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2018 NDAA: Changes to TINA Threshold and Incurred Cost Audits

In November, the conference committee for the National Defense Authorization Act (“NDAA”) for fiscal year 2018 completed one of the final steps in the NDAA process filing its report reconciling the differences between the House version and the Senate version of the legislation. Shortly after the reports were reconciled, the conference report was officially enacted into law as the fiscal year 2018 NDAA. This bill authorizes fiscal year 2018 appropriations and sets forth policies for Department of Defense (“DOD”) programs and activities.

One of the major changes in the fiscal year 2018 NDAA, Section 811, is the increase in the dollar threshold for the submission of certified cost or pricing data. Currently, the Truth in Negotiations Act (“TINA”) threshold is set at $750,000. However, Section 811 of the fiscal year 2018 NDAA includes a provision that increases the threshold up to $2,000,000. While this is great news for government contractors, Contracting Officers may still require cost or pricing data without certification as they are still tasked with ensuring the cost or pricing data is fair and reasonable.

Another interesting change requires the Defense Contract Audit Agency (“DCAA”) to revise its Annual Report to Congress to provide clarity on the cost effectiveness of different types of audits. This change comes about due to DCAA simply writing off “low risk” audits in order to achieve an 18-month average time frame for completing incurred cost audits from the time an adequate contractor submission was received. You may recall that just a few years ago, the DCAA backlog was well over four years. As a result of this drastic change, per Section 803 of the fiscal year 2018 NDAA, Congress is implementing a plan for private certified public accounting firms to take on at least 25 percent of the workload.

Cherry Bekaert is hosting a free webinar, “DCAA Hot Buttons,” on Thursday, January 17, which will cover a number of topics related to the 2018 NDAA. Registration for the event is open on our website until Wednesday. If you’re unable to attend, you can still participate on demand at the conclusion of the event. Please include/keep the hyperlink to the Hot Buttons webinar registration, as provided in this blog post.

For any questions on any of the changes to the NDAA, feel free to contact one of our experienced GovCon professionals.

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