TRUTH IN NEGOTIATION

ONE SECTION OF THE ARMED SERVICES PROCUREMENT ACT CALLED THE TRUTH IN NEGOTIATION LAW CONTAINS MEASURES TO ASSURE FAIR PRICES. THOSE CONTRACTORS AND SUBCONTRACTORS SUBJECT TO THE ACT MUST, UNDER MOST CIRCUMSTANCES, ACCEPT THE FOLLOWING OBLIGATIONS: (1) SUBMIT COST OR PRICING DATA TO JUSTIFY THEIR PROPOSED CHANGES TO THE GOVERNMENT, (2) CERTIFY THAT THESE DATA ARE ACCURATE, COMPLETE, AND CURRENT, (3) AGREE THAT THE PRICE TO THE GOVERNMENT WILL BE ADJUSTED TO EXCLUDE ANY SIGNIFICANT SUMS BY WHICH THE PRICE WAS INCREASED BECAUSE THE DATA WERE INACCURATE, INCOMPLETE, OR NON- CURRENT, AND (4) AGREE THAT THE GOVERNMENT MAY AUDIT THE BOOKS TO DETERMINE WHETHER THESE OBLIGATIONS HAVE BEEN SATISFIED. THESE OBLIGATIONS ARE DISCUSSED. THE BURDEN OF PROOF IS ON THE GOVERNMENT TO ENFORCE PRICE ADJUSTMENT. VARIOUS LEGAL ACTIONS ARE CITED ILLUSTRATING THE DIFFICULTY OF PROVING THESE DEFECTS. HOWEVER, IT HAS BEEN HELD THAT THE CONTINUATION OF UNSUCCESSFUL MANUFACTURING EXPERIMENTS DOES NOT CONSTITUTE DATA AND THAT A PROJECTED LABOR COST WAS NOT FACTUAL. HOWEVER, ONCE THE GOVERNMENT ESTABLISHES THAT DEFECTIVE DATA WERE FURNISHED, AND SUCH DATA CAUSED THE CONTACT PRICE TO BE INCREASED BY A CERTAIN AMOUNT, THE CONTRACTOR MAY NOT OFFSET ERRORS IN OTHER ITEMS WHICH FAVORED THE GOVERNMENT. CRITICISM OF THE ADMINISTRATION OF THE LAW WITHIN THE DEPARTMENT OF DEFENSE ARE CITED AND DISCUSSED. ALTHOUGH THE LAW MAY HAVE A MORE MEANINGFUL APPLICATION TO MANUFACTURING CONTRACTS, IT DOES APPLY TO CONSTRUCTION AND ENGINEERING CONTRACTS AND SHOULD PROVE TO BE A VERY USEFUL TOOL IN NEGOTIATION.

  • Supplemental Notes:
    • Vol 8, No 8, PP 25-27, 1 FIG, 1 PHOT
  • Publication Date: 1967-11

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  • Accession Number: 00238434
  • Record Type: Publication
  • Files: TRIS
  • Created Date: May 1 1994 12:00AM