Category:Truth In Negotiations Act (TINA)

Public Law 87-653 (codified by 10 USC 2306a) was originally enacted in 1962 to place the Government on equal footing with the contractor. The law gives the Government informational parity with contractors and subcontractors during (sole source) price negotiations so Government avoids excessive prices

The History of the Regulation

FY86 Defense Authorization Act

Added requirement for interest on overpayments

Added “doubles” for knowing nondisclosures

FY87 Defense Authorization Act

Added Government’s non-reliance on cost or pricing data as legitimate defense to defective pricing

Added unacceptable defenses

Sole source or superior bargaining position

Contracting Officer should have known data were defective

Agreement was reach on total cost basis

Certificate was not submitted

Provided rules on offsets

FY88/89 Defense Authorization Act

Provided definition of cost or pricing data

TINA is a disclosure rule. It is not a rule that prohibits excessive or windfall profits, which is a common misconception. The rule is very simple, it requires a contractor to disclose current, complete and accurate data with which to place the government on an equal footing or level bargaining position. It gives the Government access to the same factual information that the contractor has. It allows Government negotiators to act as more informed buyers, facilitating equal negotiations. It avoids excessive contract costs that result from a contractor withholding relevant facts that affect price negotiations.

Excessive profits, or what we will call "additional" profits are perfectly acceptable, as long as they were events or facts, that were not known by the contractor during the proposal and negotiation phase.

TINA is a Disclosure Statue nothing more, nothing less.

TINA is only applicable when certified cost or pricing data is required. It does not apply to commercial procurement's or commercial procurement's (FAR 12).

If Defective Pricing has occurred or asserted, the Government is responsible for proving Defective Pricing.The Government must assert a claim.

The Government must prove 5 elements to prove Defective Pricing, which are:

1. Cost or Pricing Data, the data at issue is Cost or Pricing Data.

2. Reasonable Availability, The data was reasonably available to the contractor prior to the agreement on price. The contractor knew or should have known that there was available data which would have affected price negotiations.

3. Non-Disclosure, and No Government Knowledge. The contractor failed to submit current, complete and accurate data, and lacked knowledge that the data was not current, complete, and accurate.

4. Government Reliance. The Government detrimentally relied on the defective cost or pricing data. Whenever the Government requires submission of cost or pricing data, the regulations mandate that the Government perform cost analysis^[1]. If the Government or Prime Contractor fails to review the cost or pricing data, any subsequent defective pricing may fail due to lack of reliance.

5. Causation. The Government's reliance on the defective cost or pricing data caused an increase in the contract price.

If the Government is able to prove these 5 elements, it's claim may still fail due to offsets.

References

1. ↑ 1. FAR 15.404-1(a)(3). "Cost Analysis shall be used to evaluate the reasonableness of individual cost estimates when certified cost or pricing data are required." In other words, there is a duty for the Government, or Prime Contractor to review the cost or pricing data.