When the government needs to procure highly specialized weapons systems, it frequently chooses to use a company that already makes them, known as a “sole source supplier.”
This ensures a company with expertise will be the one making the weapons.
The problem for the government is to ensure that it pays a fair price since it cannot put out the contract for competitive bids. TINA requires the contractor to truthfully disclose all relevant information about its costs to the government in sole-source contract negotiations. That way, the government can make an informed decision about what price is fair to pay for the product.
Companies sometimes are tempted, however, to hold back relevant information, or to deliberately inflate their projected costs to get a higher price. Such conduct can form the basis for a False Claims Act case.
A whistleblower represented by Phillips & Cohen brought a qui tam lawsuit charging that FMC Corp. had inflated its research and development costs as part of its Department of Defense work. The Army used the inflated figures to reach a price that it would pay FMC for the Bradley fighting vehicle. FMC paid $13 million to the federal government to settle the qui tam case.