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By memorandum dated June 7, 2018, Shay Assad, DoD's
Director, Defense Pricing/Defense Procurement and Acquisition
Policy, has reversed decades of procurement practice that has been
embraced by industry and the government alike in attempting to
manage the often unmanageable process of providing the government
with cost or pricing data that is current, accurate and complete as
of the date of agreement on price. Recognizing that inherent
"lag time" often makes it impossible for contractors to
provide "up to the minute" data in real time at the point
when the parties "shake hands," contractors have
customarily performed immediate post-handshake "sweeps"
of their databases to provide the government with any data that may
have escaped the pre-handshake dragnet. The government, in turn,
has customarily accepted the data, evaluated its impact on the
price, and negotiated, if and as appropriate, adjustments to the
price. The net result was that the government had all the data, its
impact on price was addressed, and the contractor avoided liability
under the Truth in Negotiations Act and, possibly, under the False
Claims Act. Everyone was happy.
Not anymore.
Under the June 7th memorandum, contracting officers
are generally to request the TINA certificate within 5 days of the
agreement on price and thereafter to ignore any sweeps
data until after the award of the contract, at which point the
government will evaluate the sweeps data to determine whether it
rendered the pre-hand shake data defective and entitles the
government to a price adjustment. And let's not underestimate
the ability of some enterprising plaintiff to allege that execution
of a certificate with the knowledge of outstanding sweeps activity
and price impacts is sufficiently reckless to justify an FCA
complaint.
This is absurd. OSD is directing contracting officers to ignore
data being proffered by the contractor for the purposes of
compliance with TINA for the purpose of manufacturing a claim
against the contractor under that statute. The memorandum conjures
up images of contracting officers behaving like the universally
recognized three monkeys strategically placing their hands over
their eyes, ears and mouths so that they can later claim "I
had no idea!" Or perhaps the image that most parents will
recognize – a toddler who puts his hands over his ears and
screams "I can't hear you" when he does not like the
message being transmitted by the parent.
Seriously, are these the self-images that any rational
government wishes to project?
Assuming that the government is unwilling to recant this latest
bit of irrationality, what is the recourse for a contractor? Well,
there are several options. None is particularly compatible with a
cooperative supplier/customer relationship, but – then again
– OSD has thrown the first stone in this episode –
Postpone the handshake until the
sweep has been completed. Establish a provisional price and make
the government wait for the handshake date. There may still be some
data that lag, but they will be far more limited.
Agree on an effective date for the
certificate that is earlier than the handshake date. This is
permissible under FAR 15.403-4(b)(2) and it could eliminate from
the scope of the certificate some of the "lag time" data
that the sweeps are designed to capture.
"Just say no." Advise the
government prior to award that the handshake is off unless and
until the government accepts, evaluates, and negotiates the impact
of the sweeps data. The customer won't like it; the folks who
book the business won't like it; and Shay Assad won't like
it. But it will work, and that matters.
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