NCJ Number
93652
Date Published
1984
Length
35 pages
Annotation
This article explores the potential civil and criminal liability that may result when a contractor certifies that cost or pricing data submitted in price negotiations with the Government are accurate, complete, and current, but later are discovered to be defective.
Abstract
Defective pricing was chosen to illustrate the contractor's vulnerability in the Government procurement process because the Defense Department has been monitoring this area closely, the potential for defective pricing always exists because of the financial complexities involved in Government contracts, and contractors have failed to recognize the serious consequences of defective pricing. The paper sets forth the elements that constitute a prima facie violation of the Truth in Negotiations Act which requires a contractor to certify that cost or pricing data submitted in negotiations are accurate, complete, and current as of the date agreement is reached on the price. The Act's legislative intent was to eliminate overpricing in the negotiation of noncompetitive defense contracts. The paper also discusses the Government's recovery under this law, citing cases involving Sylvania Electric Products and Bell and Howell Company. Defective pricing may also lead to potential civil and criminal liability under the False Claims Act. These sanctions extend to the corporate entity as well as to corporate employees. Elements necessary to a prima facie case under the Civil and Criminal False Claims Statutes are detailed, as are damages the Government can recover. The paper uses a hypothetical example of a defective pricing case to highlight similarities and differences between the two laws. While the Truth in Negotiations Act requires Government reliance on the data and actual damages to sustain a liablity, the False Claims Act says that the Government must prove only that the party knowingly submitted a false claim. A table and l53 footnotes are included.