1. Cost or pricing data
John Cancellara March 2018

2. Why Do We Have These Rules?
Contracting Officers must purchase supplies and service from RESPONSIBLE sources at FAIR & REASONABLE prices
Contracting Officers must NOT obtain more info from Contractor than is necessary to determine reasonableness
If CERTIFIED Cost or Pricing Data (COPD) is NOT required, preference in FAR is in the following order:
1) no additional data from Offeror
2) Information Other Than Cost or Pricing Data (COPD)
3) Cost or Pricing Data (COPD)
Must ensure price reasonableness with the least info possible

3. 3 Categories of Pricing Data
If 1) Over threshold; and
2) No exception applies
No Additional
Data
Other Than
Certified Cost or Pricing Data
Certified
Cost or Pricing Data
Whatever is necessary to determine
fair & reasonable price
Price Analysis
Cost Analysis
Price Analysis or +

4. What is Cost or Pricing Data? (COPD)
All facts that,
As of the date of price agreement, or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price,
Prudent buyers and sellers would reasonably expect to affect price negotiations significantly.
This is one of the few things I ask you to MEMORIZE

5. What is CERTIFIED Cost or Pricing Data? (COPD)
Cost or Pricing Data (COPD) WITH a certificate 
Offeror CERTIFIES in writing that all COPD is CURRENT, ACCURATE, and COMPLETE
Distinction between FACT vs. JUDGMENT
Certificate does NOT constitute a representation as to the accuracy of the contractor’s judgment on the estimate of future costs or projections
Certificate applies to the DATA upon which the judgment or estimate is based
We “SWEEP” before signing a Certificate

6. When is Certified COPD Required?
1) Over the Threshold
2) None of the 4 EXCEPTIONS apply
We MUST provide it, whether or not requested

7. What Format is Required for COPD
Table 15-2 (FAR)
Individual COST ELEMENTS must be broken down into 3 categories
BASE
RATE
DOLLAR AMOUNTS
Cost Element
Base
Rate
Total
Direct Labor
10 Hours
$100/Hr
$1,000
Labor O/H
10%
$100
Profit
$1,100
20%
$220
$1,320

8. What is Other Than Certified COPD?
Non-Certified
Information adequate to evaluate price reasonableness and determine cost realism
MUST include information regarding prices at which same items have previously been sold
Can be any form required
Brochure
Additional market data
Full cost proposal (not-certified)
Required unless MARKET FORCES are such that price reasonableness can be determined without it
Can look just like Certified COPD

9. 4 Exceptions to Certified Cost or Pricing Data
Adequate Price Competition
Prices Set by Law or Regulation
Commercial Items
Waivers
Other Than COPD may still be required

10. First Exception – Adequate Price Competition
1) 2 or more RESPONSIBLE offerors, COMPETING INDEPENDENTLY submit priced offers that SATISFY the Government’s REQUIREMENT
If PRICE will be a SUBSTANTIAL in source selection
NO finding that the price of the otherwise-successful offeror is UNREASONABLE
2) REASONABLE EXPECTATION based upon MARKET RESEARCH that (see #1 above) 2 or more responsible offerors, competing independently will submit priced offers that satisfy the Gov requirement
Offeror BELIEVED that at least one other offeror was CAPABLE of competing
Offeror had NO reason to believe other potential offeror(s) did NOT intend to compete
Proposed price is approved ONE LEVEL ABOVE PCO as fair & reasonable
Can Happen 3 Different Ways

11. First Exception – Adequate Price Competition
3) PRICE ANALYSIS demonstrates that the proposed price is FAIR & REASONABLE in COMPARISON with CURRENT or RECENT prices for SAME or SIMILAR items, ADJUSTED to reflect CHANGES in MARKET CONDITIONS, that RESULTED from adequate price competition (#1 or #2 above).
Can Happen 3 Different Ways

12. First Exception – Adequate Price Competition
If Adequate Price Competition DOES exist, can the PCO still require COPD?
YES
PCO may still require OTHER THAN COPD if the price was not set by MARKET FORCES
Will not be certified
Purpose of this Exception is to deem MARKET PRICING as fair & reasonable

13. Second Exception – Prices Set by Law or Regulation
Pronouncements in the form of periodic RULINGS, REVIEWS, or similar actions embodied in LAWS
Does not necessarily mean that the price is REASONABLE, only that a CERTIFIED COPD is not required
This exception can NOT be used for “SIMILAR” items
Other Than Certified COPD may still be required

14. Third Exception – Commercial Items
Acquisition of COMMERCIAL items (FAR 2.101)
MODIFICATIONS to commercial items that do NOT change them to non-commercial items
If the cost of the modification itself does not exceed to CCOPD threshold, and
If the cost of the modification itself does not exceed 5% of the value of the item
Services OF A TYPE offered and sold COMPETITIVELY in SUBSTANTIAL quantities in the COMMERCIAL MARKETPLACE
Does not necessarily mean that the price is REASONABLE, only that a CERTIFIED COPD is not required
Purpose of this Exception is to deem MARKET PRICING as fair & reasonable

15. Fourth Exception – Waiver
May only be issued by HCA WITHOUT power to delegate
Used if price can be determined fair & reasonable without submission
e.g. Certified COPD furnished on previous production buys
Waiver does NOT flow down to subcontractors unless it specifically states
SHOULD request waiver if PCO has sufficient information to determine price reasonableness
Memo from Shay Assad in 2007 to “...make it clear that the standard to be met for granting a TINA waiver is extremely high…”
Not likely to obtain a waiver, however PCO has duty to request

16. Examples of Other than Certified COPD Situations
1) Adequate price competition may exist, but the source selection could be based upon best value with technical factor weighted greater than price. Market forces may not be directly setting the price.
2) Tariff prices may have been set by a law or regulation, however it may be common practice to negotiate a lower price than the full tariff.
3) An item may be determined to be commercial because it is offered for sale, however there may not yet be a history of actual sales. Market forces may not be directly setting the price.
Exception to Certified COPD may apply, but Other than Certified COPD still required for fair & reasonable price

17. Certified COPD Threshold
CURRENTLY $750K
Price adjustment amount must consider the absolute value of BOTH INCREASES AND DECREASES unless changes are unrelated and separately priced
Contract change that causes both a deletion of $400K of work and an addition of $400K of work may result in zero dollar modification, BUT IS STILL OVER THE CERTIFIED COPD THRESHOLD
Threshold changes – check FAR (a)(1)

18. Subcontractor Certified COPD Requirements
Subcontractor is required to submit Certified COPD (and certificate) to Prime Contractor if:
Prime is required to submit Certified COPD to Gov; AND
Subcontract is above threshold; AND
No exception applies to Subcontract
Prime Contractor is required to submit ANALYSIS of subcontractor COPD to Gov (as part of prime proposal)
Government assist audit may be required if Subcontractor is not willing to disclose COPD to Prime Contractor
Subcontractor Certified COPD (not just the Prime’s analysis) SHALL flow up to Gov if:
Subcontract is over $13.5M; OR
Subcontract is over threshold AND more than 10% or Prime Contractor’s proposal
Subcontract thresholds change – check FAR (c)(1)

19. When is Price Analysis performed? ALWAYS
Evaluate proposed price and proposed profit WITHOUT evaluating separate cost elements
Use when Certified COPD is NOT required
Also use when Certified COPD IS required
COMPARISON of proposed price to:
Other proposed prices
Historical prices paid
Published price lists
Other data obtained through MARKET RESEARCH
Parametric estimating methods
Dollars/pound, etc.
When is Price Analysis performed? ALWAYS

20. Cost Analysis
Evaluation of separate COST ELEMENTS and profit/fee proposed
Use when Certified COPD IS required
Use when Other Than Certified COPD IS required in the form of individual cost elements
COMPARISON of individual cost elements with:
Previous actuals
Previous estimates
Independent Government Estimate (IGE)
Forecists of planned expenditures
Verification that the offeror’s cost submissions are in accordance with the contract cost principles and procedures
Application of judgment to determine how well the proposed costs represent what the cost of the contract should be