What are the fact patterns involved in false negotiation or defective pricing cases, often in violation of the Truth in Negotiations Act?

The Government’s contracting process is governed by the principles outlined in the Truth in Negotiations Act (sometimes referred to as “TINA“). All Government contracts which involve negotiated pricing (rather than, for example, catalog pricing or competitive bidding) usually require compliance with the Truth in Negotiations Act. The Truth in Negotiations Act broadly requires that Government contractors must be honest and truthful with the Government and must disclose the actual costs of providing a good or service. These negotiations must be based upon accurate cost and pricing data. Otherwise, the Government will rely upon this data and pay too high a price for the goods or services, resulting in an unreasonably high rate of profit for the contractor.

The Government often requires cost and pricing information in negotiation contracts because there is no "market" among dozens of competitors for the specialty goods the Government is procuring. The TINA exists because the Government needs to be able to rely on the accuracy of contractor information.  It is not always possible for a Government contracting officer to simply go to K-Mart, like a normal consumer would, and determine what the “market” price is for the specialized products it procures. That is, there are not many multiple American businesses competing to make stealth bombers, amphibious armored jeeps, cruise missiles, and aircraft carriers. In some instances, the highly specialized nature of Government items may result in a single company being the only manufacturer or “sole source” of the product. Moreover, a Government contracting officer may not have any particular technical training, background, or education about the type of product or service being bought.  Thus, for a variety of reasons, federal law requires that, unlike in the private sector, the contractor supplying less-than-ordinary products or services must fully and accurately disclose its cost and pricing information to the Government. 
Return to Search Results