FAR 52.215-10—Price Reduction for Defective Certified Cost or Pricing Data.
Plain-English Summary
FAR 52.215-10, Price Reduction for Defective Certified Cost or Pricing Data, is the Government’s remedy clause for situations where a negotiated contract price or reimbursable cost was increased because the contractor, a subcontractor, or a prospective subcontractor provided certified cost or pricing data that were not complete, accurate, and current, or otherwise provided inaccurate data. It applies when the Government later discovers that defective data affected the negotiated price, profit or fee, or reimbursable costs, and it requires the contract price to be reduced accordingly and the contract modified to reflect the correction. The clause also addresses defective data from prospective subcontractors, limits the reduction in certain cases to the difference between the estimated and actual subcontract cost plus markup, and allows a contractor to seek an offset for qualifying data that was available but not submitted before the certification date. It further bars several common defenses, such as claims that the contractor was a sole source, that the Government should have known the data were defective, or that the contract was based on a total-cost agreement rather than item-by-item pricing. Finally, if the Government has already paid the inflated amount, the clause requires repayment with daily compounded interest and, in cases of knowing submission of defective certified cost or pricing data, a penalty equal to the overpayment. In practice, this clause is a powerful post-award price adjustment and recovery tool that creates strong incentives for accurate, current, and complete pricing data throughout proposal preparation, subcontract pricing, and certification.
Key Rules
Price reduced for defective data
If defective certified cost or pricing data increased the negotiated price, profit, fee, or reimbursable cost, the Government is entitled to a corresponding reduction. The contract must be modified to reflect the corrected amount.
Applies to contractor and subcontractor data
The clause reaches defective data furnished by the contractor, a subcontractor, or a prospective subcontractor, including data used in the contractor’s own certification. Liability can flow through the pricing chain when inaccurate data affected the prime contract price.
Prospective subcontractor limit
When the defect comes from a prospective subcontractor that was not ultimately awarded the subcontract, the reduction is limited to the difference between the estimated subcontract cost and the actual subcontract price or actual contractor cost, plus applicable overhead and profit markup, so long as the actual subcontract price was not itself tainted by defective data.
No common defenses
The contractor may not defend against a reduction by arguing sole-source status, superior bargaining position, Government awareness of the defect, a total-cost agreement, or failure to submit a Certificate of Current Cost or Pricing Data. The clause prevents these arguments from defeating the Government’s right to a price adjustment.
Offset may be allowed
The contractor may receive an offset against the price reduction for qualifying data that were available before the certification 'as of' date but were not submitted, if the contractor certifies entitlement to the offset and proves the data were available and omitted. No offset is allowed if the contractor knew the data were understated or if the Government proves the price would not have increased by the offset amount anyway.
Repayment with interest
If the Government already paid the inflated price, the contractor must repay the overpayment with daily compounded interest from the date of overpayment until repayment, using the applicable Treasury underpayment rate. This makes delayed correction more expensive for the contractor.
Penalty for knowing submission
If the contractor or subcontractor knowingly submitted certified cost or pricing data that were incomplete, inaccurate, or noncurrent, the contractor must also pay a penalty equal to the amount of the overpayment. This is separate from interest and increases exposure for intentional or reckless conduct.
Responsibilities
Contracting Officer
Determine whether defective certified cost or pricing data increased the contract price or reimbursable cost, calculate the appropriate reduction, and modify the contract to reflect the corrected amount. The Contracting Officer also evaluates any claimed offset, applies the subcontract limitation where relevant, and seeks repayment, interest, and any applicable penalty when overpayments have already been made.
Contractor
Provide complete, accurate, and current certified cost or pricing data when required, ensure the Certificate of Current Cost or Pricing Data is truthful as of the stated date, flow accurate data from subcontractors, and repay overpayments with interest when a reduction is made. The contractor may request an offset only by certifying entitlement and proving the omitted data were available before the certification date.
Subcontractor
Provide certified cost or pricing data that are complete, accurate, and current when required, because defective subcontractor data can trigger a reduction in the prime contract price. A subcontractor’s knowing submission of defective data can also contribute to penalties and recovery actions.
Prospective Subcontractor
Provide accurate pricing data when its estimate is used in the prime contractor’s proposal, because defective estimates can still reduce the prime contract price even if the subcontract is never awarded. The impact is limited to the difference between the estimate and the actual subcontract or actual contractor cost, plus markup, if the actual subcontract price was not itself defective.
Government
Identify defective data, prove the price or cost increase caused by the defect, and recover the overpayment through contract modification and repayment. The Government also may oppose offsets by showing the omitted data would not have increased the price or that the contractor knew the data were understated.
Practical Implications
Contractors should treat certified cost or pricing data as a live compliance obligation, not just a proposal package, because later-discovered omissions or inaccuracies can trigger retroactive price reductions, interest, and penalties.
Subcontract pricing is a major risk area: inaccurate estimates from subcontractors or prospective subcontractors can flow into the prime contract and create liability even when the subcontract is never awarded.
The clause sharply limits defenses, so arguments based on Government knowledge, sole-source status, or the absence of item-by-item pricing usually will not prevent a reduction.
Offsets are possible but narrow and evidence-driven; contractors need documentation showing the omitted data existed before the certification date and were not knowingly understated.
If an overpayment has already been made, the financial exposure can grow quickly because interest accrues daily and a knowing violation can add a penalty equal to the overpayment, making prompt self-disclosure and correction important.
Official Regulatory Text
As prescribed in 15.408 (b) , insert the following clause: Price Reduction for Defective Certified Cost or Pricing Data (Aug 2011) (a) If any price, including profit or fee, negotiated in connection with this contract, or any cost reimbursable under this contract, was increased by any significant amount because— (1) The Contractor or a subcontractor furnished certified cost or pricing data that were not complete, accurate, and current as certified in its Certificate of Current Cost or Pricing Data; (2) A subcontractor or prospective subcontractor furnished the Contractor certified cost or pricing data that were not complete, accurate, and current as certified in the Contractor’s Certificate of Current Cost or Pricing Data; or (3) Any of these parties furnished data of any description that were not accurate, the price or cost shall be reduced accordingly and the contract shall be modified to reflect the reduction. (b) Any reduction in the contract price under paragraph (a) of this clause due to defective data from a prospective subcontractor that was not subsequently awarded the subcontract shall be limited to the amount, plus applicable overhead and profit markup, by which (1) the actual subcontract or (2) the actual cost to the Contractor, if there was no subcontract, was less than the prospective subcontract cost estimate submitted by the Contractor; provided, that the actual subcontract price was not itself affected by defective certified cost or pricing data. (c) (1) If the Contracting Officer determines under paragraph (a) of this clause that a price or cost reduction should be made, the Contractor agrees not to raise the following matters as a defense: (i) The Contractor or subcontractor was a sole source supplier or otherwise was in a superior bargaining position and thus the price of the contract would not have been modified even if accurate, complete, and current certified cost or pricing data had been submitted. (ii) The Contracting Officer should have known that the certified cost or pricing data in issue were defective even though the Contractor or subcontractor took no affirmative action to bring the character of the data to the attention of the Contracting Officer. (iii) The contract was based on an agreement about the total cost of the contract and there was no agreement about the cost of each item procured under the contract. (iv) The Contractor or subcontractor did not submit a Certificate of Current Cost or Pricing Data. (2) (i) Except as prohibited by subdivision (c)(2)(ii) of this clause, an offset in an amount determined appropriate by the Contracting Officer based upon the facts shall be allowed against the amount of a contract price reduction if- (A) The Contractor certifies to the Contracting Officer that, to the best of the Contractor’s knowledge and belief, the Contractor is entitled to the offset in the amount requested; and (B) The Contractor proves that the certified cost or pricing data were available before the "as of" date specified on its Certificate of Current Cost or Pricing Data, and that the data were not submitted before such date. (ii) An offset shall not be allowed if— (A) The understated data were known by the Contractor to be understated before the "as of" date specified on its Certificate of Current Cost or Pricing Data; or (B) The Government proves that the facts demonstrate that the contract price would not have increased in the amount to be offset even if the available data had been submitted before the "as of" date specified on its Certificate of Current Cost or Pricing Data. (d) If any reduction in the contract price under this clause reduces the price of items for which payment was made prior to the date of the modification reflecting the price reduction, the Contractor shall be liable to and shall pay the United States at the time such overpayment is repaid- (1) Interest compounded daily, as required by 26 U.S.C.6622 , on the amount of such overpayment to be computed from the date(s) of overpayment to the Contractor to the date the Government is repaid by the Contractor at the applicable underpayment rate effective for each quarter prescribed by the Secretary of the Treasury under 26 U.S.C. 6621(a)(2) ; and (2) A penalty equal to the amount of the overpayment, if the Contractor or subcontractor knowingly submitted certified cost or pricing data that were incomplete, inaccurate, or noncurrent. (End of clause)