Is This the Death of Cost Analysis?

All of us value reminders of important tasks.  We get reminders to pick up the kids from soccer, take out the garbage, or pay the electric bill.  As a Nontraditional Defense Contractor (NDC), however, the Defense Pricing and Contracting (DPC) “reminder” to Contracting Officers on May 5, 2024 (download it below), definitely drew our attention.  It appears to state that unless a vendor is subject to full CAS, they are exempt from Certified Cost or Pricing Data!

What is a Nontraditional Defense Contractor (NDC) and why should I care?  I’m glad you asked.

As defined in 10 USC 3014, the term “nontraditional defense contractor”, with respect to a procurement or with respect to a transaction authorized under section 4021(a) or 4022 of this title, means an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation of sources by the Department of Defense for the procurement or transaction, any contract or subcontract for the Department of Defense that is subject to full coverage under the cost accounting standards (CAS) prescribed pursuant to section 1502 of title 41 and the regulations implementing such section.

Why is being a NDC so important when it comes to Certified Cost or Pricing Data (CCoPD) and Commerciality?  Another excellent inquiry! 

DPC’s May 5, 2024, memo reminds Contractors Officers that, when DFARS 252.215-7010, Requirements for Certified Cost or Pricing Data or Pricing Data Other than Certified Cost or Pricing Data is included in a solicitation, “…contractors may make an NDC determination about their suppliers and subcontractors, so long as the suppliers and subcontractors meet the definition of an NDC…” (emphasis added).  This is a (significant!) shift from prior guidance that suggested only Contracting Officers were able to make an NDC determination.

The reason it’s so significant is that DFARS 252.215-7010 allows an offeror to submit a written request stating it satisfies one of the exceptions in lieu of submitting certified cost or pricing data.  You’re probably already familiar with the typical exceptions of “competition” and “commercial items or services.”  In these cases, certified cost or pricing data is not required.

This new memo, under DFARS 252.215-7010(b)(1)(ii)(E), allows an exception to certified cost or pricing data to be made by the supplier/subcontractor just by virtue of status as an NDC. This allows the procurement to be treated as commercial, which means, in the case of procurements over the current CCoPD threshold of $2M, certified cost or pricing data is not required.

Is this really what was intended?  How do I use it?

Whether the DPC realized or intended to eliminate CCoPD requirements for contractors not subject to full CAS remains to be seen.  We expect to see additional guidance and clarification (particularly when the GAO gets wind of it!)  For now, though, we are recommending that our clients utilize the DPC’s memo to consider taking an exception to Certified Cost or Pricing Data.  This includes not only looking at vendors that are not subject to full CAS coverage, but also the Prime itself, many of which fall into the same category.

There are a few things to bear in mind:

1. First check that DFARS 252.215-7010 has been flowed down.
2. To use the NDC exception, all you must do is include a declaration in your proposal attesting to your NDC status. You do not need to make a commercial product or service assertion or determination.
3. As a follow-on to #2 above, unlike a commercial determination, this exception applies only to the procurement action, not the product or service itself. The declaration statement of NDC status must therefore be included in each procurement action therafter.
4. Expect to see further clarification down the road. We will provide updates as they occur here and, on our website, https://SpendLogic.com.

See for yourself!

Download a copy of DPC’s May 5, 2024, Memo.

As with any changes in the FAR and DFARs, SpendLogic is always up to date with the latest requirements.  Our Documentation Folder module will help your buyers and subcontract administrators recognize and react to this exception.  Let us show you how by scheduling a free, no-obligation demo.