Friday, June 2, 2017

Contractors Unwittingly Subject to TINA

Suppose that a prospective contractor submits a proposal that falls under the threshold requiring certified cost or pricing data (currently $750,000) but subsequent to submitting the proposal, the Government decides to add additional quantities that causes the resultant contract to exceed that threshold. Is that contractor required to certify its cost or pricing data?

The short answer is 'yes'. FAR 15.403 (and 10 USC 2306a, the Truth in Negotiations Act or TINA) applies to the dollar value of a contract (or subcontract). The eventual value of the contract action, not the original proposed value, is determinative.

Contractors need to be aware of this. Even if the Government does not require them to sign a certificate of current cost or pricing data, the requirement still applies (see Christian Doctrine and Is Your Contract Subject to a TINA Audit), Some contractors have unwittingly signed up for something they didn't plan for.

There may be ways around this requirement. If the Government negotiates a contract based on the original proposal and subsequently negotiates a modification to add the additional quantities, and neither the proposal nor the modification rise to the threshold level, neither the basic contract nor the modification(s) would be subject to TINA. Each pricing action stands on its own when it comes to the requirement for certified cost or pricing data.

Another situation that may surprise contractors is modifications of contracts that did not require certified cost or pricing data because it was exempt (perhaps because it was based on adequate price competition). Certified cost or pricing data would still be required for any modification should the value of that modification exceed the $750,000 TINA threshold.

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