How to Avoid the Truth in Negotiations Act TINA Pricing & False Claims Act Criminal Liability

Theodore P. Watson, Government Contracts and Procurement Fraud Attorney: The Truth in Negotiations Act (TINA requirements), also known as Public Law 87-653, is a U.S. federal law, 10 U.S.C. § 2306a, 41 U.S.C. § 254b that requires government contractors to submit cost or pricing data in their bids and to certify that the data is accurate, complete, and current when negotiating certain contracts with the federal government.

TINA compliance is aimed at preventing the government from overpaying for goods and services by requiring transparency in pricing data.  See also FAR 15.403-4.

What are TINA Violations

The Truth in Negotiations Act, or “TINA,” mandates that you as a federal government contractor that is bidding or negotiating sole source contracts without any reachable market price” for the good or service, to submit truthful, accurate, and complete. cost and pricing data to the Federal Government. TINA violations are often referred to as “defective pricing.

The Truth in Negotiations Act (TINA) was enacted in 1962 to help the. government level the playing field when it comes to federal sole source contracts. The act focuses on making sure that government negotiators have access to the cost or pricing data that the offeror used when developing bid in response to the solicitation.

In a  TINA False Claims Act case, federal prosecutors will often claim that you violated the False Claims Act by knowingly failing to disclose cost or pricing data, as required by the TINA, regarding the rates that your company used for the service contract in question.

Failing to disclose pricing data used can include data relating to labor and equipment costs. Using the Truth in Negotiations Act attorneys at Watson & Associates may be able to offset the Government’s argument that it agreed to award the contract based on inflated labor rates, equipment, and services for the contract.

What is the TINA Threshold?

The Truth in Negotiations Act has specific amounts that it applies. It doesn’t apply to every federal government contract contract. TINA threshold applies to government contracts and subcontracts for at least $2 million.  The threshold also applies to government contract modifications in that amount.

How Does The Truth in Negotiations Act Impact the False Claims Act?

The False Claims Act (FCA) imposes serious penalties on individuals or government contractors who violate the Act by knowingly submitting false claims to the federal government. FCA penalties include a civil penalty and three times the amount of damages caused by the fraudulent act. The civil penalty is adjusted for inflation and as of February 12, 2024, the minimum penalty is $13,946 per claim and the maximum is $27,894 per claim.

Are You TINA Compliant? Who is Subject to TINA Pricing Requirements?

Under the Truth in Negotiations Act, government contractors and subcontractors in federal procurement are subject to TINA requirements and must provide cost and pricing data for negotiated contracts, subcontracts, or contract modifications exceeding a specified threshold. These issues usually come when contracts are awarded without adequate competition.

Become TINA compliant: To avoid Truth in Negotiations Act TINA Pricing Criminal Liability and government contract fraud under FAR 15.403-4, companies should perform their due diligence when certifying that pricing data is current, truthful, and complete. Government contractor fraud is common and the Department of Justice often conducts investigations alleging fraud against the government. Prime contractors and subcontractors can be charged and indicted for fraud under the False Claims Act for defective pricing if they deliberately withhold or submit false TINA pricing.

There are a few crucial points to understand about defective pricing and TINA requirements violation:

1. Intent is Not a Factor: It’s important to note that defective pricing doesn’t necessarily imply intentional deceit or fraud on the part of the contractor. Honest mistakes or oversights can lead to defective pricing. However, the consequences can be significant regardless of intent.
2. Discovery and Disclosure: If a contractor discovers they provided defective data after the fact, it’s in their best interest to promptly disclose this to the government. Early disclosure can mitigate potential penalties and demonstrate good faith.
3. Adjustment of Contract Price: If it’s determined that defective pricing led to an inflated contract price, the government may seek a downward adjustment to the contract price or even recover overpayments. This is done to ensure the government only pays the amount it should have based on accurate data.
4. Audits and Reviews: The Defense Contract Audit Agency (DCAA) or other government entities may conduct post-award audits to verify the accuracy of cost or pricing data. If these audits uncover discrepancies, it could lead to investigations into potential defective pricing.
5. Penalties and Legal Consequences: Beyond contract price adjustments, contractors can face other penalties for defective pricing, especially if there’s an indication of willful negligence or intentional misconduct. These penalties can include fines or even potential legal action.

What are Some TINA Compliance Exceptions?

Not every government contract or situation demands adherence to TINA compliance pricing requirements. There are several notable exceptions where contractors are not required to submit this data:

1. Competitive Pricing: One of the primary exceptions to TINA contracts pricing is when prices are based on adequate price competition. If there is competitive bidding, and the contract is awarded to the lowest responsive, responsible bidder, then cost or pricing data may not required.

2. Commercial Items: Contracts for the procurement of commercial items, as defined in the Federal Acquisition Regulation (FAR), are exempt from TINA’s cost or pricing data requirements. This is because commercial items, which are sold in substantial quantities to the general public, have market-established prices.

3. Prices Set by Law or Regulation: When prices are set by federal law or regulation, the submission of cost or pricing data isn’t necessary under TINA contracts.

4. Waivers: In certain situations, the head of a procuring agency can waive the requirement for cost or pricing data if it’s deemed in the best interest of the government.

5. Contracts Below the Simplified Acquisition Threshold: TINA requirements generally don’t apply to contracts below a specific dollar amount, known as the simplified acquisition threshold, unless the contracting officer determines that submission of the data is necessary for ensuring a fair and reasonable price.

When seeking to avoid Truth in Negotiations Act TINA Pricing Criminal Liability, government contractors should always be sure to understand when TINA applies and when it doesn’t. This understanding is crucial because even if TINA doesn’t apply, other regulations might still necessitate the submission of pricing information, though it wouldn’t require certification as accurate, complete, and current. Given the nuances and potential for changes in regulation, contractors often find it beneficial to consult with experts or legal professionals familiar with government contracting to ensure compliance. See information about Contracting By Negotiation Process With the Federal Government.

Here’s what you, as a government contractor needs to know about the Truth in Negotiations Act:

1. Applicability: TINA compliance applies to contracts and subcontract modifications where the negotiated price is expected to exceed a specified threshold. This threshold can change and is often adjusted for inflation.

2. Cost or Pricing Data: This is factual information, as of a particular date, that prudent buyers and sellers would reasonably expect to affect price negotiations. This includes information like vendor quotes, nonrecurring costs, unit costs, and cost trends.

3. Certification Requirement: Contractors must certify that the cost or pricing data they submit is accurate, complete, and current as of the date of agreement on the price. This certification helps the government ensure that it pays fair and reasonable prices.

4. Exceptions: There are exceptions to the TINA requirements, including when price competition is present, when commercial items are being procured, or when a waiver has been granted by the appropriate government authority.

5. Consequences of Non-Compliance: If a contractor fails to comply with TINA compliance requirements, the government can seek a price reduction or even terminate the contract for default. In severe cases, a government contractor might face civil or criminal penalties for government contract fraud.

6. Disclosure of TINA Defective Pricing: If a federal contractor discovers defective pricing after the fact (i.e., the cost or pricing data was inaccurate, incomplete, or not current), they are required to promptly disclose this to the government. This can result in a price adjustment.

7. Impact on Subcontractors: The requirements of TINA may flow down to subcontractors if their portion of the work is above the specified threshold, and if the subcontractor is providing cost or pricing data to the prime contractor.

TINA, or the Truth in Negotiations Act, requires contractors and subcontractors to submit accurate, complete, and current cost or pricing data when negotiating certain contracts with the federal government. The focus is on ensuring that government contracts are fairly priced.

Government Contract Fraud Defense Lawyers Against Truth in Negotiations Act Pricing Allegations: Your Legal Shield

If faced with allegations of non-compliance with TINA, our legal services provide vigorous defense strategies. As government contract fraud lawyers, we understand the complexities of TINA Truth in Negotiations Act. We represent clients in DOJ investigations and criminal cases involving government contracts.

Compliance with TINA is a critical aspect of government contracting, and the legal landscape is filled with pitfalls. Whether you need guidance on how to become TINA compliant or defend against fraud allegations, our government contract fraud lawyers are here to assist. 

Contact our government contractor fraud TINA requirements False Claims Act defense lawyers for immediate help with Truth in Negotiations Act compliance. Speak to Theodore Watson, our Department Head. Call 1.866.601.5518.