Wifcon.Forum Archives

To Contents	Use of price information and the exemptions from cost and pricing data
Anonymous Posted on Wednesday, July 02, 2003 - 05:47 pm: Our procurement staff buys for a government owned contractor operated facility. FASA indicates that competitive price analysis, then use of information other than cost and pricing data should be considered before asking for cost and pricing data. Many of our staff rely on the use of information other than the use of cost and pricing information to justify the price of non-competitive procurements over the threshold. Our staff believes that they can adequately justify the price. Recently however, questions have been raised if our buyers should be requiring cost and price information even though they can justify the price without cost and price information. In some cases, it is a real stretch to call something a commercial item, a waiver is generally not available, and most of what we buy does not have a price set by law or regulation. Thus, the question that I have is that "is there a contradiction between FAR parts 15.402 and 15.403?" To what degree are agencies asking for cost and price information when it may be possible to justify the price without requiring the submission of cost and pricing data? Vern Edwards Posted on Wednesday, July 02, 2003 - 07:56 pm You ask: "To what degree are agencies asking for cost and price information when it may be possible to justify the price without requiring the submission of cost and pricing data?" Is that really your question? Because if that's your question, I'm not sure that anyone has any statistics on which to base an answer. Also, I'm confused by the way you use the terms "cost and price information" and "cost and pricing data." Lone Wolf Posted on Thursday, July 03, 2003 - 08:25 am: Anon: Although I understand what your staff is doing, their actions probably violate TINA and the FAR. The "order of precedence" list at FAR 15.402, which as you note establishes a preference for "information other than cost or pricing data" over "cost or pricing data," is expressly subject to FAR 15.403-4. See FAR 15.402(a): "To the extent that cost or pricing data are not required by 15.403-4, the contracting officer shall generally use the following order of precedence ...." In short, FAR 15.403-4 trumps FAR 15.402. If the action is above the $550K threshold, no exception applies, and there is no waiver, your staff needs to obtain cost or pricing data. As a side note, if you examine EACH OF THE PRONGS of the "adequate price competition" exception at FAR 15.403-1(c)(1), and EACH OF THE PRONGS of the "commercial item" definition at FAR 2.101, and construe them broadly, you'll see that you can legitimately justify one or both of these exceptions in a surprisingly large number of cases. Vern Edwards Posted on Thursday, July 03, 2003 - 08:56 am: I agree with Lone Wolf that there is no conflict between FAR §§ 15.402 and 15.403. The way to read the third sentence in FAR § 15.402(a) is: If you don't have to get cost or pricing data, then use the following order of precedence to determine what other information you need to determine if the price is fair and reasonable. There is a strong regulatory bias against asking for cost or pricing data. See FAR §§ 15.402(a)(3) and 15.403-4(a)(1). Depending on your inclination, you can use the exception at FAR § 15.403-1(c)(1)(iii), based on "similar items," for almost anything. joel hoffman Posted on Thursday, July 03, 2003 - 09:43 am: I can understand a policy that advocates not requiring cost or pricing data for puchasing manufactured goods and equipment, but don't see the necessity or value of such a policy for a construction contract. I don't want to know the manufacturing cost of building components, but do want to know the cost of obtaining labor, equipment, materials, and subcontracts, which comprise a proposal, wherever possible. These components are highly variable, depending upon job conditions and market conditions. I like to know the bais of the contractor's "true" cost estimate (hence the reason for "Truth in Negotiations"). happy sails! joel hoffman

Use of price information and the exemptions from cost and pricing data

Anonymous Posted on Wednesday, July 02, 2003 - 05:47 pm:

Our procurement staff buys for a government owned contractor operated facility.

FASA indicates that competitive price analysis, then use of information other than cost and pricing data should be considered before asking for cost and pricing data. Many of our staff rely on the use of information other than the use of cost and pricing information to justify the price of non-competitive procurements over the threshold. Our staff believes that they can adequately justify the price. Recently however, questions have been raised if our buyers should be requiring cost and price information even though they can justify the price without cost and price information. In some cases, it is a real stretch to call something a commercial item, a waiver is generally not available, and most of what we buy does not have a price set by law or regulation. Thus, the question that I have is that "is there a contradiction between FAR parts 15.402 and 15.403?" To what degree are agencies asking for cost and price information when it may be possible to justify the price without requiring the submission of cost and pricing data?

Vern Edwards Posted on Wednesday, July 02, 2003 - 07:56 pm

You ask: "To what degree are agencies asking for cost and price information when it may be possible to justify the price without requiring the submission of cost and pricing data?"

Is that really your question? Because if that's your question, I'm not sure that anyone has any statistics on which to base an answer. Also, I'm confused by the way you use the terms "cost and price information" and "cost and pricing data."

Lone Wolf Posted on Thursday, July 03, 2003 - 08:25 am:

Anon: Although I understand what your staff is doing, their actions probably violate TINA and the FAR. The "order of precedence" list at FAR 15.402, which as you note establishes a preference for "information other than cost or pricing data" over "cost or pricing data," is expressly subject to FAR 15.403-4. See FAR 15.402(a): "To the extent that cost or pricing data are not required by 15.403-4, the contracting officer shall generally use the following order of precedence ...."

In short, FAR 15.403-4 trumps FAR 15.402. If the action is above the $550K threshold, no exception applies, and there is no waiver, your staff needs to obtain cost or pricing data.

As a side note, if you examine EACH OF THE PRONGS of the "adequate price competition" exception at FAR 15.403-1(c)(1), and EACH OF THE PRONGS of the "commercial item" definition at FAR 2.101, and construe them broadly, you'll see that you can legitimately justify one or both of these exceptions in a surprisingly large number of cases.

Vern Edwards Posted on Thursday, July 03, 2003 - 08:56 am:

I agree with Lone Wolf that there is no conflict between FAR §§ 15.402 and 15.403. The way to read the third sentence in FAR § 15.402(a) is:

If you don't have to get cost or pricing data, then use the following order of precedence to determine what other information you need to determine if the price is fair and reasonable.

There is a strong regulatory bias against asking for cost or pricing data. See FAR §§ 15.402(a)(3) and 15.403-4(a)(1). Depending on your inclination, you can use the exception at FAR § 15.403-1(c)(1)(iii), based on "similar items," for almost anything.

joel hoffman Posted on Thursday, July 03, 2003 - 09:43 am:

I can understand a policy that advocates not requiring cost or pricing data for puchasing manufactured goods and equipment, but don't see the necessity or value of such a policy for a construction contract. I don't want to know the manufacturing cost of building components, but do want to know the cost of obtaining labor, equipment, materials, and subcontracts, which comprise a proposal, wherever possible. These components are highly variable, depending upon job conditions and market conditions. I like to know the bais of the contractor's "true" cost estimate (hence the reason for "Truth in Negotiations"). happy sails! joel hoffman