FAR 15.408 Table 15-2: Certified Cost or Pricing Data

Table 15-2 in FAR 15.408 prescribes the format contractors must use when submitting certified cost or pricing data with a proposal. It requires a summary of all cost elements tied to each contract line item, detailed backup for materials, labor, indirect costs, and other costs, a description of the accounting system, and a signed Certificate of Current Cost or Pricing Data current as of the date of price agreement. Getting the format or the underlying data wrong exposes the contractor to price reductions, interest on overpayments, and penalties long after award.¹

When Table 15-2 Applies

The Truth in Negotiations Act requires certified cost or pricing data on negotiated contracts expected to exceed the FAR threshold, which currently stands at $2.5 million.²³ When that trigger is pulled, Table 15-2 governs how the proposal must be organized.

The reach extends beyond initial awards. Subcontracts at any tier require certified data if the prime and every higher-tier subcontractor were required to furnish it. Modifications trigger the requirement based on the absolute size of the pricing adjustment, counting increases and decreases together. A change that reduces some costs by $1.5 million and adds $1 million produces a $2.5 million adjustment that exceeds the threshold.²

Exceptions That Take You Out of Table 15-2

Four statutory exceptions relieve the contractor from submitting certified data, and with them, from Table 15-2. The contracting officer can still request other data to support price reasonableness under a different framework.

Adequate price competition is the most common exception. It applies when two or more responsible offerors submit priced offers independently, award goes to a best-value offeror with price as a substantial factor, and the winning price is not found unreasonable. Civilian agencies (other than DoD, NASA, and the Coast Guard) may apply the exception to a single offer if the contracting officer reasonably concludes the offeror expected competition and price analysis confirms reasonableness.⁴

Commercial products and services are exempt when the contracting officer determines the item meets the FAR definition. Prices set by law or regulation are exempt because the contractor has no pricing discretion. And the Head of the Contracting Activity may waive the requirement in exceptional cases, in writing, with the waiver non-delegable and supported by a determination that a fair and reasonable price can be established without the certified data.⁴

General Format of the Proposal

The proposal must present all cost elements in a clear summary with enough detail to permit cost analysis. It must show the relationship between individual contract line item prices and the total contract price, with a cost-element breakdown attached for each proposed line item. Those breakdowns must be consistent with the offeror’s cost accounting system and follow any specific format instructions the contracting officer includes in the solicitation.⁵

Materials and Services

The materials section requires a consolidated priced summary of every material quantity in the proposed line items. Each item needs the source, quantity, unit price, and basis for pricing, whether that’s a vendor quote, invoice history, catalog price, or engineering estimate. This covers raw materials, parts, components, assemblies, and services performed by others.⁵

Subcontractor pricing gets close attention. The prime must conduct a price analysis on every subcontractor proposal. When a subcontractor’s expected price exceeds the certified data threshold, the prime must also perform a cost analysis and submit the subcontractor’s certified cost or pricing data with its own submission. Failing to analyze subcontractor data is a common audit finding; the government expects real due diligence, not a pass-through of numbers.⁵

Inter-Organizational Transfers

Work or materials coming from the contractor’s own divisions, subsidiaries, or affiliates are treated much like subcontracts. If the transfer is priced at something other than the cost of comparable commercial work performed by that division, the proposal must explain the pricing method. If it is priced at cost, a separate cost-element breakdown is required.⁵ These transactions feel internal, but auditors scrutinize them closely for inflated pricing between related entities.

Labor

Table 15-2 requires a time-phased breakdown of labor hours, rates, and cost by appropriate category, along with the basis for each estimate.⁵ Time-phased means hours are distributed across the performance period in whatever increment the solicitation specifies. Labor categories should match the contractor’s accounting system, not a breakdown invented for the proposal.

The bases for estimates draw the most scrutiny. The contracting officer wants to see the evidence: historical actuals from similar contracts, payroll records, collective bargaining agreements, staffing plans, or internal work standards. Vague references to engineering judgment without supporting documentation rarely survive cost analysis.

Indirect Costs

The proposal must explain how the contractor computed and applied its indirect costs, with detailed rate breakdowns and trend and budgetary data that give the government a basis for evaluating reasonableness.⁵ In practice, contracting officers and auditors expect to see two to three years of historical rate data alongside projected rates for the contract period, though Table 15-2 itself doesn’t fix a number of years.

Each rate schedule must identify the cost pool (facility expenses, general management, and the like) and the allocation base (direct labor dollars, total cost input, or another measure). If the contractor has a Forward Pricing Rate Agreement, the proposal should identify and include a copy to support the proposed indirect rates.⁵

If awarding the contract would require the contractor to change an established cost accounting practice, the proposal must be priced using the new practice for the relevant period, and a description of the change must go to both the contracting officer and the cognizant federal agency official.⁶ The point is to prevent the government from finding out after award that it negotiated against practices the contractor never intended to follow.

Profit, Fee, and Facilities Capital Cost of Money

Profit is not a cost, but the proposal must include the analysis behind the proposed profit or fee. The government evaluates profit through a structured approach weighing contract type risk, technical complexity, capital investment, and cost responsibility. A percentage asserted without linking to those factors invites pushback in negotiations.

Claiming facilities capital cost of money as an allowable cost requires a completed Form CASB-CMF. That form converts the net book value of facilities capital allocated to the business unit into cost-of-money factors tied to each overhead or G&A allocation base, using the Treasury Department’s semiannual rate.⁷ Omitting the CASB-CMF is a routine oversight that delays evaluation.

Royalties and Other Costs

Costs that don’t fit into materials, labor, or indirect categories go into “Other Costs,” including special tooling, test equipment, startup expenses, and royalties. Each item needs a clear pricing basis.

Royalties exceeding $1,500 require detailed information on a separate page for each royalty or license fee:

Name and address of the licensor and date of the license agreement
Patent numbers or application serial numbers forming the basis for the royalty
The percentage or dollar rate per unit, the unit price of the contract item, number of units, and total royalty amount
A brief description of each contract item or component subject to the royalty, including part or model numbers

The contracting officer can also request a copy of the current license agreement and identification of the specific patent claims that apply.¹ Royalty costs buried inside material estimates create problems when the government later audits the proposal and finds undisclosed licensing obligations.

Accounting System Description

Table 15-2 requires a description of the contractor’s cost accounting system. That description must address whether the contractor is subject to Cost Accounting Standards and, if so, the status of its Disclosure Statement.⁵ The proposed costs need to align with the contractor’s actual established practices, not practices invented for the submission. If a practice has changed or is going to change, the proposal must disclose the change.⁶ Inconsistencies between a Disclosure Statement and a proposal often signal that costs have been misclassified or shifted between pools.

The Certificate and the Data Sweep

Every proposal requiring certified cost or pricing data must include a signed Certificate of Current Cost or Pricing Data. The certificate affirms the data is accurate, complete, and current as of the date of price agreement, not the date the proposal was prepared. The obligation to update runs from submission until final agreement, and any new information that becomes available in that window must be disclosed.⁸

That is why experienced contractors run a data sweep just before signing. The sweep checks every cost element for changes since submission: new vendor quotes, updated labor rates, revised subcontractor pricing, shifts in overhead. The contracting officer and contractor are encouraged to agree in advance on cutoff dates, especially because certain data (like actual indirect costs) is only available at normal periodic closing dates.⁸ Data that exists inside the contractor’s organization on matters significant to management is “reasonably available” even if it has not been formally compiled. Skipping the sweep is where most defective pricing findings originate.

What Defective Pricing Costs You

Certified data that turns out to be inaccurate, incomplete, or not current triggers consequences that can surface years after award. DCAA actively selects contracts for defective pricing reviews.

Price Reduction

If defective data caused the negotiated price to increase by a significant amount, the price is reduced and the contract modified accordingly.⁹ The government must establish five elements: the information qualifies as cost or pricing data, accurate data existed and was reasonably available before price agreement, the data was not submitted or disclosed, the government relied on the defective data in negotiations, and that reliance increased the price.

Interest on Overpayments

When a price reduction covers amounts already paid, the contractor owes interest running from the date of each overpayment to the date of repayment, compounded daily at the underpayment rate the Treasury Secretary sets each quarter under 26 U.S.C. 6621(a)(2).¹⁰ On a large contract, compounding across several years can be substantial by itself.

Penalty for Knowing Submissions

If the contractor knowingly submitted defective data, a penalty equal to the full amount of the overpayment applies on top of the reduction and interest.⁹ In cases of intentional fraud, False Claims Act exposure adds per-claim civil penalties and treble damages.

Records After Award

Submitting the proposal and receiving award does not close the book. Contractors must retain all records supporting the proposal, including books, documents, accounting procedures, and supporting data, for three years after final payment. If final indirect cost rate proposals are submitted late, the retention clock extends day-for-day past the original deadline.¹¹

DCAA conducts post-award audits to verify that actual practices match what the proposal described. A full post-award audit is required whenever the previous one is more than four years old or the accounting system has changed, and a material weakness finding can result in system disapproval that effectively freezes new cost-type awards until the problems are corrected. Contractors who treat Table 15-2 as a paperwork exercise rather than a reflection of their real cost structure tend to struggle here. The proposal and the books need to tell the same story, because the government will eventually compare them.

1
Acquisition.GOV. FAR 15.408 Solicitation Provisions and Contract Clauses
2
Acquisition.GOV. FAR 15.403-4 Requiring Certified Cost or Pricing Data
3
Office of the Law Revision Counsel. 41 US Code 3502 – Required Cost or Pricing Data and Certification
4
eCFR. 48 CFR 15.403-1 – Prohibition on Obtaining Certified Cost or Pricing Data
5
eCFR. 48 CFR Part 15 – Contracting by Negotiation – Table 15-2
6
eCFR. 48 CFR 30.603-1 – Required Changes
7
eCFR. Appendix A to 9904.414 – Instructions for Form CASB CMF
8
Acquisition.GOV. FAR 15.406-2 Certificate of Current Cost or Pricing Data
9
eCFR. 48 CFR 52.215-10 – Price Reduction for Defective Certified Cost or Pricing Data
10
Office of the Law Revision Counsel. 10 USC 3707 – Interest and Penalties for Certain Overpayments
11
eCFR. 48 CFR 4.703 – Policy