How to Spot and Report TINA violations of government contracts

This article explains how to report Truth in Negotiations Act violations (TINA fraud) and receive a whistleblower reward.
Some military and other government contracts require the contractor to tell the government of its actual or projected costs to perform the military or government contract. It is considered fraud (and a violation of TINA) if the contractor lies, omits, or conceals relevant information when negotiating the contract, and a whistleblower is entitled to a reward.

If the government buys goods that are common or commercially available, it will either ask multiple contractors to bid on the contract or buy it on the open market. But when the military or government wants a new product and there is not adequate information about how much it costs to make the product, the military or government can negotiate the contract. Typically, the military or government will pay the contractor its actual costs to make the product, goods or services plus a reasonable profit. The problem is how to determine a fair price. That’s where the Truth in Negotiations Act (TINA) fits it. Below is an overview of TINA and how to report Truth in Negotiations Act violations (TINA fraud) and get a whistleblower reward in the process.

TINA applies to Sole Source Contracts and Negotiated Contracts

When a company is a sole source provider or if it is awarded a contract based upon the cost estimates it provided to the government, it is governed by the Truth in Negotiations Act (TINA), located at 10 U.S.C. § 2306a and 41 U.S.C. § 254b. The Truth in Negotiations Act (TINA) requires a company as part of the negotiations to provide the government with its current and good faith estimates of its costs to perform the military or government contract, which is known as “cost or pricing data.”

The FAR defines “cost or pricing data” as “all facts that, as of the date of agreement on the price of a contract (or the price of a contract modification), a prudent buyer or seller would reasonable expect to affect price negotiations significantly.” (FAR 15.401)

Basically, if the government contractor or subcontractor conceals cost or pricing data or if it lies about data or information relevant to estimating the true cost to perform the contract, it is liable for fraud under the Truth in Negotiations Act (TINA).

How to recognize and how to report Truth in Negotiations Act violations (TINA fraud)

There are some common TINA fraud schemes. Concealing costs or pricing data is one of the most common Truth in Negotiations Act violation (TINA fraud) entitling a whistleblower to get a reward. Another common TINA fraud scheme is concealing the amount of discounts the contractor expects. For instance, it reports the list price of items, but does not included any volume discounts or other customer discounts the contractor reasonably expects to receive.

Here are a few other ways as to how to spot and report Truth in Negotiations Act violation (TINA fraud):

  • Failure to update cost or pricing data when the contractor knows that its past activity shows that the cost or price have decreased or gone down
  • Failure to make complete or full disclosure of all data
  • Failure to timely correct estimated costs or pricing data that is outdated, incorrect or containing errors
  • Failure to disclose any deficiencies in its estimating methods or pricing system

Basically, anything a contractor does or fails to do to provide the military or government with its best estimate of costs may violate TINA.

Example of inflating prices as a negotiation strategy

Inflating costs at the start of negotiations is also a Truth in Negotiations Act violation (TINA fraud). In one case I worked on while at the U.S. Department of Justice in the Civil Fraud Section, a whistleblower told us that his company had inflated its cost and pricing data by 10 percent because it expected the military to reduce the prices by 10 percent during the negotiation process. Clearly, it is a Truth in Negotiations Act violations (TINA fraud) to inflate prices in anticipation of negotiations. Even if the final price negotiated is less than the company’s true estimated costs, it is still TINA fraud. In that case I worked on while at DOJ, the contractor paid the government $55 million to settle the TINA fraud allegations and the whistleblower received nearly $10 million as a whistleblower reward.

How to report Truth in Negotiations Act violation (TINA fraud)

You can ask Mr. Hesch to review your TINA fraud case and help you decide whether and how to report the Truth in Negotiations Act violations (TINA fraud) and apply for a reward. The rest of this website provides more details regarding how to report fraud against the government and how to get a reward.

See the link below “Do I have a case” which shows you how to report Truth in Negotiations Act violations (TINA fraud) and ask Mr. Hesch to represent you in seeking a reward.

See the link below “Report Fraud” to learn more about how to report TINA fraud and other fraud against the government and how to obtain a whistleblower reward.