Preventing Defective Pricing / Submitting Certified Cost and Pricing Data

Many negotiated contracts and subcontracts require submission of certified cost or pricing data.  When certified cost or pricing data is submitted, contractors are vulnerable to extensive audits as well as allegations of defective pricing under the Truth and Negotiation Act (TINA) which can lead to potential investigations of criminal or civil fraud.  There are several opportunities to avoid having to submit certified cost or pricing data which is usually quite desirable.  For example, if certified cost or pricing data is not submitted then defective pricing audits and allegations are avoided, thereby eliminating the risk of downward adjustments to contract prices and investigations into potential criminal or civil fraud. Current regulations allow for numerous exemptions for submitting certified cost or pricing data so contractors need to be aware of when these exemptions apply, either to their own proposals as well as their subcontractors.  We have extensive knowledge of when contractors and their subcontractors may avoid submission of certified cost or pricing data.

If submission of certified price and costing data cannot be avoided, then strict compliance with FAR Part 15 and other regulations must be achieved.  Agencies are increasingly rejecting proposals due to some perceived deficiency in the proposal so it is always a good idea to make sure that proposals are compliant with all requirements related to certified cost or pricing data.  Our staff has been on “both sides of the table” as DCAA auditors auditing proposals for compliance with certified price and costing requirements and consultants ensuring proposals are compliant with these requirements.

Post award audits, which are otherwise known as defective pricing audits, can and often do result in erroneous findings or failure to apply relevant offsets to mitigate defective pricing questioned costs.  When a defective pricing audit is conducted clients often wisely seek our advice so as to lessen responses that can result in either defective pricing allegations or as is increasingly common these days, expensive and time consuming investigations into potential civil or criminal wrongdoing once defective pricing is suspected.  Our staff consists of former DCAA auditors and supervisors who were members of dedicated defective pricing teams so they are fully knowledgeable about how DCAA does business and very sensitive to any danger signs.

Our Services include:

• Ascertaining the need to submit certified cost or pricing data where, for example, parts of a proposal may be excluded from these requirements
• Identify opportunities to use alternative measures such as cost or pricing data that is not certified, price analysis, etc.
• Ensure requirements of certified cost or pricing data are complied with to avoid rejection of proposals
• Avoid vulnerability to assertions of defective pricing during the proposal process
• Liaison with audits conducting defective pricing (post award) audits
• Respond to audit assertions of defective pricing