2018 NDAA - Increase in TINA Threshold

Earlier this week, the Senate passed its version of the NDAA (National Defense Authorization Act) for fiscal year 2018. The House passed its version earlier this summer. Now the differences will need to be worked out in a joint compromise committee before it is forwarded to the President.

Both bills have provisions that increase the threshold for the requirement to furnish certified cost or pricing data. Currently, the threshold sits at $750 thousand. Under the House version of the NDAA, the threshold will rise to $2.5 million (Section 803). Under the Senate version, the threshold will rise to $1 million.

We have no idea why the need to raise the TINA threshold as it is already adjusted for inflation every five years. The Senate committee report contains the following explanation that the provisions is intended to save money.

The committee recommends a provision that would amend Section 2306a of title 10, United States Code, to increase the threshold for certified cost or pricing data and truth in negotiation requirements to $1.0 million., Section 824 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114-328) sets goals for the Secretary of Defense to follow in reducing reimbursable costs pertaining to bid and proposal submissions. This provision would aid the Department of Defense in realizing that goal.

The logic seems to be that if contractors are not required to submit certified cost or pricing data, the cost of preparing and submitting proposals will be reduced. Perhaps that's true. Without the requirement to certify that cost or pricing data is current, complete, and accurate, contractors can be less diligent in preparing their proposals. But, does the Government really want to encourage contractors to be less diligent in their estimating practices?