The Truthful Cost or Pricing Data Act, formerly and more commonly known as The Truth in Negotiations Act (“TINA”) was passed by Congress in 1962 as a result of a general sense at the time that government contractors were overcharging the government for their products and services. TINA generally applies to government contracts over $2 million where no or little competition exists for a specific procurement.
If your company does business with the Department of Defense (“DoD”), then it is likely subject to TINA and pursuant to which, upon request, you may be required to disclose full applicable cost and pricing data including subcontracted services and materials to the DoD. Also, you may be required to certify the accuracy of all the data supplied and you may be subject to audit by the Defense Contract Audit Agency (DCAA).
We have seen a number of clients that were ill-prepared for buyer due diligence relating to TINA. Accordingly, we strongly recommend taking proactive measures to minimize the risk of being found in violation. Specifically, you should implement policies and procedures to maintain good financial records, to strengthen internal controls, and ensure accurate financial data can be easily provided on short notice and with a high level of confidence if requested by the DoD. Promptly disclosing accurate cost and pricing data is key to a successful TINA audit. Failure to successfully pass a TINA audit can lead to not only buyer price adjustments but also can subject the company to potential civil and/or criminal penalties and severely limit your company’s future participation in government subcontracting.
As we have said many times, careful long-term planning and thoughtful execution are two keys to selling your company for an aspirational price.
Have a great day,
Managing Director, Defense