Jenner & Block

Defective Pricing: The Truth in Negotiations Act

The Truth in Negotiations Act (TINA) has no counterpart in commercial contracting, and is in fact contrary to the way commercial companies negotiate prices.  In the private sector, one would rarely if ever disclose to the other side during a contract price negotiation all the elements of your company’s historical and current actual labor and material costs — both direct and indirect — or your management’s plans for future costs savings, manufacturing efficiencies, new business, pension reform, acquisitions, and other strategic and closely-held information.  But failing to that in a government contract covered by TINA could be a violation of law — known as “defective pricing” — subjecting your company to a unilateral price reduction and opening you up to civil and criminal penalties.   We help clients avoid defective pricing allegations by counseling them on the requirements of the Truth in Negotiations Act.  We help them respond to and negotiate post-award audit allegations of defective pricing.  And, if negotiations break down, we help them litigate — and win.