Price, Cost and Finance - Pricing Topics

Cost or Pricing Topics

Definition of Cost or Pricing Data

The definition of cost or pricing data (10 U.S.C. 2306a(h)(1)) and the distinction between “certified cost or pricing data” and “data other than certified cost or pricing data” may be found at Federal Acquisition Regulation (FAR) 2.101.

Certified Cost or Pricing Data Threshold

The threshold for obtaining certified cost or pricing data are provided in FAR 15.403-4. See also FAR 15.403-4(a)(1)(ii) for subcontractor certified cost or pricing data requirements.

Pilot Program to Accelerate Contracting and Pricing Processes (“TINA Lite”)

Section 890 of the National Defense Authorization Act for FY 2019, as amended, authorizes DoD to conduct a pilot program through January 2, 2023 for contract actions exceeding $50 million. Pilot program authority is implemented in DFARS Class Deviation 2020-O0020, dated August 14, 2020. Subject to approval by the Director, DPC, Price, Cost and Finance, the contracting officer may strategically establish the extent, structure, and level of detail of the historical actual cost data the contractor will be required to submit in lieu of providing complete certified cost or pricing data.

Click Hereto contact PCF for more information.

Inflation

Guidance to assist contracting officers in understanding the impacts of inflation on existing contracts as well as considerations for the proper use of economic price adjustment (EPA) clauses in new contracts, when appropriate, is available here. Guidance to assist contracting officers in managing the effects of inflation with existing firm-fixed-priced contracts is available here.

DPC has partnered with DAU to provide training for acquisition professionals regarding the impact of inflation based on contract type pertaining to existing contracts, and the proper use of the Economic Price Adjustment (EPA) clause to address inflation-related concerns for prospective contracts. This training consists of a DAU online training course, CON 7470 Inflation and Economic Price Adjustments, and a Striking the Balance webinar series course entitled "Striking the Balance: Constructing Fair Economic Price Adjustment Clauses". Click here to access the training.

The Contracting Incentive Guidebook also addresses the appropriate use of EPA clauses and it is located here.

Commercial Acquisition

Commercial Acquisition Training

DAU Commercial Acquisition Resources: Examples, Roles, and References (Resources & Training)

  • DAU Continuous Learning Module CLC 020, Commercial Item Determination
  • DAU Continuous Learning Module CLC 139, Acquisition of Commercial Items
  • DAU Course CMC 170, Pricing Commercial Acquisitions

Commercial Acquisition Resources

DCMA Commercial Item Group Website

Department of Defense Guidebook for Acquiring Commercial Items

Data Denials

Contracting Officers are responsible for ensuring that negotiated prices are fair and reasonable. When contractors fail to comply with a contracting officer’s request to provide data other than certified cost or pricing data, it can have a detrimental impact on the Government’s ability to determine a fair and reasonable price as well as the ability to award contracts in a timely manner. To resolve this problem, DFARS PGI 215.404-1 provides a sequence of steps for contracting officers to take to fulfill their responsibility.

If the contractor still refuses to provide data, the issue is elevated to the Head of the Contracting Activity (HCA) to determine that contract award is still in the best interest of the Government subject to the criteria in FAR 15.403-3(a)(4).

HCAs across the Department of Defense are required to submit to DPC, on a quarterly basis, all contractor refusals to provide data that nonetheless resulted in a contract award. The reporting of data denials is essential in providing DPC with a holistic view of the extent of the problem across the Department. These reports are consolidated, validated, and submitted to Congress on an annual basis.

The requirement for reporting contractor data denials is implemented in DFARS PGI 215.403-3(6), and components are reminded to download the most current report template referenced in the PGI each quarter.

Performance Based Payments

Performance Based Payments Training

It is imperative that acquisition professionals have a solid understanding of how to develop a PBP contract financing arrangement that is beneficial for both Government and Industry. This course covers six key steps in how to develop an adequate PBP agreement.

Click Herefor the August 2020 training.

Performance Based Payments Tool

The amount and timing of contract financing has a direct impact on the cost to the Government and the financial outcome to the contractor as measured by the Internal Rate of Return (IRR) and Net Present Value (NPV) of the contract cash flows. The purpose of this tool is to demonstrate the financial impact to both the Government and the contractor of using PBPs versus customary progress payments. For a PCF training demonstration on how to use the PBP tool, click here.

Click Hereto access the tool.

Performance Based Payment Guidebook

The purpose of the Guide is to provide assistance to users based on lessons learned over the past fifteen years. It is important for users to read the entire guide because of the inter-relationship of the topics covered.

Click Hereto access the PBP Guidebook.

Contract Incentives

Contract Incentives Training

FPIF Training

CPIF Training

Contract Incentives Tools

Download the CPIF Tool

Download the FPIF Tool

Contract Incentive Guidebook

Incentive-type contracts are proven vehicles for DoD and industry to share equitably in cost savings or risks. When structured correctly, an incentive contract aligns industry motivations with the Government’s desired outcomes. DFARS 216.104 requires contracting officers to follow the principles and procedures in the DoD Guidebook locatedhere.

Pricing Variable Quantities

Pricing variable quantities can be one of the most challenging aspects of contract pricing. While pricing a range of possible quantities provides flexibility, it also adds complexity with respect to the analysis, and requires careful thought in choosing the most appropriate variation in quantity methodology. It is imperative that acquisition professionals understand the various methodologies prior to selecting the one that is most appropriate for your acquisition. The “Pricing Variable Quantities” webinar, which is part of the Striking the Balance Series, covers the 3 common methodologies and their application. This training can be found here.

There are also two tools available to acquisition professionals who are considering the utilization of variation in quantity pricing curves. These tools can be found here.

Sole Source Peer Reviews

The Sole Source Peer Review program provides expert pricing advice, improves the quality of the business deal, and facilitates the sharing of best practices and lessons learned. For more information about the program, click here.

IR&D and BP

Below are the Defense Contract Audit Agency summary reports on Independent Research and Development costs incurred by major defense contractors since 1985.