on price.

Most higher up individuals at my company are of the position that the price was agreed upon and the letter of the law dictates that the negotiated pricing does not need to be re-evaluated. The opposite position seems to be rooted in logic...but my research for clarity has not yet yielded a clear result.

I don't see anything in the OP's facts that says the prime is now providing certified data to the government. So let's break this into two parts: prime is now submitting certified data; and prime is not submitting certified data but is just now issuing the sub's IDIQ. In the latter case, I think there would no need for updated sub data. Why would you need it and what would you do with it?

I think there are other issues. Are the prices still valid or was there an expiration? If I were the sub I would want to re-open the negotiations and resubmit the data, but that doesn't appear to be what is happening. I think that as long as the prime is not now submitting and certifying data, and is awarding to the sub at the old negotiated prices, then the data supporting those prices are still valid.

I do agree that if a prime is now submitting and certifying data, then it should obtain updated data and a certification from the sub.

Just saw TNT1's latest post. I'm not sure, but it still doesn't look like the prime is submitting and certifying any data to the government.

TNT1 said:

Thanks Fara & Vern. We might consider that the future releases against the IDIQ are likely to be tied to a future prime contract, but at this time, not tied to the Prime contractor's proposal to the Government. In the event that the IDIQ pricing is incorporated on a future proposal to the Government, then the CCPD would still be "outdated" in the sense that it is from 2020 (or 2022 if we get it refreshed), which one might assume is why the FAR references that the data needs to be current at time of agreement on price.

There is apparently no open action for the current ID/IQ or delivery order involving the parts in question. Yes, as Vern said,  the data needs to be accurate, complete and current as of the time of agreement with the government for any future proposal for the parts.

TNT1 said:

Most higher up individuals at my company are of the position that the price was agreed upon and the letter of the law dictates that the negotiated pricing does not need to be re-evaluated. The opposite position seems to be rooted in logic...but my research for clarity has not yet yielded a clear result.

The old subcontract proposal isn’t tied to any current action or prime contractor proposal. Any future action on this or for another contract would require then certified CURRENT, complete and accurate data. Old C and P data that predate a proposal for a new action by several years aren’t “current”.

Fara Fasat said:

Just saw TNT1's latest post. I'm not sure, but it still doesn't look like the prime is submitting and certifying any data to the government.

@Fara FasatI'm sticking with my response to the OP question. And that is my response to all further queries in this thread.

TNT1 said:

Most higher up individuals at my company are of the position that the price was agreed upon and the letter of the law dictates that the negotiated pricing does not need to be re-evaluated.

Here is what the statute says about subcontractor CPD "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 and the price of the subcontract is expected to exceed $2,000,000."

In your situation, why do you think the statute applies?

My understanding from TNT’s somewhat cryptic explanations is that somebody (prime and sub?) agreed on a price for out-year parts but apparently no line items for the parts were incorporated into the prime contract.

It is unclear whether the government had agreed on the prices but that would seem moot if the prices weren’t incorporated as line items or optional line items. TNT didn’t say that the certificate of current cost or pricing was submitted to the government at the time.

TNT indicated that the parts might be added to this contract at some future point or might be purchased under a separate, future contract or task order(s).

Perhaps this June 2020 contract clause, if included in the prime, may answer the question. Not sure what predecessor dated clause might apply instead, since the date of prime award was not clear to me. I would require the subcontractor Certificate of Current Cost or Pricing Data date of execution be a date as close as practicable to the date of subcontract award, whenever that may be. I would require that the subcontractor annotate its Certificate to state the date price agreement was reached.I would require the "as of" date on the Certificate be the same date as date of execution.

52.215-12 Subcontractor Certified Cost or Pricing Data.

As prescribed in 15.408(d)(1), insert the following clause:

Subcontractor Certified Cost or Pricing Data (Jun 2020)

      (a) Before awarding any subcontract expected to exceed the threshold for submission of certified cost or pricing data in Federal Acquisition Regulation (FAR) 15.403-4(a)(1), 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 certified cost or pricing data in FAR 15.403-4(a)(!), the Contractor shall require the subcontractor to submit certified cost or pricing data (actually or by specific identification in writing ), in accordance with FAR 15.408, Table 15-2(to include any information reasonably required to explain the subcontractor 's process such as the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data , and the nature and amount of any contingencies included in the price), unless an exception under 15.403-1(b) applies. If the threshold for submission of certified cost or pricing data specified in FAR 15.403-4(a)(1) is adjusted for inflation as set forth in FAR 1.109(a), then pursuant to FAR 1.109(d) the changed threshold applies throughout the remaining term of the contract , unless there is a subsequent threshold adjustment.

      (b) 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.

      (c) In each subcontract that, when entered into, exceeds the threshold for submission of certified cost or pricing data in FAR 15.403-4(a)(1), the Contractor shall insert either—

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

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

(End of clause)

Neil TNT wrote "We might consider that the future releases against the IDIQ are likely to be tied to a future prime contract, but at this time, not tied to the Prime contractor's proposal to the Government. "  From this it does not seem to be a prime contract for which the "sub" would do any work.

Retreadfed said:

Neil TNT wrote "We might consider that the future releases against the IDIQ are likely to be tied to a future prime contract, but at this time, not tied to the Prime contractor's proposal to the Government. "  From this it does not seem to be a prime contract for which the "sub" would do any work.

Edited:  

A thought occurred to me. TNT’s company might have an ID/IQ contract with a supplier that isn’t under or pursuant to any government contract(?) But it would be strange if a private contract was formulated  pursuant to FAR format and clauses.

TNT never did clarify some questions that respondents asked: 

1.  “Who” (Supplier, TNT’s company, Government?) agreed to the prices?

2. Was it was pursuant to a federal contract or task order?

3. Why, if negotiated pursuant to an existing contract or task order, was it was negotiated but never ordered? Never added to the prime contract. (Basically, why was it negotiated in the first place?) 

4. What type of pricing (cost, FFP, etc,) is such a federal contract priced at? 

This is another case of an ambiguous scenario, with the OP adding some detail from time to time, which has resulted in much speculation, guessing, pontification, etc., etc.

Retreadfed said:

Neil TNT wrote "We might consider that the future releases against the IDIQ are likely to be tied to a future prime contract, but at this time, not tied to the Prime contractor's proposal to the Government. "  From this it does not seem to be a prime contract for which the "sub" would do any work.

@Retreadfed, looks to me like the negotiations took place in connection with a current or future follow-on Government prime contract.

Neil Roberts said:

@Retreadfed, looks to me like the negotiations took place in connection with a current or future follow-on Government prime contract.

Who knows? See my edited post above. Anyway, the certificate is meaningless now.

Retreadfed said:

Neil TNT wrote "We might consider that the future releases against the IDIQ are likely to be tied to a future prime contract, but at this time, not tied to the Prime contractor's proposal to the Government. "  From this it does not seem to be a prime contract for which the "sub" would do any work.

Who knows for sure? Anyway, the certificate is meaningless now.

joel hoffman said:

Anyway, the certificate is meaningless now.

Joel, why is a Certificate of Current Cost or Pricing Data meaningless now (or in the future?)

The 2 year old Certificate would not apply to a future solicitation or contract. The OP indicated that it wasn’t part of any proposal to the government and “are likely to be tied to a future prime contract”. We don’t even know whether the prime contract itself is an ID/IQ or only the supply subcontract.

We don’t know who agreed with, what it was  for or why there is an ID/IQ or price agreement for out year parts acquisitions. 

On 2/3/2022 at 6:52 PM, TNT1 said:

Thanks Fara & Vern. We might consider that the future releases against the IDIQ are likely to be tied to a future prime contract, but at this time, not tied to the Prime contractor's proposal to the Government. In the event that the IDIQ pricing is incorporated on a future proposal to the Government, then the CCPD would still be "outdated" in the sense that it is from 2020 (or 2022 if we get it refreshed), which one might assume is why the FAR references that the data needs to be current at time of agreement on price.

Most higher up individuals at my company are of the position that the price was agreed upon and the letter of the law dictates that the negotiated pricing does not need to be re-evaluated. The opposite position seems to be rooted in logic...but my research for clarity has not yet yielded a clear result.

deleted

TNT1, TINA requires "current" facts and prices. Since your company prohibits new documentation, my position is that your company's Certificate may be questionable to your customer in the following way. The supplier cost or pricing data is not certified as current because that is new documentation.There will be no new documentation concerning potential competition or other non-competitive sources available after a 2 year gap that a prudent negotiator would want to know about. There will be no new documentation regarding assumptions or facts in the cost analysis that may be different 2 years later, which may include price analysis.

Thanks all for the responses. While I agree, I am still searching for a clear basis to move forward with (other than what would seem to be obvious logic). To play devil's advocate to my own position:

The highlighted language seemingly indicates leeway in terms of agreement on the date in which CCPD can be used. If both the contractor and subcontractor agree that the negotiated price 2 years ago was predicated on valid data from that time, under what basis could the customer take exception? It seems like the prudent action would be to receive new CCPD, but is there really any evidence to suggest that the customer would have grounds to assert defective CCPD here?

TNT1, here is  how FAR 2.101 defines cost or pricing data.  Cost or pricing data " means 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 affect price negotiations significantly."  Do you think that data that is at least two years old fits that definition in regard to pricing the prime contract?

TNT1,

I still cannot figure out the facts from your original posting and subsequent postings.  I don't know whether (1) the Government agency is issuing (or recently issued) a contract or modification that requires certified cost or pricing data, and your proposed subcontract has been on the shelf for two years; or (2) the Government agency contract or modification was issued two years ago and you're just now getting around to issuing a subcontract under that prime contract or modification.  I don't think anyone here can tell you anything more than they already have.  You know your facts better than anyone here, and it seems to me that you have been stingy with sharing the facts.

It sounds like you want permission, or validation, or pre-absolution for an understanding of "current" that covers two-year-old certified cost or pricing data -- but no one here can give that to you.

ji20874 said:

You know your facts better than anyone here, and it seems to me that you have been stingy with sharing the facts.

I agree. I don’t understand why TNT is reluctant to provide a clear explanation and the full context of the agreement and the associated prime contract action involved after several of us have repeatedly asked. For what purpose did you agree on a price and it get submitted to the government? Thanks in advance .

@ji20874@joel hoffman

Apologies for the confusion. The Government is not intimately involved here. I am the prime contractor looking to establish an IDIQ with one of our subcontracts for parts for FY24-25. There is no overarching prime contract for this IDIQ, but the subsequent task orders to be released within FY24-25 will have prime contracts tied to them. 

When the customer (Government) would be involved is when the task Orders are pulled in an audit (CPSR) and the overarching IDIQ is called into question in regards to the 2 year gap between the final negotiated price and the formal placement of the IDIQ. 

The reason for the 2 year delay between a negotiated, finalized price predicated on CCPD between myself (the prime contractor) and the subcontractor is employee turnover and perhaps laziness.

@TNT1

• You say you are a prime contractor and you want to enter into a IDIQ subcontract.
• But then you say there is "no overarching prime contract for this IDIQ [subcontract]."
• Then you say that "subsequent task orders... will have prime contracts (plural) tied to them.

???

What I think you mean by all the stuff you have posted is that you want to enter into an IDIQ contract with a company to provide supplies or services for your use when you perform under task orders issued by the Government under IDIQ contracts.

You negotiated with a company a couple of years ago and reached a tentative agreement on prices. You got certified cost or pricing then, but didn't actually sign a contract. Now you want to sign a contract with that company based on the prices you negotiated back then.

When you use its supplies or services in the performance of task orders, that company will be a subcontractor under those orders.

What you want to know is whether you should require the company to update the cost or pricing data that it submitted two years ago before you sign a subcontract. 

Is that what you have been trying say? If not, what of that is not correct?

Correct.

TNT1 wants to enter into a long-term agreement (LTA) with a supplier. The supplier will receive orders and the cost of those orders will be charged to a USG prime contract(s). We don't know whether the USG prime contracts will be FFP or Cost-Type, or what.

DCAA has audit guidance on this topic, for what it may be worth.

Quote

An LTA is an agreement entered into between a prime or higher-tier contractor and a subcontractor to establish pricing for future purchases of specified items. It is common for contractors to enter into an LTA with a subcontractor in advance of a specific Government RFP; therefore, DCAA audit assistance may be necessary to ensure the reasonableness of the subcontract price. Before initiating the audit, the following is required:

1. The subcontract proposal has been approved by the appropriate subcontractor management;

2. The prime contractor has submitted the subcontract proposal to the Government with an assertion from the prime contractor’s management that it intends to award an LTA with the subcontractor and identifies the benefit of the LTA to the Government;

3. The subcontract proposal is adequate for examination based on the requirements set forth in FAR Subpart 15.4, Contract Pricing; and

4. The Contracting Officer has determined that subcontract audit support is required based on DFARS PGI 215.404-3 Subcontract pricing considerations.

Bottom-line: I think the government will be more concerned about price reasonableness than it will about TINA compliance. The contractor should be prepared to show how two-year-old pricing will result in a reasonable price.

Thanks everyone for the comments in this thread and otherwise. They are valuable in shaping my perspective. Been a long time lurker here and you guys are all awesome. 

TNT1

here_2_help said:

Bottom-line: I think the government will be more concerned about price reasonableness than it will about TINA compliance.

While that might be a valid thought with respect to price negotiations, if there are any, it might not be true in later years if the contract is audited for any reason.

In what I think was the biggest (and longest) TINA/False Claims litigation in history, the United Technologies (Pratt & Whitney) aircraft engine defective pricing case, which lasted more than a decade, the Air Force was not concerned about TINA compliance at the time of contract award. The concerns were raised by a DCAA auditor years later, and led to litigation at the ASBCA and in the federal courts.

Never take TINA lightly. Never ever.