The Transparency in Contract Pricing Act of 2025: Why It Matters for Federal Contractors

The Transparency in Contract Pricing Act of 2025 proposes a targeted but consequential shift in how the Department of Defense monitors price growth on sole-source sustainment procurements. Framed by recent oversight findings that DoD has paid “unfair and unreasonable” prices for a notable share of spare parts, the bill’s central thesis is straightforward: contracting officers need earlier, clearer, and mandatory notice of price spikes in order to intervene before overpayment becomes entrenched. The one-pager summary credits the work of the GAO, the DoD Inspector General, and investigative journalism in surfacing startling markups, including a 7,943 percent increase for a lavatory soap dispenser on an Air Force program, and it channels those findings into an ex ante disclosure regime that seeks to prevent similar outcomes.

At its core, the proposal would require contractors on covered contracts to notify the government within 30 days of becoming aware of a “covered price increase.” That term is defined with three bright-line tests: a 25 percent rise over the price in the accepted bid, a 25 percent rise over the price paid in the prior calendar year, or a 50 percent rise over any price the government has paid for the item within the previous five years. Coverage is further narrowed to sole-source awards, where competitive tension and public price discovery are absent, and the Defense Contract Audit Agency would be tasked with reporting noncompliance and related audit activity into the Federal Awardee Performance and Integrity Information System (FAPIIS) through SAM.gov. For contractors, these thresholds and the 30-day clock convert what today may be ad hoc discussions into a formal obligation with reputational visibility when missed.

The immediate significance for federal contractors lies in the operationalization of price governance. First, the bill would compel sustained, transaction-level monitoring of pricing across the life of a sole-source sustainment contract—particularly where supply chains are volatile and catalog items are repriced frequently. Compliance cannot be an annual true-up; contractors would need controls that detect qualifying variance triggers promptly, align part numbers and configurations to historical baselines, and document cost drivers in a contemporaneous file that a contracting officer can test. ERP alerts, supplier-price substantiation, market indices, and escalation formulas would become not only good practice but necessary risk-mitigation tools to avoid both overpayment claims and adverse FAPIIS entries.

Second, the proposal shifts negotiations forward in time. Because notice is keyed to threshold crossing rather than to an end-of-period audit, contractors should expect earlier engagement from contracting officers regarding the basis of price, cost realism, and value analysis. In practice, this favors clear price-formation narratives: transparent bills of material, discrete labor and overhead assumptions, and traceable links to commercial-market comparables where available. It also elevates the role of Economic Price Adjustment clauses and commodity-index references, which can provide a principled framework for acknowledging legitimate inflationary pressure while minimizing the need for repeated bespoke justifications.

Third, the enforcement mechanism matters. Public reporting by DCAA of noncompliance and related audit results into FAPIIS increases the stakes beyond a single program. FAPIIS entries are visible to source-selection officials and can influence responsibility determinations, past-performance assessments, and even award-fee judgments. For large suppliers with diversified defense portfolios, a failure to notify on one sole-source sustainment line item could echo into competitive procurements elsewhere, altering the calculus on whether to over-rely on opaque vendor quotes versus investing in cost and data transparency.

Finally, the bill’s narrow scope—sole-source sustainment—belies broader lessons for the industrial base. Even competitive contracts can face post-award modifications, obsolescence, and vendor-driven repricing. A governance model that tracks price drift against accepted baselines, explains deltas without hand-waving, and produces timely, audit-ready documentation will travel well beyond sustainment and reduce dispute risk across the contracting portfolio. Contractors that pre-build these controls will be better positioned if Congress enacts similar thresholds in other categories or if agencies adopt parallel guidance in acquisition supplements.

Disclaimer: This summary is provided for informational purposes only, reflects the attached one-pager at the time of writing, and does not constitute legal advice. Contractors should consult counsel about how any enacted law or implementing guidance would apply to specific contracts and pricing practices.