Q. One of the suppliers we are considering using informed us there would be a $5 drop in unit prices they had previously quoted for a key component after we submitted our proposal but before we have negotiated a price with the government. Must we divulge this to the government?
A. I assume you are concerned about defective pricing. First, it depends whether the contract is covered by the Truth in Negotiations Act (e.g. does the contract require submission of certified cost and pricing data, does it exceed $550,000). Many contracts are not covered by TINA and hence there is no requirement to divulge this information. If TINA covered, you most likely have to divulge the information if it is factual, relevant to negotiations and would have a significant impact on price. Failure to do so means you did not submit the most current, accurate and complete cost or pricing data as of the date of price agreement which makes the contract subject to a defective pricing reduction. However, even if covered by TINA, you may not have to divulge the information if it does not meet the definition of cost or pricing data (see the Lockheed Martin case discussed above) or you do not intend to use the supplier because, for example, there are quality or delivery schedule problems.
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