R131-4-415. Rules and Regulations to Determine Allowable Incurred Costs - Required Information - Auditing of Books

(1) Applicability. Cost or pricing data shall be required when negotiating contracts and adjustments to contracts if:

(a) adequate price competition is not obtained as provided in this rule; and

(b) the amounts listed in Subsection (3) below are exceeded.

(2) Adequate Price Competition. Adequate price competition for portions of, or entire contracts, occurs when:

(a) a contract is awarded based on competitive sealed bidding;

(b) a contractor is selected from competitive sealed proposals and cost was one of the selection criteria;

(c) a portion of a contract is awarded for a lump sum amount or a fixed percentage of other costs, and the cost of the lump sum or percentage amount is one of the selection criteria, and when contractor selection is made from competitive sealed proposals;

(d) a portion of a contract is awarded for which adequate price competition that was not otherwise obtained when competitive bids were obtained and documented by either the board, executive director, or the contractor;

(e) costs are based upon established catalogue prices or market prices;

(f) costs are set by law or rule; or

(g) the executive director makes a written determination that other circumstances have resulted in adequate price competition.

(3) Amounts. R131-4-415 does not apply to:

(a) Contracts or portions of contracts costing less than $200,000, and

(b) Change orders or other price adjustments of less than $50,000.

(4) Other Applications: R131-4-415 may apply to any contract or price adjustment when it is found by the executive director to be in the best interest of the state and any contract may require cost or pricing data and certifications by the contractor as to the accuracy of such cost or pricing data.

(5) Submission of Cost or Pricing Data and Certification. When cost or pricing data is required, the data shall be submitted prior to beginning price negotiation. The offeror or contractor shall keep the data current throughout the negotiations and certify as soon as practicable after agreement is reached on price that the cost or pricing data submitted are accurate, complete, and current as of a mutually determined date.

(6) Refusal to Submit. If the offeror fails to submit the required data, the executive director may disqualify the noncomplying offeror, to defer award pending further investigation, or to enter into the contract. If the matter involves a price adjustment, the executive director may further investigate the price adjustment, disallow any price adjustment, or set the amount of the price adjustment.

(7) Defective Cost or Pricing Data. If certified cost or pricing data are subsequently found to have been inaccurate, incomplete, or noncurrent as of the date stated in the certificate, the Board shall be entitled to an adjustment of the contract price to exclude any significant sum, including profit or fee, to the extent the contract sum was increased because of the defective data. It shall be assumed that overstated cost or pricing data resulted in an increase of the contract price in the amount of the defect plus any related overhead and profit or fee; therefore, unless documentation can show that the defective data were not used or relied upon, the price may be reduced by a requisite amount. In establishing that defective data caused an increase in the contract price, the executive director shall not be required to reconstruct the negotiation or speculate on the mental attitudes of the negotiating parties if correct data had been submitted at the time of agreement on price.

(8) Audit. The state, board or executive director may, in its discretion, and at reasonable times and places, audit or cause to be audited the books and records of any person who has submitted cost or pricing data pursuing to this rule or any contractor, prospective contractor, subcontractor, or prospective subcontractor which are related to the cost or pricing data submitted.

(9) Retention of Books and Records. Any contractor who receives a contract or price adjustment for which cost or pricing data is required shall maintain all books and records that relate to the cost or pricing data for three years following the end of the fiscal year in which final payment is made under the prime contract and by the subcontractor for three years following the end of the fiscal year in which final payment is made under the subcontract.