A proposed FAR change the drafters assert are intended to resolve “confusion” regarding what data may be obtained by federal contracting officers to allow a determination that a contract price is fair and reasonable generated a lot of controversy at a Nov 15 public meeting held to discuss the rule.  Much of the discussion on the rule, which was issued April 23 and discussed in the third quarter issue of the GCA DIGEST, focused on the proposed addition of a new term “data other than certified cost or pricing data” which would mean “any data, including cost or pricing data and judgmental information necessary for the contracting officer to determine a fair and reasonable price or price reasonableness.”  The term would replace the current term “information other than cost or pricing data” to make the regulations more consistent with Truth in Negotiations Act requirements according to the rule writers.  COs would still be instructed to obtain “data other than certified cost or pricing data” when the data needed to determine price reasonableness and certification is not needed according to TINA.

Contractor representatives said the change would apply the same “all facts” requirement under TINA (contractors must certify all factual data is current, accurate and complete as of price agreement date for contracts, mods and subcontracts valued at $650,000 or more) to other non-TINA covered contracts including commercial items. This would be a great problem since commercial contractors do not maintain systems required to provide “all facts,” which would likely result in them refusing to sell to the government. Several government speakers disagreed asserting the proposed rule “does not change the standard one iota” but only expresses the policy in “clear terms.”  It gives COs no rights or requires no data from contractors that is not now required. They also point out the current directive to obtain only the minimum data necessary to support price reasonableness is still in force.

In written positions one industry representative said the proposed rule would blur the current “bright line” test between certified and non-certified data which would increase, not reduce confusion. It discards the current preferences for determining price reasonableness based on sales information in favor of a requirement for cost data while the requirement for submitting judgmental information “goes beyond even traditional TINA requirements” of submitting only factual cost data. Another industry rep stated that when commercial sales information cannot be provided (e.g. IBM desk tops or servers) there is the assumption the item is not commercial in which case the CO would be entitled to obtain for a clearly commercial item all the cost data required for non-commercial items subject to TINA.

A Defense Department rep said the rule changes were necessary because “the big guys argue that everything is commercial, even items that they have developed at DOD expense.” He asserted large defense contractors often have “few” commercial sales to support their pricing and frequently refuse to provide commercial sales information when it is available. His response was that the government should “get the cost data, get the cost data, get the cost data.” Additional comments are being invited.

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