2.  Information Necessary To Make a Determination of Fair and Reasonable Prices

Comment: According to the respondent, under current defense procurement arrangements, Canada assumes the cost of investigating and verifying whether the prices on a procurement contract and its subsequent management are fair and reasonable. The respondent expressed concern over significant costs associated with investigation and verification of price reasonableness for companies and Government, so that duplication should be avoided. Nevertheless, the respondent acknowledged that DoD is ultimately responsible for making a final decision regarding the reasonableness of the prices it pays and that there may be some cases (such as sole source fixed-price contracts over $500 million and sole source cost-reimbursement contracts that exceed the simplified acquisition threshold) in which additional information may be needed. The respondent suggested modification to the DFARS rule to emphasize that the DoD contracting officer should not request more information than is necessary to determine that the price is fair and reasonable.

Response: The principle that the contracting officer should not request more data than is necessary to determine that the price is fair and reasonable is stated in FAR 15.402(a)(3) and applies to all DoD requests for cost or pricing data. This DFARS rule reiterates at 225.870-4(c)(2), and in paragraph (b)(iii) of both the new provision at 252.215-7003 and the new clause at 252.215-7004, that the contracting officer shall only require submission of data other than certified cost or pricing data to the extent necessary to determine a fair and reasonable price.

To avoid unnecessary duplication of effort, the provision and clause both provide that the Canadian Commercial Corporation shall provide to the contracting officer the analysis provided to the Canadian Commercial Corporation by Public Works and Government Services Canada (comparable to the analysis required at FAR 15.404-1) as well as profit rate or fee.