Whether the Gov. can bring this up base on these TINA clauses disclosed in the contract. My fiend told me that this contract was competitively awarded (not sole source); therefore, defective pricing is not applicable. I know that my friend may be wrong, because FAR 52.215-11(d)(1) states: "If the Contracting Officer determines under paragraph (b) of this clause that a price or cost reduction should be made, the Contractor agrees not to raise the following matters as a defense:
(i) The Contractor or subcontractor was a sole source supplier".
Thanks for your help in this matter. I greatly appreciate it.
From the guidance found at Federal Acquisition Regulation (FAR) 15.403-4 -- Requiring Certified Cost or Pricing Data (10 U.S.C. 2306a and 41 U.S.C. 254b):
Open full Question Details
“…(a)(1) The contracting officer shall obtain certified cost or pricing data only if the contracting officer concludes that none of the exceptions in 15.403-1(b) applies.” It further states that “…Unless an exception applies, certified cost or pricing data are required before accomplishing any of the following actions expected to exceed the current threshold or, in the case of existing contracts, the threshold specified in the contract:
(i) The award of any negotiated contract (except for undefinitized actions such as letter contracts).
(ii) The award of a subcontract at any tier, if the contractor and each higher-tier subcontractor were required to furnish cost or pricing data (but see waivers at 15.403-1(c)(4)).
(iii) The modification of any sealed bid or negotiated contract (whether or not cost or pricing data were initially required) or any subcontract covered by paragraph (a)(1)(ii) of this subsection.”
And from (FAR) 15.407-1-- Defective Certified Cost or Pricing Data:
“…(b)(1), If, after award, certified cost or pricing data are found to be inaccurate, incomplete, or noncurrent as of the date of final agreement on price or an earlier date agreed upon by the parties given on the contractor’s or subcontractor’s Certificate of Current Cost or Pricing Data, the Government is entitled to a price adjustment, including profit or fee, of any significant amount by which the price was increased because of the defective data. This entitlement is ensured by including in the contract one of the clauses prescribed in 15.408 (b) and (c) and is set forth in the clauses at 52.215-10, Price Reduction for Defective Certified Cost or Pricing Data, and 52.215-11, Price Reduction for Defective Certified Cost or Pricing Data -- Modifications. The clauses give the Government the right to a price adjustment for defects in certified cost or pricing data submitted by the contractor, a prospective subcontractor, or an actual subcontractor.”
Based on the information you provided, the FAR sections above appear to apply to your situation. The first exception in 15.403-1(b) to requiring certified cost or pricing data is adequate price competition. If the FAR definition of adequate price competition applied to the originally competed effort, the contractor would NOT be required to submit certified cost or pricing data. Therefore, 52.215-10, “Price Reduction for Defective Certified Cost or Pricing Data”, would not apply in this situation. However, if a modification to the existing contract was accomplished, which exceeded the threshold and none of the exceptions applied to the modification, then 52.215-11 “Price Reduction for Defective Certified Cost or Pricing Data—Modifications” gives the Government the right to a price adjustment for defects in the certified cost or pricing data submitted for that modification.
Key points are the Contracting Officer needs to make the determination as to whether or not certified cost or pricing data were required; if they were required whether or not the submitted data were accurate, complete, and current as of the date certified; whether or not the Government relied on the data; and finally, whether or not any contractual action should be taken for defective certified cost or pricing data.