The government may not rely on the defective pricing clause as a substitute for diligent negotiation.However, that presumption can be overcome, and if the agency chooses a pricing approach that does not depend on the missing or inaccurate data, it cannot prevail. The government receives a legal presumption that it relied on the contractor’s data. There must be a causal nexus between a contractor’s supposedly defective data and the agency’s pricing decisions.That remains true even if the contractor’s estimates or judgments about performance turn out to be accurate or are produced near the end of production. A contractor’s estimates and managerial judgments about performance - including work-in-progress - do not qualify as cost or pricing data.Its decision rejected the Army’s claim that a manufacturer should have disclosed data from an in-progress delivery order during price negotiations for the follow-on order. 59625, the ASBCA provided detailed guidance on navigating the requirement for cost or pricing data.
If a contractor fails to turn over relevant information, the contract officer can adjust the contract’s price or costs for the effect of the non-disclosure and assess double-damages in the event of a knowing violation, and the Department of Justice may seek relief under the False Claims Act for a knowing or reckless false certification. Contractors must certify that their data is accurate, complete, and current to the best of their knowledge as of the date of agreement on price. However, that leaves contractors with challenging questions about what counts as “judgmental,” and what to do with data containing both fact and judgment.ĭespite the lack of a clear standard, the consequences of mistakenly failing to disclose data can be significant.
The FAR defines “cost or pricing data” broadly to mean the “facts” that “prudent buyers and sellers would reasonably expect to affect price negotiations significantly.” The FAR goes on to state that cost or pricing data does not include “judgmental” information. TINA requires companies to disclose cost or pricing data to the government when negotiating contracts or contract modifications in excess of $2 million, unless an exception applies. While the full effect of that enhanced focus on TINA compliance remains to be seen, a recent decision by the Armed Services Board of Contract Appeals (“ASBCA”) provides helpful guidance for navigating upcoming TINA audits and defending against defective pricing claims, particularly in situations involving an on-going program where documents contain both facts and judgmental estimates. Late last year, a spokesman for the Department of Defense announced without fanfare that the agency would increase audits of certified cost or pricing data under the Truth in Negotiations Act (“TINA”).
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