15.408 Solicitation provisions and contract

clauses.

(a) Changes or Additions to Make-or-Buy Program. The contracting officer shall insert the clause at

52.215-9, Changes or Additions to Make-or-Buy Program, in solicitations and contracts when it is

contemplated that a make-or-buy program will be incorporated in the contract. If a less economical

"make" or "buy" categorization is selected for one or more items of significant value, the contracting

officer shall use the clause with-

(1) Its Alternate I, if a fixed-price incentive contract is contemplated; or

(2) Its Alternate II, if a cost-plus-incentive-fee contract is contemplated.

(b) Price Reduction for Defective Certified Cost or Pricing Data. The contracting officer shall, when

contracting by negotiation, insert the clause at 52.215-10, Price Reduction for Defective Certified

Cost or Pricing Data, in solicitations and contracts when it is contemplated that certified cost or

pricing data will be required from the contractor or any subcontractor (see 15.403-4).

(c) Price Reduction for Defective Certified Cost or Pricing Data-Modifications. The contracting

officer shall, when contracting by negotiation, insert the clause at 52.215-11, Price Reduction for

Defective Certified Cost or Pricing Data—Modifications, in solicitations and contracts when it is

contemplated that certified cost or pricing data will be required from the contractor or any

subcontractor (see 15.403-4) for the pricing of contract modifications, and the clause prescribed in

paragraph (b) of this section has not been included.

(d) Subcontractor Certified Cost or Pricing Data. The contracting officer shall—

(1) Insert the clause at 52.215-12, Subcontractor Certified Cost or Pricing Data, in solicitations and

contracts when the clause prescribed in paragraph (b) of this section is included; or

(2) Upon the request of a contractor that was required to submit certified cost or pricing data in

connection with a prime contract entered into before July 1, 2018, the contracting officer shall

modify the contract without requiring consideration, to replace clause 52.215-12, Subcontractor

Certified Cost or Pricing Data, with its Alternate I.

(e) Subcontractor Certified Cost or Pricing Data-Modifications. The contracting officer shall—

(1) Insert the clause at 52.215-13, Subcontractor Certified Cost or Pricing Data—Modifications, in

solicitations and contracts when the clause prescribed in paragraph (c) of this section is included; or

(2) Upon the request of a contractor that was required to submit certified cost or pricing data in

connection with a prime contract entered into before July 1, 2018, the contracting officer shall

modify the contract without requiring consideration, to replace clause 52.215-13, Subcontractor

Certified Cost or Pricing Data—Modifications, with its Alternate I.

(f) Integrity of Unit Prices.

(1) The contracting officer shall insert the clause at 52.215-14, Integrity of Unit Prices, in

solicitations and contracts except for-
(i) Acquisitions at or below the simplified acquisition threshold;

(ii) Construction or architect-engineer services under part 36;

(iii) Utility services under part 41;

(iv) Service contracts where supplies are not required;

(v) Acquisitions of commercial products and commercial services; and

(vi) Contracts for petroleum products.

(2) The contracting officer shall insert the clause with its Alternate I when contracting without

adequate price competition or when prescribed by agency regulations.

(g) Pension Adjustments and Asset Reversions. The contracting officer shall insert the clause at

52.215-15, Pension Adjustments and Asset Reversions, in solicitations and contracts for which it is

anticipated that certified cost or pricing data will be required or for which any preaward or

postaward cost determinations will be subject to part 31.

(h) Facilities Capital Cost of Money. The contracting officer shall insert the provision at 52.215-16,

Facilities Capital Cost of Money, in solicitations expected to result in contracts that are subject to

the cost principles for contracts with commercial organizations (see subpart 31.2).

(i) Waiver of Facilities Capital Cost of Money. If the prospective contractor does not propose

facilities capital cost of money in its offer, the contracting officer shall insert the clause at

52.215-17, Waiver of Facilities Capital Cost of Money, in the resulting contract.

(j) Reversion or Adjustment of Plans for Postretirement Benefits (PRB) Other Than Pensions. The

contracting officer shall insert the clause at 52.215-18, Reversion or Adjustment of Plans for

Postretirement Benefits (PRB) Other Than Pensions, in solicitations and contracts for which it is

anticipated that certified cost or pricing data will be required or for which any preaward or

postaward cost determinations will be subject to part 31.

(k) Notification of Ownership Changes. The contracting officer shall insert the clause at 52.215-19,

Notification of Ownership Changes, in solicitations and contracts for which it is contemplated that

certified cost or pricing data will be required or for which any preaward or postaward cost

determination will be subject to subpart 31.2.

(l) Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing

Data. Considering the hierarchy at 15.402, the contracting officer shall insert the provision at

52.215-20, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or

Pricing Data, in solicitations if it is reasonably certain that certified cost or pricing data or data other

than certified cost or pricing data will be required. This provision also provides instructions to

offerors on how to request an exception from the requirement to submit certified cost or pricing

data. The contracting officer shall-

(1) Use the provision with its Alternate I to specify a format for certified cost or pricing data other

than the format required by Table 15-2 of this section;

(2) Use the provision with its Alternate II if copies of the proposal are to be sent to the ACO and

contract auditor;
(3) Use the provision with its Alternate III if submission via electronic media is required; and

(4) Replace the basic provision with its Alternate IV if certified cost or pricing data are not expected

to be required because an exception may apply, but data other than certified cost or pricing data will

be required as described in 15.403-3.

(m) Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing

Data-Modifications. Considering the hierarchy at 15.402, the contracting officer shall insert the

clause at 52.215-21, Requirements for Certified Cost or Pricing Data and Data Other Than Certified

Cost or Pricing Data-Modifications, in solicitations and contracts if it is reasonably certain that

certified cost or pricing data or data other than certified cost or pricing data will be required for

modifications. This clause also provides instructions to contractors on how to request an exception

from the requirement to submit certified cost or pricing data. The contracting officer shall-

(1) Use the clause with its Alternate I to specify a format for certified cost or pricing data other than

the format required by Table 15-2 of this section;

(2) Use the clause with its Alternate II if copies of the proposal are to be sent to the ACO and

contract auditor;

(3) Use the clause with its Alternate III if submission via electronic media is required; and

(4) Replace the basic clause with its Alternate IV if certified cost or pricing data are not expected to

be required because an exception may apply, but data other than certified cost or pricing data will

be required as described in 15.403-3.

(n) Limitations on Pass-Through Charges.

(1) The contracting officer shall insert the provision at 52.215-22, Limitations on Pass-Through

Charges-Identification of Subcontract Effort, in solicitations containing the clause at 52.215-23.

(2)

(i) Except as provided in paragraph (n)(2)(ii), the contracting officer shall insert the clause

52.215-23, Limitations on Pass-Through Charges, in solicitations and contracts including task or

delivery orders as follows:

(A) For civilian agencies, insert the clause when-

(1) The total estimated contract or order value exceeds the simplified acquisition threshold as

defined in section 2.101 and

(2) The contemplated contract type is expected to be a cost-reimbursement type contract as defined

in subpart 16.3; or

(B) For DoD, insert the clause when-

(1) The total estimated contract or order value exceeds the threshold for obtaining cost or pricing

data in 15.403-4; and

(2) The contemplated contract type is expected to be any contract type except-
(i) A firm-fixed-price contract awarded on the basis of adequate price competition;

(ii) A fixed-price contract with economic price adjustment awarded on the basis of adequate price

competition;

(iii) A firm-fixed-price contract for the acquisition of a commercial product or commercial service;

(iv) A fixed-price contract with economic price adjustment, for the acquisition of a commercial

product or commercial service;

(v) A fixed-price incentive contract awarded on the basis of adequate price competition; or

(vi) A fixed-price incentive contract for the acquisition of a commercial product or commercial

service.

(ii) The clause may be used when the total estimated contract or order value is below the thresholds

identified in 15.408(n)(2)(i) and for any contract type, when the contracting officer determines that

inclusion of the clause is appropriate.

(iii) Use the clause 52.215-23 with its Alternate I when the contracting officer determines that the

prospective contractor has demonstrated that its functions provide added value to the contracting

effort and there are no excessive pass-through charges.

Table 15-2—Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data

Are Required

This document provides instructions for preparing a contract pricing proposal when certified cost or pricing data are required.

Note 1. There is a clear distinction between submitting certified cost or pricing data and merely making available books,

records, and other documents without identification. The requirement for submission of certified cost or pricing data is met

when all accurate certified cost or pricing data reasonably available to the offeror have been submitted, either actually or by

specific identification, to the Contracting Officer or an authorized representative. As later data come into your possession, it

should be submitted promptly to the Contracting Officer in a manner that clearly shows how the data relate to the offeror’s

price proposal. The requirement for submission of certified cost or pricing data continues up to the time of agreement on price,

or an earlier date agreed upon between the parties if applicable.

Note 2. By submitting your proposal, you grant the Contracting Officer or an authorized representative the right to examine

records that formed the basis for the pricing proposal. That examination can take place at any time before award. It may

include those books, records, documents, and other types of factual data (regardless of form or whether the data are

specifically referenced or included in the proposal as the basis for pricing) that will permit an adequate evaluation of the

proposed price.

I. General Instructions

A. You must provide the following information on the first page of your pricing proposal:

(1) Solicitation, contract, and/or modification number;

(2) Name and address of offeror;

(3) Name and telephone number of point of contact;

(4) Name of contract administration office (if available);

(5) Type of contract action (that is, new contract, change order, price revision/redetermination, letter contract, unpriced order,

or other);
(6) Proposed cost; profit or fee; and total;

(7) Whether you will require the use of Government property in the performance of the contract, and, if so, what property;

(8) Whether your organization is subject to cost accounting standards; whether your organization has submitted a CASB

Disclosure Statement, and if it has been determined adequate; whether you have been notified that you are or may be in

noncompliance with your Disclosure Statement or CAS (other than a noncompliance that the cognizant Federal agency official

has determined to have an immaterial cost impact), and, if yes, an explanation; whether any aspect of this proposal is

inconsistent with your disclosed practices or applicable CAS, and, if so, an explanation; and whether the proposal is consistent

with your established estimating and accounting principles and procedures and FAR part 31, Cost Principles, and, if not, an

explanation;

(9) The following statement: This proposal reflects our estimates and/or actual costs as of this date and conforms with the

instructions in FAR 15.403-5(b)(1) and Table 15-2. By submitting this proposal, we grant the Contracting Officer and

authorized representative(s) the right to examine, at any time before award, those records, which include books, documents,

accounting procedures and practices, and other data, regardless of type and form or whether such supporting information is

specifically referenced or included in the proposal as the basis for pricing, that will permit an adequate evaluation of the

proposed price.

(10) Date of submission; and

(11) Name, title, and signature of authorized representative.

B. In submitting your proposal, you must include an index, appropriately referenced, of all the certified cost or pricing data

and information accompanying or identified in the proposal. In addition, you must annotate any future additions and/or

revisions, up to the date of agreement on price, or an earlier date agreed upon by the parties, on a supplemental index.

C. As part of the specific information required, you must submit, with your proposal-

(1) Certified cost or pricing data (as defined at FAR 2.101). You must clearly identify on your cover sheet that certified cost or

pricing data are included as part of the proposal.

(2) Information reasonably required to explain your estimating process, including-

(i) The judgmental factors applied and the mathematical or other methods used in the estimate, including those used in

projecting from known data; and

(ii) The nature and amount of any contingencies included in the proposed price.

D. You must show the relationship between line item prices and the total contract price.You must attach cost-element

breakdowns for each proposed line item, using the appropriate format prescribed in the "Formats for Submission of Line Item

Summaries" section of this table. You must furnish supporting breakdowns for each cost element, consistent with your cost

accounting system.

E. When more than one line item is proposed, you must also provide summary total amounts covering all line items for each

element of cost.

F. Whenever you have incurred costs for work performed before submission of a proposal, you must identify those costs in your

cost/price proposal.

G. If you have reached an agreement with Government representatives on use of forward pricing rates/factors, identify the

agreement, include a copy, and describe its nature.

H. As soon as practicable after final agreement on price or an earlier date agreed to by the parties, but before the award

resulting from the proposal, you must, under the conditions stated in FAR 15.406-2, submit a Certificate of Current Cost or

Pricing Data.

II. Cost Elements
Depending on your system, you must provide breakdowns for the following basic cost elements, as applicable:

A. Materials and services. Provide a consolidated priced summary of individual material quantities included in the various

tasks, orders, or line items being proposed and the basis for pricing (vendor quotes, invoice prices, etc.). Include raw

materials, parts, components, assemblies, and services to be produced or performed by others. For all items proposed, identify

the item and show the source, quantity, and price. Conduct price analyses of all subcontractor proposals. Conduct cost

analyses for all subcontracts when certified cost or pricing data are submitted by the subcontractor. Include these analyses as

part of your own certified cost or pricing data submissions for subcontracts expected to exceed the appropriate threshold in

FAR 15.403-4. Submit the subcontractor certified cost or pricing data and data other than certified cost or pricing data as part

of your own certified cost or pricing data as required in paragraph IIA(2) of this table. These requirements also apply to all

subcontractors if required to submit certified cost or pricing data.

(1) Adequate Price Competition. Provide data showing the degree of competition and the basis for establishing the source and

reasonableness of price for those acquisitions (such as subcontracts, purchase orders, material order, etc.) exceeding, or

expected to exceed, the appropriate threshold set forth at FAR 15.403-4 priced on the basis of adequate price competition. For

interorganizational transfers priced at other than the cost of comparable competitive commercial work of the division,

subsidiary, or affiliate of the contractor, explain the pricing method (see FAR 31.205-26(e)).

(2) All Other. Obtain certified cost or pricing data from prospective sources for those acquisitions (such as subcontracts,

purchase orders, material order, etc.) exceeding the threshold set forth in FAR 15.403-4 and not otherwise exempt, in

accordance with FAR 15.403-1(b) ( i.e., adequate price competition, commercial products or commercial services, prices set by

law or regulation or waiver). Also provide data showing the basis for establishing source and reasonableness of price. In

addition, provide a summary of your cost analysis and a copy of certified cost or pricing data submitted by the prospective

source in support of each subcontract, or purchase order that is the lower of either $15 million or more, or both more than the

pertinent certified cost or pricing data threshold and more than 10 percent of the prime contractor's proposed price. Also

submit any information reasonably required to explain your estimating process (including 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). The Contracting Officer may require you to submit cost or pricing data

in support of proposals in lower amounts. Subcontractor certified cost or pricing data must be accurate, complete and current

as of the date of final price agreement, or an earlier date agreed upon by the parties, given on the prime contractor’s

Certificate of Current Cost or Pricing Data. The prime contractor is responsible for updating a prospective subcontractor’s

data. For standard commercial products fabricated by the offeror that are generally stocked in inventory, provide a separate

cost breakdown, if priced based on cost. For interorganizational transfers priced at cost, provide a separate breakdown of cost

elements. Analyze the certified cost or pricing data and submit the results of your analysis of the prospective source’s

proposal.When submission of a prospective source’s certified cost or pricing data is required as described in this paragraph, it

must be included as part of your own certified cost or pricing data. You must also submit any data other than certified cost or

pricing data obtained from a subcontractor, either actually or by specific identification, along with the results of any analysis

performed on that data.

B. Direct Labor. Provide a time-phased (e.g., monthly, quarterly, etc.) breakdown of labor hours, rates, and cost by appropriate

category, and furnish bases for estimates.

C. Indirect Costs. Indicate how you have computed and applied your indirect costs, including cost breakdowns. Show trends

and budgetary data to provide a basis for evaluating the reasonableness of proposed rates. Indicate the rates used and provide

an appropriate explanation.

D. Other Costs. List all other costs not otherwise included in the categories described above (e.g.,special tooling, travel,

computer and consultant services, preservation, packaging and packing, spoilage and rework, and Federal excise tax on

finished articles) and provide bases for pricing.

E. Royalties. If royalties exceed $1,500, you must provide the following information on a separate page for each separate

royalty or license fee:

(1) Name and address of licensor.

(2) Date of license agreement.

(3) Patent numbers.

(4) Patent application serial numbers, or other basis on which the royalty is payable.

(5) Brief description (including any part or model numbers of each contract item or component on which the royalty is payable)
(6) Percentage or dollar rate of royalty per unit.

(7) Unit price of contract item.

(8) Number of units.

(9) Total dollar amount of royalties.

(10) If specifically requested by the Contracting Officer, a copy of the current license agreement and identification of

applicable claims of specific patents (see FAR 27.202 and 31.205-37).

F. Facilities Capital Cost of Money. When you elect to claim facilities capital cost of money as an allowable cost, you must

submit FormCASB-CMF and show the calculation of the proposed amount (see FAR 31.205-10).

III. Formats for Submission of Line Item Summaries

A. New Contracts (including letter contracts).

Cost Elements Proposed Contract EstimateTotal Cost

Proposed Contract

Estimate-Unit Cost Reference

(1) (2) (3) (4)

Column Instruction

(1) Enter appropriate cost elements.

(2)

Enter those necessary and reasonable costs that, in your judgment, will properly be

incurred in efficient contract performance. When any of the costs in this column have

already been incurred (e.g., under a letter contract), describe them on an attached

supporting page. When preproduction or startup costs are significant, or when

specifically requested to do so by the Contracting Officer, provide a full identification

and explanation of them.

(3) Optional, unless required by the Contracting Officer.

(4) Identify the attachment in which the information supporting the specific cost element

may be found.

(Attach separate pages as necessary.)

B. Change Orders, Modifications, and Claims.

Cost

Elements

Estimated Cost of

All Work Deleted

Cost of Deleted

Work Already

Performed

Net Cost

To Be

Deleted

Cost of

Work

Added

Net Cost

of

Change

Reference

(1) (2) (3) (4) (5) (6) (7)
Column Instruction

(1) Enter appropriate cost elements.

(2)

Include the current estimates of what the cost would have been to complete the deleted

work not yet performed (not the original proposal estimates), and the cost of deleted

work already performed.

(3)

Include the incurred cost of deleted work already performed, using actuals incurred if

possible, or, if actuals are not available, estimates from your accounting records. Attach

a detailed inventory of work, materials, parts, components, and hardware already

purchased, manufactured, or performed and deleted by the change, indicating the cost

and proposed disposition of each line item. Also, if you desire to retain these items or any

portion of them, indicate the amount offered for them.

(4) Enter the net cost to be deleted, which is the estimated cost of all deleted work less the

cost of deleted work already performed. Column(2) minus Column(3) equals Column(4).

(5)

Enter your estimate for cost of work added by the change. When nonrecurring costs are

significant, or when specifically requested to do so by the Contracting Officer, provide a

full identification and explanation of them. When any of the costs in this column have

already been incurred, describe them on an attached supporting schedule.

(6)

Enter the net cost of change, which is the cost of work added, less the net cost to be

deleted. Column(5) minus Column(4) equals Column(6). When this result is negative,

place the amount in parentheses.

(7) Identify the attachment in which the information supporting the specific cost element

may be found.

(Attach separate pages as necessary.)

C. Price Revision/Redetermination.

Cutoff Date

Number of

Units

Completed

Number of

Units To

Be

Completed

Contract

Amount

Redetermination

Proposal Amount Difference

(1) (2) (3) (4) (5) (6)

Cost

Elements

Incurred CostPreproduction

Incurred CostCompleted

Units

Incurred

Cost-Work

in

Progress

Total

Incurred

Cost

Estimated

Cost to

Complete

Estimated

Total

Cost

Reference

(7) (8) (9) (10) (11) (12) (13) (14)

(Use as applicable)

Column Instruction

(1) Enter the cutoff date required by the contract, if applicable.
(2) Enter the number of units completed during the period for which experienced costs of

production are being submitted.

(3) Enter the number of units remaining to be completed under the contract.

(4) Enter the cumulative contract amount.

(5) Enter your redetermination proposal amount.

(6)

Enter the difference between the contract amount and the redetermination proposal

amount. When this result is negative, place the amount in parentheses. Column (4)

minus Column (5) equals Column (6).

(7)

Enter appropriate cost elements. When residual inventory exists, the final costs

established under fixed-price-incentive and fixed-price-redeterminable arrangements

should be net of the fair market value of such inventory. In support of subcontract costs,

submit a listing of all subcontracts subject to repricing action, annotated as to their

status.

(8)

Enter all costs incurred under the contract before starting production and other

nonrecurring costs (usually referred to as startup costs) from your books and records as

of the cutoff date. These include such costs as preproduction engineering, special plant

rearrangement, training program, and any identifiable nonrecurring costs such as initial

rework, spoilage, pilot runs, etc. In the event the amounts are not segregated in or

otherwise available from your records, enter in this column your best estimates. Explain

the basis for each estimate and how the costs are charged on your accounting records

(e.g., included in production costs as direct engineering labor, charged to manufacturing

overhead). Also show how the costs would be allocated to the units at their various

stages of contract completion.

(9) Enter in Column (9) the production costs from your books and records (exclusive of

preproduction costs reported in Column (8)) of the units completed as of the cutoff date.

(10)

Enter in Column (10) the costs of work in process as determined from your records or

inventories at the cutoff date. When the amounts for work in process are not available in

your records but reliable estimates for them can be made, enter the estimated amounts

in Column (10) and enter in column (9) the differences between the total incurred costs

(exclusive of preproduction costs) as of the cutoff date and these estimates. Explain the

basis for the estimates, including identification of any provision for experienced or

anticipated allowances, such as shrinkage, rework, design changes, etc. Furnish

experienced unit or lot costs (or labor hours) from inception of contract to the cutoff

date, improvement curves, and any other available production cost history pertaining to

the item(s) to which your proposal relates.

(11) Enter total incurred costs (Total of Columns (8), (9), and (10)).

(12)

Enter those necessary and reasonable costs that in your judgment will properly be

incurred in completing the remaining work to be performed under the contract with

respect to the item(s) to which your proposal relates.

(13) Enter total estimated cost (Total of Columns (11) and (12)).

(14) Identify the attachment in which the information supporting the specific cost element

may be found.

(Attach separate pages as necessary.)

Parent topic: Subpart 15.4 - Contract Pricing