Truth in Negotiations Act: Thresholds, Exceptions, and Defective Pricing

The Truth in Negotiations Act, now formally called the Truthful Cost or Pricing Data Act but still known as TINA, requires contractors on negotiated federal contracts above a set dollar threshold to hand over their actual cost data before price is finalized and to certify that the data is accurate, complete, and current. The current threshold in the Federal Acquisition Regulation is $2.5 million. For defense contracts entered after June 30, 2026, that number rises to $10 million.¹ When a contractor certifies data that turns out to be wrong, the government can claw back the overpayment, add interest and penalties, and in serious cases pursue fraud liability.

Which Contracts Trigger the Disclosure Requirement

Two parallel statutes set the rule. Defense contracts are governed by 10 U.S.C. § 3702, civilian agency contracts by 41 U.S.C. § 3502.²³ Both apply only to negotiated procurements. Contracts awarded through sealed bidding are outside TINA, because competitive bidding provides its own price discipline. The FAR sets the disclosure threshold at $2.5 million for prime contracts awarded on or after July 1, 2018.¹

The threshold reaches beyond the initial award. Modifications and change orders that themselves exceed the threshold require certified data for the adjustment. The FAR counts increases and decreases together when measuring the size of a modification, so a change that reduces costs by $1.5 million and adds $1 million in new costs produces a $2.5 million pricing adjustment and crosses the line.¹ Subcontracts are covered by the same rules when the subcontractor’s portion of the work reaches the applicable dollar limit.

The Defense Threshold Change in 2026

Under the FY2026 National Defense Authorization Act, the TINA threshold for defense prime contracts entered after June 30, 2026 rises from $2.5 million to $10 million. The same $10 million threshold applies to subcontracts under those new prime contracts and to modifications of the prime contracts themselves.²

One carve-out is easy to miss. Modifications to subcontracts under defense contracts keep a $2 million threshold even when the prime contract was entered after June 30, 2026.² Subcontractors working under defense primes should not assume the $10 million number applies across the board to their own change orders.

Civilian contracts are unchanged. The $2 million statutory threshold under 41 U.S.C. § 3502, implemented at $2.5 million in the FAR, stays in place with no scheduled adjustment.³ A contractor selling the same product to a defense agency and a civilian agency could face different disclosure obligations depending on the buyer.

Exceptions That Turn Off Certification

Even when a contract clears the threshold, several statutory exceptions eliminate the requirement for certified cost or pricing data. Under 10 U.S.C. § 3703 and 41 U.S.C. § 3503, the main ones are:

Adequate price competition. When two or more responsible offerors submit independent proposals and the contracting officer can evaluate price on that basis, the market itself checks the price and the government does not need to see internal cost structures.⁴
Prices set by law or regulation. When a statute or regulation already fixes the price, no cost analysis is needed.⁵
Commercial products and services. Items sold in substantial quantities in the commercial marketplace at established catalog or market prices do not require certified data.⁴

The head of a contracting activity can also grant a specific waiver where certified data would be impractical or would delay an urgent procurement. These waivers are rare and require written justification.

An exception does not mean the government gives up on price analysis. Under FAR 15.403-3, contracting officers can still require “data other than certified cost or pricing data” whenever needed to determine that a price is fair and reasonable, including prior sales history, comparable-item pricing, and information on labor or material costs.⁶ The contractor does not sign the formal certificate for this uncertified data and does not face the defective pricing remedies, but refusing to provide it can stall the negotiation. For commercial products, the contracting officer typically starts with prior sales data and can escalate to full cost breakdowns if that does not establish a reasonable price.⁷

What Must Be Disclosed and Certified

When certified cost or pricing data is required, the submission must include every fact that could reasonably affect the negotiated price. That means vendor quotes for materials, current labor rates, overhead allocation methods, historical costs from similar contracts, and any discounts or rebates the contractor has received or expects to receive. Judgments and projections standing alone are not cost or pricing data, but the factual inputs behind them are.

Once the data is assembled, the contractor signs a Certificate of Current Cost or Pricing Data in the form prescribed by FAR 15.406-2. The certificate attests that the submitted information is accurate, complete, and current as of a specific date: either the date the parties reached agreement on price or an earlier date the parties agreed on that is as close as practicable to the agreement date.⁸ The certificate identifies the contractor, the solicitation or contract number, and the proposal being certified.

This “as of” date is the linchpin of TINA compliance. Every fact the contractor knew or should have known before that date must be reflected in the submission. If a supplier sends a revised quote the day before price agreement, the old quote in the proposal must be updated. If it is not, the submission is defective whether or not the omission was intentional.

The Pre-Certification Sweep

Experienced contractors run a “sweep” between the price agreement date and the certificate signing date. During a sweep, the contractor reviews all available cost or pricing data to catch anything that changed or was overlooked during negotiations: a new subcontractor quote, an updated labor rate, a volume discount not reflected in the original proposal. The sweep is not a regulatory requirement. It is the practical way contractors catch latent data problems before those problems become defective pricing findings years later.

Consequences of Defective Certified Data

When the government discovers that certified data was inaccurate, incomplete, or not current as of the certificate date, it has the right to reduce the contract price. The Defense Contract Audit Agency performs most of these post-award audits, usually within three years of final payment on the contract.⁹

The adjustment is calculated by comparing the negotiated price to the price the parties would have agreed on if the data had been accurate. If the contractor failed to disclose a 15% supplier discount, the government subtracts that discount from the contract price. Interest runs on any overpayment from the date the government made each payment until the contractor repays, using the IRS underpayment interest rate set under 26 U.S.C. § 6621(a)(2).¹⁰

Where the defective data was a “knowing submission,” the government adds a penalty equal to the full overpayment amount on top of the price reduction. The contracting officer’s demand letter itemizes the overpayment, the penalty, and the accrued interest separately.¹⁰

Offsets for Understated Costs

Defective pricing does not always run in one direction. If the contractor also understated costs in the same pricing action, the contracting officer must allow an offset against the overpayment claim. The offset does not need to come from the same cost category: a material understatement can offset a labor overstatement. To claim the offset, the contractor must certify entitlement and prove the understated data existed before the certificate date but was not submitted.¹¹ The contractor cannot claim an offset for data it knew was understated at the time; the offset is meant for innocent omissions that cut the other way, not strategic silence.

Challenging a Defective Pricing Finding

A contractor that disagrees with the contracting officer’s final decision can appeal to the agency’s Board of Contract Appeals within 90 days or file suit in the U.S. Court of Federal Claims within 12 months.¹² The burden is heavy. The government’s audit establishes a presumption of overpayment, and the contractor must show the omitted or inaccurate data would not have changed the negotiated price. That is hard to argue when the data clearly would have moved the number.

Fraud Exposure Beyond Price Adjustments

A price reduction is the mildest remedy. When a false submission looks intentional, the exposure rises sharply.

The False Claims Act (31 U.S.C. § 3729) allows the government to recover three times its actual damages plus a civil penalty of $14,308 to $28,619 for each false claim submitted.¹³¹⁴ Unlike a TINA price reduction, an FCA action is punitive. Knowingly certifying inaccurate data while aware of the TINA obligation gives the government strong evidence of intent to defraud. Courts can reduce treble damages to double damages when the contractor voluntarily disclosed the violation and cooperated fully, but that mitigation is narrow.

Signing a false Certificate of Current Cost or Pricing Data can also violate 18 U.S.C. § 1001, the general federal false statements statute. A conviction carries up to five years in prison, a fine, or both.¹⁵ Individual employees who sign the certificate are personally exposed, not just the corporate entity.

Repeated or serious violations can also trigger suspension or debarment. Under FAR Subpart 9.4, agencies can exclude a contractor from future government work for fraud, criminal conduct in performing a public contract, or a pattern of serious contract violations. Debarment decisions weigh the contractor’s history, whether full restitution was made, and whether management put corrective programs in place.¹⁶ For many contractors, losing eligibility for federal work is a heavier consequence than any dollar penalty.

1
Acquisition.gov. 48 CFR 15.403-4 – Requiring Certified Cost or Pricing Data
2
Office of the Law Revision Counsel. 10 USC 3702 – Required Cost or Pricing Data and Certification
3
Office of the Law Revision Counsel. 41 USC 3502 – Required Cost or Pricing Data and Certification
4
Office of the Law Revision Counsel. 10 USC 3703 – Exceptions
5
Office of the Law Revision Counsel. 41 USC 3503 – Exceptions
6
Acquisition.gov. 48 CFR 15.403-3 – Requiring Data Other Than Certified Cost or Pricing Data
7
eCFR. 48 CFR 15.403-1 – Prohibition on Obtaining Certified Cost or Pricing Data
8
Acquisition.gov. 48 CFR 15.406-2 – Certificate of Current Cost or Pricing Data
9
Defense Contract Audit Agency. DCAA Contract Audit Manual – Chapter 14 – Other Contract Audit Assignments
10
Acquisition.gov. 48 CFR 15.407-1 – Defective Certified Cost or Pricing Data
11
eCFR. 48 CFR 15.407-1 – Defective Certified Cost or Pricing Data
12
Acquisition.gov. FAR Subpart 33.2 – Disputes and Appeals
13
Office of the Law Revision Counsel. 31 USC 3729 – False Claims
14
Federal Register. Civil Monetary Penalties Inflation Adjustments for 2025
15
Office of the Law Revision Counsel. 18 USC 1001 – Statements or Entries Generally
16
Acquisition.gov. FAR Subpart 9.4 – Debarment, Suspension, and Ineligibility