When Is Certified Cost or Pricing Data Required Under FAR?

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The obligation to submit certified cost or pricing data is rooted in the Truthful Cost or Pricing Data statute (commonly still known by its historic name, the Truth in Negotiations Act or TINA). Under Federal Acquisition Regulation (FAR) Part 15, contracting officers may require contractors to submit cost or pricing data so the government can evaluate a proposed price, particularly in negotiated procurements.

Understanding Cost or Pricing Data

“Cost or pricing data” is defined in FAR 2.101 as all factual and verifiable information that a prudent buyer would expect to significantly affect price negotiations. This includes vendor quotations, historical costs, labor rates, and indirect expenses. The purpose is to give contracting officers a complete, accurate picture of how a proposed price was developed.

When certified, this data must be accompanied by a certificate of current cost or pricing data, which affirms that all information submitted is current, complete, and accurate as of the date of the price agreement. Certification transforms ordinary data into a legal attestation under federal law.

When Certification Is Required

Under FAR 15.403-4, certified cost or pricing data is required before a contractor can be awarded a negotiated contract, subcontract, or contract modification expected to be $2,000,000 or more. This threshold applies to all procurements awarded on or after July 1, 2018.

The requirement also extends to:

1. Negotiated Contracts: When a contract is awarded without adequate price competition, and the price is expected to meet the threshold, the contractor must submit certified cost or pricing data. This includes contracts awarded through sole-source negotiations or when only one offer is received in response to a solicitation.
2. Contract Modifications: If a contract or subcontract is being modified and the modification price adjustment is expected to meet the threshold, certified cost or pricing data is required unless an exception applies.
3. Subcontracts: Subcontractors must also provide certified cost or pricing data if their portion of the work meets the threshold and is not otherwise exempt.

Exceptions to Certification

FAR 15.403-1(b) identifies several exceptions where certified cost or pricing data is not required:

• Adequate price competition: When two or more responsible offerors independently submit priced offers and price is a substantial evaluation factor.
• Prices set by law or regulation: When the government price is controlled by statute or regulation.
• Commercial products or services: Acquisitions for commercial items are exempt, though the contracting officer may request “data other than certified cost or pricing data” to assess price reasonableness.
• Waivers: The head of the contracting activity may issue a written waiver when it is in the government’s best interest.

If an exception applies, the offeror may still need to provide supporting data, but it will not be certified. This is referred to as “other than cost or pricing data.”

What Certification Means

When required, contractors must sign a Certificate of Current Cost or Pricing Data as outlined in FAR 15.406-2. This certification confirms that all data provided to the government are accurate, complete, and current as of a specific date, usually the date of the final price agreement.

Sample wording (FAR 15.406-2):

“This is to certify that, to the best of my knowledge and belief, the cost or pricing data submitted… are accurate, complete, and current as of [date].”

Contractors typically perform a “sweep” before signing to verify that no relevant data has been omitted or updated. Failing to conduct this internal review increases the risk of later being found non-compliant.

Risks of Noncompliance

Requiring certified cost or pricing data increases compliance exposure in two main ways:

1. False Certification Risk
    Submitting inaccurate or incomplete data under certification,whether intentional or not, can lead to significant legal and financial consequences. Under the TINA Truth in Negotiations Act, false statements may expose contractors to contract termination, penalties, and potential criminal liability.
2. Defective Pricing Adjustments
    Under FAR 52.215-10, if certified data are later found inaccurate, incomplete, or outdated and the contract price was inflated as a result, the contracting officer can unilaterally reduce the contract price. This process is known as defective pricing.

Prime contractors must also obtain certified cost or pricing data from their subcontractors (FAR 52.215-13) unless an exception applies. These flow-down requirements extend accountability throughout the supply chain.

Maintaining TINA Compliance

To remain TINA compliant, contractors should establish robust procedures for gathering and reviewing data before submission. This includes documenting cost elements, validating indirect rates, and maintaining version control of estimates and source documents.

Organizations providing Financial Statement Audit Services to government contractors can help assess whether accounting systems are adequate to support cost or pricing data requirements. Reliable audit-ready records ensure the data supporting proposals can withstand government review or Defense Contract Audit Agency (DCAA) examination.

Contractors should also consider the nuances of Nonprofit vs For-Profit Accounting, as indirect cost pools, allocations, and rate structures differ depending on the organization’s entity type. Maintaining proper segregation of costs ensures transparency and compliance under both FAR and Cost Accounting Standards (CAS).

Best Practices for Contractors

• Review solicitation clauses: If FAR 52.215-20 appears in the solicitation, certified cost or pricing data will likely be required.
• Understand timing: Certification must be signed as close as possible to the date of final price agreement.
• Document updates: Keep a clear audit trail of cost revisions or newly discovered data.
• Train staff: Ensure pricing, contracts, and accounting personnel understand FAR 15.403 and 15.406 requirements.
• Work with advisors: Partner with professionals who provide Audit Services and have expertise in government contracting rules to ensure compliance with FAR, CAS, and TINA certification obligations.

The Bottom Line

Certified cost or pricing data plays a vital role in maintaining fairness and transparency in federal procurement. The certification requirement applies when negotiated contract values exceed $2 million and no exception under FAR 15.403-1 applies. By understanding when certification is needed, ensuring the accuracy of submissions, and keeping accounting systems audit-ready, contractors can confidently pursue larger opportunities while minimizing compliance risks.

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