NCMA NORTH TEXAS CHAPTER
DEFECTIVE PRICING SEMINAR

 

 
DEFECTIVE PRICING

A two-day custom course in all the problems, the consequences, the fraud risks, and the operating realities of satisfying Government contract "truth in negotiation" requirements.

Who can quarrel with the concept of “truth in negotiation”? The principle that, in negotiating prices for contracts and changes, contractors should provide the Government current complete and accurate data upon which their quotations are based.  Few would dispute that this is not a proper object for Government to pursue or a reasonable standard to which contractors should adhere. But saying it is easier than doing it. And there’s the problem ... and the reason for this course.

The subject is not a new one. It’s been with us since 1962, when Public Law 87-653 was enacted. Because of its significance, it has been covered—from its inception—in other general procurement courses. But its presentation often led to frustration spawned by the many questions to which there were no definite answers. With the passage of years, however, have come a host of developments, a more complete definitization of the defective pricing requirements, and—most importantly—a cumulation of experience in cost and pricing data problems.

Now, we can help you deal with practical operating problems which sometimes are at odds with the principles of truth in negotiation. Now, we can detail the full range of possible penalties that you may face should your prices be defective—and catalog the battery of defenses available to charges of defective pricing. Now, we can analyze some questions which are still unanswered—but analyze them in a more predictable way, based upon a respectable body of precedents. The course is intended to serve contracts professionals from both Government and industry, who have any connection with pricing matters. It takes you through all phases of the subject . . . and a little bit beyond, into areas of innovative theory and practice.

INTRODUCTION

 
1.        A Panorama
a.        Background and History
b.        The Contractual Setting
c.        Rationale
2.        Capsule of The Rules
a.        Truth in Negotiations Act
b.        False Claims Act
c.        Miscellaneous Fraud Statutes
d.        “Inspection” Clause Remedies
e.        Relationships and Overlaps

TRUTH IN NEGOTIATIONS
3.        Requirements of Public Law 87-653
a.        Applicability
b.        Certified Cost or Pricing Data
c.        “Price Reduction” Clause
d.        Exemptions and Exceptions
e.        Government Audit Rights
4.        Exemptions & Exceptions
a.        Adequate Price Competition
b.        Established Catalog or Market Price
c.        Federal Acquisition Streamlining Act Commercial Item Exemption
d.        Prices Set By Law or Regulation
e.        Secretarial Waiver
f.        The Dollar Floor
g.        Proving Exemptions
h.        Mandatory Vs. Discretionary Exemptions
i.        Partial Application of Exemptions
j.        Exemptions Improperly Granted
k.       Appealing Exemption Denials
l.        Non-Exempt Contract Terminations
m.      Cumulation of Changes
5.        Contractor Submission of Data
a.        Defining “Cost or Pricing Data”
b.        Data Submission Requirements
c.        Refusal To Submit Data
d.        Type of Certification
e.        Absence of Certification
6.        Government Disclosure of Cost-Facts
a.        Extent of Government Duty
b.        Possible Contractor Recourse
7.        Government Audit Rights
a.        The Contracting officer
b.        Defense Contract Audit Agency
c.        General Accounting office
d.        Proposed Regulation Changes
8.        Subcontractor Data
a.        Prime’s Submission of Subcontractor's Data
b.        Prime’s Liability for Subcontractor's Data
c.        Prime’s Audit of Subcontractor's Books
d.        Subcontractor's Liability To Prime and Government
e.        Mandatory Subcontract Clauses
f.        Suggested Subcontract Clauses
9.        Contractor’s Liability
a.        Basis For Government Recovery
b.        Calculation of Government Recovery
c.        Government Reliance On Defective Data
d.        Defective Data’s Effect On Price
e.        Setoffs
f.        Treatment of Contractor’s Legal Fees
g.        Value Engineering vs. Defective Pricing

 

Kent R. Morrison - Partner in the Washington, D.C. office of Crowell & Moring LLP. He has practiced in the government contracts field for more than 20 years and he chaired the firm’s Government Contracts Practice Group from 1988 to 2003. Mr. Morrison is a graduate of Rice University and the Yale Law School. He is one of the founding partners of Crowell & Moring and has served two terms on the Firm’s Management Board.

Mr. Morrison is an expert in counseling and disputes regarding the Truth in Negotiations Act, but his practice spans the government contracts field. He has helped prepare and has litigated construction and supply contract claims before the boards of contract appeals and in the United States Court of Federal Claims. He has represented contractors in contract negotiations, ADR proceedings, bid protests, and in responding to government audits and investigations. He is experienced in defending against False Claims Act and qui tam allegations.

Mr. Morrison is a regular lecturer in the Government Contracts field, frequently for Federal Publications Seminars LLC. He is the author or co-author, among other publications, of Compliance With the Truth In Negotiations Act, Federal Publications (1987-1989); “Truth In Negotiations III,” Briefing Papers, Federal Publications (No. 89-11, October 1989) (updated in Briefing Papers 1990 Revision Note); Defective Pricing, Federal Publications Seminars LLC (1992 - 2006); and “Subcontractor Cost or Pricing Data: Riddles, Mysteries, Quandaries & Ghosts,” Government Contract Costs, Pricing & Accounting Reports, Federal Publications (Issue 93-12; December 1993).

Mr. Morrison is a member of the Bars of Texas and the District of Columbia. He is admitted to practice before the United States Supreme Court, the United States Court of Federal Claims, and a number of federal circuit courts of appeal and district courts. Mr. Morrison has served in leadership positions in various professional organizations, including as a member of the governing Council of the Public Contract Law Section of the American Bar Association and as Chair or Co-Chair of that Section’s Federal Claims and Remedies Committee, Emerging Issues Committee, Annual Programs Committee, and Federal Division. Mr. Morrison has also been a member of and frequent speaker for the National Contract Management Association, a member of NCMA’s National Board of Advisors, and a member of the Advisory Board for the Bureau of National Affairs' Federal Contracts Report.

Mr. Morrison is named a top lawyer nationally in the Government Contracts field in Chambers USA.

David Z. Bodenhiemer - Partner in the Washington, DC office of Crowell & Moring LLP (www.crowell.com) where he specializes in Government Contracts and False Claims Act suits. He graduated with highest honors from the University of North Carolina at Chapel Hill (UNC) in 1978 and received his law degree and MBA from UNC in 1982.

Mr. Bodenheimer advises clients on defective pricing and False Claims Act matters and has substantial litigation experience with both, including the largest defective pricing claim litigated in the history of the Truth in Negotiations Act. See Wynne v. United Technologies Corp., 463 F.3d 1261 (Fed. Cir. 2006), affirming United Technologies Corp., ASBCA Nos. 51410, 53089, 53349, 04-1 BCA ¶ 32,556, modified on recon., 05-1 BCA ¶ 32,860.

He has often lectured on Government Contracts topics, including Federal Publications Inc. and American Bar Association seminars. His publications include many focused upon defective pricing, cost, and False Claims Act issues:

• Government’s Defective Pricing Claim in the Great Engine War Flames Out at the Federal Circuit, 48 THE GOVERNMENT CONTRACTOR 338 (Oct. 2006)

• "False” or “Inaccurate” Estimates, BRIEFING PAPERS (Dec. 2005)

• The Strange Notion of Estimates as Fraud: Will Weather Predictions Be Next Under the False Claims Act?, 40 THE PROCUREMENT LAWYER 1 (Summer 2005)

• Putting Teeth into the False Claims Act’s Pre-Complaint Disclosure Requirements for Realtors, 37 THE PROCUREMENT LAWYER 4 (Summer 2002)

• Profits in Government Contracting: The Continuing Tug of War, GOVERNMENT CONTRACT AUDIT REPORT 12-16 (Nov. 2001)

• Damages Under the False Claims Act: Is the Sky the Limit? GOVERNMENT CONTRACT AUDIT REPORT 16-20 (Sept. 2000)

• The New Battleground: Defective Pricing Invades Competitive Procurements, GOVERNMENT CONTRACT AUDIT REPORT 16-20 (Dec. 1999/Jan. 2000)

Mr. Bodenheimer is a member of the Bars of North Carolina and the District of Columbia. He is admitted to practice before the United States Court of Appeals for the Federal Circuit, the Court of Federal Claims, and a number of federal district courts. He is a member of the American and District of Columbia Bar Associations. Prior to coming to Crowell & Moring LLP, Mr. Bodenheimer worked for the Navy’s Office of General Counsel where he served in a number of positions, including Assistant to the General Counsel