Truthful Cost or Pricing Data (TINA) for Software Companies: When Certification Applies

Most software companies selling to the government never certify a cost breakdown. Commercial SaaS is priced off a price list, and the contracting officer judges it against the market. But a sole-source development contract, a non-commercial services task or a cost-type award above a dollar threshold can bring in a different regime: certified cost or pricing data.

That regime comes from the Truthful Cost or Pricing Data statute, still widely called TINA, after the Truth in Negotiations Act of 1962. It lets the government see the facts behind your price and claw back money if those facts were wrong. This guide covers when it applies, which exceptions cover most software companies, what you actually certify, and how defective pricing is handled. It is written for founders, finance leads and whoever prices federal proposals.

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What the law requires

The statute is codified at 10 U.S.C. chapter 271 for the Department of War (DoW), NASA and the Coast Guard, and at 41 U.S.C. chapter 35 for civilian agencies. The FAR implements it in Subpart 15.4.

Under FAR 15.403-4, the contracting officer must obtain certified cost or pricing data before awarding:

• a negotiated contract expected to exceed the threshold in that section;
• a modification to any contract, where the price adjustment is expected to exceed the threshold;
• a subcontract above the threshold, at any tier, where the prime contractor was required to submit certified data.

The threshold is set in FAR 15.403-4 and adjusted periodically for inflation, so check the current figure. Below it, a contracting officer can still require certified data in limited cases with a written justification, but that is rare.

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The exceptions that cover most software

FAR 15.403-1(b) bars the contracting officer from requiring certified cost or pricing data when one of these applies:

• Adequate price competition. Two or more responsible offerors, competing independently, submit priced offers that satisfy the requirement, and price is a substantial factor in the award.
• Prices set by law or regulation.
• Commercial products or commercial services. Our guide to commercial products and FAR Part 12 covers how that determination is made.
• A waiver granted by the head of the contracting activity in exceptional cases.
• A modification to a contract or subcontract for commercial products or services that does not change it to a non-commercial one.

For a SaaS company, the commercial exception is the one that usually applies. Subscriptions sold to the general public on the same terms are the textbook commercial product. Our guide to price reasonableness covers what a contracting officer asks for instead.

On DoW contracts, a competitive solicitation that draws only one offer gets extra scrutiny under DFARS 215.371, and the contracting officer can ask for cost or pricing data to judge the price. Do not assume competition was adequate just because the solicitation was competitive.

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Where software companies run into it

The requirement tends to appear where the work stops looking commercial:

• Custom development. A contract to build something new for one agency, priced from labor hours, may not qualify as commercial.
• Sole-source awards. Without competition, the contracting officer has no market price to compare. Our guide to sole-source awards covers when they are allowed.
• SBIR Phase III. Phase III awards can be made sole-source, and above the threshold non-commercial work can bring in certified data. Our guide to SBIR and STTR covers the phases.
• Cost-type contracts. Pricing built from your costs invites a look at the facts behind them. Our guide to accounting systems and DCAA audits covers when cost rules apply.
• Large modifications. A modification above the threshold can require certified data even if the original award did not, unless an exception covers it. Our guide to contract modifications covers how changes are priced.

Other transaction agreements are not FAR contracts, so FAR Subpart 15.4 does not apply to them. Our guide to other transaction authority covers that route. GSA Schedule pricing uses its own disclosure regime, covered in our guide to GSA Schedule pricing.

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What counts as cost or pricing data

FAR 2.101 defines cost or pricing data as all facts that, as of the date of price agreement, prudent buyers and sellers would reasonably expect to affect price negotiations significantly. Two points matter:

• It is facts, not judgments. Your estimate of future hours is a judgment, but the historical hours you based it on are facts.
• It is broader than your proposal. It includes facts you did not use, if a prudent buyer would want to know them.

For a software company, that can include:

• historical labor hours and rates on similar projects;
• vendor and subcontractor quotes, including cloud hosting and third-party licenses;
• indirect cost rates and the actuals behind them;
• discounts and prices you have given other customers for the same work;
• make-or-buy decisions and management decisions that change cost, such as a planned hiring freeze or a new hosting contract.

FAR 15.408, Table 15-2, sets out the default format for a proposal that includes certified data. Clause 52.215-20 in the solicitation tells you what format the contracting officer wants.

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The certificate

After you and the government agree on price, you sign a Certificate of Current Cost or Pricing Data under FAR 15.406-2. It states that the data you submitted is accurate, complete and current as of the date of price agreement, or another date agreed as close to it as practicable.

That date matters. Facts that change between your proposal and the handshake, such as a new vendor quote or a lower hosting rate, must be disclosed before you sign. Contractors that certify regularly run a sweep before the agreement date to collect anything new and disclose it in writing.

Disclosure means actually providing the data to the contracting officer, or to the auditor, and saying what it is. Having the information somewhere in your files, or mentioning it in passing, may not count.

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Defective pricing

If the government later finds that certified data was not accurate, complete or current, and the price was higher as a result, the defective pricing clause (FAR 52.215-10, or 52.215-11 for modifications) entitles it to a price reduction, including related profit or fee.

Under FAR 15.407-1, the government also recovers:

• interest on any overpayment, from the date of overpayment;
• a penalty equal to the overpayment if the contractor knowingly submitted defective data.

Knowing submission can also bring False Claims Act liability and other civil or criminal remedies. Audit rights under the audit and records clause, FAR 52.215-2, let the government examine your records after award to check the data, generally until three years after final payment. Our guide to contract closeout covers record retention.

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Subcontractors

The obligation flows down. Under FAR 52.215-12, a prime contractor that submitted certified data must obtain certified data from subcontractors above the threshold, unless an exception applies. A prime can face a price reduction for a subcontractor’s defective data, so primes often ask for indemnity in the subcontract.

If you are the software subcontractor, expect your prime to ask whether your product is commercial and, if not, for a cost breakdown. Our guide to teaming and subcontracting covers how those relationships work.

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A TINA checklist

• Establish commercial status early. Keep a commercial price list, public pricing and sales history that support a commercial determination.
• Ask which exception applies before you price a non-commercial or sole-source deal above the threshold.
• Keep historical cost records by project, so that estimates have a factual basis you can disclose.
• Disclose, do not just retain. Hand over the data and identify it in writing.
• Sweep before the handshake. Collect new quotes, rates and decisions up to the agreement date.
• Flow the clause down to subcontractors where it applies, and collect their certificates.
• Read the current rule text. The FAR is being rewritten under the Revolutionary FAR Overhaul, so section numbers and wording may change. Confirm the clauses in your solicitation, and get advice from counsel before you certify.

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What this means for a software company

• Commercial SaaS is usually exempt. The requirement mainly reaches custom, sole-source and cost-type work.
• Certified data is facts, not estimates. It includes facts you did not use but a buyer would want.
• The certificate speaks as of the handshake. Changes up to that date must be disclosed.
• Defective pricing costs money. Price reduction and interest, plus a penalty if it was knowing.
• The obligation flows down. Subcontractors above the threshold certify too.

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Where this fits

Whether your product is treated as commercial shapes how every federal deal is priced. Before you bid, it helps to know how your company looks across the categories federal buyers review, from compliance posture to registration and federal track record. Score your company’s federal readiness to see where you stand.

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Related reading

• Price Reasonableness for Software Companies: How Contracting Officers Judge Your Price
• FAR Part 12 for Software Companies: Selling Your Product as a Commercial Product
• Accounting Systems and DCAA Audits for Software Companies: When Cost Rules Apply
• Contract Closeout for Software Companies: Final Invoices, Releases and Record Retention
• Sole-Source Awards for Software Companies: When an Agency Can Buy Without Competing
• Glossary: IDIQ · Task order