Summary
DoW’s cost and pricing guidance gives contracting officers more room to request actual costs when needed to support a price. Learn what changed, what didn’t, and how connected pricing, execution and accounting data helps teams respond.
Why It Matters: When information is scattered across teams and systems, responding can become a time-consuming reconciliation exercise instead of a traceable explanation of the price.
Key Takeaways:
- Requests are conditional, not blanket: The Oct. 1 guidance says contracting officers may request prime- and supplier-level actual costs when needed to determine a fair and reasonable price, generally using information contractors already maintain.
- Connected data strengthens readiness: Linking estimating, accounting and execution information helps teams find, trust and defend the data behind a price.
- Deltek supports each stage of the lifecycle: ProPricer, Costpoint, TIP Technologies and PPM can help connect estimating, actual costs and execution context.
Picture it: 3:47 on a Friday afternoon, and a new email pops up.
A contracting officer needs more support for a price. Actual costs. More detail behind the numbers. Maybe information that reaches into the supply chain.
You know the information exists. The harder question is where. Pricing has the estimate and assumptions. Finance has the actuals. Operations has labor and execution data. Program teams have schedule and performance information. Procurement has supplier information.
Now everyone is asking the same thing: How quickly can we pull this together, verify it and stand behind it?
That question has taken on new importance after a series of Department of War (DoW) actions since August. But the story isn't simply that DoW wants more data. Some requirements are changing, long-standing pricing rules still apply, and others are still taking shape.
What DoW's Cost and Pricing Memos Actually Changed
The August 18 memo put a new spotlight on actual-cost transparency across the supply chain, saying contracting officers must have access to actual cost information at the prime and supplier levels for negotiations of $10 million or more, excluding commercial off-the-shelf (COTS) items. We covered the initial implications in our earlier article, The Pentagon Wants In.
Since then, the picture has evolved.
What changed. The October 1 implementation guidance puts the August direction into practice with a more conditional approach. Contracting officers may request actual cost information at the prime and supplier levels when needed to determine a fair and reasonable price. Where certified data isn't required and competition, market pricing or sales data can't establish price reasonableness, actual cost is one type of information that may help support an "other than nominal" year-over-year price increase.
September's direction also points toward greater use of GAAP and narrower government-unique Cost Accounting Standards (CAS) requirements. Separately, the CAS Board's final rule raised the basic CAS threshold to $35 million and the full-coverage threshold to $100 million.
What stayed the same. The existing pricing hierarchy still applies. A request for cost information doesn't by itself create CAS coverage, require a cost-reimbursement contract or create access rights beyond those already provided by the contract. Contractors should generally be able to respond using information in the form they already maintain. No new accounting system or special data format is required, and ERP data should be accepted where practicable.
What is still evolving. Risk-based audit changes, contractor business-system reforms, profit and forward-pricing policy, and automated data access remain in various stages of implementation or rulemaking. DoW plans to study secure push-only access to cost data, while any API initiative would require rulemaking and participation would be voluntary.
The October memo also sets no dollar threshold for these requests, doesn't say how often contracting officers will make them and doesn't prescribe a particular report or system.
Why Disconnected Data is the Bigger Risk
For many contractors, the challenge isn't whether the information exists. It's whether it connects.
Pricing has one view, accounting another, while manufacturing, program and procurement teams have their own. Spreadsheets often become the bridge.
When a request arrives, three questions matter: Can you find it? Can you trust it? Can you defend it?
And there is a fourth: How much time and disruption does it take to get there?
That's where connected estimating, execution and accounting information can make a meaningful difference.
How Deltek Connects Pricing, Execution and Actual Costs
Connected Deltek solutions can support each stage of that lifecycle.
Build a Price You Can Explain
Cost and pricing transparency starts before award. When competition or market information isn't enough to establish price reasonableness, the basis behind the proposed price becomes especially important.
Deltek ProPricer gives pricing teams a structured environment for building estimates and maintaining rates, labor and material inputs, basis-of-estimate information, assumptions and the rationale behind the proposed price.
If an assumption, rate or cost element is questioned during negotiations, the team can go back to the basis behind the estimate rather than reconstructing the proposal logic after the fact. That can help reduce the effort required to support a price and provide a more consistent foundation for future estimates.
Trace Actual Costs Back to the Books
After award, the question shifts from what you thought the work would cost to what it actually cost. That's particularly relevant when the October guidance says requests should generally rely on information contractors already maintain.
Deltek Costpoint provides the accounting foundation for labor and non-labor direct costs, indirect costs, supplier invoices and payments, revenue and project profitability. For example, the Project Status Report provides project-level visibility, while Project Ledger Detail and drill-through can help teams move from a summarized amount to the accounting activity supporting it. Approvals and audit history add traceability into what changed and when, which helps you trust the number as well as find it.
Historical actuals can also help explain whether changes were driven by labor, material, indirect rates or how the work was ultimately performed.
For contractors, that means a number being questioned can be connected to its underlying cost drivers and ultimately back to the financial record. That traceability can help reduce the effort involved in reconciling support across separate sources, strengthen audit readiness and give teams greater confidence that the explanation they provide aligns with their books.
Supplier-level transparency also depends on what cost information the prime can obtain under its subcontract terms. Knowing where that visibility begins and ends before a request arrives is another important part of readiness.
None of these Deltek reports or capabilities is prescribed by the DoW memos. They are examples of information contractors may already maintain to support cost, profitability and audit-related questions.
Understand What Happened During Execution
The accounting record tells you where costs landed. It doesn't always explain what happened along the way.
For manufacturers, Deltek TIP Technologies contributes shop-floor execution and labor information, with labor flowing into Costpoint when appropriately configured. Deltek PPM adds planning, schedule, risk, estimate-at-completion and earned-value information where those disciplines apply.
That gives teams additional context between the original estimate and the accounting outcome. Instead of learning only that actual performance differed from the plan, teams have more information to understand where differences emerged, which can help inform program decisions and future estimating.
Use Actual Experience to Strengthen the Next Bid
The lifecycle shouldn't end when actual costs hit the books. What the business learns during execution should help inform how it approaches the next opportunity. And with Deltek, those pieces can connect across the lifecycle when configured.
Together, that information can help teams see where estimate and actual diverged, what happened in between and what it should mean for the next bid.
Estimate → Execute → Actuals → Understand → Estimate again.
Government transparency may be the trigger. The business opportunity is using what you already know to make better-informed decisions the next time you price the work.
Five Questions to Test Your Readiness
You don't need to wait for every DoW reform to be finalized to ask:
- Can you trace a proposed price back to its rates, assumptions and basis of estimate?
- Can you retrieve actual costs and connect them to your accounting records?
- Can you explain the gap between estimate and actual, and use that experience to inform the next bid?
- Do you know what supplier cost information is available and what subcontract terms allow you to obtain and share?
- If supporting cost information is requested, can you produce it from the systems you already use without starting a reconciliation exercise?
If several answers begin with "we'd have to pull that together," the gap may not be the newest memo. It may be the connections between the information you already have.
DoW's approach to cost and pricing will continue to evolve. But contractors can control whether their pricing, execution and accounting data tells one consistent, traceable story.
That's worth working out before the next Friday-afternoon email.
Webinar
Cost and Pricing Transparency, Preparing for What's Next
The TINA threshold and DoW pricing guidance are reshaping what contractors need to support a price. Join us on December 10 to learn how to strengthen audit readiness, improve pricing transparency and see how Deltek ProPricer supports BOE traceability and defensible pricing.
