Contracting with the federal government isn't exactly a walk in the park. If you've ever stared at a massive Request for Proposal (RFP) and felt your soul slowly leaving your body, you aren't alone. One specific section usually causes more headaches than almost anything else: FAR Table 15-2.
It sounds like a boring spreadsheet. Honestly, it kind of is. But for any contractor trying to win a negotiated contract under FAR Part 15, this table is the "holy grail" of instructions. If you ignore it, the Contracting Officer (CO) won't even read your proposal. They’ll just kick it back for being "non-compliant."
No second chances. No "oops, let me fix that." Just a rejection letter.
What is FAR Table 15-2 anyway?
Technically, it's found in the Federal Acquisition Regulation (FAR) 15.408. The formal name is "Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data are Required."
That’s a mouthful.
Basically, when the government wants to buy something and there isn't enough competition to let the "market" decide the price, they need to see your math. They need to know exactly how much you're paying your employees, what your rent costs, and how much profit you’re tacking on top. FAR Table 15-2 is the checklist that tells you how to present that data so the government auditors—usually the DCAA (Defense Contract Audit Agency)—can verify it.
The "Checklist" Mentality that Fails
Most people think of this as a suggestion. It really isn't. When the FAR says "the contractor shall," it means "do this or go home."
I’ve seen billion-dollar defense firms get their hands slapped because they tried to use their internal accounting format instead of following the Table 15-2 structure. The government doesn't care if your internal software produces beautiful reports. If it doesn't match the table’s requirements for labor, overhead, and G&A (General and Administrative) expenses, it’s useless to them.
Breaking Down the Big Three: Labor, Materials, and Indirects
You have to show the "who, what, where, and why" for every penny.
Let's talk about Labor. You can't just say, "It’s going to cost $500,000 for engineering." You have to break it down by category. How many hours for a Senior Engineer? What’s their hourly rate? Is that based on their actual salary or a labor survey? If you’re using "escalation factors" (planning for raises over a 5-year contract), you have to justify those percentages.
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Then there are Materials. FAR Table 15-2 requires a "Consolidated Bill of Materials" (CBOM). You need to list every part, the quantity, the unit price, and—this is the part everyone misses—the source of that price. Did you get a quote? Is it a historical price? You have to prove it.
Indirect Costs are the real nightmare. This is your overhead. The government wants to see your "pool" and your "base."
- The Pool: The total cost of things like rent, utilities, and HR.
- The Base: The direct labor or total costs you're applying that overhead to.
If your math doesn't track back to your last two years of audited financial statements, the DCAA is going to have a field day with your proposal.
The "Adequacy" Trap
There is a specific document called the Pre-award Survey of Prospective Contractor Accounting System Checklist (SF 1408). While Table 15-2 tells you how to format the proposal, the SF 1408 checks if your accounting system can even handle the data.
If your proposal follows Table 15-2 but your accounting software is basically a glorified Excel sheet, you're going to fail the audit. The two go hand-in-hand. You need to be able to segregate "allowable" costs from "unallowable" costs.
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What's unallowable?
- Alcohol. (Yes, really.)
- Lobbying.
- Certain advertising costs.
- Entertainment.
If your FAR Table 15-2 submission includes the pizza party you threw last Friday as part of your overhead pool, you're in trouble.
Why Certification Matters
The table specifically applies when Certified Cost or Pricing Data is required. This is a big deal. Under the Truth in Negotiations Act (TINA), you are legally certifying that your data is "accurate, complete, and current."
If you win the contract and the government later finds out you had a lower quote from a supplier that you didn't disclose in your Table 15-2 submission, they can claw back the money. It's called "Defective Pricing." It can lead to massive fines or even debarment (being banned from government work).
Real-World Nuance: The TINA Threshold
Not every contract needs a Table 15-2. Usually, you only need this level of detail if the contract value is over $2 million (this threshold changes occasionally, so always check the latest FAR updates).
Also, if you're selling something "commercial"—like laptops or standard office chairs—you might get an exemption. The government figures if everyone else is paying $1,000 for that laptop, they shouldn't need to see your electricity bill to justify the price.
But if you’re building a custom widget for a satellite? Yeah, get ready to spend weeks on your Table 15-2.
Common Mistakes That Kill Proposals
I've talked to plenty of COs who say the same thing: "I want to give them the work, but I can't find the data."
- No Indexing: Table 15-2 requires a detailed index of all cost data. If the auditor has to hunt for your fringe benefit rate calculation, they get cranky.
- Inter-organizational Transfers: If you’re buying parts from a "sister company," you can't charge the government a profit on that transfer unless certain strict conditions are met. Most people try to hide a little extra margin here. Don't.
- Outdated Data: If you got a quote in 2024 for a proposal you’re submitting in 2026, that’s not "current." You need fresh numbers.
How to Get It Right
Start with the Index of Material. Create a roadmap that tells the auditor exactly where every piece of supporting documentation lives.
Use a Compliance Matrix. Literally take every requirement in FAR 15.408, Table 15-2, and map it to a page number in your proposal. If the table asks for "historical cost experience," and you put it on page 42, write that down. It makes the auditor's life easy. And a happy auditor is a fast auditor.
Actionable Steps for Your Next Proposal
If you're staring down a deadline, here is how you handle the "Table 15-2" monster without losing your mind.
- Download a Template: Don't reinvent the wheel. Many procurement technical assistance centers (PTACs) offer templates that are pre-formatted to Table 15-2 standards.
- Separate Your "Unallowables" Now: Don't wait until the proposal is due. Run a report in your accounting system to scrub out any costs that FAR Part 31 says are a no-go.
- Gather Your "Basis of Estimates" (BOEs): Every number needs a story. "We need 100 hours because the last time we did this for the Navy in 2022, it took 95 hours, and this version is 5% more complex." That’s a BOE. Write them early.
- Check Your Thresholds: Verify if you actually need "Certified Cost or Pricing Data." If the CO hasn't explicitly asked for it, or if there is "adequate price competition," you might be able to submit "Data Other Than Certified Cost or Pricing Data," which is much less painful.
- Conduct a "Red Team" Review: Have someone who didn't write the proposal look at it specifically for Table 15-2 compliance. Give them a highlighter and the FAR text. If they can't find a required element in 30 seconds, fix it.
Consistency is everything. If your summary page says the total cost is $1,200,500, but the detailed labor breakdown adds up to $1,200,498, the government will flag it. It seems petty, but in the world of federal oversight, math matters.
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The goal isn't just to be right; it's to be verifiable. If a stranger can't look at your Table 15-2 and reconstruct your entire price from scratch using only your notes, you aren't done yet.