Cost or Pricing Data Threshold

The cost or pricing data threshold is the dollar value above which contractors must submit and certify cost or pricing data under the Truth in Negotiations Act, currently set at $2 million for prime contracts by the Federal Acquisition Regulation, applicable to both prime contract awards and negotiated contract modifications above the threshold.

What is the Cost or Pricing Data Threshold?

The TINA threshold establishes the line between contracts where the government relies on market competition to ensure fair pricing and contracts where the absence of competition requires cost data disclosure to level the information asymmetry between buyer and seller. Below $2M, the government either accepts market-based pricing or uses simplified acquisition procedures that do not require TINA compliance. Above $2M on negotiated (non-sealed-bid) procurements, certified cost or pricing data is required unless a specific exemption applies.

The $2M threshold has been adjusted several times since TINA's original enactment in 1962 (starting at $100,000, raised to $500,000 in 1987, $500,000 in FAR, then raised through the National Defense Authorization Act cycles). The current $2M level has been in place since 2018 (NDAA 2018, effective October 2018). Defense Department contracts are governed by the same statutory threshold as civilian agency contracts.

The threshold applies to each modification separately as well as to the base contract. A series of modifications each below $2M on a base contract may collectively represent significant additional negotiated cost, but each modification is evaluated independently against the threshold. Only a single modification above $2M triggers TINA for that modification.

For subcontracts, the TINA threshold flows down: prime contractors must obtain certified cost or pricing data from subcontractors on subcontracts at or above $2M that are not covered by an exemption (adequate price competition, commercial items, catalog prices). The prime includes subcontractor certifications as part of its own TINA submission.

Why the Threshold Matters for Government Contractors

The $2M threshold is a critical inflection point in proposal and contract compliance management. Below $2M, a simplified or commercial pricing approach typically suffices. Above $2M, the firm needs a formal data collection and certification process, designated signing authority, and documentation discipline. Companies growing toward the threshold should build TINA compliance procedures in advance so the first large contract is not an administrative emergency.

Example

A mid-tier analytics firm receives a $1.8M contract modification to add scope to an existing $3.5M cost-plus task order. The modification falls below the $2M TINA threshold, so no certified cost or pricing data is required, the parties negotiate using the firm's forward pricing rate agreement as the basis for labor cost reasonableness. Six months later, a second modification for $2.4M triggers TINA. The firm assembles a certified cost or pricing data package covering labor rates, vendor quotes for data subscription services included in the modification, and its current DCAA-approved provisional billing rates.

Frequently Asked Questions

Does the $2M threshold apply per year or per contract?

The threshold applies per contract action, per original award or per individual modification. There is no annual aggregation test. A contractor that wins 20 contracts in a year each valued at $1.9M does not trigger TINA on any of them, regardless of the total volume. Each contract or modification is evaluated independently against the $2M threshold.

What if the contract value is uncertain at award (as in an IDIQ)?

For IDIQs, the TINA determination is made at the ordering level, not the IDIQ vehicle level. Each task order above $2M requires its own TINA analysis. Some large IDIQ vehicles specify in their solicitations how TINA will be applied at the task order level, contractors should review this carefully before submitting task order proposals on vehicles where the contract type and pricing approach for task orders involves negotiation.

Can the threshold be waived or adjusted by agency policy?

The $2M threshold is statutory, set by Congress. Agencies cannot lower the threshold by regulation, though they can request certified cost or pricing data below the threshold as a matter of contracting officer discretion on specific procurements where price analysis is insufficient to determine reasonableness. Some agencies' internal acquisition regulations (DFARs for DoD, HFARs for HHS, etc.) provide additional guidance on TINA compliance, but none can change the statutory threshold.

Does the threshold apply to option exercises?

Option exercises are typically not separately subject to TINA if the prices were established and certified at contract award. The option exercise is a unilateral government action at pre-agreed prices, not a new negotiation. However, if the government negotiates a price change to an option at the time of exercise (rather than exercising at the pre-agreed price), that negotiated modification is subject to TINA if the negotiated change exceeds $2M.