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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: July 3, 2000

FROM: Barry McVay, CPCM

SUBJECT: Federal Acquisition Regulation (FAR); Truth in Negotiations Act Threshold

SOURCE: Federal Register, July 3, 2000, Vol. 65, No. 128, page 41267

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed to amend FAR 15.403-4, Requiring Cost or Pricing Data (10 U.S.C. 2306a and 41 U.S.C. 254b), to increase the Truth in Negotiation Act threshold from $500,000 to $550,000.

DATES: Submit comments on or before September 1, 2000.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, e-mail: farcase.2000-300@gsa.gov. Cite FAR case 2000-300 in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Olson, 202-501-0692.

SUPPLEMENTAL INFORMATION: The Federal Acquisition Streamlining Act of 1994 (Public Law 103-355) requires that the threshold for the submission of cost or pricing data in accordance with the Truth in Negotiation Act be adjusted "effective on October 1 of each year that is divisible by 5" to "the amount that is equal to the fiscal year 1994 constant dollar value of the amount set forth" -- $500,000 (Section 1201 for DOD, NASA, and the Coast Guard; Section 1251 for all other agencies). The amount is to be rounded to the nearest multiple of $50,000.

The next adjustment is due on October 1, 2000 (the first adjustment was due October 1, 1995, but there was insufficient inflation between 1994 and 1995 to warrant a threshold adjustment). The proposed increase is based on an escalation of 10.22% from 1994 to 2000, which was calculated using the gross domestic product deflators from the fiscal year 2001 budget. This increase equates to $51,100, which is rounded to $50,000 and, when added to the $500,000 threshold that was established in 1994 by the Federal Acquisition Streamlining Act, produces a new threshold of $550,000.

To implement this change, it is proposed that the threshold in FAR 15.403-4(a)(1) be increased from $500,000 to $550,000. Also, the example in paragraph (a)(1)(iii) which demonstrates how a $150,000 modification resulting from a reduction of $350,000 and an increase of $200,000 is a pricing adjustment exceeding $500,000 would be changed to demonstrate how a $200,000 modification resulting from a reduction of $400,000 and an increase of $200,000 would be a pricing adjustment exceeding $550,000.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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