FAR 15.406-2: Certificate of Current Cost or Pricing Data

The Certificate of Current Cost or Pricing Data is the sworn statement required by FAR 15.406-2 before the government awards most negotiated contracts above the certification threshold. By signing it, an authorized representative of the contractor confirms that, to the best of their knowledge and belief, all cost or pricing data submitted to the contracting officer is accurate, complete, and current as of the date the parties agreed on price.¹ The certificate is short. The exposure behind it is not: if the data turns out to be defective, the government can recover every dollar of overpayment plus daily compounding interest, and can double that recovery when the defect was knowing.

When a Certificate Is Required

The obligation attaches when a contract action exceeds the applicable dollar threshold and no exception applies. For prime contracts awarded on or after July 1, 2018, the threshold is $2.5 million.² Three kinds of actions trigger the requirement above that figure:

Any negotiated prime contract expected to exceed the threshold, excluding undefinitized actions like letter contracts.
Any subcontract at any tier, where the prime and every higher-tier subcontractor were also required to furnish certified data.
Any modification to a sealed-bid or negotiated contract, or to a covered subcontract, where the pricing adjustment exceeds the threshold. This applies whether or not the underlying contract originally required certified data.

The modification rule catches contractors off guard. The threshold is measured by the aggregate of all increases and decreases, not the net change. A modification that cuts one line by $1.5 million and adds $1 million to another is a $2.5 million pricing adjustment, even though the net effect is a $500,000 reduction.²

Section 1804 of the National Defense Authorization Act for Fiscal Year 2026 amends 10 U.S.C. 3702 to raise the certification threshold to $10 million for prime contracts and subcontracts entered into after June 30, 2026, and for modifications of prime contracts going forward.³ Contracts awarded on or before June 30, 2026, stay under the existing threshold for the life of those contracts. The statutory change takes effect regardless of when the FAR is updated to match, so contractors working both legacy and new contracts after mid-2026 will need to track which threshold governs each action.

Even above the threshold, certification is not required if an exception applies. The most common ones are adequate price competition, prices set by law or regulation, commercial products and services, and exceptional-circumstances waivers granted in writing by the head of the contracting activity.⁴ A waiver at the prime level does not automatically shield subcontractors. Unless the waiver names a specific subcontract and gives supporting rationale, any lower-tier work above the threshold still requires certified data.

What the Certification Actually Covers

Cost or pricing data means all facts that a reasonable buyer or seller would expect to significantly affect price negotiations, as of the date the parties agree on price. The distinction that matters most is between facts and judgments. Facts are certifiable; judgments are not. A vendor quote for raw materials is a fact. An engineer’s estimate of how long assembly will take is a judgment. The underlying inputs to that judgment, like historical labor hours on similar assemblies, are certifiable data.⁵

In practice, the material a contractor must gather and verify spans:

Vendor quotes and purchase orders, including any volume discounts or price breaks.
Labor rates, planned raises, and labor-hour projections based on recent production history.
Overhead and indirect cost rates, plus any forward pricing rate agreements already in place.
Make-or-buy decisions that affect the cost structure.
Learning-curve data, process improvements, or tooling changes that would lower unit costs.

The certificate covers data “reasonably available” within the contractor’s organization. Information known anywhere in the company on matters significant to management counts, even if the person at the negotiating table never personally saw it.¹ If a contractor holds information showing lower material costs than what appears in the proposal, that information must be disclosed before the price is finalized.

The Sweep Before You Sign

Between the handshake on price and the signing of the certificate, something in a contractor’s cost picture almost always changes. A new vendor quote arrives. A subcontractor revises delivery pricing. A production run finishes with better-than-expected labor hours. FAR 15.406-2(c) addresses this gap by requiring the contractor to update data to the latest closing or cutoff dates for which the data are available before the price is agreed upon.¹

This is the origin of the industry term “data sweep,” though the regulation does not use that phrase. The contractor reviews every significant cost input one final time to confirm nothing material has changed since the proposal was submitted. If the sweep turns up new information that would affect the negotiated price, the contractor must disclose it to the contracting officer before signing. The regulation encourages both sides to agree in advance on the criteria for setting closing or cutoff dates so this step does not stall the schedule.

Skipping or rushing the sweep is one of the most common paths to a defective-pricing finding. Auditors work backward from the certificate date and look for information that existed in the contractor’s systems but never made it into the proposal. The negotiators’ personal unawareness of what the organization possessed is not a defense.

Filling Out and Signing the Certificate

The certificate must follow the exact format prescribed in FAR 15.406-2(a). Its operative sentence certifies, to the best of the signer’s knowledge and belief, that the cost or pricing data submitted are accurate, complete, and current as of a specific date, and it also covers data supporting any advance agreements and forward pricing rate agreements that form part of the proposal.¹

Three dates appear on the form, and confusing them causes problems:

The “as of” date is the day price negotiations concluded and the parties reached agreement. All data must be accurate and current through this date. If the parties choose an earlier date, it must be as close as practicable to the agreement date.
The date of execution is the day the authorized individual actually signs. It should sit as close as possible to the price-agreement date so no fresh data can emerge in the gap.
The proposal or action identifier is the specific RFP number, price adjustment request, or other submission the certificate covers.

FAR 15.406-2 does not specify which corporate title must sign. The form includes signature blocks for firm name, signer name, and title, but the regulation leaves it to the contractor to decide who has authority to bind the organization. Most companies designate a contracts manager, division vice president, or chief financial officer, meaning someone senior enough to have real visibility into the data and authority to speak for the company’s compliance posture. The contracting officer must include the executed certificate in the contract file.

Subcontractor Certificates and Prime Liability

When a prime is required to submit certified cost or pricing data, that obligation flows down to any subcontractor whose work exceeds the threshold and does not fall under an exception. The prime bears direct responsibility for ensuring subcontractors submit accurate, complete, and current data.² This is not optional oversight. It is a regulatory duty running through every tier of the supply chain.

If a subcontractor supplies defective data and the prime rolls it into its own proposal, the government can reduce the prime contract price based on the subcontractor’s error. The prime absorbs the reduction first and then has to pursue recovery from the subcontractor. Prime contractors who take this seriously build indemnification clauses into their subcontracts to shift defective-pricing liability back to the party that supplied the bad numbers. Government auditors routinely examine subcontractor data during defective-pricing reviews, so treating subcontractor certification as a paperwork formality is a reliable way to end up paying for someone else’s mistake.

What Happens If the Data Is Defective

When the government finds that a contract price was inflated because certified data was inaccurate, incomplete, or outdated, the consequences escalate depending on whether the defect was inadvertent or deliberate.

Price Reduction and Interest

The standard remedy is a contract price reduction equal to the amount by which the price was increased due to the defective data, plus applicable profit or fee on that amount. The clause at FAR 52.215-10 requires the contractor to repay any resulting overpayment with interest compounded daily at the IRS underpayment rate under 26 U.S.C. 6621(a)(2), running from the date of each overpayment until repayment.⁶ Overpayments are measured from the date the government actually paid for completed and accepted contract items, not from the date of contract award. For subcontractor defective pricing, the overpayment date is when the government paid the prime on progress billings or deliveries that included the affected subcontract work.⁷

Knowing-Submission Penalty

If the defective data was submitted knowingly, the government is entitled to a penalty equal to the full amount of the overpayment, on top of the price reduction and interest. Before pursuing this penalty, the contracting officer must consult legal counsel.⁷ A contractor that knew its data was stale or incomplete and certified it anyway can end up repaying roughly double the overpayment, plus the accrued interest.

No Certificate Is Not a Defense

Some contractors assume that if no certificate was actually signed, the government cannot pursue defective-pricing remedies. That is wrong. FAR 15.407-1 states that the government’s right to a price adjustment is not affected by the contractor’s failure to submit a certificate when one was required.⁷ Skipping the paperwork adds a procedural violation to the underlying substantive problem.

False Claims Act Exposure

Beyond the FAR’s own remedies, submitting defective certified data can trigger liability under the False Claims Act. A contractor that knowingly presents a false claim faces per-claim civil penalties adjusted annually for inflation plus up to three times the government’s actual damages. These amounts stack on top of any price reduction under the contract clause.

Records You Have to Keep

Contractors must retain all records related to certified cost or pricing data, including books, documents, and accounting procedures used during contract negotiation and administration, for at least three years after final payment on the contract.⁸ The clock does not start when the certificate is signed or when the contract is awarded. It starts after the last dollar changes hands. On a multi-year contract with extended deliveries, that can mean holding records for a decade or more from the original proposal date.

Defective-pricing audits typically begin years after contract award. The Defense Contract Audit Agency and other oversight bodies work backward through the contractor’s records to compare what was known at certification against what was disclosed. If the records are gone, the contractor loses the ability to prove its data was accurate. A clear audit trail from proposal through final payment is the most effective protection against a defective-pricing finding that documentation could have resolved.

1
Acquisition.GOV. 48 CFR 15.406-2 – Certificate of Current Cost or Pricing Data
2
Acquisition.GOV. 48 CFR 15.403-4 – Requiring Certified Cost or Pricing Data
3
Office of the Law Revision Counsel. 10 USC 3702 – Required Cost or Pricing Data and Certification
4
Acquisition.GOV. 48 CFR 15.403-1 – Prohibition on Obtaining Certified Cost or Pricing Data
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Office of the Law Revision Counsel. 10 USC Ch. 271 – Truthful Cost or Pricing Data (Truth in Negotiations)
6
Acquisition.GOV. 48 CFR 52.215-10 – Price Reduction for Defective Certified Cost or Pricing Data
7
Acquisition.GOV. 48 CFR 15.407-1 – Defective Certified Cost or Pricing Data
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Acquisition.GOV. 48 CFR Subpart 4.7 – Contractor Records Retention