Truth in Negotiations Act (TINA): Thresholds and Defective Pricing

Truth in Negotiations Act compliance requirements come down to a straightforward exchange: when you negotiate a covered non-competitive federal contract above the dollar threshold, you must give the government your actual cost or pricing data, certify that the data are accurate, complete, and current as of an agreed cutoff date, and keep the supporting records long enough to defend that certification in an audit. Codified at 10 U.S.C. Chapter 271 for defense procurement and 41 U.S.C. Chapter 35 for civilian agencies, the law currently applies to contracts expected to exceed $2 million, with a significant increase scheduled for defense contracts after June 30, 2026.

When TINA Applies to Your Contract

Certified cost or pricing data are required when a sole-source or otherwise non-competitive prime contract is expected to exceed $2 million.¹ The same threshold reaches down to subcontracts at any tier, as long as the prime contractor was itself required to submit certified data.²

Modifications count too, even when the original contract did not trigger TINA. Contracting officers look at the aggregate value of a price change, adding increases and decreases together rather than netting them. A modification that raises one line item by $1 million and lowers another by $1.5 million is a $2.5 million pricing adjustment, and it crosses the threshold.³

The 2026 Defense Threshold Increase

For defense prime contracts entered into after June 30, 2026, certified cost or pricing data will not be required unless the contract price is expected to exceed $10 million. Subcontracts under those newer prime contracts move to the same $10 million floor.¹ Civilian agency thresholds under 41 U.S.C. § 3502 stay at $2 million.

Acquisition-related thresholds are also reviewed by the FAR Council every five years for inflation, using the Consumer Price Index for All Urban Consumers. When a threshold moves, the new amount applies to existing contracts for their remaining term, not just to new awards.⁴

What You Have to Submit

The FAR defines cost or pricing data as all facts that a prudent buyer and seller would reasonably expect to affect price negotiations significantly. The data have to be factual and verifiable, not judgmental estimates or aspirational projections.⁵ In practice that covers vendor quotes, labor rates, production methods, historical unit costs, make-or-buy decisions, and any management decisions that shift what the work will actually cost. A lower quote arriving from a supplier the day before negotiations is cost or pricing data, and holding it back is exactly the situation TINA was built for.

The “As Of” Date

Certified data must be accurate, complete, and current as of a specific cutoff date. That date is typically the day you and the contracting officer reach agreement on price, though the parties can agree to an earlier date.⁶ Any relevant fact that existed before the cutoff but was not disclosed can trigger a defective pricing claim later, even when the omission was accidental. If weeks pass between preparing the proposal and finalizing negotiations, sweep the records again before signing. New vendor quotes, staffing changes, and production efficiencies from that window all count.

Format and Organization

FAR Table 15-2 sets the format. The first page of the cost proposal identifies the solicitation or contract number, the type of contract action, the proposed cost and profit, and whether the contractor is subject to cost accounting standards. The proposal also carries an index that references every piece of certified cost or pricing data, with supplemental updates annotated for any changes that occur up to the cutoff.⁷ Each cost element (materials, direct labor, indirect costs, subcontractor pricing) should trace back to supporting documentation such as invoices, payroll records, or purchase orders. A clean audit trail reduces the risk of a post-award defective pricing finding.

The Certificate of Current Cost or Pricing Data

Submitting the data is only half the obligation. The contractor also signs a Certificate of Current Cost or Pricing Data using the exact format prescribed in FAR 15.406-2, stating that the data are accurate, complete, and current as of the agreed cutoff date to the best of the signer’s knowledge and belief.⁸ The contracting officer places the signed certificate in the contract file. This is the legal hook: every dollar of overstatement traced back to data that was inaccurate as of the certification date gives the government grounds for a price reduction, with interest.

When Certified Data Are Not Required

Federal law recognizes several situations where the certified data requirement drops out, even above the threshold.

Adequate price competition. Two or more responsible offerors independently submit priced offers meeting the government’s requirements, award is based on best value with price as a substantial factor, and the winning price is not found unreasonable. For civilian agencies (not DoD, NASA, or the Coast Guard), a single offer can still qualify if the contracting officer reasonably expected competition and can show the offer was submitted as if competition existed.⁹
Prices set by law or regulation. Rates fixed by a regulatory body (utilities, regulated carriers, and similar entities) are accepted without cost data.¹⁰
Commercial products and services. Items sold in substantial quantities to the general public at established market prices are exempt, because the commercial marketplace already disciplines the price.
Waivers. The head of the procuring activity may waive TINA in exceptional cases. The authority cannot be delegated and must be justified in writing.¹⁰

Waivers come with strings. For defense procurements, the agency has to develop a strategy to avoid needing the waiver in the future, whether by cultivating a second source, developing an alternative product, or bringing production in-house. Waivers exceeding $100 million require coordination with the senior procurement executive.¹¹ They exist primarily for cases where a sole-source supplier of a mission-critical item refuses to provide certified data and the government has no alternative.

Defective Pricing After Award

Every contract requiring certified cost or pricing data includes a price-reduction clause that lets the government recover any amount by which the price was inflated because the data were inaccurate, incomplete, or noncurrent.¹² The Defense Contract Audit Agency and other federal auditors run compliance audits looking for exactly this, typically after award and once work is underway.¹³

When auditors find defective pricing, the contracting officer calculates the difference between what the government paid and what it would have paid with accurate data, and the government is entitled to recover that difference. One defense that does work is proving the government did not actually rely on the defective data during negotiations. If the contracting officer reached the price through independent analysis and the bad data played no role, there is no overpayment to recover. Several arguments do not work. You cannot claim the price would have been the same because you were the only source and had bargaining leverage. You cannot argue the contracting officer should have caught the error. And you cannot hide behind a total agreed price when individual costs were not broken out.¹²

Offsets for Understated Costs

An audit can cut both ways. If some data overstated costs while other data understated them, the contractor can claim an offset that reduces the government’s recovery. The offset does not have to come from the same cost category: an overstatement in materials can be offset by an understatement in labor.⁶ To qualify, the contractor must certify the offset amount and show the understated data existed before the certification cutoff but was not submitted. Offsets are disallowed if the contractor knew the data was understated before that date, which forecloses any strategy of low-balling one element to bank a future offset.

Interest

Beyond the price reduction, the government charges interest on every dollar of overpayment from the date each payment was made until repayment. The rate is the IRS underpayment rate, the federal short-term rate plus three percentage points, recalculated quarterly.⁶¹⁴ On a large defense contract where an audit takes years to close, accumulated interest alone can be substantial.

When Defective Pricing Becomes a False Claims Act Case

Defective pricing escalates when the contractor knowingly submitted false data. The False Claims Act imposes liability on anyone who knowingly presents a false claim to the government, and a contract price inflated by intentionally defective cost data fits that description. The penalty structure is treble damages, three times the amount the government overpaid, plus a per-claim civil penalty.¹⁵ As of mid-2025, the per-claim penalty ranges from $14,308 to $28,619, adjusted annually for inflation.¹⁶

The practical difference between a routine defective pricing finding and a False Claims Act case often turns on intent. An accidental failure to update a vendor quote before certification produces a price reduction and interest. A deliberate decision to withhold a lower quote or to fabricate cost estimates can produce criminal referrals, debarment from future government work, and damages that dwarf the original contract value. A contractor who discovers a pricing error after award should consider prompt voluntary disclosure to the contracting officer and DCAA, which can influence how the government characterizes the problem.¹⁷

Record Retention

Contractors must keep records supporting their certified cost or pricing data for at least three years after final payment on the contract. When data from one contract is used to negotiate a follow-on contract, the retention clock restarts from the date of the later contract.¹⁸ If records from different categories are filed together and cannot be separated, the entire batch must be kept for the longest applicable retention period. DCAA audits can begin years after award, and a contractor who cannot produce the underlying documentation to explain its pricing is in a weak position to contest a defective pricing finding.

1
Office of the Law Revision Counsel. 10 USC 3702 – Required Cost or Pricing Data and Certification
2
Office of the Law Revision Counsel. 41 USC 3502 – Required Cost or Pricing Data and Certification
3
Acquisition.GOV. FAR 15.403-4 – Requiring Certified Cost or Pricing Data
4
eCFR. 48 CFR 1.109 – Adjustment for Inflation
5
Acquisition.GOV. FAR 2.101 – Definitions
6
Acquisition.GOV. FAR 15.407-1 – Defective Certified Cost or Pricing Data
7
Acquisition.GOV. FAR 15.408 – Solicitation Provisions and Contract Clauses
8
Acquisition.GOV. FAR 15.406-2 – Certificate of Current Cost or Pricing Data
9
Acquisition.GOV. FAR 15.403-1 – Prohibition on Obtaining Certified Cost or Pricing Data
10
Office of the Law Revision Counsel. 10 USC 3703 – Exceptions
11
Acquisition.GOV. PGI 215.403-1 – Prohibition on Obtaining Certified Cost or Pricing Data
12
Office of the Law Revision Counsel. 10 USC 3706 – Price Reductions for Defective Cost or Pricing Data
13
Defense Contract Audit Agency. DCAA Contract Audit Manual Chapter 14 – Other Contract Audit Assignments
14
Office of the Law Revision Counsel. 26 USC 6621 – Determination of Rate of Interest
15
Office of the Law Revision Counsel. 31 USC 3729 – False Claims
16
Federal Register. Civil Monetary Penalties Inflation Adjustments for 2025
17
Acquisition.GOV. DFARS 215.407-1 – Defective Certified Cost or Pricing Data
18
GovInfo. Federal Acquisition Regulation 4.703 Policy