FAR 15.403-1—Prohibition on obtaining certified cost or pricing data (10 U.S.C. chapter 271 and 41 U.S.C. CHAPTER 35).
Plain-English Summary
FAR 15.403-1 explains when the Government may not obtain certified cost or pricing data and when exceptions apply. It covers the basic prohibition for acquisitions at or below the simplified acquisition threshold, the general rule that contracting officers must not require certified cost or pricing data when an exception applies, and the ability to request data other than certified cost or pricing data to support price reasonableness or cost realism. It then lays out the main exceptions: adequate price competition, prices set by law or regulation, commercial products and commercial services, waivers, and modifications of commercial products or commercial services. The section also gives the standards for determining adequate price competition, including special rules for agencies other than DoD, NASA, and the Coast Guard when only one offer is received, and it explains how prices set by law or regulation satisfy the exception. For commercial items, it addresses when a product or service is exempt, when a contracting officer must still require certified cost or pricing data if the item is not actually commercial, and special treatment for certain commercial services and minor modifications. In practice, this section is central to the Truth in Negotiations framework because it determines when the Government can rely on competition, market pricing, or statutory/regulatory pricing instead of requiring certified cost or pricing data.
Key Rules
No certified data below threshold
Certified cost or pricing data shall not be obtained for acquisitions at or below the simplified acquisition threshold. This is a hard prohibition, not a discretionary rule.
Exceptions bar the requirement
When an exception applies, the contracting officer may not require certified cost or pricing data for contracts, subcontracts, or modifications. The officer may still request other data under FAR 2.101 to support a fair and reasonable price or cost realism determination.
Adequate price competition
A price is based on adequate price competition when two or more responsible offerors independently submit priced offers that meet the requirement, award is made on a best-value basis where price is a substantial factor, and there is no supported finding that the successful price is unreasonable. Any unreasonableness finding must be fact-based and approved above the contracting officer.
Single-offer rule for most civilian agencies
For agencies other than DoD, NASA, and the Coast Guard, adequate price competition may still exist even if only one offer is received, if market research showed a reasonable expectation of competition and the offer appears to have been submitted with that expectation. The determination must be approved above the contracting officer, or price analysis must clearly show reasonableness against recent comparable competitive prices.
Prices set by law or regulation
If a governmental body sets the price through law, regulation, ruling, review, or similar action, certified cost or pricing data is not required. The key point is that the price is externally established, not negotiated from the contractor’s cost build-up.
Commercial products and services
Acquisitions of commercial products or commercial services are exempt from certified cost or pricing data. If the contracting officer concludes the item is not commercial and no other exception applies, certified cost or pricing data must be required if the threshold is exceeded.
Commercial services need price support
Some services that are of a type sold commercially but not offered and sold competitively in substantial quantities may still be treated as commercial only if the contracting officer can determine price reasonableness through price analysis. The officer may request commercial sales data, and if that is insufficient, other relevant cost or pricing information such as labor, material, and overhead data may be requested.
Minor commercial modifications
Minor modifications that do not change a commercial product into a noncommercial product are generally exempt from certified cost or pricing data. The rule distinguishes between agencies outside DoD/NASA/Coast Guard and those agencies, which have additional requirements for certain funded modifications.
Waivers remain available
A waiver can remove the certified cost or pricing data requirement when properly granted. This is an exception, not the default, and it must be supported under the standards referenced in the regulation.
Responsibilities
Contracting Officer
Determine whether certified cost or pricing data is prohibited, required, or excepted; document the basis for any exception; request other data when needed to establish fair and reasonable price or cost realism; and require certified cost or pricing data when an asserted commercial item is not actually commercial and no other exception applies.
Contracting Officer Supervisor or Higher-Level Approver
Approve findings that a price is unreasonable under the adequate price competition exception, and approve certain single-offer adequate price competition determinations for agencies other than DoD, NASA, and the Coast Guard.
Offeror/Contractor
Provide pricing information sufficient for the contracting officer to determine price reasonableness when claiming commercial item status or when the Government requests data other than certified cost or pricing data; submit certified cost or pricing data when required by the contracting officer and no exception applies.
Government Agency
Apply the correct statutory and regulatory framework for its department, including the special rules for DoD, NASA, and the Coast Guard versus other agencies; ensure market research and acquisition planning support the chosen pricing approach.
Subcontractor
Provide certified cost or pricing data or other required pricing information when the prime contractor or contracting officer requires it under applicable flowdown or subcontract pricing rules and no exception applies.
Practical Implications
This section is a gatekeeper for when the Government can negotiate from certified cost or pricing data versus relying on competition or market pricing. Getting the exception wrong can lead to defective pricing risk, audit findings, or an unsupported price determination.
Contracting officers should not stop at the label "commercial" or "competitive"; they need a documented factual basis. A claimed commercial item that is not supported by market evidence can trigger a requirement for certified cost or pricing data.
For competitive procurements, the record must show not just that offers were received, but that the competition met the regulatory standard. If only one offer is received, civilian agencies need especially careful documentation and higher-level approval when relying on the single-offer adequate price competition rule.
Even when certified cost or pricing data is not required, the Government can still ask for other data to support price reasonableness. Contractors often overlook this and assume an exception means no pricing support is needed at all.
Commercial services and minor commercial modifications are common trouble spots because the line between commercial and noncommercial can be fact-specific. Contractors should be prepared to show commercial sales history, while contracting officers should be ready to request additional information if price analysis alone is not enough.
Official Regulatory Text
(a) Certified cost or pricing data shall not be obtained for acquisitions at or below the simplified acquisition threshold. (b) Exceptions to certified cost or pricing data requirements . The contracting officer shall not require certified cost or pricing data to support any action (contracts, subcontracts, or modifications) (but may require data other than certified cost or pricing data as defined in FAR 2.101 to support a determination of a fair and reasonable price or cost realism)— (1) When the contracting officer determines that prices agreed upon are based on adequate price competition (see standards in paragraph (c)(1) of this subsection); (2) When the contracting officer determines that prices agreed upon are based on prices set by law or regulation (see standards in paragraph (c)(2) of this subsection); (3) When a commercial product or commercial service is being acquired (see standards in paragraph (c)(3) of this subsection); (4) When a waiver has been granted (see standards in paragraph (c)(4) of this subsection); or (5) When modifying a contract or subcontract for commercial products or commercial services (see standards in paragraph (c)(3) of this section). (c) Standards for exceptions from certified cost or pricing data requirements— (1) Adequate price competition . (i) A price is based on adequate price competition when— (A) Two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement; (B) Award will be made to the offeror whose proposal represents the best value (see 2.101 ) where price is a substantial factor in source selection; and (C) There is no finding that the price of the otherwise successful offeror is unreasonable. Any finding that the price is unreasonable must be supported by a statement of the facts and approved at a level above the contracting officer. (ii) For agencies other than DoD, NASA, and the Coast Guard, a price is also based on adequate price competition when– (A) There was a reasonable expectation, based on market research or other assessment, that two or more responsible offerors, competing independently, would submit priced offers in response to the solicitation's expressed requirement, even though only one offer is received from a responsible offeror and if- (1) Based on the offer received, the contracting officer can reasonably conclude that the offer was submitted with the expectation of competition, e.g., circumstances indicate that– (i) The offeror believed that at least one other offeror was capable of submitting a meaningful offer; and (ii) The offeror had no reason to believe that other potential offerors did not intend to submit an offer; and (2) The determination that the proposed price is based on adequate price competition and is reasonable has been approved at a level above the contracting officer; or (B) Price analysis clearly demonstrates that the proposed price is reasonable in comparison with current or recent prices for the same or similar items, adjusted to reflect changes in market conditions, economic conditions, quantities, or terms and conditions under contracts that resulted from adequate price competition. (2) Prices set by law or regulation . Pronouncements in the form of periodic rulings, reviews, or similar actions of a governmental body, or embodied in the laws, are sufficient to set a price. (3) Commercial products and commercial services. (i) Any acquisition that the contracting officer determines meets the commercial product or commercial service definition in 2.101 , or any modification, as defined in paragraph (3)(i) of the commercial product definition, that does not change a commercial product to other than commercial, is exempt from the requirement for certified cost or pricing data. If the contracting officer determines that a product or service claimed to be commercial is not, and that no other exception or waiver applies ( e.g. , the acquisition is not based on adequate price competition; the acquisition is not based on prices set by law or regulation; and the acquisition exceeds the threshold for the submission of certified cost or pricing data at 15.403-4 (a)(1)) the contracting officer shall require submission of certified cost or pricing data. (ii) In accordance with section 41 U.S.C. 3501 : (A) When purchasing services that are not offered and sold competitively in substantial quantities in the commercial marketplace, but are of a type offered and sold competitively in substantial quantities in the commercial marketplace, they may be considered commercial services (thus meeting the purpose of 41 U.S.C.chapter 35 and 10 U.S.C. chapter 271 for truth in negotiations) only if the contracting officer determines in writing that the offeror has submitted sufficient information to evaluate, through price analysis, the reasonableness of the price of such services. (B) In order to make this determination, the contracting officer may request the offeror to submit prices paid for the same or similar commercial services under comparable terms and conditions by both Government and commercial customers; and (C) If the contracting officer determines that the information described in paragraph (c)(3)(ii)(B) of this section is not sufficient to determine the reasonableness of price, other relevant information regarding the basis for price or cost, including information on labor costs, material costs and overhead rates may be requested. (iii) The following requirements apply to minor modifications defined in paragraph (3)(ii) of the definition of a commercial product at 2.101 that do not change the commercial product to other than commercial: (A) For acquisitions funded by any agency other than DoD, NASA, or Coast Guard, such modifications of a commercial product are exempt from the requirement for submission of certified cost or pricing data. (B) For acquisitions funded by DoD, NASA, or Coast Guard, such modifications of a commercial product are exempt from the requirement for submission of certified cost or pricing data provided the total price of all such modifications under a particular contract action does not exceed the greater of the threshold for obtaining certified cost or pricing data in 15.403-4 or 5 percent of the total price of the contract at the time of contract award. (C) For acquisitions funded by DoD, NASA, or Coast Guard such modifications of a commercial product are not exempt from the requirement for submission of certified cost or pricing data on the basis of the exemption provided for at 15.403-1 (c)(3) if the total price of all such modifications under a particular contract action exceeds the greater of the threshold for obtaining certified cost or pricing data in 15.403-4 or 5 percent of the total price of the contract at the time of contract award. (iv) Any acquisition for other than commercial products or services treated as commercial products or commercial services at 12.102 (f)(1), except sole source contracts greater than $25 million, is exempt from the requirements for certified cost or pricing data ( 41 U.S.C. 1903 ). (4) Waivers . The head of the contracting activity (HCA) may, without power of delegation, waive the requirement for submission of certified cost or pricing data in exceptional cases. The authorization for the waiver and the supporting rationale shall be in writing. The HCA may consider waiving the requirement if the price can be determined to be fair and reasonable without submission of certified cost or pricing data. For example, if certified cost or pricing data were furnished on previous production buys and the contracting officer determines such data are sufficient, when combined with updated data, a waiver may be granted. If the HCA has waived the requirement for submission of certified cost or pricing data, the contractor or higher-tier subcontractor to whom the waiver relates shall be considered as having been required to provide certified cost or pricing data. Consequently, award of any lower-tier subcontract expected to exceed the certified cost or pricing data threshold requires the submission of certified cost or pricing data unless- (i) An exception otherwise applies to the subcontract; or (ii) The waiver specifically includes the subcontract and the rationale supporting the waiver for that subcontract.