Friday, June 12, 2015

TINA Threshold May Raise to $5 Million (from $750 thousand)

We've been discussing some of the contracting provisions included in the House and Senate versions of the fiscal year 2016 National Defense Authorization Act (NDAA). The House and Senate have different versions and at some point, the two Bodies will have to come together and compromise on a final bill to send the President. So, at this point, there's no guarantee that some of these provisions will survive the compromise committee. But, it's interesting nonetheless to see which legislative proposals have made it through to the final versions of the respective House and Senate bills.

One provision that will have significant impact on contractors and the contracting community is a proposal to raise the threshold for cost or pricing data from $750 thousand to $5 million. Now that's a big jump. Here's what the Senate Armed Services Committee reported concerning the increased threshold:
The committee recommends a provision that would amend the Truth in Negotiations Act (Public Law 87–653; 10 U.S.C. section 2306a) to raise the threshold for the requirement to provide certified cost or pricing data in non-price competitive procurements on non-commercial items from the current $750,000 to $5.0 million. For non-price competitive procurements valued at less than the new threshold of $5.0 million but more than the current threshold of $750,000, the Department of Defense (DOD) would be required to establish a riskbased contracting approach, under which certified cost or pricing data would be required for a risk-based sample of contracts, to ensure that DOD is getting fair and reasonable prices for such contracts. 
The committee believes that a 100 percent review of certified cost or pricing data on thousands of small contracts is not the best use of DOD’s limited acquisition and auditing resources, particularly for those contracts that have been awarded based on a technical competition. By enabling DOD to adopt a risk-based contracting approach, this provision should free up significant resources to be applied in areas where they are likely to achieve a better return.
In addition, the provision will enable non-traditional contractors to participate in innovative DOD research projects valued at less than $5.0 million without triggering government-unique contracting procedures, enhancing DOD’s access to cutting-edge technologies developed by companies that might otherwise be unwilling to do business with the government. Limitation of the use of reverse auctions
We're not at all sure what the committee has in mind in proposing a "risk-based contracting approach under which certified cost or pricing data would be required for a risk-based sample of contracts" because they don't define risk factors.

We guess this is one of those cases where we have to wait until the law passes to learn what it all means.

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