Cost PrinciplesThe rules promulgated by the government in FAR Part 31 that define which costs are allowable in the negotiation and administration of government contracts. This part of the FAR contains contract cost principles and procedures for (1) the pricing of contracts, subcontracts, and contract modifications whenever cost analysis is performed and (2) the determination, negotiation, or allowance of costs when required by a contract clause. These principles are made a part of all cost-reimbursement contracts by incorporation by reference in the Allowable Cost and Payment clause at FAR 52.216-7.
Any negotiated contract or subcontract that is subject to the Cost Accounting Standards. 48 C.F.R. § 9903.201-2 provides that such contracts are subject to either full or modified coverage of the Cost Accounting Standards requirements in accordance with the rules in FAR 30.301(b), which provide 15 exemptions from those requirements.
Truth In Negotiations Act (TINA)
An Act (10 U.S.C. § 2306a, 41 U.S.C. § 254b) that was added to the Armed Services Procurement Act in 1963 to enhance the government’s ability to negotiate fair prices by ensuring that the contracting officer has the same factual information that is available to the contractor at the time of price negotiations. TINA requires contractors to submit Cost or Pricing Data and certify of their accuracy, completeness, and currency for the award of any negotiated contract expected to exceed $650,000 ($100,000 in the case of a contract entered into on or before Dec. 5, 1990). However, requiring such data is prohibited when simplified Acquisition procedures are used, when there is adequate price competition, when the agency is procuring a commercial item, when the price is established by law or regulation, when a waiver is obtained, and when the agency exercises an option or funds an overrun. FAR 15.403-1 and 15.403-2.It also provided for contract price adjustment as a result of submission of defective cost or pricing data. In 1984 the competition in contracting act added these requirements to the federal property and administrative services act of 1949 at 41 U.S.C. § 254b. Subsequently, in 1986, TINA was greatly expanded and codified at 10 U.S.C. § 2306a. The Federal Acquisition Streamlining Act of 1994, Pub. L. No. 103-355 further modified and refined TINA requirements.
TINA is not the only remedy available to the government for defective data; a contractor may be found liable for civil fraud under the false claims act, 31 U.S.C. §§ 3729–3732, for knowingly submitting defective data. Certification under the Act is accomplished by the Certificate of Current Cost or Pricing Data in FAR 15.506-2. The Act is implemented by the Price Reduction for Defective Cost or Pricing Data clauses at FAR 52.215-22 and -23. The data are submitted in accordance with Table 15-2, FAR 15.408.