Imagine trying to resolve an inaccurate pricing decision by a contracting officer -- like the cost of steel in a shipbuilding contract – a decision that is stalling the contracting process and putting the business at risk. What would you do?
Before anything like that happens, you want to get familiar with two of the most important United States (U.S.) Government resources that provide guidance for ensuring not only compliance with existing regulations but best contracting practices as well.
Reviewing the history and recent developments of TINA will help you more clearly understand the TINA jurisdiction and accurately apply FAR and ASPR regulations and guidelines. It’s critical to know how to price the products your business is providing to the U.S. Government.
- TINA, the Truth in Negotiations Actis a law that requires contractors performing government contracts for the U.S. Government to submit cost and pricing data that is truthful, accurate, and complete.
Prior to July 2018, TINA “required offerors to certify that accurate, current, and complete cost or pricing data disclosed to the government for negotiated procurements valued at $750,000 or more, however Section 811 of the 2018 National Defense Authorization Act increased the TINA threshold to $2 million for all contracts entered into after July 1, 2018. While the contracting officer may still request cost or pricing data to support proposals under the TINA threshold, this cost or pricing data would not be certified, substantially reducing the offeror’s risk.”1
- FAR, the Federal Acquisition Regulation2is the U.S. government-wide regulation governing executive agency procurement contracts – the main set of rules in the Federal Acquisition Regulations System for government procurement in the United States. FAR is codified at Chapter 1 of Title 48 of the Code of Federal Regulations, 48 C.F.R. 1.3
ASPR, the U.S. Armed Services Procurement Regulations
To give historical background and show its relationship with FAR and TINA, consider ASPR, the Armed Services Procurement Regulations and how it relates. ASPR, issued under the Armed Services Procurement Act, established defense procurement regulations from 1948 to 1978. After that, ASPR was renamed the Defense Acquisition Regulation (DAR) in 19784 and was superseded by the Federal Acquisition Regulation System in 1984.5
Looking more closely within these three will give you better insights on when and how to use them. Reviewing the history and recent developments of TINA, for example, could increase your knowledge of its jurisdiction to enable you to discover what options you might have to appeal an erroneous decision of a contracting officer.
History - why was TINA enacted?
TINA was implemented in 1962 by the ASPR and later, as mentioned, was incorporated into the FAR in 1984, to establish a standard for measuring “fair and reasonable” pricing of a contract. Contractors were mandated to certify that the cost or pricing data furnished were accurate, complete, and current.
Originally, the TINA cost and pricing threshold was set at $100,000 in 19626 and was raised to $750,000 in 2018. And, in 2018, FAR Subpart 15.4, Contract Pricing,7 required the contracting officer to obtain certified cost or pricing data on acquisitions or modifications at or above the $2 million TINA threshold in accordance with FAR 2.101, Definitions.8
To interpret TINA accurately, it’s important to get a closer look at recent developments and the specific TINA jurisdiction -- otherwise you will not know what remedies to take if, for example, you plan to appeal a decision you might need to make using TINA.
TINA was enacted because the U.S. Congress was unhappy with contractors not complying with ASPR Section III, part 8 titled Price Negotiations Policies and Techniques9 that required contractors to supply the government with “current, complete, and correct cost or pricing data.”
The ASPR regulations were originally passed when it was discovered that between 1957 and 1962,10 contractors were overcharging the U.S. government on contracts they held with the government. This prompted public outcry due to public perception of profiteering,11 congressional investigation, and subsequent scrutiny.
One problem: The ASPR overlooked the possibility that the lack of independent cost or pricing data would make the government overly reliant on industry cost or pricing data, particularly in circumstances -- such as wartime -- which made it impractical to rely on supply and demand cost estimates alone.
So, on September 10, 1962, TINA was passed as an amendment to the ASPA (Armed Services Procurement Act)12 that governs the ASPR that, in turn, became the Defense Acquisition Regulation (DAR) in 1978 13.
Currently, TINA requires contractors to:
- submit cost or pricing data under certain circumstances;
- define cost or pricing data;
- provide the right for government to examine contractor records; and
- provide rules regarding defective pricing.
How pricing data is handled
Certified cost or pricing data is not required for acquisitions below the simplified acquisition threshold ($750,000) nor is it required when an exemption applies (e.g. the acquisition of commercial items). For acquisitions between the simplified threshold and the TINA threshold ($2 million), the head of the contracting activity may direct the contracting officer to require certified cost or price data.
The prime contractor gives the certified cost or pricing data to the contracting officer and the subcontractor gives certified cost or pricing data to prime contractor. The contracting officer must determine that the price is fair and reasonable while also considering drawbacks per FAR 15.402(a) Pricing Policy.14
Recent Developments of TINA – threshold details
As noted in the U.S. Secretary of Defense document titled Threshold for Obtaining Certified Cost and Pricing Data Class Deviation 2018-O001215 , the threshold for obtaining certified cost or pricing data was increased to $2 million from $750,000 in 2018. The increase gives wider discretion to a contracting officer to perhaps approve certified cost or pricing data on acquisitions between the simplified acquisition threshold of $750,000 and $2 million. The increase would cover most of routinely encountered acquisitions. A June 7, 2018, memorandum requires contracting officers to request the execution of Certificate of Current Cost or Pricing Data16 no later than 5 business days after date of price agreement.
This was an effort by the U.S. Department of Defense (DoD) to acquire items subject to TINA quickly. A December 2017 DoD effort to streamline the acquisition process by eliminating the need to gather certified cost and pricing data for arms sales to other countries and instead relying on actual costs DoD paid for the same items.17 This effort may backfire if actual costs are outdated such as acquiring certain arms that were last acquired years ago.
As reported on PubKLaw,18 a DoD Office of Inspector General (OIG)19 audit conducted in response to congressional inquiries of contracts compliant with TINA requirements regarding selling spare parts recommended that contractors provide refunds based on excessive profits.
Although the Federal contracting website is not authoritative, its blog posts reveal areas of concern for the acquisitions community to consider for TINA.
- The contractor’s perception that TINA certification is not required for overrun modifications on a Cost-Plus Fixed Fee (CPFF) delivery order.
- TINA’s defective pricing showing up in cost-reimbursement contracts;
- Government rights under TINA can be required if due diligence has not been performed on a proposal or a negotiation process.
As noted by the Ask A Professor (AAP) 20 , which replaced the Defense Acquisition University (DAU), TINA-certified cost or pricing data collection may become complicated by the fact that FAR 32.202-1(b)21 lists circumstances under which the government can make advance payments. One is that the contract must exceed the simplified acquisition threshold. However, FAR 32.202-1(d) 21 provides for approval of "unusual contract financing."
But normally, the head of the contracting activity has to approve such unusual contract financing. While the AAP only addresses advance payments, it is conceivable that an agency may be purchasing a supply or service to use in the future and may need to obtain certified cost or pricing data for that acquisition.
DoD efforts to streamline acquisition procedures are oftentimes the reason why TINA is modified through class deviations, memorandums, etc.; however the application of TINA in industry and government is murky, because the legislation does not address all the scenarios where cost or pricing data would be used.
Questions frequently asked about TINA Jurisdiction
- Is TINA within the jurisdiction of the Civilian Board of Contracting Appeals?
No, because there is no case law on it. As noted on its website22 the Civilian Board of Contracting Appeal’s jurisdiction is limited to Contracts Dispute Act (CDA) cases, requests for arbitration under the Stafford Act, FEMA arbitrations (e.g. American Recovery and Reinvestment Act of 2009), Indian Self-Determination Act, etc. applicable to federal civilian agencies (e.g. Veterans Affairs). Since TINA does not fall into one of these categories, TINA’s appeals on a contracting officer’s decision can only be pursued at either the Armed Services Board of Contract Appeals (ASCBA)23 or the U.S. Federal Court of Claims24 within a six-year statute of limitations starting when the claim accrues (FAR 33.20125).
- Can TINA appeals be protested at the U.S. Government Accountability Office (GAO)?
Yes, as an alternative to the U.S. Federal Court of Claims26, contractors may protest TINA Claims at the Government Accountability Office (GAO)27.
- Does the Armed Services Board of Contracting Appeals (ASBCA)28have jurisdiction over TINA claims?
Yes, in the ASBCA Charter Preface section 1, the Board (ASBCA) has jurisdiction to decide any appeal from a final decision of a contracting officer, pursuant to the Contract Disputes Act, 41 U.S.C. 7101-7109,29 or its Charter, 48 CFR Chap. 2, App. A, Pt. 1,30 relative to a contract created by the Department of Defense, the Department of the Army, the Department of the Navy, the Department of the Air Force, the National Aeronautics and Space Administration; or any other department or agency, as permitted by law. The Board’s jurisdiction dates back to the Armed Services Procurement when in Defense Electronics, Inc., the Board identified what information qualifies as cost or pricing data.
- Does the U.S. Federal Court of Claims have jurisdiction over TINA claims?
Yes, the U.S. Federal Court of Claims also has jurisdiction over TINA claims since U.S.C. §1491(b)(1)31 states “Both the United States Court of Federal Claims and the district courts of the United States shall have jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.”
An aggrieved party has 120 days to appeal the decision of either the ASBCA or the U.S. Federal Court of Claims to the U.S. Court of Appeals, Federal Circuit within 120 days for ASBCA decisions or 60 days for Court of Claims Decisions. An aggrieved party can appeal the Court of Appeals decisions through writ of certiorari to the U.S. Supreme Court.32
No doubt, this is complex! But it’s worth the effort to overview the history and recent developments of TINA help to provide context for enriching your knowledge of TINA jurisdiction as well as your accurate application of FAR and ASPR regulations and guidelines. It is important for contractors to know how to properly support the pricing of their products being offered to the United States Government.
- TINA and CAS Thresholds Increased to $2Million, Aaronson Assurance and Tax Consulting: Thomas Marcinko. See Section 811 of the 2018 National Defense Authorization Act. See also:
- Legal Information Institute. (2019). 10 U.S. Code § 2306a.Cost or pricing data: truth in negotiations. Retrieved August 4, 2019
- Legal Information Institute. (2019). 41 U.S. Code Chapter 35 – J N COST OR PRICING DATA. Retrieved August 4, 2019, from 41 U.S. Code CHAPTER 35—TRUTHFUL COST OR PRICING DATA
- Federal Acquisition Regulation. See also: Farsite. http://farsite.hill.af.mil
- The CFR is the Code of Federal Regulations, a codification of the general and permanent rules and regulations published in the Federal Registerby the executive departments and agencies of the U.S. federal government. The CFR is divided into 50 titles representing major areas subject to federal regulation. See Chapter 1 of Title 48 of the Code of Federal Regulations, 48 C.F.R. 1
- Report by the Congressional Research Service on Federal Acquisition Regulation (FAR): Answers to Frequently Asked Questions. https://www.secnav.navy.mil/rda/Documents/FARfaq.pdf
- Government Contracts Reference Book, page 39
- NCMA TINA article. https://www.ncmahq.org/news/magazine-details/how-well-do-you-know-the-truthful-cost-or-pricing-data-statute-a.k.a.-tina
- FAR 15.4 Contract Pricing
- FAR 2.101 Definitions (Acquisition.gov)
- Section 811 of the 2018 National Defense Authorization Act
- John D. Lanoue, The Truth-in-Negotiating Clause of P.L. 87-653 as Interpreted by the Armed Services Board of Contract Appeals, 13 Vill. L. Rev. 604 (1968). Available at: Villanova Law Review
- Ward T. Williams, The Truth-in-Negotiations Act: The Need for Both Truth and Fairness, 16 Vill. L. Rev. 108 (1970). Available at: http://digitalcommons.law.villanova.edu/vlr/vol16/iss1/6
- Graetz, Michael J., "The Truth-in-Negotiations Act - An Examination of Defective Pricing in Government Contracts" (1968). Faculty Scholarship Series. 1638.
- The Federal Acquisition Regulation (FAR) Answers to Frequently Asked Questions, footnote 38
- FAR 15.402(a) Pricing Policy
- Threshold for Obtaining Certified Cost and Pricing DataClass Deviation 2018-O0012
- Certificate of Current Cost or Pricing Data (FAR)
- Federal News Network. “Pentagon wants more leeway on Truth in Negotiations Act.” Retrieved August 5, 2019, from www.federalnewsnetwork.com
- PubKLaw. Retrieved August 5, 2019, from www.pubklaw.com
- DOD OIG audit
- DAU Ask a Professor (https://www.dau.edu/aap/Pages/home.aspx)
- FAR 32-202-1, Policy
- Civilian Board of Contract Appeals. “United States Civilian Board of Contract Appeals” Retrieved August 5, 2019, from https://www.cbca.gov/
- 23. Armed Services Board of Contract Appeals (ASBCA)
- U.S. Court of Federal Claims
- FAR 33.201 Acquisition.gov Definitions as used in subpart
- U.S. Court of Federal Claims. Retrieved August 5, 2019 www.uscfc.uscourts.gov.
- Government Accountability Office. Retrieved August 5, 2019, www.gao.gov
- Armed Services Board of Contract Appeals, August 5, 2019: from https://www.acq.osd.mil/dpap/dars/dfars/html/current/appendix_a.htm (See also https://www.asbca.mil)
- United States Supreme Court. www.supremecourt.gov
- Charter, 48 CFR Chap. 2, App. A, Pt. 1
- U.S.C. §1491(b)(1)
- writ of certiorari, definition.
ABOUT THE AUTHOR
Greg Tharp has over 15 years of experience as a librarian and researcher, including research positions with Harvard Medical School, and Tufts University. He previously served as a member of the State of Connecticut Library Advisory Council on Library Planning and Development. He is a member of the American Library Association, Massachusetts Library Association, ARMA International, IAACM, and the National Contract Management Association. Tharp’s area of expertise is information policy.
Tharp holds an Advanced Certificate in Archives Management from Simmons University, a Master of Library Science from Southern Connecticut State University, and a Bachelor of Science from Sacred Heart University where he was elected to Phi Eta Sigma and received the Passion for Learning Award. Additionally, he received acquisitions training at Defense Acquisitions University, Federal Acquisitions Institute, American Graduate University, and the University of Virginia. He also received human resources training at HR University.