Panegea held a fixed price contract that included the defective pricing clause that entitled the government to an adjustment in contract price if the submitted cost or pricing data was defective.  As is normal, the parties did not reach agreement as to the individual cost elements of the proposal but agreed only as to the total contract price.  Included in its proposal was an estimate on bond premiums where the government sought a contract price reduction upon learning that the actual costs of the premiums were lower than those estimated for pricing purposes, asserting that Panegea’s certificates of cost and pricing data submitted in its proposal entitled it to the price reduction.  The Board sided with Panegea, ruling the estimated costs included in the proposals were not cost or pricing data and hence no price reduction was justified.  The Board stated unless a bidding schedule for a fixed price contract specifically requires bidders to include actual bond costs in the bids, the Payments clause in a fixed price contract does not limit the contractor’s right to receive the entire contract price, even if the actual bond premiums incurred after contract award are less than those estimated during the bidding process.   The Board concluded that here Pangea was not required to include actual premiums in its proposals and the parties entered into negotiations based on proposals that included estimates of bond premiums (Pangea Inc., GSBCA No. 16688).

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