Supplying Principles and Practices > Contract Clauses > Clause B-1 Definitions (March 2006) > Clause 1-1 Privacy Protection (July 2007) > Clause 5-1 Price Reduction for Defective Cost or Pricing Data (March 2006)

Clause 5-1 Price Reduction for Defective Cost or Pricing Data
(March 2006)

a. If any price, including profit or fee, negotiated in connection with this contract, or modification to this contract, or any cost reimbursable under this contract, was increased by any significant amount because:

(1) The supplier or subcontractor furnished cost or pricing data that were not complete, accurate, and current as of the date of the final agreement on price;

(2) A subcontractor or prospective subcontractor furnished the supplier cost or pricing data that were not complete, accurate, and current as of the date of final agreement on price; or

(3) Any of these parties furnished data of any description that were not accurate - then the price or cost will be reduced accordingly and the contract will be modified to reflect the reduction.

b. Any reduction in the contract price under paragraph a above due to defective data from a prospective subcontractor that was not awarded the subcontract will be limited to the amount, plus applicable overhead and profit markup, by which the actual subcontract, or the actual cost to the supplier if there was no subcontract, was less than the prospective subcontract cost estimate submitted by the supplier (provided that the actual subcontract price was not itself affected by defective cost or pricing data).

Clause 5-2 Subcontractor Cost or Pricing Data (March 2006)

a. Before awarding any subcontract or pricing any subcontract modification, the supplier must require the subcontractor to submit cost or pricing data whenever cost or pricing data are required by the Conduct Price/Cost Analysis topic of the Evaluate Proposals task of Process Sep 2: Evaluate Sources, of the Postal Service Supplying Practices.

b. If the subcontractor is required to submit cost or pricing data under paragraph a above, then the supplier must insert the substance of this clause, including this paragraph b, in the subcontract.

Clause 5-3 Predetermined Indirect Cost Rates (March 2006)

a. Notwithstanding the Allowable Cost and Payment clause of this contract, allowable indirect costs under this contract will be determined by applying predetermined indirect cost rates established in accordance with Postal Service Supplying Practices.

b. Predetermined rate agreements must be incorporated into the contract Schedule and must specify:

(1) The predetermined indirect cost rates;

(2) The bases to which the rates apply;

(3) The fiscal year (or other period) for which the rates apply; and

(4) The specific terms treated as direct costs or any changes in the items previously treated as direct costs.

c. The predetermined indirect cost rate agreement may not change any monetary ceiling, contract obligation, or specific cost allowance or disallowance provided for in this contract.

d. Allowable indirect costs for the period from the beginning of performance until the end of the supplier's fiscal year must be obtained using the predetermined indirect cost rates and the bases shown in the Schedule.