§3506 Price reductions for defective cost or pricing data

Summary

Require prime contracts that need a cost-pricing certificate to include a clause saying the government can reduce the contract price, including profit or fee, by any significant amount that was added because the contractor or a required subcontractor gave faulty cost or pricing data. "Defective cost or pricing data" means data that were wrong, incomplete, or out-of-date as of the date the parties agreed on the price (or another agreed date that is as close as possible to that price agreement). If the agency did not rely on the bad data, the contractor can use that as a defense against a price cut. But the contractor cannot avoid a price cut just because it was the only source, had more bargaining power, the contract covered only a total cost, or the contractor failed to give the required certificate. A contractor may claim an offset against the price reduction if it certifies and proves the missing data existed before the price was agreed and were not submitted. No offset is allowed if the contractor knowingly lied in its certification or if the government shows the missing data would not have increased the price by the offset amount.