By Taimur Rabbani
Is your business pursuing a U.S. government contract, or seeking to subcontract for a U.S. government contractor? There are several legal and regulatory schemes that you should be aware of that are relevant to this process. Among the most significant of them are the regulations implementing the Truth in Negotiations Act (TINA).
In general, TINA requires the disclosure of certain factual information to a contracting officer. TINA may require – among other things – that a business submit certified cost or pricing data prior to the award or modification of certain contracts and subcontracts.
Ordinarily, the threshold amount above which a business may have to submit certified cost or pricing data is $700,000. Above this threshold, under FAR 15.403-4(a)(1), a business must (with some exceptions) submit certified cost or pricing data prior to the award of any negotiated contract, the award of a subcontract at any tier, or the modification of any sealed bid or negotiated contract. Below this threshold, a business may still be required to submit certified cost or pricing data, or to submit other data to assist the contracting officer in determining a fair and reasonable price.
A business may be able to satisfy an exemption to the requirement of submitting certified cost and pricing data. Under FAR 15.403-1, these exceptions include scenarios where (1) there is adequate price competition, (2) prices are set by law or regulation, (3) the contract or subcontract at issue is for a commercial item, or (4) where the head of the contracting activity provides a written waiver.
There are a number of pitfalls for both domestic and foreign businesses pursuing a contract with the U.S. government, or seeking a subcontract for a U.S. government contract. Prospective contractors and subcontractors should be aware of the requirements (and exemptions) for submitting certified, accurate, complete, and current cost and pricing data. Otherwise, the business may be at risk for price reductions, penalties, interest, and other liabilities.
Our law firm is able to guide businesses through the complexities of this and other procurement laws. If you have any questions, do not hesitate to contact one of our partners.