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There may still be some data that lag, but they will be far more limited.Īnother strategy is to agree on an effective date for the TINA certificate that is earlier than the handshake date. One is to postpone agreement on price until the sweep has been completed, and establish a provisional price and make the government wait for the handshake date. However, risk mitigation strategies are available to the contractor. Enterprising plaintiffs’ attorneys will argue that this is sufficiently “reckless” to justify a False Claims Act complaint and, with it, the threat of treble damages. Contractors will be encouraged and perhaps required to execute the TINA certificate without sufficient time to complete the sweep and address the price impact. The new policy also exposes contractors to an increased risk of liability under the False Claims Act. Ironically, Assad’s stated objective is to streamline the acquisition process - an objective that is ill-served by substituting the claims process for an additional, limited round of negotiations. The Pentagon is telling contracting officers to ignore data being proffered by contractors to ensure compliance with the Truth in Negotiations Act for the purpose of manufacturing post-award TINA claims against the contractor. At that point, the contracting officer must evaluate the sweeps data to determine whether it rendered the pre-handshake data defective and entitles the government to a price adjustment.
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In addition, contracting officers are directed to ignore any sweeps data furnished after the date of agreement on price until the contract action has been awarded. This is particularly true in the case of large contractors with multiple sites, thousands of employees and numerous subcontractors.Īssad’s memo directs contracting officers to “request” offerors to execute the TINA certificate within five days of the agreement on price.
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Even in the information age, it takes time to make its way to the individual responsible for contract negotiations. It is impossible for most contractors to provide up-to-the-minute cost or pricing data. The consequences of defective pricing can include price reductions, penalties and even False Claims Act allegations based on false certification. " The new policy also exposes contractors to an increased risk of liability under the False Claims Act."ĭata that are not current, accurate and complete as of the handshake date are said to be defective. The memo, issued by Director of Defense Pricing/Defense Procurement and Acquisition Policy Shay Assad, aims to reduce acquisition lead time by eliminating the time honored practice of conducting Truth in Negotiations Act sweeps after the handshake date. In a memorandum dated June 7, the Defense Department reversed decades of procurement practice that has been embraced by industry and the government alike. The net result was that the government had all the data, its impact on price was addressed, and the contractor avoided liability under the Truth in Negotiations Act and the False Claims Act. The government, in turn, has customarily accepted the information, evaluated its impact on price, and negotiated, if and as appropriate, an adjustment to the price. Recognizing the inherent lag time between the creation of the data and its availability to the contract negotiator, contractors have customarily performed immediate post-handshake “sweeps” of their databases and functional organizations to provide the government with any data that may have escaped the pre-handshake dragnet. They include vendor quotes, production costs, learning curves, estimates to achieve business objectives, and management decisions. It also requires contractors to submit a certification of compliance with this requirement.Ĭost or pricing data are defined broadly as facts that reasonably prudent buyers and sellers would expect to affect price negotiations significantly and contribute to the soundness of estimates of future costs. Subject to certain exceptions, the statute requires contractors to disclose cost or pricing data that are current, accurate and complete as of the date of agreement on price - sometimes called the “handshake” date. It aims to place the government on a level playing field with contractors in price negotiations. The law, also known as TINA, was originally enacted by Congress in 1962. § 2306a, just became a whole lot harder for defense contractors. Complying with the Truth in Negotiations Act, 10 U.S.C.