The Truth in Negotiations Act Essay Sample

Truth In Negotiations Act ( TINA ) was enacted in September 1962. As one might anticipate from a ordinance that has been in being from 50 old ages. major alterations have been made in order to reflect the alterations in the market place every bit good as reference the hazard involved for all parties. TINA requires the entry of cost or pricing informations for all offerers for a premier contract that is entered into utilizing processs other than sealed-bid if the contract sum exceeds $ 700. 000. Not merely does TINA necessitate the entry of cost or pricing informations. but it requires that contractors or subcontractor certify the informations. When a contractor or subcontractor certifies the cost or pricing informations they are asseverating that to the best of their cognition and belief that the cost or pricing informations submitted is accurate and complete. Arguably the most combative issue refering TINA is the definition of “cost or pricing data” .

The definition has been through many alterations and while it is has come a long manner in specifying cost or pricing informations ; it has created a criterion that is excessively restrictive and frequently times unattainable given the market place. Additionally. while it has a proviso that allows the Government to reimburse the overpayment associated with exaggerated monetary values on the contractors behalf ; it does non reasonably give the contractor the same ability to reimburse underpayments as a consequence of unostentatious monetary values from the Government. If TINA addresses these issues in the hereafter. it can go an even more powerful tool in “leveling the playing field” between the private sector and the Government. The History of TINA

Public Law 87-653. Truth In Negotiations Act ( TINA ) . was enacted on September 10. 1962. The purpose behind the act was to put the Government on equal terms with the contractor by necessitating the contractor to supply the Government entree to all cost or pricing informations the contractor used in doing its offer. It required that every premier and subcontractor submit cost or pricing informations. They were besides required to attest that all such informations was current. complete and accurate prior to present of any negotiated contract or subcontract. The contract threshold that was established for attachment to TINA ordinances was $ 100. 000. Additionally. TINA stipulated that if relevant cost or pricing informations was withheld ensuing in exaggerated monetary values. that the Government would be able to reimburse the extra monetary values from the exaggerated costs. A main ailment from the private industry is that TINA did non cover with was the issue of unostentatious costs. ( Di Guiseppe 2011. p. 2 ) Major Changes/Amendments

The 1980’s
In the 1980’s the Government sought to beef up TINA ; during Fiscal Year ( FY ) 1986 the Defense Authorization Act added the demand for the aggregation of involvement on overpayments every bit good as duplicating the sum paid to the Government for contractors wittingly non unwraping cost or pricing informations. In FY 1987 the writers added that the contractor could non use the Government’s non-reliance on cost or pricing informations as a legitimate defence to faulty pricing. Additionally. the Defense Authorization Act made ( 1 ) sole beginning or superior bargaining. ( 2 ) Contracting Officer should hold known day of the month was faulty. ( 3 ) understanding was reached on entire cost footing and ( 4 ) certification was non submitted unacceptable defences for misdemeanor of TINA. Finally in FY1988/1989 the Defense Authorization Act provided a definition for cost or pricing informations.

The 1990’s
The 1990’s saw continual strengthening of TINA. peculiarly in 1994 with the debut of the Federal Acquisition Streamlining Act ( FASA ) and the Clinger-Cohen Act. The important alterations to TINA with passage of these Acts were ( 1 ) the creative activity of the “commercial item” exclusion. ( 2 ) add-on of the prohibition on obtaining cost or pricing informations when an exclusion applied. ( 3 ) creative activity a hierarchy for obtaining info. ( 4 ) increased TINA threshold every 5 old ages and made it $ 550. 000 for all bureaus. ( 5 ) changed the blessing degree for TINA releases. and ( 6 ) the add-on of “other than cost or pricing data” .

The 2000’s
In the Government’s chase to beef up TINA. more important alterations were made so in old decennaries. In 2001. the thought of the Contracting officer’s finding of monetary value rationality when cost or pricing informations was non obtained was enacted. In 2002. more counsel was provided on allowing releases for certified cost or pricing informations. In FY 2003. the Government directed that merely the HCA may publish releases based upon their finding. The consequence was a important lessening in the figure of TINA releases. The industry reacted with the formation of the Acquisition Reform Working Groups Legislative Package for Year 2004 which recommended revoking the restrictions on releases. Applicability

The entry of cost or pricing informations applies to all offerers for a premier contract that is entered into utilizing processs other than sealed-bid if the contract sum exceeds $ 700. 000. Additionally. the entry of cost or pricing is required when the monetary value accommodation of a alteration or alteration exceeds $ 700. 000. In the instance of a alteration or alteration. the $ 700. 000 threshold is applied to the absolute value ( cumulative value ) of the alteration or alteration. For case. if an $ 110. 000 alteration ensuing from a $ 300. 000 decrease and an addition of $ 410. 000 ; entry of cost or pricing informations would be required because the cumulative value of the alteration is $ 710. 000. The entry of cost or monetary value informations besides applies to any tier subcontract in which the premier contractor is required to subject cost or pricing informations. Exemptions

Several freedoms to the entry of certified cost or pricing informations are listed in FAR 15. 403-1. The exclusions include when the monetary values agreed upon ( 1 ) are based on equal competition. ( 2 ) are set by jurisprudence or ordinance. ( 3 ) when a commercial point is being used. ( 4 ) when a release is granted. and ( 5 ) when modifying a contract or subcontract with commercial points. Development of the definition of “Cost or Pricing Data”

Arguably at the bosom of the TINA is the definition of cost or pricing informations. so it stands to ground that a public jurisprudence that has been enacted for about 50 old ages would see many amendments. No other part of the jurisprudence has seen more dramatic development than the definition of cost or pricing informations. In fact. TINA was enacted for twenty-plus old ages before “cost or pricing data” was foremost defined. In a 1986 amendment to TINA. regulators attempted to supply a definition of cost or pricing informations in 10 USC § 2306a ( g ) : ( g ) Cost or pricing Datas Defined. — In this subdivision. the term “cost or pricing data” means all information that is verifiable and that. as of the day of the month of understanding on the monetary value of a contract ( or the monetary value of a contract alteration ) . a prudent purchaser or marketer would moderately anticipate to impact monetary value dialogues significantly. Such term does non included information that is judgmental. but does include factual information from which a judgement was derived. The definition was once more amended in 1987 with a elusive alteration in which cost or pricing informations was defined as “all fact” as opposed to “all information that is verifiable” . Issues Confronting “Cost or Pricing Data” Definition

While the Government has made many important paces in authoring a useable definition of cost or pricing ; as Walker ( 2003 ) claims “Perhaps the most equivocal facets of TINA are the demand for and definition of “cost or pricing informations. ” The three major elements of the definition are: ( 1 ) all facts ( non judgements ) . ( 2 ) bing at the day of the month of understanding on monetary value. ( 3 ) that are important to the monetary value dialogues. Of these elements. the most combative issue by far is the definition of facts. A landmark determination associating to this component came in 1995 when the Armed Services Board of Contract Appeals ( ASBCA ) after hearing the entreaties from Lockheed Corporation. decided that “management decisions” do non go cost or pricing informations until the contractor decides to move upon those determinations. Further. the board stated that direction programs must hold a important consequence upon costs and that there be grounds that appropriate company governments have decided to move upon those programs. ( Walker. 2003. p. 47 ) .

While projections contain a blend of judgmental estimations and historical factual information. the landmark determination reaffirmed the difference between cost or pricing informations and judgement and held that merely the historical factual information represented cost or pricing informations. In Lockheed Corp. . ASBCA Nos. 36420. 37495. & A ; 39195. May 23. 1995. the ASBCA provides counsel on three antecedently unsolved issues refering revelation of concern programs and projections: First. the ASBCA determined that concern programs and projections do non go cost or pricing informations until the contractor decides to move upon them. Second. the ASBCA articulates a bipartite nonsubjective trial for finding what constitutes a “management decision” that triggers the TINA revelation duty. Rejecting statements that a program or projection becomes a “management decision” every bit shortly as a company gives it serious consideration. the ASBCA ruled that: ( 1 ) the program must bear a significant relationship to costs. and ( 2 ) a company functionary with needed authorization must hold decided to move on the program. Finally. the ASBCA reaffirms that strictly judgmental estimations are non cost or pricing informations. and it holds that projections incorporating a mix of facts ( historical accounting informations ) and judgements ( prognosiss of future costs ) need non be disclosed every bit long as the factual informations have been antecedently disclosed.

The ulterior opinion bounds earlier instances keeping that assorted fact/judgment paperss must be disclosed to explicate the significance of the factual information. ( Kilcullen. 1995 ) While the Lockheed instance was important in footings of specifying what is fact and what is judgement. the definition is excessively rigorous to take into history the contractor’s needs. For case. how does a contractor categorise the gross baseline prognosis which may be comprised of current contracted work and anticipated? Furthermore. the labour and indirect rates that are used in outstanding commands or proposals ; but will they be victors or also-rans. Finally. should the contractor acquire penalized for non utilizing the seller quotation mark used to set up their monetary values due to the altering market place? It is unjust to hold a contractor submit cost or pricing informations with such rigidness when the world of the market place is much more fluid. Submission & A ; Certification of Cost or Pricing Data

TINA sets forth that cost or pricing informations must be submitted on Standard Form 1411. “Contract Pricing Proposal Cover Sheet” . along with back uping paperss. There are no difficult and fast regulations that detail what proper entry of informations is ; but entry of informations is non satisfied by merely simply supplying the Government with records for review. Additionally. since the responsibility to supply accurate and complete information is imposed by legislative act it can’t be waived or modified by the Contracting Officer. ( Tiefer & A ; Shook. 2004. p. 184 )

TINA non merely requires that contractors and subcontractors submit all cost
or pricing informations that are important to monetary value dialogues. but it besides requires that the information is “certified” . When a contractor or subcontractor certifies the cost or pricing informations they are asseverating that to the best of their cognition and belief that the cost or pricing informations submitted is accurate and complete. The FAR requires that the contractor certifies the cost or pricing informations through the usage of the “Certificate of Current Cost or Pricing Data” in FAR 15. 406-2. Defective Cost or Pricing Data

Defective cost or pricing informations is defined in FAR 15. 407-1. which defines defective cost or pricing informations as it applies in two distinguishable instances-before monetary value understanding and after award. In both cases the cost or pricing informations either anterior to monetary value understanding or after award is deemed faulty if any certified cost or pricing informations submitted are determined to be inaccurate. uncomplete. or noncurrent. ( Far 15. 407-1 ( a ) . ( B ) ( 1 ) . n. d. )

In his paper. Di Guiseppe ( 2011 ) offers several do’s and don’ts for contractors to mind in order to avoid faulty cost or pricing informations. Most notably: Bash:
• Remember that the overall load of turn outing faulty pricing is with the Government.
• Require the contractor to update all informations as of the latest day of the months for which information is moderately available. Don’ts:

• Accept subcontract monetary values that are negotiated before the premier contract is negotiated as the exclusive grounds that these monetary values are sensible. • The responsibility to supply accurate. complete and current cost or pricing informations when such informations are otherwise required by jurisprudence or ordinance can’t be waived by a Government agent. Overstated and Understated Costss

Subsection F of TINA gives the Government an avenue to reimburse the money paid to a contractor based on an overpayment. 10 USC § 2306a ( degree Fahrenheit ) provinces: ( degree Fahrenheit ) ( 1 ) if the United States makes an overpayment to a contractor under a contract capable to this subdivision and the overpayment was due to the entry by the contractor of faulty cost or pricing informations. the contractor shall be apt to the United States.

While TINA provides a proviso for the Government to reimburse overpayment as a consequence of faulty cost or pricing informations ; really liberally as seen in Aerojet Solid Propulsion Co. v. Secretary of the Army. it makes no such proviso to protect the contractor in instances of unostentatious monetary values. Merely when the cost or pricing informations is deemed faulty does the Government take into consideration additions and lessenings ( overstated or understated ) in contract monetary values based on the faulty cost or pricing informations.

A similar subdivision should be added to protect the contractor against major market fluctuations. While most will claim that it is an built-in hazard in the market place. the contractor should be given an chance to extenuate that hazard much the same manner the Government mitigates its hazard by using TINA and seeking payment when overpayments occur. Decision

The definition of “cost or pricing data” has undergone important alterations in an effort to clearly specify what constitutes cost or pricing informations. The writers have non suitably allowed contractors to calculate and accommodate to alterations in the market place and let them to attest and subject this information under TINA. The definition should be adapted to let contractors to calculate indirect costs based on their forecasted work load. Whereby leting them to be more responsive/realistic in their command based on alterations in the market place. Additionally. a subdivision should be added to let the contractor or subcontractor to seek compensation from the Government for unostentatious monetary values. These alterations would let the contractor to accommodate to alterations in the market place.

Mentions

Reimer. J. ( 1997. November-December ) . Truth in Negotiations Act-What is Fair and Reasonable? Program Management Magazine. 50-53.

Walker. Darryl L. ( 2003. May ) . The Cost or Pricing Data Dilemma. Contract Management Magazine. 46-49.

Muskopf. J. Truth in Negotiations Act ( TINA ) 2006. Making a Rejoinder?
[ PowerPoint Slides ] . Retrieved from hypertext transfer protocol: //acc. dau. mil/docs.

Diguiseppe. T. ( 2011 ) . Understanding the Truth in Negotiations Act in Federal Procurement

Federal Acquisition Regulation. ( n. vitamin D ) . Retrieved from hypertext transfer protocol: //www. aqusisition. gov/far/html

United States Code. ( n. vitamin D ) . Retrieved from hypertext transfer protocol: //www. gpoaccess. gov/uscode/

Kilcullen. ( 1995 ) When Does a Management Decision Have to be Disclosed Under TINA? Retrieved from hypertext transfer protocol: //www. attny. com/cpgpage1. hypertext markup language

Aerojet Solid Propulsion Company v. Secretary of The Army. 291 F. 3d 1328 ( 2002 ) .

Michael W. Wynne. Secretary of the Air Force v. United Technologies. 463 F. 3d ( 2006 ) .