Truth in Negotiations Requests
Have you recently received a letter from the local Defense Contract Audit Agency (DCAA) office requesting specific information on recent government contract awards? Many of our clients have, which raised concern because the letters have not disclosed DCAA’s purpose, need or intended use of the information requested.
What You Need to Know:
- DCAA will use the information collected to select contracting actions awarded during Government FY 2019 which will be subject to “Defective Pricing Audits” (Truth in Negotiations Audits; DCAA Audit Program 42000).
- These audits were formerly called Truth in Negotiations Act (TINA) audits, but are now known as Truth in Negotiations (TiN).
- The objective of the TiN audit is to assess contractor compliance with the statement required in FAR 15.406-2 that Certified Cost or Pricing Data submitted to the Government are “…accurate, complete, and current…” as of the date of agreement on price.
- DCAA recently stated in its 2018 Report to Congress that the agency would be expanding the mix of audits in future years to include “…business systems, Truth in Negotiations, Cost Accounting standards, preaward surveys, claims, and terminations…” (emphasis added)
Who Will be Conducting the Audits:
- Formerly, local DCAA offices conducted Defective Pricing Audits.
- DCAA has pulled this effort into the headquarters umbrella and established four audit teams through the U.S.
- It is possible that a contractor may encounter a TiN audit with a team or individuals with which they have no previous experience.
- Contractors should compile a list of contract awards from several prior fiscal year periods that required submission of certified cost or pricing data.
- From this list, contractors should perform some due diligence to determine if sufficient supporting documentation exists and is readily available, proper disclosures were made to the government and identify potential compliance risk situations.
- Log revised or additional cost or pricing data that was provided to the Government during negotiations to support the proposed costs, to include the information, submittal date, and documentation that supports that the information was in fact provided to the Government. If a log or documentation of this nature was not prepared by contractors at the conclusion of negotiations, we recommend that it be constructed based on current existing data, documents, and archived communications.
- Document, in narrative fashion, the correspondence, exchanges and critical decision points and events regarding price negotiations with the Government. The Government produces this type document for internal purposes and refers to it as a Price Negotiation Memorandum.