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TINA & Lack of approved accounting system


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Background: Defense contractor is providing services and products under "Commercial" definition via FFP subcontracts. Currently, the Finance/Accounting system is not set up to accurately provide direct and indirect rates for cost plus contracting. (GL doesn't notate unallowables) An accounting type has created what are believed to be reasonably accurate DCAA-like rates. (insert reaction here)

Current situation: Bidding via a prime to provide Modified versions of a Commercial item. Modification exceeds $700k (90% labor). DoD Contracts Specialist requests labor detail for cost justification. I VERY clearly & repeatedly state in both verbal and written form that we can only provide DCAA-like rates, as noted above. Since our DCAA-like rates exceed our standard published commercial labor rates by 10%+ resulting in a cost type proposal exceeding the price proposal by 10%+, the Specialist signs off.

Problem: DoD Contracts Specialist requests that I sign a TINA cert. Morally, I have no issue with signing off on our FFP proposal price, based on our Commercial labor rates. Given that our DCAA-like rates were provided merely to provide a rough estimate against our commercial labor rates, the accuracy, or lack thereof, should not give me pause. Correct?

Thank you.

BC

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Guest Vern Edwards

Your post indicates that you are greatly confused about many things.

Question: Are you proposing a commercial item as defined in FAR 2.101 or are you not -- yes, no, or I don't know?

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Vern,

The original work was Commercial Item as defined in FAR Part 2.101, however, the USG later directed a modification to the Commercial item. The value of this modification exceeds the 5% threshold for "minor" modifications to a commercial item and is well in excess of 700k, thereby triggering TINA.

V/R

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Non-commercial modifications to commercial items are NOT exempt from requirement

for certified cost or pricing data if they exceed the TINA threshold or 5% of the total

price of the contract. (Further amended in FY 2008 NDAA to add “. . . at the time of

award”). [see also FAR 15.403-1(c)(3)(iii)]

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Guest Vern Edwards

Got it. Thanks. Yes, you should be concerned about signing a TINA cert. A TINA cert does not apply to the price you proposed. TINA applies to the facts that you submitted to the prime and/or the government in support of your price. TINA requires that you disclose all of the pertinent pricing facts that reasonable buyers and sellers would expect to affect the price. Have you done that? Have you disclosed all of the pertinent facts? If you have disclosed all of the facts, and if the facts are accurate, complete and current as of the date of price agreement, then you should be OK. Otherwise, don't sign the cert. If you are not sure, then don't sign the cert.

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Vern,

Thank you. I believe I am on solid ground as to disclosure of pertinent facts. The key being that our FP labor proposal is truly based on current, published, commercial labor rates, which rates have truly been used for actual commercial sales. The cost comp. using so-called DCAA-like rates (full disclosure having been made re: (in)accuracy of said rates) resulted in a larger number than our FP price.

I greatly appreciate your feedback. Better to ask for advice than have my ethics questioned.

V/R,

BC

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