FAR 52.215-11—Price Reduction for Defective Certified Cost or Pricing Data-Modifications.
Plain-English Summary
FAR 52.215-11 is the contract clause that lets the Government reduce a contract price when a modification was priced using defective certified cost or pricing data. It applies only to certain contract modifications that are expected to exceed the certified cost or pricing data threshold on the date the modification is signed, unless an exception in FAR 15.403-1(b) applies. The clause covers when it becomes operative, what counts as defective data, how price or cost reductions are calculated, special limits for defective data from a prospective subcontractor that never receives the subcontract, what defenses the contractor may not raise, when offsets may be allowed, and when the contractor must pay interest and a penalty on overpayments. In practice, this clause protects the Government from paying too much because a contractor, subcontractor, or prospective subcontractor submitted incomplete, inaccurate, or noncurrent data during pricing of a modification. It also creates strong incentives for contractors to validate their data, flow the requirement down to subcontractors, and correct known errors before certification. For contracting officers, the clause is a post-award remedy and enforcement tool that can be used to adjust the contract and recover overpayments when defective data affected the negotiated price.
Key Rules
Applies only to covered mods
The clause becomes operative only for a contract modification involving a pricing adjustment expected to exceed the FAR 15.403-4(a)(1) threshold on the date the modification is executed. It does not apply if an exception to certified cost or pricing data applies under FAR 15.403-1(b).
Defective data trigger reduction
If a negotiated price, profit, fee, or reimbursable cost was increased significantly because certified cost or pricing data were not complete, accurate, and current, the contract price or cost must be reduced accordingly. The remedy also applies when any party furnished data of any kind that were not accurate and those data affected the price.
Limited to the covered modification
The Government’s right to reduce price is limited to defects in data relating to the specific modification for which the clause is operative. The clause does not create a general price-reopening right for unrelated contract actions or earlier pricing events.
Prospective subcontractor limits
If defective data came from a prospective subcontractor that was never awarded the subcontract, the reduction is limited to the amount by which the actual subcontract price, or the contractor’s actual cost if no subcontract was awarded, was less than the estimate submitted, plus applicable overhead and profit markup. This limit applies only if the actual subcontract price was not itself affected by defective certified cost or pricing data.
No listed defenses
The contractor may not defend against a reduction by arguing that the supplier was sole source or had superior bargaining power, that the contracting officer should have known the data were defective, that the contract was based on a total-cost agreement rather than item-by-item pricing, or that no Certificate of Current Cost or Pricing Data was submitted.
Offsets may be allowed
The contracting officer may allow an offset against the price reduction if the contractor certifies entitlement to the offset and proves the relevant data were available before the certificate’s 'as of' date but were not submitted. Offsets are barred if the contractor knew the data were understated before the as-of date or if the Government proves the price would not have increased even if the data had been submitted.
Interest and penalty on overpayments
If the price reduction lowers the price of items already paid for, the contractor must repay the overpayment with daily compounded interest from the date of overpayment until repayment. A penalty equal to the overpayment also applies if the contractor or subcontractor knowingly submitted incomplete, inaccurate, or noncurrent certified cost or pricing data.
Responsibilities
Contracting Officer
Determine whether the modification is covered by the clause, assess whether defective certified cost or pricing data increased the negotiated price or reimbursable cost, calculate and document the appropriate price reduction, decide whether an offset is warranted, and ensure the contract is modified to reflect the reduction. The contracting officer also administers recovery of overpayments, interest, and any applicable penalty.
Contractor
Submit 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 the requirement to relevant subcontractors and prospective subcontractors; disclose known defects before certification; and repay overpayments, interest, and penalties when defective data caused an excessive price.
Subcontractor
Provide certified cost or pricing data that are complete, accurate, and current when required and support the contractor’s pricing of the prime contract modification. A subcontractor’s defective data can trigger a reduction against the prime contractor and may also create penalty exposure if the submission was knowing.
Prospective Subcontractor
Provide accurate pricing data when its proposal is used in the contractor’s pricing of a modification. If the subcontract is not ultimately awarded, defective data can still support a reduction, but the Government’s recovery is limited by the actual subcontract price or actual contractor cost.
Government
Prove the existence and impact of defective data when seeking a reduction, and prove the facts needed to defeat an offset when applicable. The Government must also establish the basis for interest and any penalty tied to knowing submission of defective data.
Practical Implications
This clause is a post-award price protection tool, so contractors should treat modification pricing with the same rigor as initial proposal pricing when certified cost or pricing data are required.
The biggest risk is not just bad data, but bad data that materially affects the negotiated price; contractors should maintain audit trails showing what was submitted, when it was submitted, and how the price was built.
Offsets can reduce the Government’s recovery, but only if the contractor can prove the data existed before the certificate date and were not submitted; late discovery of favorable data is not enough by itself.
Contractors should not rely on arguments that the Government knew or should have known about the defect, or that the deal was negotiated as a lump-sum bargain; the clause expressly removes those defenses.
If an overpayment has already been made, interest can accrue daily and a knowing violation can add a penalty equal to the overpayment, making prompt correction and disclosure financially important.
Official Regulatory Text
As prescribed in 15.408 (c) , insert the following clause: Price Reduction for Defective Certified Cost or Pricing Data-Modifications (Jun 2020) (a) This clause shall become operative only for any modification to this contract involving a pricing adjustment expected to exceed the threshold for submission of certified cost or pricing data in Federal Acquisition Regulation (FAR) 15.403-4 (a)(1) on the date of execution of the modification, except that this clause does not apply to any modification if an exception under FAR 15.403-1 (b) applies. (b) If any price, including profit or fee, negotiated in connection with any modification under this clause, 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. This right to a price reduction is limited to that resulting from defects in data relating to modifications for which this clause becomes operative under paragraph (a) of this clause. (c) Any reduction in the contract price under paragraph (b) 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. (d) (1) If the Contracting Officer determines under paragraph (b) 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 paragraph (d)(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. (e) 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 26U.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)