2018 NDAA: Changes to TINA Threshold and Incurred Cost Audits

calendar iconMarch 9, 2020

Update on Increased Truth in Negotiations Act Threshold for Submission of Certified Cost and/or Pricing Data

By: John Ford, Senior Consultant

Section 811 of the FY 2018 National Defense Authorization Act (“NDAA”) revised the threshold for submission of certified cost or pricing data for contracts entered into after June 30, 2018 to $2 million. In addition, the threshold for submission of certified cost and/or pricing data concerning modifications to such contracts was raised to $2 million. Further, the threshold for submission of certified cost and/or pricing data for subcontracts and modifications to subcontracts awarded under such contracts was raised to $2 million.

As a result of the passage of section 811, the Federal Acquisition Regulation (“FAR”) Councils opened FAR Case 2018-005. As of Jan. 13, 2020, the Defense Acquisition Regulations (“DAR”) Council representing Department of Defense (“DoD”) and the Civilian Agency Acquisition Council (“CAAC”) had not been able to agree on how to implement these seemingly straight forward changes. Instead, each has its own idea how to do this and they are trying to resolve their differences. Thus, no estimates can be made as to when the FAR will be modified to include these changes.

In the meantime, some agencies, such as DoD, have issued deviations to the FAR in order to accommodate the changes in law. DoD issued class deviation 2018-O0015 on May 31, 2018 which superseded class deviation 2018-O0012 dated April 13, 2018. Deviation 2018-O0015 is still in effect. Significantly, this deviation permits contracting officers to modify contracts awarded before July 1, 2018, to permit prime contractors to receive certified cost or pricing data in regard to subcontracts and modifications to subcontracts expected to exceed $2 million, regardless of when the prime contract was awarded.

In addition, the DoD deviation also addresses the applicability of the Cost Accounting Standards (“CAS”) because the CAS threshold and threshold for submission of certified cost or pricing data are the same. In this regard, the DoD deviation recognizes that the threshold for application of the CAS to a contract is now $2 million.

We will continue to monitor this issue and keep you updated as matters develop. For questions regarding the TINA Threshold or changes to the NDAA, please contact an experienced Cherry Bekaert GovCon professional.

Previously published on January 17, 2018

In November of 2017, 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.

What is the threshold for certified cost and/or pricing data?

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 hosted a webinar, “DCAA Hot Buttons,” that covered a number of topics related to the 2018 NDAA.

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