FAR 52.215-14—Integrity of Unit Prices.
Plain-English Summary
FAR 52.215-14, Integrity of Unit Prices, is a pricing integrity clause used in negotiated procurements for supplies. It addresses how offerors must distribute costs across contract line items so that unit prices reflect the actual base cost of the items, such as manufacturing or acquisition cost, rather than being artificially shifted or averaged in a way that distorts pricing. The clause also allows the Contracting Officer to ask the offeror or contractor to identify supplies it will not manufacture or to which it will not contribute significant value, which helps the Government evaluate pricing realism and detect potential pricing manipulation. In addition, the clause requires flowdown of the substance of the clause to most subcontracts, with specific exceptions for simplified acquisitions, construction and architect-engineer services, utility services, services without supply requirements, commercial products and commercial services, and petroleum products. The clause explicitly states that it does not create a new requirement to submit certified cost or pricing data beyond what is otherwise required by law or regulation. In practice, this clause is meant to protect the Government from misleading unit pricing, support fair price analysis, and improve transparency in supply pricing and subcontract pricing structures.
Key Rules
Unit prices must reflect base cost
For proposals covering supplies, costs must be distributed so that unit prices are proportional to each item’s base cost, such as manufacturing or acquisition cost. The pricing method cannot distort the relationship between the item’s actual cost and its unit price.
No artificial cost spreading
Methods that spread costs in a way that masks true item pricing are prohibited. A common example is dividing costs equally across line items when the items have materially different base costs; that approach is not acceptable unless there is little or no variation in base cost.
No new certified data requirement
The clause does not itself require certified cost or pricing data. Any obligation to submit such data must come from another applicable law, regulation, or solicitation requirement.
Disclosure of non-manufactured items
If the Contracting Officer requests it, the offeror or contractor must identify supplies it will not manufacture or to which it will not contribute significant value. This helps the Government understand the contractor’s actual role in the supply chain and pricing structure.
Subcontract flowdown required
The contractor must insert the substance of the clause, except paragraph (b), in applicable subcontracts. The flowdown applies broadly to subcontracts for supplies unless an exception applies.
Flowdown exceptions apply
The clause does not have to be flowed down to subcontracts for acquisitions at or below the simplified acquisition threshold, construction or architect-engineer services, utility services, services where supplies are not required, commercial products and commercial services, or petroleum products.
Alternate I simplifies paragraph (b)
Alternate I replaces paragraph (b) with a shorter version that still requires the offeror or contractor to identify supplies it will not manufacture or to which it will not contribute significant value, but without the introductory request language tied to the Contracting Officer’s discretion.
Responsibilities
Offeror
Structure proposal pricing for supply items so unit prices are aligned with each item’s base cost and do not distort pricing through artificial allocation methods. If the Contracting Officer requests it, identify supplies the offeror will not manufacture or to which it will not contribute significant value.
Contractor
Maintain integrity of unit prices during contract performance and ensure subcontract flowdown of the clause’s substance, except paragraph (b), to required subcontracts. Respond to Contracting Officer requests to identify non-manufactured or low-value-added supplies when applicable.
Contracting Officer
Use the clause when prescribed, review proposed unit pricing for distortion, and request identification of supplies not manufactured or not significantly value-added when needed to support price analysis or evaluate the contractor’s role in the supply chain.
Subcontractor
Comply with the flowed-down substance of the clause in applicable subcontracts for supplies, unless an exception applies. Structure subcontract pricing in a way that preserves the integrity of unit prices.
Agency
Apply the clause in accordance with the prescription at FAR 15.408(f)(1) or use Alternate I when prescribed at FAR 15.408(f)(2), and ensure procurement personnel understand when the clause and its flowdown exceptions apply.
Practical Implications
This clause is mainly about preventing price manipulation in supply contracts, so contractors should make sure line-item pricing matches actual cost structure instead of using averages or arbitrary allocations.
A common pitfall is spreading overhead, freight, or other indirect costs evenly across line items when the items have very different base costs; that can trigger concerns about distorted unit prices.
Contracting Officers may ask for a list of items the contractor will not manufacture or will not significantly value-add, so contractors should be prepared to explain their supply chain and make-or-buy structure.
The clause does not by itself require certified cost or pricing data, but it can still support Government scrutiny of pricing and may be used alongside other pricing requirements.
Contractors should pay close attention to subcontract flowdown obligations and the listed exceptions, especially when buying supplies through lower-tier suppliers or mixed contracts that include both supplies and services.
Official Regulatory Text
As prescribed in 15.408 (f)(1) , insert the following clause: Integrity of Unit Prices (Nov 2021) (a) Any proposal submitted for the negotiation of prices for items of supplies shall distribute costs within contracts on a basis that ensures that unit prices are in proportion to the items’ base cost ( e.g., manufacturing or acquisition costs). Any method of distributing costs to line items that distorts unit prices shall not be used. For example, distributing costs equally among line items is not acceptable except when there is little or no variation in base cost. Nothing in this paragraph requires submission of certified cost or pricing data not otherwise required by law or regulation. (b) When requested by the Contracting Officer, the Offeror/Contractor shall also identify those supplies that it will not manufacture or to which it will not contribute significant value. (c) The Contractor shall insert the substance of this clause, less paragraph (b) of this clause, in all subcontracts for other than: acquisitions at or below the simplified acquisition threshold, as defined in Federal Acquisition Regulation (FAR) 2.101 on the date of subcontract award; construction or architect-engineer services under FAR part 36 ; utility services under FAR part 41 ; services where supplies are not required; commercial products and commercial services; and petroleum products. (End of clause) Alternate I (Oct 1997) . As prescribed in 15.408 (f)(2), substitute the following paragraph (b) for paragraph (b) of the basic clause: (b) The Offeror/Contractor shall also identify those supplies that it will not manufacture or to which it will not contribute significant value.