§ 254b. — Cost or pricing data: truth in negotiations.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 41USC254b]
TITLE 41--PUBLIC CONTRACTS
CHAPTER 4--PROCUREMENT PROCEDURES
SUBCHAPTER IV--PROCUREMENT PROVISIONS
Sec. 254b. Cost or pricing data: truth in negotiations
(a) Required cost or pricing data and certification
(1) The head of an executive agency shall require offerors,
contractors, and subcontractors to make cost or pricing data available
as follows:
(A) An offeror for a prime contract under this subchapter to be
entered into using procedures other than sealed-bid procedures shall
be required to submit cost or pricing data before the award of a
contract if--
(i) in the case of a prime contract entered into after
October 13, 1994, the price of the contract to the United States
is expected to exceed $500,000; and
(ii) in the case of a prime contract entered into on or
before October 13, 1994, the price of the contract to the United
States is expected to exceed $100,000.
(B) The contractor for a prime contract under this subchapter
shall be required to submit cost or pricing data before the pricing
of a change or modification to the contract if--
(i) in the case of a change or modification made to a prime
contract referred to in subparagraph (A)(i), the price
adjustment is expected to exceed $500,000;
(ii) in the case of a change or modification made to a prime
contract that was entered into on or before October 13, 1994,
and that has been modified pursuant to paragraph (6), the price
adjustment is expected to exceed $500,000; and
(iii) in the case of a change or modification not covered by
clause (i) or (ii), the price adjustment is expected to exceed
$100,000.
(C) An offeror for a subcontract (at any tier) of a contract
under this subchapter 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--
(i) in the case of a subcontract under a prime contract
referred to in subparagraph (A)(i), the price of the subcontract
is expected to exceed $500,000;
(ii) in the case of a subcontract entered into under a prime
contract that was entered into on or before October 13, 1994,
and that has been modified pursuant to paragraph (6), the price
of the subcontract is expected to exceed $500,000; and
(iii) in the case of a subcontract not covered by clause (i)
or (ii), the price of the subcontract is expected to exceed
$100,000.
(D) The subcontractor for a subcontract covered by subparagraph
(C) shall be required to submit cost or pricing data before the
pricing of a change or modification to the subcontract if--
(i) in the case of a change or modification to a subcontract
referred to in subparagraph (C)(i) or (C)(ii), the price
adjustment is expected to exceed $500,000; and
(ii) in the case of a change or modification to a
subcontract referred to in subparagraph (C)(iii), the price
adjustment is expected to exceed $100,000.
(2) A person required, as an offeror, contractor, or subcontractor,
to submit cost or pricing data under paragraph (1) (or required by the
head of the procuring activity concerned to submit such data under
subsection (c) of this section) shall be required to certify that, to
the best of the person's knowledge and belief, the cost or pricing data
submitted are accurate, complete, and current.
(3) Cost or pricing data required to be submitted under paragraph
(1) (or under subsection (c) of this section), and a certification
required to be submitted under paragraph (2), shall be submitted--
(A) in the case of a submission by a prime contractor (or an
offeror for a prime contract), to the contracting officer for the
contract (or to a designated representative of the contracting
officer); or
(B) in the case of a submission by a subcontractor (or an
offeror for a subcontract), to the prime contractor.
(4) Except as provided under subsection (b) of this section, this
section applies to contracts entered into by the head of an executive
agency on behalf of a foreign government.
(5) A waiver of requirements for submission of certified cost or
pricing data that is granted under subsection (b)(1)(C) of this section
in the case of a contract or subcontract does not waive the requirement
under paragraph (1)(C) for submission of cost or pricing data in the
case of subcontracts under that contract or subcontract unless the head
of the procuring activity granting the waiver determines that the
requirement under that paragraph should be waived in the case of such
subcontracts and justifies in writing the reasons for the determination.
(6) Upon the request of a contractor that was required to submit
cost or pricing data under paragraph (1) in connection with a prime
contract entered into on or before October 13, 1994, the head of the
executive agency that entered into such contract shall modify the
contract to reflect subparagraphs (B)(ii) and (C)(ii) of paragraph (1).
All such modifications shall be made without requiring consideration.
(7) Effective on October 1 of each year that is divisible by 5, each
amount set forth in paragraph (1) shall be adjusted to the amount that
is equal to the fiscal year 1994 constant dollar value of the amount set
forth. Any amount, as so adjusted, that is not evenly divisible by
$50,000 shall be rounded to the nearest multiple of $50,000. In the case
of an amount that is evenly divisible by $25,000 but not evenly
divisible by $50,000, the amount shall be rounded to the next higher
multiple of $50,000.
(b) Exceptions
(1) In general
Submission of certified cost or pricing data shall not be
required under subsection (a) of this section in the case of a
contract, a subcontract, or a modification of a contract or
subcontract--
(A) for which the price agreed upon is based on--
(i) adequate price competition; or
(ii) prices set by law or regulation;
(B) for the acquisition of a commercial item; or
(C) in an exceptional case when the head of the procuring
activity, without delegation, determines that the requirements
of this section may be waived and justifies in writing the
reasons for such determination.
(2) Modifications of contracts and subcontracts for
commercial items
In the case of a modification of a contract or subcontract for a
commercial item that is not covered by the exception to the
submission of certified cost or pricing data in paragraph (1)(A) or
(1)(B), submission of certified cost or pricing data shall not be
required under subsection (a) of this section if--
(A) the contract or subcontract being modified is a contract
or subcontract for which submission of certified cost or pricing
data may not be required by reason of paragraph (1)(A) or
(1)(B); and
(B) the modification would not change the contract or
subcontract, as the case may be, from a contract or subcontract
for the acquisition of a commercial item to a contract or
subcontract for the acquisition of an item other than a
commercial item.
(c) Cost or pricing data on below-threshold contracts
(1) Authority to require submission
Subject to paragraph (2), when certified cost or pricing data
are not required to be submitted by subsection (a) of this section
for a contract, subcontract, or modification of a contract or
subcontract, such data may nevertheless be required to be submitted
by the head of the procuring activity, but only if the head of the
procuring activity determines that such data are necessary for the
evaluation by the agency of the reasonableness of the price of the
contract, subcontract, or modification of a contract or subcontract.
In any case in which the head of the procuring activity requires
such data to be submitted under this subsection, the head of the
procuring activity shall justify in writing the reason for such
requirement.
(2) Exception
The head of the procuring activity may not require certified
cost or pricing data to be submitted under this paragraph for any
contract or subcontract, or modification of a contract or
subcontract, covered by the exceptions in subparagraph (A) or (B) of
subsection (b)(1) of this section.
(3) Delegation of authority prohibited
The head of a procuring activity may not delegate the functions
under this paragraph.
(d) Submission of other information
(1) Authority to require submission
When certified cost or pricing data are not required to be
submitted under this section for a contract, subcontract, or
modification of a contract or subcontract, the contracting officer
shall require submission of data other than certified cost or
pricing data to the extent necessary to determine the reasonableness
of the price of the contract, subcontract, or modification of the
contract or subcontract. Except in the case of a contract or
subcontract covered by the exceptions in subsection (b)(1)(A) of
this section, the contracting officer shall require that the data
submitted include, at a minimum, appropriate information on the
prices at which the same item or similar items have previously been
sold that is adequate for evaluating the reasonableness of the price
for the procurement.
(2) Limitations on authority
The Federal Acquisition Regulation shall include the following
provisions regarding the types of information that contracting
officers may require under paragraph (1):
(A) Reasonable limitations on requests for sales data
relating to commercial items.
(B) A requirement that a contracting officer limit, to the
maximum extent practicable, the scope of any request for
information relating to commercial items from an offeror to only
that information that is in the form regularly maintained by the
offeror in commercial operations.
(C) A statement that any information received relating to
commercial items that is exempt from disclosure under section
552(b) of title 5 shall not be disclosed by the Federal
Government.
(e) Price reductions for defective cost or pricing data
(1)(A) A prime contract (or change or modification to a prime
contract) under which a certificate under subsection (a)(2) of this
section is required shall contain a provision that the price of the
contract to the United States, including profit or fee, shall be
adjusted to exclude any significant amount by which it may be determined
by the head of the executive agency that such price was increased
because the contractor (or any subcontractor required to make available
such a certificate) submitted defective cost or pricing data.
(B) For the purposes of this section, defective cost or pricing data
are cost or pricing data which, as of the date of agreement on the price
of the contract (or another date agreed upon between the parties), were
inaccurate, incomplete, or noncurrent. If for purposes of the preceding
sentence the parties agree upon a date other than the date of agreement
on the price of the contract, the date agreed upon by the parties shall
be as close to the date of agreement on the price of the contract as is
practicable.
(2) In determining for purposes of a contract price adjustment under
a contract provision required by paragraph (1) whether, and to what
extent, a contract price was increased because the contractor (or a
subcontractor) submitted defective cost or pricing data, it shall be a
defense that the United States did not rely on the defective data
submitted by the contractor or subcontractor.
(3) It is not a defense to an adjustment of the price of a contract
under a contract provision required by paragraph (1) that--
(A) the price of the contract would not have been modified even
if accurate, complete, and current cost or pricing data had been
submitted by the contractor or subcontractor because the contractor
or subcontractor--
(i) was the sole source of the property or services
procured; or
(ii) otherwise was in a superior bargaining position with
respect to the property or services procured;
(B) the contracting officer should have known that the cost or
pricing data in issue were defective even though the contractor or
subcontractor took no affirmative action to bring the character of
the data to the attention of the contracting officer;
(C) the contract was based on an agreement between the
contractor and the United States about the total cost of the
contract and there was no agreement about the cost of each item
procured under such contract; or
(D) the prime contractor or subcontractor did not submit a
certification of cost or pricing data relating to the contract as
required under subsection (a)(2) of this section.
(4)(A) A contractor shall be allowed to offset an amount against the
amount of a contract price adjustment under a contract provision
required by paragraph (1) if--
(i) the contractor certifies to the contracting officer (or to a
designated representative of the contracting officer) that, to the
best of the contractor's knowledge and belief, the contractor is
entitled to the offset; and
(ii) the contractor proves that the cost or pricing data were
available before the date of agreement on the price of the contract
(or price of the modification), or, if applicable consistent with
paragraph (1)(B), another date agreed upon between the parties, and
that the data were not submitted as specified in subsection (a)(3)
of this section before such date.
(B) A contractor shall not be allowed to offset an amount otherwise
authorized to be offset under subparagraph (A) if--
(i) the certification under subsection (a)(2) of this section
with respect to the cost or pricing data involved was known to be
false when signed; or
(ii) the United States proves that, had the cost or pricing data
referred to in subparagraph (A)(ii) been submitted to the United
States before the date of agreement on the price of the contract (or
price of the modification) or, if applicable under paragraph (1)(B),
another date agreed upon between the parties, the submission of such
cost or pricing data would not have resulted in an increase in that
price in the amount to be offset.
(f) Interest and penalties for certain overpayments
(1) If the United States makes an overpayment to a contractor under
a contract with an executive agency subject to this section and the
overpayment was due to the submission by the contractor of defective
cost or pricing data, the contractor shall be liable to the United
States--
(A) for interest on the amount of such overpayment, to be
computed--
(i) for the period beginning on the date the overpayment was
made to the contractor and ending on the date the contractor
repays the amount of such overpayment to the United States; and
(ii) at the current rate prescribed by the Secretary of the
Treasury under section 6621 of title 26; and
(B) if the submission of such defective data was a knowing
submission, for an additional amount equal to the amount of the
overpayment.
(2) Any liability under this subsection of a contractor that submits
cost or pricing data but refuses to submit the certification required by
subsection (a)(2) of this section with respect to the cost or pricing
data shall not be affected by the refusal to submit such certification.
(g) Right of United States to examine contractor records
For the purpose of evaluating the accuracy, completeness, and
currency of cost or pricing data required to be submitted by this
section, an executive agency shall have the authority provided by
section 254d(a)(2) of this title.
(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)(B) of this section, 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.
(2) Subcontract
The term ``subcontract'' includes a transfer of commercial items
between divisions, subsidiaries, or affiliates of a contractor or a
subcontractor.
(3) Commercial item
The term ``commercial item'' has the meaning provided such term
by section 403(12) of this title.
(June 30, 1949, ch. 288, title III, Sec. 304A, as added Pub. L. 103-355,
title I, Sec. 1251(a)(2), Oct. 13, 1994, 108 Stat. 3278; amended Pub. L.
104-106, div. D, title XLII, Sec. 4201(b), title XLIII, Sec. 4321(e)(3),
(4), Feb. 10, 1996, 110 Stat. 651, 675; Pub. L. 105-261, div. A, title
VIII, Secs. 805(b), 808(b), Oct. 17, 1998, 112 Stat. 2083, 2085.)
Amendments
1998--Subsec. (a)(5). Pub. L. 105-261, Sec. 805(b), amended par. (5)
generally. Prior to amendment, par. (5) read as follows: ``For purposes
of paragraph (1)(C), a contractor or subcontractor granted a waiver
under subsection (b)(1)(B) of this section shall be considered as having
been required to make available cost or pricing data under this
section.''
Subsec. (d)(1). Pub. L. 105-261, Sec. 808(b), substituted ``the
contracting officer shall require that the data submitted'' for ``the
data submitted shall''.
1996--Subsec. (b). Pub. L. 104-106, Sec. 4201(b)(1), amended subsec.
(b) generally, substituting pars. (1) and (2) relating to submission of
certified cost or pricing data for former pars. (1) and (2) relating to
submission of cost or pricing data and striking out par. (3) relating to
FAR standards.
Subsec. (c). Pub. L. 104-106, Sec. 4201(b)(1), amended subsec. (c)
generally, substituting pars. (1) to (3) relating to authority to
require submission of certified cost or pricing data for former par. (1)
relating to authority to require submission of cost or pricing data and
striking out former par. (2) relating to authority to require
information other than certified cost or pricing data.
Subsec. (c)(1). Pub. L. 104-106, Sec. 4321(e)(3), which directed
amendment of heading of par. (1) by changing each letter that is
capitalized (other than the first letter of the first word) to
lowercase, could not be executed because of the general amendment of
subsec. (c) by Pub. L. 104-106, Sec. 4201(b)(1). See above.
Subsec. (d). Pub. L. 104-106, Sec. 4201(b)(1), amended subsec. (d)
generally, substituting pars. (1) and (2) relating to submission of
other information for former pars. (1) to (6) relating to additional
exceptions regarding commercial items.
Subsec. (d)(2)(A)(ii). Pub. L. 104-106, Sec. 4321(e)(4), which
directed amendment of par. (2)(A)(ii) by inserting ``to'' after ``The
information referred'', could not be executed because par. (2)(A) did
not contain a cl. (ii) or the phrase ``The information referred'',
subsequent to the general amendment of subsec. (d) by Pub. L. 104-106,
Sec. 4201(b)(1). See above.
Subsecs. (h), (i). Pub. L. 104-106, Sec. 4201(b)(2), redesignated
subsec. (i) as (h) and struck out heading and text of former subsec.
(h). Text read as follows: ``The Federal Acquisition Regulation shall
include regulations concerning the types of information that offerors
must submit for a contracting officer to consider in determining whether
the price of a procurement to the Government is fair and reasonable when
certified cost or pricing data are not required to be submitted under
this section because the price of the procurement to the United States
is not expected to exceed the applicable threshold amount set forth in
subsection (a) of this section (as adjusted pursuant to paragraph (7) of
such subsection). Such information, at a minimum, shall include
appropriate information on the prices at which the same item or similar
items have previously been sold that is adequate for evaluating the
reasonableness of the price of a proposed contract or subcontract for
the procurement.''
Effective Date of 1996 Amendment
For effective date and applicability of amendment by Pub. L. 104-
106, see section 4401 of Pub. L. 104-106, set out as a note under
section 251 of this title.
Effective Date
For effective date and applicability of section, see section 10001
of Pub. L. 103-355, set out as an Effective Date of 1994 Amendment note
under section 251 of this title.
Section 1251(b) of Pub. L. 103-355, as amended by Pub. L. 104-106,
div. D, title XLIII, Sec. 4321(a)(3), Feb. 10, 1996, 110 Stat. 671,
provided that: ``Subsection (a) of section 304A of the Federal Property
and Administrative Services Act of 1949 [subsec. (a) of this section],
as added by subsection (a), shall apply according to the provisions
thereof on and after the date of the enactment of this Act [Oct. 13,
1994], notwithstanding section 10001(b) [see Effective Date of 1994
Amendment note set out under section 251 of this title].''
[Section 4321(a) of Pub. L. 104-106 provided that the amendment made
by that section to section 1251(b) of Pub. L. 103-355, set out above, is
effective as of Oct. 13, 1994, and as if included in Pub. L. 103-355 as
enacted.]
Eligibility for Contracts and Subcontracts To Be Conditioned on
Compliance
Pub. L. 105-261, div. A, title VIII, Sec. 808(c), Oct. 17, 1998, 112
Stat. 2085, provided that: ``Not later than 180 days after the date of
the enactment of this Act [Oct. 17, 1998], the Federal Acquisition
Regulation shall be amended to provide that an offeror's compliance with
a requirement to submit data for a contract or subcontract in accordance
with section 2306a(d)(1) of title 10, United States Code, or section
304A(d)(1) of the Federal Property and Administrative Services Act of
1949 [41 U.S.C. 254b(d)(1)] shall be a condition for the offeror to be
eligible to enter into the contract or subcontract, subject to such
exceptions as the Federal Acquisition Regulatory Council determines
appropriate.''
Criteria for Determining Specific Price Information Required
Pub. L. 105-261, div. A, title VIII, Sec. 808(d), Oct. 17, 1998, 112
Stat. 2085, provided that: ``Not later than 180 days after the date of
the enactment of this Act [Oct. 17, 1998], the Federal Acquisition
Regulation shall be amended to include criteria for contracting officers
to apply for determining the specific price information that an offeror
should be required to submit under section 2306a(d) of title 10, United
States Code, or section 304A(d) of the Federal Property and
Administrative Services Act of 1949 (41 U.S.C. 254b(d)).''
Section Referred to in Other Sections
This section is referred to in sections 254d, 423 of this title;
title 15 section 205c.
