not greater than the contract price; and (b) and item is normally procured competitively but in a particular situation only one offer is solicited or received, and the price clearly is reasonable in comparison with recent purchases of comparable quantities for which there was adequate price competition.)

(2) Established catalog or market prices of commercial items sold in substantial quantities to the general public. Application of this exception also requires judgment and analysis on a caseby-case basis. In making this judgment, the various elements of the term must be considered and a price must meet all these conditions in order to be considered for exception. In other words, the price must be, or be based on: (i) An established catalog or market price, (ii) of commercial items, (iii) sold in substantial quantities, (iv) to the general public. The following criteria should be applied in determining whether an item falls within the scope of this exception:

(a) An "established catalog price" is a price included in a catalog, price list, schedule, or other form that (1) is regularly maintained by the manufacturer or vendor, (2) is either published or otherwise available for inspection by customers, and (3) states prices at which sales are currently, or were last, made to a significant number of buyers constituting the general public. An "established market price" is a current price, established in the usual and ordinary course of trade between buyers and sellers free to bargain, which can be substantiated from sources independent of the manufacturer or vendor.

(b) A "commercial item" is an item, which term included both supplies and services, of a class or kind which (1) is regularly used for other than Government purposes, and (2) is sold or traded in the course of conducting normal business operations.

(c) Supplies are "sold in substantial quantities" when the facts or circumstances are sufficient to support a reasonable conclusion that the quantities regularly sold are sufficient to constitute a real commercial market for the item. Nominal quantities, such as models, specimens, samples, and prototype or experimental units, cannot be considered as meeting this requirement. Services are sold in substantial quantities if they are customarily provided by the contractor, with personnel regularly employed, and with equipment, if any is

necessary, regularly maintained, solely or principally, for the purpose of providing such services.

(d) An item is sold "to the general public" if it is sold to other than affiliates of the seller for end use by other than the Government. Items sold to affiliates of the seller and sales for end use by the Government are not sales to the general public.

A price may be considered to be "based on" established catalog or market prices of commercial items sold in substantial quantities to the general public if the item being purchased is sufficiently similar to such a commercial item to permit the difference between the prices of the items to be identified and justified without resort to cost analysis. The foregoing criteria require positive demonstration by convincing evidence to support the application of this exception. It is not enough that an item be listed in a catalog or price list, or be offered for sale to the general public, or be intended to become a commercial item, but tangible and substantial sales activity must be shown to result from such listing, offering, or intention. The listing of an item in the Federal Supply Schedules is an offer to furnish the item to Government agencies at stipulated price and delivery terms, and does not, of itself, meet the criteria for exception.

§ 18-3.807-2 Requirement for price or cost analysis.

(a) General. Some form of price or cost analysis is required in connection with every negotiated procurement action. The method and degree of analysis, however, is dependent on the facts surrounding the particular procurement and pricing situation. Cost analysis shall be performed in accordance with paragraph (c) of this section when cost or pricing data is required to be submitted under the conditions described in §183.807-3; however, the extent of the cost analysis should be that necessary to assure reasonableness of the pricing result, taking into consideration the amount of the proposed contract and the cost and time needed to accumulate the necessary data for analysis. Price analysis shall be used in all other instances to determine the reasonableness of the proposed contract price. Price analysis may also be useful in corroborating the overall reasonableness of a proposed price where

the determination of reasonableness was developed through cost analysis.

(b) Price analysis. (1) Price analysis is the process of examining and evaluating a prospective price without evaluation of the separate cost elements and proposed profit of the individual prospective supplier whose price is being evaluated. Price analysis may be accomplished in various ways including the following:

(i) The comparison of the price quotations submitted;

(ii) The comparison of prior quotations and contract prices with current quotations for the same or similar end items (to provide a suitable basis for comparison, appropriate allowances must be made for differences in such factors as specifications, quantities ordered, time for delivery, Government-furnished materials, and experienced trends of improvements in production efficiency; it must also be recognized that such comparison may not detect an unreasonable current quotation unless the reasonableness of the prior price was established and unless changes in the general level of business and prices have been considered);

(iii) The use of rough yardsticks (such as dollars per pound, per horsepower, or other units) to point up apparent gross inconsistencies which should be subjected to greater pricing inquiry;

(iv) The comparison of prices set forth in published price lists issued on a competitive basis, published market prices of commodities and similar indices, together with discount or rebate arrangements; and

(v) The comparison of proposed prices with estimates of cost independently developed by personnel within the procurement office.

(2) Price analysis techniques should be used to support or supplement cost analysis wherever appropriate.

(c) Cost analysis. (1) Cost analysis is the review and evaluation of a contractor's cost or pricing data (§ 18-3.807-3) and of the judgmental factors applied in projecting from the data to the estimated costs, in order to form an opinion on the degree to which the contractor's proposed costs represent what performance of the contract should cost, assuming reasonable economy and efficiency. It includes the appropriate verification of cost data, the evaluation of specific elements of costs (see § 18-16.202), and

the projection of these data to determine the effect on prices of such factors as: (i) The necessity for certain costs; (ii) The reasonableness of amounts estimated for the necessary costs;

(iii) Allowances for contingencies; (iv) The basis used for allocation of overhead costs; and

(v) The appropriateness of allocations of particular overhead costs to the proposed contract.

(2) Cost analysis shall also include appropriate verification that the contractor's cost submissions are in accordance with the Part 18-15, Contract Cost Principles and Procedures.

(3) Among the evaluations that should be made where the necessary data are available, are comparisons of a contractor's or offeror's current estimated costs with:

(i) Actual costs previously incurred by the contractor or offeror;

(ii) His last prior cost estimate for the same or similar item or a series of prior estimates;

(iii) Current cost estimates from other possible source; and

(iv) Prior estimates or historical costs of other contractors manufacturing the same or similar items.

(4) Forecasting future trends in costs from historical cost experience is of primary importance. In periods of either rising or declining costs, an adequate cost analysis must include some evaluation of the trends. In cases involving production of recently developed, complex equipment, even in periods of relative price stability, trend analysis of basic labor and materials costs should be undertaken, and in contracts extending over a period of several years, trend analysis should be made of overhead forecasts for life of the contract. [36 F.R. 21481, Nov. 10, 1971] § 18-3.807-3

Cost or pricing data.

(a) The contracting officer shall require the contractor to submit, either actually or by specific identification in writing, cost or pricing data in accordance with § 18-16.202 and to certify, by use of the certificate in paragraph (b) of the clause set forth in § 18-3.807-4, that, to the best of his knowledge and belief, the cost or pricing data he submitted was accurate, complete, and current prior to:

(1) The award of any negotiated contract (other than a letter contract) expected to exceed $100,000 in amount;

(2) The pricing of any contract modification expected to exceed $100,000 in amount to any formally advertised or negotiated contract whether or not cost or pricing data was required in connection with the initial pricing of the contract when the modification involves aggregate increases and/or decreases in costs plus applicable profits expected to exceed $100,000. (For example, the requirement applies to a $30,000 modification resulting from a reduction of $70,000 and an increase of $40,000, or as another example, when the modification results in no change in contract price because there is an increase of $200,000 and a reduction of $200,000. However, this requirement shall not apply when unrelated and separately priced changes for which cost or pricing data would not be required are included in the same modification for administrative convenience);

(3) The award of any negotiated contract not expected to exceed $100,000 in amount or any contract modification not expected to exceed $100,000 in amount to any formally advertised or negotiated contract whether or not cost or pricing data was required in connection with the initial pricing of the contract, provided the contracting officer considers that the circumstances warrant such action in accordance with paragraph (d) of this section;

unless the contracting officer determines in writing, that the price negotiated is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. The requirements under subparagraphs (1) and (2) of this paragraph may be waived in exceptional cases where the Associate Administrator for Organization and Management, or in the case of a contract with a foreign government or agency thereof, the Assistant Administrator for Industry Affairs and Technology Utilization or the Director of Procurement authorizes such waiver and states in writing his reasons for such determination. The determination will set forth the procedures followed in attempting to obtain cost and pricing data, including any direct requests therefor, the contractor's reasons for refusing to submit cost or pricing data or reasons why data submitted by the contractor could not be used, and other efforts made by

NASA to obtain confirmation of the accuracy of pricing from sources other than the contractor. Whenever the Contractor and Subcontractor Certified Cost of Pricing Data clause set forth in § 18-3.807-4 is to be included in the contract, it should also be included in the request for proposals, the invitation for bids, or the request for quotations.

(b) Any contractor who has been required to submit and certify cost or pricing data in accordance with paragraph (a) of this section shall also be required to obtain cost or pricing data from his subcontractors under the circumstances set forth in the clause in § 18-3.807-4.

(c) When there is adequate price competition, cost or pricing data shall not be requested regardless of the dollar amount involved. As a general rule, cost or pricing data should not be requested when it has been determined that proposed prices are, or are based on, established catalog or market prices of commercial items sold in substantial quantities to the general public. Where, however, despite the willingness of a number of commercial purchasers to buy an item at such a catalog or market price, the purchaser (e.g., the contracting officer) finds that that price is not reasonable and supports such finding by an enumeration of the facts upon which it is based, cost or pricing data may be requested, if necessary, to establish a reasonable price; provided, that such finding is approved by the Procurement Officer. In addition, cost or pricing data may be requested, if necessary, where there is such a disparity between the quantity being procured and the quantity for which there is such a catalog or market price that pricing cannot reasonably be accomplished by comparing the two. Where an item is substantially similar to a commercial item for which there is an established catalog or market price at which substantial quantities are sold to the general public, but the offered price of the former is not considered to be "based on" the price of the latter in accordance with § 18-3.807-1(b) (2), any requirement for cost or pricing data should be limited to that pertaining to the differences between the items if this limitation is consistent with assuring reasonableness of pricing result.

(d) (1) Certified cost or pricing data shall not be requested prior to the award of any contract anticipated to be for

$10,000 or less and generally should not be requested for modifications in those amounts. There should be relatively few instances where the requirement for certified cost or pricing data or use of the clause set forth in § 18-3.807-4 would be justified in awards between $10,000 and $100,000. In most such awards, the administrative costs will outweigh the benefits which might otherwise accrue from receipt of certified cost or pricing data; hence, all other means of determining reasonableness of price should be utilized. When less than complete cost analysis (e.g., analysis of only specific factors) will provide a reasonable pricing result (see § 18-3.807-2(a)) on awards under $100,000 without the submission of complete cost or pricing data, the contracting officer shall request, without certification, only that data which he considers adequate to support the limited extent of the cost analysis required.

(2) Although cost and pricing data was requested in the solicitation, a certification of cost and pricing data shall not be requested in connection with the award of any contract of any dollar value where the price negotiated is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantites to the general public, or prices set by law or regulation. (See § 18-3.604-3.)

(e) "Cost or pricing data" as used in this Subpart 18-3.8, consists of all facts existing up to the time of agreement on price which prudent buyers and sellers would reasonably expect to have a significant effect on the price negotiations. The definition of cost or pricing data embraces more than historical accounting data; it also includes, where applicable, such factors as vendor quotations, nonrecurring costs, changes in production methods and production or procurement volume, unit cost trends such as those associated with labor efficiency, and make-or-buy decisions or any other management decisions which could reasonably be expected to have a significant bearing on costs under the proposed contract. In short, cost or pricing data consists of all facts which can reasonably be expected to contribute to sound estimates of future costs as well as to the validity of costs already incurred. Cost or pricing data, being factual, is that type of information which can be verified. Because the contractor's certificate pertains to "cost or pricing data", it does not make

representations as to the accuracy of the contractor's judgment on the estimated portion of future costs or projections. It does, however, apply to the data upon which the contractor's judgment is based. This distinction between fact and judgment should be clearly understood.

(f) The requirement for submission of costs or pricing data is met when all accurate cost or pricing data reasonably available (see §18-3.807-5(a)(1)) to the contractor at the time of agreement on price is submitted, either actually or by specific identification, in writing to the contracting officer or his representative. The distinction between the "submission" of cost or pricing data and the "making available" of records should be clearly understood. The mere availability of books, records and other documents for verification purposes does not constitute submission of cost or pricing data. [36 F.R. 707, Jan. 16, 1971, as amended at 36 F.R. 21481, Nov. 10, 1971]

§ 18-3.807-4 Contractor and subcontractor certified cost or pricing data clause.

(a) The clause set forth below shall be inserted in all contracts over $100,000 and in all contract modifications over $100,000 even though the original amount of the contract is $100,000 or less. (NOTE: The clause thus included is by its terms made inoperative in certain contracts and subcontracts as provided by this clause.) In addition, the contracting officer shall include this clause, with appropriate reduction in the dollar amounts provided therein, in contracts not exceeding $100,000 for which he has obtained a Certificate of Current Cost or Pricing Data in accordance with §183.807-3 (a) (3) in connection with the initial pricing of the contract.

CONTRACTOR AND SUBCONTRACTOR CERTIFIED COST OR PRICING DATA (OCTOBER 1969)

(a) (1) The Contractor shall require, under the situations described in (2) below unless exempted under the exceptions set forth in (3) below, each subcontractor under this contract to submit cost or pricing data and to certify that, to the best of his knowledge and belief, such cost or pricing data are accurate, complete, and current.

(2) Except as provided in (3) below, certified cost or pricing data shall be submitted prior to (i) the award of each subcontract, the price of which is expected to exceed $100,000 and (ii) the negotiation of the price of each change or modification to a subcontract under this contract for which the

price adjustment is expected to exceed $100,000.

(3) Certified cost or pricing data need not be furnished pursuant to this paragraph (a) where (1) the Contractor has not been required to furnish cost or pricing data; or (ii) the subcontract price or price adjustment is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or the prices are set by law or regulation; and the Contractor states in writing the basis for applying this exception.

(4) In submitting the cost or pricing data, the subcontractor shall certify that the data are accurate, complete, and current, using the form of certificate set forth in paragraph (b) below. Such certificate and data (actual or identified, as provided in the certificate prescribed below) shall be submitted by the subcontractor to the next higher tier subcontractor, or the prime contractor, as applicable, for retention.

(b) The certificate required by this clause shall be in the form set forth below. When the certificate is to be submitted by a subcontractor, the words "Contracting Officer or his representative" shall be deleted and the name of the concern requiring the certificate shall be inserted.

CERTIFICATE OF CURRENT COST OR
PRICING DATA (OCTOBER 1969)

This is to certify that, to the best of my knowledge and belief, cost or pricing data as defined in NASA PR 3.807-3 (e) submitted, either actually or by specific identification in writing (see NASA PR 3.807-3 (f)), to the Contracting Officer or his representative in support of.

are accurate, complete, and current as of (Day Month

Year)

Firm

Name

Title

(Date of Execution)

*Describe the proposal, quotation, request for price adjustment or other submission involved, giving appropriate identifying number (e.g.. RFP No. -‒‒‒‒‒).

**This date shall be the date when the price negotiations were concluded and the contract price was agreed to. The responsibility of the contractor is not limited by the personal knowledge of the contractor's negotiator if the contractor had information reasonably available (see 3.807-5(a)) at the time of agreement, showing that the negotiated price is not based on accurate, complete and current data.

***This date should be as close as practicable to the date when the price negotiations were concluded and the contract price was agreed to.

(c) For purposes of verifying that certified cost or pricing data submitted in con

junction with the negotiation of this contract or any contract change or other modification involving an amount in excess of $100,000 were accurate, complete, and current, the Contracting Officer, of the Government prime contract or his authorized representatives, shall-until the expiration of 3 years from the date of final payment under this contract or of the time periods specified in Appendix M of the NASA Procurement Regulation, whichever expires earlier have the right to examine those books, records, documents, papers and other supporting data which involve transactions related to this contract or which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein. The rights herein are in addition to those contained in any other clause of this contract dealing with records, audit and records, and examination of records.

(d) Whenever the price of any contract change or other modification to this contract is expected to exceed $100,000, the Contractor agrees to furnish the Contracting Officer certified cost or pricing data, using the certificate set forth in paragraph (b) above, unless the Contracting Officer determines that the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation.

(e) The requirement for submission of certified cost or pricing data with respect to any contract change or other modification does not apply to any subcontract change or other modification, at any tier, where the Government prime contract is a firm fixed-price or fixed-price with escalation contract unless such change or other modification results from a contract change or other modification to the Government prime contract, nor does it apply to a subcontract change or other modification, at any tier, where the Government prime contract is not firm fixed-price or fixed-price with escalation, unless the price for such change or modification becomes reimbursable under the Government prime contract.

(f) The Contractor agrees to insert paragraph (c) without change and the substance of paragraphs (a), (b), (d), (e), and (f) of this clause in each subcontract hereunder in excess of $100,000, and in each subcontract of $100,000 or less at the time of making a change or other modification thereto in excess of $100,000.

(g) Whenever the Contractor was required to furnish a certificate of current cost or pricing data, either during negotiation of this contract or pursuant to the provisions of this clause, or whenever a subcontractor hereunder should have been required to furnish such a certificate pursuant to the provisions of this clause or of a clause in the subcontract, and the Contracting Officer determines that the price of this contract, including any profit or fee, or that any price