FAR FAR Defective Pricing & Penalties 2 — Questions and Answers
Question 1: What legislation originally established the requirement for certified cost or pricing data in US government contracting?
- Federal Acquisition Streamlining Act (FASA)
- Truth in Negotiations Act (TINA), now called the Truthful Cost or Pricing Data Act (Correct answer)
- Competition in Contracting Act (CICA)
- Federal Property and Administrative Services Act
Correct answer: Truth in Negotiations Act (TINA), now called the Truthful Cost or Pricing Data Act
The Truth in Negotiations Act (TINA), now known as the Truthful Cost or Pricing Data Act, established the statutory requirement for contractors to certify cost or pricing data.
Question 2: Under the Truthful Cost or Pricing Data Act, which contracts are generally subject to certified cost or pricing data requirements?
- All government contracts regardless of type or value
- Negotiated prime contracts and subcontracts exceeding the statutory threshold, absent an applicable exception (Correct answer)
- Only cost-reimbursement type contracts above the threshold
- Only contracts awarded to large business concerns
Correct answer: Negotiated prime contracts and subcontracts exceeding the statutory threshold, absent an applicable exception
Certified cost or pricing data requirements apply to negotiated prime contracts and subcontracts above the threshold, unless a specific statutory exception applies such as adequate price competition or commercial items.
Question 3: Why is the 'date of agreement' significant in the context of certified cost or pricing data?
- It is the date the contractor signs the final contract document
- It is the date as of which cost or pricing data must be accurate, complete, and current per the certificate (Correct answer)
- It is the delivery date established for contract performance milestones
- It is the date the contracting officer approves the contractor's cost accounting system
Correct answer: It is the date as of which cost or pricing data must be accurate, complete, and current per the certificate
The date of agreement is critical because the contractor certifies that data is accurate, complete, and current as of that date, establishing the baseline for assessing defective pricing claims.
Question 4: Which of the following is a valid statutory exception to certified cost or pricing data requirements under FAR 15.403-1(b)?
- The contractor is a small business concern
- The price is based on adequate price competition (Correct answer)
- The contract value is below $5 million
- The contractor holds a DCAA-approved accounting system
Correct answer: The price is based on adequate price competition
Adequate price competition is one of the enumerated exceptions to certified cost or pricing data requirements under FAR 15.403-1(b)(1), recognizing that market forces provide sufficient pricing discipline.
Question 5: What penalty can be assessed for submission of defective cost or pricing data that rises to the level of a false claim under the False Claims Act?
- Forfeiture of the contract and all payments received
- Treble damages plus statutory civil penalties for each false claim submitted (Correct answer)
- Mandatory debarment from government contracting for two years
- Reduction of contractor profit to zero for the contract period
Correct answer: Treble damages plus statutory civil penalties for each false claim submitted
The False Claims Act provides for treble (triple) damages plus civil penalties per false claim, making defective pricing with fraudulent intent extremely costly for contractors.
Question 6: Under FAR 15.403-4(a)(1), what action must a contracting officer take before entering into a negotiated contract above the certified cost or pricing data threshold?
- Request a certified public accountant to independently verify all submitted data
- Require the contractor to submit and certify cost or pricing data before completing negotiations (Correct answer)
- Perform a fully independent government cost estimate before beginning negotiations
- Obtain DCAA audit clearance and formal approval before contract award
Correct answer: Require the contractor to submit and certify cost or pricing data before completing negotiations
FAR 15.403-4(a)(1) requires the contracting officer to obtain certified cost or pricing data from the contractor before entering into a negotiated contract above the applicable threshold.
FAR FAR Defective Pricing & Penalties 2
What legislation originally established the requirement for certified cost or pricing data in US government contracting?