What occurs when defective pricing is discovered after award?

• A. The government is entitled to a price adjustment for any significant amount
• B. The contract is automatically terminated
• C. The contractor is owed damages
• D. No action may be taken

Answer: (A)

Defective pricing is addressed after award by correcting the overpayment that resulted from inaccurate or incomplete pricing data filed during negotiations. Under Truth in Negotiations Act rules, when such defective pricing is discovered, the government is entitled to a price adjustment to reflect the difference caused by the faulty data. If the amount affected is significant, this typically means a retroactive reduction in contract price to bring it in line with what would have been negotiated with accurate data. This remedy focuses on correcting the price paid, rather than terminating the contract automatically or awarding damages to the contractor.