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FAR Clauses Relating to Price Proposals Part 1


All price proposals are reviewed and determined whether they are adequate for possible contract award. The criteria for determining price proposal adequacy include a number of FAR clauses. Each referenced FAR clause is discussed below.

FAR 15.408, Table 15-2 I.A

This clause specifies the information that must be included on the cover page of a price proposal. Information required includes:
  • contract/solicitation number,
  • company name and address,
  • company point of contact and contact information,
  • contract administration office (DCMA),
  • type of contract action such as new contract, change order price change
  • proposed cost, fee and total proposed price
  • what government property will be required , if any
  • Cost Accounting Standards (CAS) declaration, if required
  • statement authorizing government to review company records as part of the price proposal evaluation
  • date price proposal is submitted
  • name, title and signature of authorized person representing the company

FAR 15.408 Table 15-2 I. A. (8)

Part 8 of this clause requires you to include the statement below on the cover page of your price proposal.

“This proposal reflects our estimates and/or actual costs as of this date and conforms with the instructions in FAR 15.403-5(b)(1) and Table 15-2. By submitting this proposal, we grant the Contracting Officer and authorized representative(s) the right to examine, at any time before award, those records, which include books, documents, accounting procedures and practices, and other data, regardless of type and form or whether such supporting information is specifically referenced or included in the proposal as the basis for pricing, that will permit an adequate evaluation of the proposed price.”

FAR 15.408, Table 15-2. I. A. (7)

Item 7 requires you to list any government property that will be required for performance of the contract.

FAR 15.408, Table 15-2 I.B

This clause requires you to include an index to all certified pricing data included in the proposal.

FAR 15.408, Table 15-2 I.C

This FAR clause requires you to include certified pricing data in the proposal. It also requires you to include how costs were estimated, computations used to figure amounts and any contingency amounts included.

FAR 15.408, Table 15-2 I. D

Clause D says you must show pricing tied to contract line items and the total amount. The total amount needs to flow from the contract line item amounts. Supporting breakdowns of the costs must also be included.

FAR 15.408, Table 15-2 I. E

This clause requires you to include summary amounts for each cost element when there is more than one contract line item.

FAR 15.408, Table 15-2, I.F

Clause F says you must identify any costs incurred prior to proposal submission.

FAR 15.408, Table 15-2 I.G

G says for you to include forward pricing rates as approved by DCAA with the price proposal.

FAR 15.408, Table 15-2 II.A

Table 15-2 II explains the elements of the proposed cost that must be included in the price proposal. Part A covers materials and services. All proposed materials are to be shown with quantity, unit pricing and total pricing shown. You must solicit multiple bids from subcontractors to ensure there is adequate competition for the work and this pricing analysis is to be included in the proposal (FAR 15.408, Table 15-2, II. A. (1)). Certified pricing data is preferred from all subcontractors and must be included in the proposal if to be over $12.5 million (FAR 15.408, Table 15-2 II.A.(2)).

FAR 15.408, Table 15-2 II.B

Clause B explains the direct labor cost element. You are required to include a breakdown of direct labor costs including hours, rates and cost by labor category. The basis for all estimates is to be included in the price proposal. Direct labor costs are to be shown over the proposal period of performance.

FAR 15.408, Table 15-2 II.C

This clause covers the indirect costs element. The price proposal needs to include how indirect costs are computed, both the rates and the basis applied against. Rates are to be supported by showing the historical trend to show the rates are realistic for your company.

FAR 15.408, Table 15-2 II.D

D covers other costs that are not listed in the above categories. This would include costs such as travel, consultants, shipping and directly charged taxes. Explain all these costs including how the amounts have been included.

The relevant FAR clauses continue in Part 2.

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