11

The Truth in Negotiations The Truth in Negotiations ActAct

(TINA)(TINA)

20062006

Making a Comeback?Making a Comeback?

Janice MuskopfASC/PKF, x57121NCMA Hot Topics

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TINA TopicsTINA Topics

TINA – The LawTINA – The Law What & WhyWhat & Why ExceptionsExceptions HistoryHistory

Cost or Pricing DataCost or Pricing Data Adequate DisclosureAdequate Disclosure RelianceReliance Cut-Off DatesCut-Off Dates Certificate of Current Cost or Pricing DataCertificate of Current Cost or Pricing Data SweepSweep NegotiationsNegotiations 5 Points for Proving Defective Pricing5 Points for Proving Defective Pricing Sources of TINA InfoSources of TINA Info

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Why TINA?Why TINA?

Public Law 87-653 (codified by 10 Public Law 87-653 (codified by 10 USC 2306a) was originally enacted in USC 2306a) was originally enacted in 1962 to place the Government on 1962 to place the Government on equal footing with the contractorequal footing with the contractor Gives the Government informational Gives the Government informational

parity with contractors and parity with contractors and subcontractors during (sole source) subcontractors during (sole source) price negotiations so Government price negotiations so Government avoids excessive pricesavoids excessive pricesUltimate Goal = Fair and Reasonable Price

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TINA – What it DoesTINA – What it Does Defines requirements for obtaining cost or pricing dataDefines requirements for obtaining cost or pricing data

Requires certification that data are current, accurate, and Requires certification that data are current, accurate, and completecomplete

Delineates exceptions to the requirementDelineates exceptions to the requirement Addresses data submission for pricing of commercial items, Addresses data submission for pricing of commercial items,

below threshold contracts, and “other information”below threshold contracts, and “other information” Provides right of Government to examine contractor Provides right of Government to examine contractor

recordsrecords Defines cost or pricing dataDefines cost or pricing data Provides rules governing defective pricingProvides rules governing defective pricing

Downward Contract price adjustmentDownward Contract price adjustment Recovery of overpayments (cost & profit) & interest (as of Recovery of overpayments (cost & profit) & interest (as of

1985)1985)

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When Is Cost or Pricing Data When Is Cost or Pricing Data Required Per TINA?Required Per TINA?

Required for contract actions Required for contract actions >>$550k if $550k if one of the following exceptions does not one of the following exceptions does not applyapply Adequate price competitionAdequate price competition Price set by law or regulationPrice set by law or regulation TINA WaiverTINA Waiver Commercial ItemCommercial Item Modification to contract or subcontract for Modification to contract or subcontract for

commercial itemcommercial item

FAR 15.403-1(b)FAR 15.403-1(b)

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When Is Cost or Pricing DataWhen Is Cost or Pricing Data Required Per TINA? Required Per TINA?

TINA ApplicabilityTINA Applicability Contract actions include contracts, subcontracts, Contract actions include contracts, subcontracts,

and modificationsand modifications TINA applicability is not affected by contract typeTINA applicability is not affected by contract type For subcontracts, the $550k threshold applies to For subcontracts, the $550k threshold applies to

the submission of data from the sub to the primethe submission of data from the sub to the prime TINA exceptions are the same for subcontractsTINA exceptions are the same for subcontracts 15.404-3 requires analysis of subcontract prices by the 15.404-3 requires analysis of subcontract prices by the

prime and submission of the analysisprime and submission of the analysis 15.404-3 requires subcontract cost or pricing data to be 15.404-3 requires subcontract cost or pricing data to be

submitted to Gov't if subcontract exceeds 10% of submitted to Gov't if subcontract exceeds 10% of proposed prime price (& $550K) or $10M, whichever is proposed prime price (& $550K) or $10M, whichever is lower, unless the CO believes submission is lower, unless the CO believes submission is unnecessaryunnecessary

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Example: Example:

You issued a sole source undefinitized You issued a sole source undefinitized contractual action (UCA) subject to TINA on contractual action (UCA) subject to TINA on February 1 and the contractor immediately February 1 and the contractor immediately commenced work. The contractor submitted commenced work. The contractor submitted its cost proposal on March 15. The proposal its cost proposal on March 15. The proposal included a variety of labor categories. included a variety of labor categories. Proposed labor hours were based on Proposed labor hours were based on experience from similar programs. Its May 1experience from similar programs. Its May 1stst and you are preparing to negotiate. Should and you are preparing to negotiate. Should you expect to receive actual labor hours to you expect to receive actual labor hours to date? date?

Cost Proposals Subject to Cost Proposals Subject to CertificationCertification

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TINA Over Time- 80’sTINA Over Time- 80’s FY86 Defense Authorization ActFY86 Defense Authorization Act

Added requirement for interest on overpayments Added requirement for interest on overpayments Added “doubles” for knowing nondisclosures Added “doubles” for knowing nondisclosures

FY87 Defense Authorization Act FY87 Defense Authorization Act Added Government’s non-reliance on cost or pricing Added Government’s non-reliance on cost or pricing

data as legitimate defense to defective pricingdata as legitimate defense to defective pricing Added unacceptable defensesAdded unacceptable defenses

Sole source or superior bargaining positionSole source or superior bargaining position Contracting Officer should have known data were Contracting Officer should have known data were

defectivedefective Agreement was reach on total cost basisAgreement was reach on total cost basis Certificate was not submittedCertificate was not submitted

Provided rules on offsetsProvided rules on offsets FY88/89 Defense Authorization Act, Provided FY88/89 Defense Authorization Act, Provided

definition of cost or pricing datadefinition of cost or pricing dataStrengthened in the 80’s

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TINA Over Time – 90’sTINA Over Time – 90’s

1994, 1994, The DOD Regulatory Cost Premium: The DOD Regulatory Cost Premium: A Quantitative AssessmentA Quantitative Assessment

Conducted for DOD by Coopers & Lybrand and TASC.Conducted for DOD by Coopers & Lybrand and TASC. Identified average 18% premium paid by DOD for goods Identified average 18% premium paid by DOD for goods

and services due to regulatory and statutory cost driversand services due to regulatory and statutory cost drivers TINA was cited as #2 cost driverTINA was cited as #2 cost driver Study performed at 10 contractor sitesStudy performed at 10 contractor sites Costs were determined by asking managers to estimate Costs were determined by asking managers to estimate

impact of substituting best commercial practices for impact of substituting best commercial practices for DOD regulations and oversightDOD regulations and oversight

Study did not consider benefits resulting from DOD Study did not consider benefits resulting from DOD regulatory requirementsregulatory requirements

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TINA Over Time – 90’sTINA Over Time – 90’s 1994 Federal Acquisition Streamlining Act 1994 Federal Acquisition Streamlining Act

(FASA)/Clinger-Cohen Act(FASA)/Clinger-Cohen Act Created separate “commercial item” exceptionCreated separate “commercial item” exception Added prohibition on obtaining cost or pricing Added prohibition on obtaining cost or pricing

data when exception appliesdata when exception applies Added hierarchy for obtaining info (cost or Added hierarchy for obtaining info (cost or

pricing data least preferable)pricing data least preferable) Increase TINA threshold every 5 years & make it Increase TINA threshold every 5 years & make it

$500k for all agencies$500k for all agencies Changed approval level for TINA waivers from Changed approval level for TINA waivers from

head of agency to head of procuring head of agency to head of procuring (contracting) activity(contracting) activity

Added “other than cost or pricing data”Added “other than cost or pricing data”Weakened in the 90’s

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TINA Over Time – Since TINA Over Time – Since 20002000

2001, 2001, Contracting Officer Determinations of Price Contracting Officer Determinations of Price Reasonableness When Cost or Pricing Data Were Reasonableness When Cost or Pricing Data Were Not ObtainedNot Obtained (DOD-IG)(DOD-IG) CO’s lacked valid exceptions and failed to require data in CO’s lacked valid exceptions and failed to require data in

32% of contracting actions reviewed32% of contracting actions reviewed Inadequate documentation to support price Inadequate documentation to support price

reasonableness in 86% of actions reviewedreasonableness in 86% of actions reviewed CO’s did not challenge items categorized as commercial CO’s did not challenge items categorized as commercial

and accepted catalog prices/price lists without analysisand accepted catalog prices/price lists without analysis 2002, 2002, DOD Needs Better Guidance on Granting DOD Needs Better Guidance on Granting

Waivers for Certified Cost or Pricing DataWaivers for Certified Cost or Pricing Data (GAO (GAO Report)Report) Regarding type of data and analyses and outside Regarding type of data and analyses and outside

assistanceassistance Whether waivers should be granted in first placeWhether waivers should be granted in first place

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TINA Over Time – Since TINA Over Time – Since 20002000

FY03 Defense Authorization ActFY03 Defense Authorization Act Major emphasis on “Exceptional Case Major emphasis on “Exceptional Case

Exception”Exception” TINA Waivers: Section 817 directed the TINA Waivers: Section 817 directed the

HCA may only issue waivers upon a HCA may only issue waivers upon a determination that:determination that:

(i) the property or services being purchased by the (i) the property or services being purchased by the Government cannot be reasonably obtained without Government cannot be reasonably obtained without the grant of the waiver;the grant of the waiver;

(ii) the price can be determined reasonable without (ii) the price can be determined reasonable without submission of cost or pricing data; and submission of cost or pricing data; and

(iii) there are demonstrated benefits to granting the (iii) there are demonstrated benefits to granting the waiver.waiver.

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TINA Over Time – Since TINA Over Time – Since 20002000

FY03 Defense Authorization ActFY03 Defense Authorization Act (i) is a significant change to the previous (i) is a significant change to the previous

requirements for obtaining TINA waivers requirements for obtaining TINA waivers – in the past, waivers were essentially – in the past, waivers were essentially granted on the basis of (ii) and (iii)granted on the basis of (ii) and (iii)

Congressional Reporting Requirements Congressional Reporting Requirements for waivers over $15M (also includes for waivers over $15M (also includes commercial items over $15M)commercial items over $15M)

WHY?WHY?Legislative Background cites GAO/IG Reports, Legislative Background cites GAO/IG Reports,

DOD’s use of flexibility provided over time, DOD’s use of flexibility provided over time, emphasis on waiver being an exceptionemphasis on waiver being an exception

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TINA Over Time - Since TINA Over Time - Since 20002000

FY03 Defense Authorization ActFY03 Defense Authorization Act Impact – significant decrease in TINA Impact – significant decrease in TINA

waiverswaivers Industry ReactionIndustry Reaction

Acquisition Reform Working Group Acquisition Reform Working Group Legislative Package for Year 2004 Legislative Package for Year 2004 recommended repealing limitation on recommended repealing limitation on waiverswaivers

Acquisition Reform Working Group Acquisition Reform Working Group Legislative Package for 2005 recommended Legislative Package for 2005 recommended deletion of first criteria “the property or deletion of first criteria “the property or services cannot be reasonably be obtained…services cannot be reasonably be obtained…without the grant of the exception or without the grant of the exception or waiver” as it is not necessary for assuring waiver” as it is not necessary for assuring appropriate oversightappropriate oversight

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TINA Over Time - Since TINA Over Time - Since 20002000

FY05 Defense Authorization ActFY05 Defense Authorization Act TINA exception does not apply to noncommercial modifications of commercial items TINA exception does not apply to noncommercial modifications of commercial items

expected to cost >$500k or 5% of contract value (whichever is greater)expected to cost >$500k or 5% of contract value (whichever is greater) Pending change to increase TINA threshold to $600kPending change to increase TINA threshold to $600k April, 2005, Army & Air Force both announced plans to convert large $ non-April, 2005, Army & Air Force both announced plans to convert large $ non-

TINA compliant contracts to TINA compliant contractsTINA compliant contracts to TINA compliant contracts

Has the Pendulum Started to Swing Again?

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What Is Cost or Pricing Data?What Is Cost or Pricing Data?

Cost or pricing dataCost or pricing data (10 U.S.C. 2306a(h) (10 U.S.C. 2306a(h)(1) and 41 U.S.C. 254b) all (1) and 41 U.S.C. 254b) all factsfacts that, that, as of the date of price agreement, or, if as of the date of price agreement, or, if applicable, an earlier date agreed upon applicable, an earlier date agreed upon between the parties that is as close as between the parties that is as close as practicable to the date of agreement on practicable to the date of agreement on price, prudent buyers and sellers would price, prudent buyers and sellers would reasonably expect to affect price reasonably expect to affect price negotiations significantly. negotiations significantly.

FAR 2.101FAR 2.101

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Factual, not judgmental, are verifiableFactual, not judgmental, are verifiable Don’t indicate accuracy of judgment Don’t indicate accuracy of judgment

about future estimated costs, but do about future estimated costs, but do include data forming basis of judgmentinclude data forming basis of judgment

More than historical accounting data - More than historical accounting data - facts that can be reasonably expected facts that can be reasonably expected to contribute to the soundness of to contribute to the soundness of estimates of future costs & validity of estimates of future costs & validity of incurred costsincurred costs

What Is Cost or Pricing Data?What Is Cost or Pricing Data?

FAR 2.101FAR 2.101

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What Is Cost or Pricing Data?What Is Cost or Pricing Data?

Includes such factors asIncludes such factors as Vendor quotationsVendor quotations Nonrecurring costsNonrecurring costs Information on changes in production methods Information on changes in production methods

and in production or purchasing volumeand in production or purchasing volume Data supporting projections of business prospects Data supporting projections of business prospects

and objectives and related operations costsand objectives and related operations costs Unit-cost trends such as those associated with Unit-cost trends such as those associated with

labor efficiencylabor efficiency Make-or-buy decisionsMake-or-buy decisions Estimated resources to attain business goalsEstimated resources to attain business goals Information on management decisions that could Information on management decisions that could

have a significant bearing on costshave a significant bearing on costs

FAR 2.101FAR 2.101

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Are These Examples of Cost or Pricing Data?Are These Examples of Cost or Pricing Data? Actuals for Labor HoursActuals for Labor Hours

Incurred to date on current contractIncurred to date on current contract Predecessor contract historyPredecessor contract history

Purchase Order (PO) historyPurchase Order (PO) history Historical subcontract decrementsHistorical subcontract decrements Offer from prime contractor to Offer from prime contractor to

subcontractor during subcontract subcontractor during subcontract negotiationsnegotiations

Offer from subcontractor to prime Offer from subcontractor to prime contractor during subcontract negotiationscontractor during subcontract negotiations

What Is Cost or Pricing Data?What Is Cost or Pricing Data?

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What Is Cost or Pricing DataWhat Is Cost or Pricing Data? ? Government ObligationGovernment Obligation

When certified cost or pricing data are required, When certified cost or pricing data are required, Gov’t is also required to conduct cost analysis in Gov’t is also required to conduct cost analysis in order to evaluate the reasonableness of the cost order to evaluate the reasonableness of the cost elementselements

Contractor ObligationContractor Obligation FAR Clauses 52.215-20/21 instruct the contractor to FAR Clauses 52.215-20/21 instruct the contractor to

provide data in accordance with FAR Table 15-2 provide data in accordance with FAR Table 15-2 FAR Table 15-2 instructs the contractor that by FAR Table 15-2 instructs the contractor that by

submitting the proposal, they are granting the CO submitting the proposal, they are granting the CO the right to examine records that formed the basis the right to examine records that formed the basis for the pricing proposalfor the pricing proposal

Examination may include those books, records, documents, Examination may include those books, records, documents, and other types of factual information (regardless of form or and other types of factual information (regardless of form or whether the information is specifically referenced or whether the information is specifically referenced or included in the proposal as the basis for pricing) that will included in the proposal as the basis for pricing) that will permit an adequate evaluation of the proposed price. permit an adequate evaluation of the proposed price.

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What Is Cost or Pricing Data?What Is Cost or Pricing Data? Highlights of FAR 15-2 (found under 15.408)Highlights of FAR 15-2 (found under 15.408)

Proposal IndexProposal Index Relationship between total price and contract line Relationship between total price and contract line

itemsitems Cost element summaries by Contract Line ItemCost element summaries by Contract Line Item Identification of the followingIdentification of the following

Forward Pricing Rate AgreementsForward Pricing Rate Agreements Incurred CostsIncurred Costs

Any information reasonably required to explain the Any information reasonably required to explain the company’s estimating process, including --company’s estimating process, including --

(1) Judgmental factors applied and the mathematical or (1) Judgmental factors applied and the mathematical or other methods used in the estimate, including those used other methods used in the estimate, including those used in projecting from known data; andin projecting from known data; and

(2) Nature and amount of any contingencies included in (2) Nature and amount of any contingencies included in the proposed price.the proposed price.

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Cost Elements based on FAR Table 15-2Cost Elements based on FAR Table 15-2 Labor Hours – time phased breakdown of hours, Labor Hours – time phased breakdown of hours,

rates by category AND basis of estimaterates by category AND basis of estimate Bill of Materials identifying item, source, Bill of Materials identifying item, source,

quantity, and pricequantity, and price Price Analyses of all subcontractsPrice Analyses of all subcontracts Cost Analyses of subcontracts exceeding TINA Cost Analyses of subcontracts exceeding TINA

thresholdthreshold Interdivisional Work Authorizations by cost Interdivisional Work Authorizations by cost

elementelement Cost or Pricing Data for subcontracts greater Cost or Pricing Data for subcontracts greater

than $10M or 10% of prime’s price & over TINA than $10M or 10% of prime’s price & over TINA threshold (subcontractor’s actual proposal & threshold (subcontractor’s actual proposal & associated data)associated data)

Adequate Price Competition - data showing Adequate Price Competition - data showing degree of competition and basis for establishing degree of competition and basis for establishing source and reasonableness of price source and reasonableness of price

What Is Cost or Pricing Data?What Is Cost or Pricing Data?

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Cost Elements (cont & based on FAR Table Cost Elements (cont & based on FAR Table 15-2)15-2)

Indirect Costs – rates, cost breakdowns, and Indirect Costs – rates, cost breakdowns, and how costs are computedhow costs are computed

Other Costs, such as travel and packaging, Other Costs, such as travel and packaging, along with bases for pricingalong with bases for pricing

Royalties – see Table 15-2 for specificsRoyalties – see Table 15-2 for specifics Cost of Money - Form CASB-CMF and calculation Cost of Money - Form CASB-CMF and calculation

of proposed amount (usually provided to the of proposed amount (usually provided to the Administrative Contracting Officer (ACO) in Administrative Contracting Officer (ACO) in support of rate negotiations)support of rate negotiations)

What Is Cost or Pricing Data?What Is Cost or Pricing Data?

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Discussion TopicsDiscussion Topics What is best approach for handling What is best approach for handling

contractor resistance to providing contractor resistance to providing cost or pricing data?cost or pricing data?

Pending FAR Case pertaining to Pending FAR Case pertaining to definition of cost or pricing datadefinition of cost or pricing data

What Is Cost or Pricing Data?What Is Cost or Pricing Data?

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Adequate DisclosureAdequate Disclosure

Requirement for submission is met when all Requirement for submission is met when all data have been submitted, actually or by data have been submitted, actually or by identification to the CO or authorized identification to the CO or authorized Representative (e.g. DCAA, DCMA)Representative (e.g. DCAA, DCMA)

As later information comes into the As later information comes into the contractor’s possession, it should be contractor’s possession, it should be submitted promptly to the Contracting submitted promptly to the Contracting Officer in a manner that Officer in a manner that clearly shows clearly shows how the information relateshow the information relates to the to the offeror’s price proposal. offeror’s price proposal.

FAR Table 15-2FAR Table 15-2

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Adequate DisclosureAdequate Disclosure

Example: (UCA Example)Example: (UCA Example)The contractor submits actual hours incurred The contractor submits actual hours incurred

to date on the program in the following to date on the program in the following format:format:

Charge CodeCharge Code HoursHours

4939349393 5050

4939449394 100100

4939549395 1010Discussion: Is this adequate disclosure?

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RelianceReliance

Extent of influence (directly or indirectly) the cost Extent of influence (directly or indirectly) the cost or pricing data had on the Government negotiator’s or pricing data had on the Government negotiator’s position during negotiations and resultant position during negotiations and resultant determination the negotiated price was fair and determination the negotiated price was fair and reasonablereasonable

Occurs when Government negotiators directly or Occurs when Government negotiators directly or indirectly use or establish a price (or objective) indirectly use or establish a price (or objective) wholly or partly based upon or derived from cost or wholly or partly based upon or derived from cost or pricing data the contractor submittedpricing data the contractor submitted

Does not occur to extent Government negotiator Does not occur to extent Government negotiator actually knew data wasn’t current, accurate or actually knew data wasn’t current, accurate or completecomplete

Not negated by use of technical evaluations, field Not negated by use of technical evaluations, field reports, audits, etc.reports, audits, etc.

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Cutoff DatesCutoff Dates

Date earlier than date of price Date earlier than date of price agreement to which certification of agreement to which certification of data appliesdata applies

Discussion TopicsDiscussion Topics When should cut-off dates be used?When should cut-off dates be used? Should there be any time limits between Should there be any time limits between

cut-off dates and the final date of price cut-off dates and the final date of price agreement?agreement?

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Certificate of Current Cost or Certificate of Current Cost or Pricing DataPricing Data

Required by law Required by law Purpose: Certify that data are "current, accurate Purpose: Certify that data are "current, accurate

and complete" as of the date on which the parties and complete" as of the date on which the parties agreed upon a price. agreed upon a price.

FAR Table 15-2 states contractor must submit FAR Table 15-2 states contractor must submit cert as soon as practicable after price agreementcert as soon as practicable after price agreement

FAR 15.406-2 provides Cert language & statesFAR 15.406-2 provides Cert language & states Certification does not apply to accuracy of judgment, but Certification does not apply to accuracy of judgment, but

applies to data upon which judgment is basedapplies to data upon which judgment is based Contractor’s responsibility not negated by lack of Contractor’s responsibility not negated by lack of

personal knowledgepersonal knowledge Try to reach prior agreement on criteria for cut-off dates Try to reach prior agreement on criteria for cut-off dates Possession of a Cert is not a substitute for Government Possession of a Cert is not a substitute for Government

examining/analyzing the proposalexamining/analyzing the proposal

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15.406-2, Certificate of Current Cost or Pricing Data15.406-2, Certificate of Current Cost or Pricing Data

This is to certify that, to the best of my knowledge and believe, the cost or pricing This is to certify that, to the best of my knowledge and believe, the cost or pricing data (as defined in section 2.101 of the Federal Acquisition Regulation (FAR) data (as defined in section 2.101 of the Federal Acquisition Regulation (FAR) and required under FAR subsection 15.403-4) submitted, either actually or by and required under FAR subsection 15.403-4) submitted, either actually or by specific identification in writing, to the Contracting Officer or to the specific identification in writing, to the Contracting Officer or to the Contracting Officer’s representative in support of ____* are accurate, Contracting Officer’s representative in support of ____* are accurate, complete, and current as of ____**. This certification includes the cost or complete, and current as of ____**. This certification includes the cost or pricing data supporting any advance agreements and forward pricing rate pricing data supporting any advance agreements and forward pricing rate agreement between the offer and the Government that are part of the agreement between the offer and the Government that are part of the proposal.proposal.

Firm ___________________________Firm ___________________________Signature _______________________Signature _______________________Name __________________________Name __________________________Title ___________________________Title ___________________________Date of execution***______________Date of execution***______________*Identify the proposal, request for price adjustment…*Identify the proposal, request for price adjustment…**Insert the day, month, and year when price negotiations were concluded and **Insert the day, month, and year when price negotiations were concluded and

price agreement was reached or, if applicable, an earlier date agreed upon price agreement was reached or, if applicable, an earlier date agreed upon between the parties that is close as practicable to the date of agreement on between the parties that is close as practicable to the date of agreement on priceprice

***Insert the day, month, and year of signing, which should be as close as ***Insert the day, month, and year of signing, which should be as close as practicable to the date when the price negotiations were concluded and the practicable to the date when the price negotiations were concluded and the contract price was agreed to. contract price was agreed to.

(End Certificate)(End Certificate)

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SweepSweep Process whereby contractor reviews its records to Process whereby contractor reviews its records to

determine if more current cost or pricing data exist determine if more current cost or pricing data exist and needs to be disclosed to the Governmentand needs to be disclosed to the Government

Occurs after agreement on price (handshake) but Occurs after agreement on price (handshake) but before contract awardbefore contract award

Usually submitted with certificateUsually submitted with certificate NotNot required by the Government required by the Government

Tool used by Contractors to avoid defective pricing by Tool used by Contractors to avoid defective pricing by submitting data upon discovery of omissionsubmitting data upon discovery of omission

Limited to Limited to Factual dataFactual data Existing and available prior to price agreementExisting and available prior to price agreement Not previously known or considered by either sideNot previously known or considered by either side Data that would have caused a price increase (offset) or Data that would have caused a price increase (offset) or

decreasedecrease

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SweepSweepDiscussion TopicsDiscussion Topics Is contractor obligated to provide an Is contractor obligated to provide an

impact statement associated with the impact statement associated with the sweep?sweep?

Can the contract price be adjusted Can the contract price be adjusted upward due to sweep?upward due to sweep?

Should the Government make downward Should the Government make downward adjustments for low dollar values?adjustments for low dollar values?

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NegotiationsNegotiations

Gov’t Responsibility, FAR 15.407-1 (a) If, Gov’t Responsibility, FAR 15.407-1 (a) If, before agreement on price, the before agreement on price, the contracting officer learns that any cost contracting officer learns that any cost or pricing data submitted are inaccurate, or pricing data submitted are inaccurate, incomplete, or not current, the incomplete, or not current, the contracting officer shall immediately contracting officer shall immediately bring the matter to the attention of the bring the matter to the attention of the prospective contractor, whether the prospective contractor, whether the defective data increase or decrease the defective data increase or decrease the contract price. contract price.

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5 Points for Establishing 5 Points for Establishing Defective Pricing Defective Pricing

(1) The information in question fits the definition of cost or (1) The information in question fits the definition of cost or pricing data.pricing data.

  (2) Accurate, complete, and current data existed and were (2) Accurate, complete, and current data existed and were

reasonably available to the contractor before the reasonably available to the contractor before the agreement on price.agreement on price.

  (3) Accurate, complete, and current data were not submitted (3) Accurate, complete, and current data were not submitted

or disclosed to the contracting officer or one of the or disclosed to the contracting officer or one of the authorized representatives of the contracting officer and authorized representatives of the contracting officer and that these individuals did not have actual knowledge of that these individuals did not have actual knowledge of such data or its significance to the proposal.such data or its significance to the proposal.

  (4) The Government relied on the defective data in negotiating (4) The Government relied on the defective data in negotiating

with the contractor.with the contractor.  (5) The Government’s reliance on the defective data caused (5) The Government’s reliance on the defective data caused

an increase in the contract price.an increase in the contract price.

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Sources of TINA InfoSources of TINA Info 10 U.S.C. 2306(a)10 U.S.C. 2306(a) FAR Part 15.4FAR Part 15.4 DOD-IG TINA HandbookDOD-IG TINA Handbook Contract Pricing Reference Guides, Contract Pricing Reference Guides,

Volumes 3 & 4Volumes 3 & 4