FAR 15.403-4—Requiring certified cost or pricing data (10 U.S.C. chapter 271 and 41 U.S.C. chapter 35).
Plain-English Summary
FAR 15.403-4 explains when a contracting officer must require certified cost or pricing data, when higher-level approval can require it below the normal threshold, and what supporting certifications and related data must be obtained. It covers the dollar threshold for prime contracts, how inflation-adjusted thresholds apply over the life of a contract, and the specific actions that trigger the requirement: negotiated contract awards, subcontract awards at any tier in certain circumstances, contract modifications, and negotiated final pricing actions such as termination settlements and total final price agreements. It also addresses the special authority of the head of the contracting activity to require certified cost or pricing data below the threshold, the contractor’s right to request a contract modification for older prime contracts to reflect the updated subcontract threshold, and the required submission of both certified cost or pricing data and a Certificate of Current Cost or Pricing Data. Finally, it clarifies that if an exception later applies, the submitted data are not treated as certified cost or pricing data, and it extends these requirements to contracts entered into on behalf of foreign governments. In practice, this section is the core trigger rule for Truthful Cost or Pricing Data compliance and is central to pricing negotiations, subcontract flowdowns, and post-award modifications.
Key Rules
Threshold controls the trigger
Certified cost or pricing data are required only when no exception in 15.403-1(b) applies and the action exceeds the applicable threshold. The threshold is $950,000 for prime contracts awarded before July 1, 2018, and $2.5 million for prime contracts awarded on or after that date, subject to inflation adjustments under 1.109.
Threshold changes can carry forward
If the threshold is adjusted for inflation, the adjusted threshold applies for the remainder of the contract term unless a later threshold adjustment occurs. For existing contracts, the threshold specified in the contract controls when the clause refers to a threshold.
Negotiated awards may require data
Before awarding any negotiated contract, the contracting officer must obtain certified cost or pricing data unless an exception applies. This does not include undefinitized actions such as letter contracts, which are treated separately.
Subcontracts can be covered
Certified cost or pricing data may be required for a subcontract at any tier if the contractor and each higher-tier subcontractor were themselves required to furnish certified cost or pricing data. Waivers under 15.403-1(c)(4) may affect this requirement.
Modifications count both ways
A modification to a sealed bid or negotiated contract, or to a covered subcontract, requires certified cost or pricing data if the pricing adjustment exceeds the threshold. The adjustment must include both increases and decreases, and unrelated separately priced changes cannot be bundled merely for administrative convenience to avoid the rule.
Final pricing actions are included
Negotiated final pricing actions, including termination settlements and total final price agreements for fixed-price incentive and redeterminable contracts, are treated as contract modifications. They require certified cost or pricing data when the total final price or the partial termination settlement plus the estimate to complete exceeds the threshold.
Below-threshold authority is limited
The head of the contracting activity, without delegation, may authorize requiring certified cost or pricing data below the threshold only when the action exceeds the simplified acquisition threshold and no exception applies. The decision must be justified in writing with facts showing the data are necessary to determine price reasonableness.
Required submissions are specific
When required, the contractor or prospective contractor must submit certified cost or pricing data and any additional data the contracting officer needs to determine a fair and reasonable price. The contractor must also provide the Certificate of Current Cost or Pricing Data in the prescribed format.
Later exceptions change treatment
If data were requested and submitted but an exception is later found to apply, the information is not treated as certified cost or pricing data under the FAR definition and must not be certified under 15.406-2.
Foreign government contracts are covered
These requirements also apply when an agency enters into contracts on behalf of a foreign government, so the same pricing-data rules can apply in international or foreign-assistance procurement contexts.
Responsibilities
Contracting Officer
Determine whether any exception in 15.403-1(b) applies before requiring certified cost or pricing data. Obtain the data when required, request additional data as needed to determine price reasonableness, ensure the Certificate of Current Cost or Pricing Data is provided, and apply the rule to awards, subcontracts, modifications, and final pricing actions.
Head of the Contracting Activity
Personally authorize, without delegation, any requirement for certified cost or pricing data below the threshold when the action exceeds the simplified acquisition threshold and no exception applies. Prepare a written justification and factual finding that the data are necessary to determine whether the price is fair and reasonable.
Contractor or Prospective Contractor
Submit certified cost or pricing data and any other requested pricing support when required, and provide the Certificate of Current Cost or Pricing Data as of the date of price agreement or an agreed earlier date. For older prime contracts, request the contract modification needed to reflect the updated subcontract threshold when applicable.
Subcontractor or Prospective Subcontractor
Provide certified cost or pricing data to the prime contractor or appropriate higher-tier subcontractor when the subcontract is covered by the rule and the flowdown requirements apply.
Higher-Tier Subcontractor
Pass the certified cost or pricing data requirement down to lower-tier subcontractors when the rule applies at multiple tiers, and collect the required data from covered lower-tier firms.
Agency
Apply the rule consistently, including in contracts entered into on behalf of a foreign government, and ensure threshold changes and related contract clauses are administered correctly.
Practical Implications
This section is a major pricing gate: if no exception applies and the threshold is met, the government must get certified cost or pricing data before award or certain post-award actions. Missing the trigger can create defective pricing risk and contract administration problems.
Contracting teams must calculate modification value carefully by netting increases and decreases together; trying to split or bundle unrelated changes for convenience does not avoid the threshold if the pricing action is really covered.
Subcontract flowdowns matter. A prime contractor may need to collect and pass through certified cost or pricing data requirements to lower tiers, so subcontract planning and proposal schedules should account for that early.
The below-threshold authority is narrow and requires senior approval plus a written factual justification. It is not a routine workaround for pricing uncertainty.
Older contracts can create threshold mismatch issues after July 1, 2018. Contractors and contracting officers should check whether the contract needs a modification to reflect the updated subcontract threshold and avoid using the wrong dollar level.
Official Regulatory Text
(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. However, if the contracting officer has reason to believe exceptional circumstances exist and has sufficient data available to determine a fair and reasonable price, then the contracting officer should consider requesting a waiver under the exception at 15.403-1 (b)(4). The threshold for obtaining certified cost or pricing data is $950,000 for prime contracts awarded before July 1, 2018, and $2.5 million for prime contracts awarded on or after July 1, 2018.When a clause refers to this threshold, and if the threshold is adjusted for inflation pursuant to 1.109 (a), then pursuant to 1.109 (d) the changed threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment. 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 certified 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 certified cost or pricing data were initially required) or any subcontract covered by paragraph (a)(1)(ii) of this subsection. Price adjustment amounts must consider both increases and decreases (e.g., a $500,000 modification resulting from a reduction of $1,500,000 and an increase of $1,000,000 is a $2,500,000 pricing adjustment exceeding the $2,000,000 threshold). This requirement does not apply when unrelated and separately priced changes for which certified cost or pricing data would not otherwise be required are included for administrative convenience in the same modification. Negotiated final pricing actions (such as termination settlements and total final price agreements for fixed-price incentive and redeterminable contracts) are contract modifications requiring certified cost or pricing data if- (A) The total final price agreement for such settlements or agreements exceeds the pertinent threshold set forth at paragraph (a)(1) of this subsection; or (B) The partial termination settlement plus the estimate to complete the continued portion of the contract exceeds the pertinent threshold set forth at paragraph (a)(1) of this subsection (see 49.105 (c)(15)). (2) Unless prohibited because an exception at 15.403-1 (b) applies, the head of the contracting activity, without power of delegation, may authorize the contracting officer to obtain certified cost or pricing data for pricing actions below the pertinent threshold in paragraph (a)(1) of this subsection, provided the action exceeds the simplified acquisition threshold. The head of the contracting activity shall justify the requirement for certified cost or pricing data. The documentation shall include a written finding that certified cost or pricing data are necessary to determine whether the price is fair and reasonable and the facts supporting that finding. (3) Upon the request of a contractor that was required to submit certified cost or pricing data in connection with a prime contract entered into before July 1, 2018, the contracting officer shall modify the contract, without requiring consideration, to reflect a $2.5 million threshold for obtaining certified cost or pricing data on subcontracts entered on and after July 1, 2018. See 15.408 . (b) When certified cost or pricing data are required, the contracting officer shall require the contractor or prospective contractor to submit to the contracting officer (and to have any subcontractor or prospective subcontractor submit to the prime contractor or appropriate subcontractor tier) the following in support of any proposal: (1) The certified cost or pricing data and data other than certified cost or pricing data required by the contracting officer to determine that the price is fair and reasonable. (2) A Certificate of Current Cost or Pricing Data, in the format specified in 15.406-2 , certifying that to the best of its knowledge and belief, the cost or pricing data were accurate, complete, and current as of the date of agreement on price or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price. (c) If certified cost or pricing data are requested and submitted by an offeror, but an exception is later found to apply, the data must not be considered certified cost or pricing data as defined in 2.101 and must not be certified in accordance with 15.406-2 (d) The requirements of this subsection also apply to contracts entered into by an agency on behalf of a foreign government.