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TINA and judgment


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#1 ContractPriceAnalyst

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Posted 23 April 2012 - 11:55 AM

I am looking for some clarification regarding the Government's rights under TINA when the Government did not perform due diligence in its review of the cost proposal and subsequent negotiation.

Scenario: The basis of estimates (BOEs) included in a $30M+ cost proposal do not contain any factual data supporting the estimate. The rationale included in the BOEs is essentially engineering judgment. For example, one BOE for a task that is estimated to take 2,756 hours states that the rationale for the estimated hours is "Subject matter staffing assessment based on closeout experience with other programs". That same BOE states "no specific data source". The PCO did not ask for the underlying data supporting that estimate nor did the PCO chose to request an audit by DCAA.

Question: The PCO claims that the Government is protected under TINA because the contractor will be submitting a Certificate of Current Cost or Pricing Data. If the PCO relied upon estimates that were based on judgment without requiring disclosure of the underlying facts behind that estimate, would the Government be able to sustain a defective pricing claim?

#2 here_2_help

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Posted 23 April 2012 - 12:17 PM

In my view, if the BOE stated that the staffing was based on "closeout experience with other programs" then the other programs should have been identified, and actual labor hours for analogous tasks should have been provided for analysis. The contractor's failure to submit the information violates the requirements of FAR Table 15-2--

"The requirement for submission of certified cost or pricing data is met when all accurate certified cost or pricing data reasonably available to the offeror have been submitted, either actually or by specific identification, to the Contracting Officer or an authorized representative."

Hope this helps.

#3 Retreadfed

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Posted 23 April 2012 - 12:30 PM

I am looking for some clarification regarding the Government's rights under TINA when the Government did not perform due diligence in its review of the cost proposal and subsequent negotiation.

Scenario: The basis of estimates (BOEs) included in a $30M+ cost proposal do not contain any factual data supporting the estimate. The rationale included in the BOEs is essentially engineering judgment. For example, one BOE for a task that is estimated to take 2,756 hours states that the rationale for the estimated hours is "Subject matter staffing assessment based on closeout experience with other programs". That same BOE states "no specific data source". The PCO did not ask for the underlying data supporting that estimate nor did the PCO chose to request an audit by DCAA.

Question: The PCO claims that the Government is protected under TINA because the contractor will be submitting a Certificate of Current Cost or Pricing Data. If the PCO relied upon estimates that were based on judgment without requiring disclosure of the underlying facts behind that estimate, would the Government be able to sustain a defective pricing claim?


Your post indicates that the contract has not been awarded yet. If that is the case, the PCO should stll be able to require the submission of cost or pricing data. FAR 15.407-1 requires the contracting officer to go back to the contractor if the contracting officer recognizes that defective data have been submitted. The implication of this to me is that contracting officers shall not award a contract knowing that defective data have been submitted. Doing so could jeopardize any potential recovery by the government for defective data.

#4 Vern Edwards

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Posted 23 April 2012 - 12:47 PM

Scenario: The basis of estimates (BOEs) included in a $30M+ cost proposal do not contain any factual data supporting the estimate. The rationale included in the BOEs is essentially engineering judgment. For example, one BOE for a task that is estimated to take 2,756 hours states that the rationale for the estimated hours is "Subject matter staffing assessment based on closeout experience with other programs". That same BOE states "no specific data source". The PCO did not ask for the underlying data supporting that estimate nor did the PCO chose to request an audit by DCAA.

Question: The PCO claims that the Government is protected under TINA because the contractor will be submitting a Certificate of Current Cost or Pricing Data. If the PCO relied upon estimates that were based on judgment without requiring disclosure of the underlying facts behind that estimate, would the Government be able to sustain a defective pricing claim?


If the CO requires that you submit certified cost or pricing data with the proposal the CO is under no obligation to request specific information. You are required to submit:

all facts that, as of the date of price agreement, or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price, prudent buyers and sellers would reasonably expect to affect price negotiations significantly.


The burden is on you to be proactive in the submission of certified cost or pricing data. If you have facts in support of the BOEs prior to price agreement and do not submit them, then you might have a problem.

#5 ContractPriceAnalyst

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Posted 23 April 2012 - 01:28 PM

Clarification: I am a Government civil servant who normally provides pricing advice/support to Contracting Officers for actions exceeding a certain dollar threshold. In this case, the PCO requested and was granted a waiver for pricing support. When the PrePNM was completed, another staff reviewer requested my assistance in reviewing the file. During that review, I noticed that the BOEs were unsupported. Unfortunately for the Government, the contracting officer was planning on negotiating/accepting the proposed price this past weekend despite my concerns with regard to his determination of reasonableness of the FFP amount. I would say that the contracting officers is awarding a contract in which defective data (i.e. not complete) has been submitted. I cannot speak to the contracting officer's knowledge of its defectiveness. Based upon the comments, it appears that it is unclear as to whether or not the Government could sustain a defective pricing case should a post award audit be performed. Thanks for the input. I learn a lot from WIFCON.

#6 Guest_Infoseeker_*

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Posted 24 April 2012 - 07:28 PM

I am sorry for muddying the waters, but are you saying this is a $30M FFP contract/proposal for unknown services? Did I read too much into your post?

#7 ContractPriceAnalyst

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Posted 30 April 2012 - 09:58 AM

Infoseeker, you did read too much into my post. The information within the Basis of Estimates did identify top-level task descriptions; what was missing was supporting data that is both factual and verifiable. The Government was fully aware of what they were buying. My question pertained to the ability to sustain a defective pricing case if the cost proposal clearly states that the estimates were based on judgment.

#8 Don Mansfield

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Posted 30 April 2012 - 10:27 AM

ContractPriceAnalyst,

In order for there to be defective pricing, the certification made by the contractor in the Certificate of Current Cost or Pricing Data would have to be false. The fact that the basis of estimate is "engineering judgment" is irrelevant. Even if the data were defective, the Government would have had to rely on the defective data (not the estimates) during the negotiations in order to be entitled to a price adjustment.

You may want to point out FAR 15.406-2(d) to the CO:

"Possession of a Certificate of Current Cost or Pricing Data is not a substitute for examining and analyzing the contractor’s proposal."

#9 Retreadfed

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Posted 30 April 2012 - 02:30 PM

Don, can you clarify your previous statement. By quoting the FAR passage that you did, are you suggesting that the contractor's proposal is cost or pricing data?

#10 Don Mansfield

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Posted 30 April 2012 - 03:12 PM

Retreadfed,

No, that's not what I meant. It seems the PCO, in this case, is cutting corners on proposal analysis because the action is subject to TINA. That's why I quoted the FAR passage.

#11 Retreadfed

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Posted 30 April 2012 - 05:36 PM

Thanks.

#12 ContractPriceAnalyst

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Posted 01 May 2012 - 02:22 PM

Don, thanks for pointing out that FAR reference!




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