[Federal Register Volume 59, Number 159 (Thursday, August 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20223]


[[Page Unknown]]

[Federal Register: August 18, 1994]


-----------------------------------------------------------------------


DEPARTMENT OF DEFENSE
48 CFR Parts 215 and 244 and Appendix C to 48 CFR Chapter 2

 

Defense Federal Acquisition Regulation Supplement; Greatest Value 
Sources

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Department of Defense is proposing changes to the Defense 
Federal Acquisition Regulation Supplement to clarify its existing 
policy concerning the selection of subcontractors based on greatest 
value and also to provide more definitive items to consider when 
evaluating contractors' vendor performance rating systems.

DATES: Comments on the proposed rule should be submitted in writing at 
the address shown below on or before October 17, 1994, to be considered 
in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, ATTN: Mr. Eric R. Mens, PDUSD 
(A&T)DP/DAR, IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-
3062. Telefax number (703) 604-5971. Please cite DFARS Case 93-D020 in 
all correspondence.

FOR FURTHER INFORMATION CONTACT:
Mr. Eric R. Mens, (702) 604-5929.

SUPPLEMENTARY INFORMATION:

A. Background

    The Federal Acquisition Regulation (FAR) at 15.605(c) currently 
authorizes contracting officers to select the source which offers the 
greatest value to the Government. The Government's policy with regard 
to contractors applying the ``greatest value'' concept to the selection 
of subcontractors is not as clear. The proposed rule revised the 
Defense FAR Supplement (DFARS) to add language at 215.806-1(a)(1) to 
clarify the Government's existing policy as it pertains to the 
selection of subcontractors based on the greatest value; adds language 
at DFARS 244.202-2 with regard to the basis for the selection of 
subcontractors which contracting officers should consider when consent 
to subcontract is required; and revises Appendix C-207.5 to establish 
more definitive items for Government personnel to consider when 
evaluating contractor vendor rating systems in the course of conducting 
a Contractor Purchasing System Review.

B. Regulatory Flexibility Act

    The proposed rule is not expected to have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because (1) the 
rule merely clarifies the Government's existing policy on contractor 
selection of subcontractors based on greatest value, (2) the 
requirement to prepare documentation to support the prime contractor's 
selection of subcontractors already exists, and (3) most small entities 
are not subject to the requirements for a Contractor Purchasing System 
Review under FAR subpart 44.3. Moreover, the revised Appendix C 
guidance for evaluating prime contractor vendor rating systems is 
intended to emphasize the importance of maintaining competitive 
opportunities for subcontractors while selecting such sources on the 
basis of greatest value. Therefore, an Initial Regulatory Flexibility 
Analysis has not been performed. Comments from small entities 
concerning the affected DFARS subpart will be considered in accordance 
with section 610 of the Act. Such comments must be submitted separately 
and cite 5 U.S.C. 610 (DFARS Case 93-D020) in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 96-511) does not apply because 
the proposed rule does not impose any additional reporting or 
recordkeeping requirements which require the approval of OMB under 44 
U.S.C. 3501 et seq. Contractors which may be subject to the proposed 
rule are already required by the FAR and DFARS to conduct and document 
an appropriate and adequate cost or price analysis before awarding any 
subcontract. The proposed rule does not impose any requirement for 
contractors to establish a formal system for the selection of 
subcontractors and suppliers based on greatest value. Rather, the rule 
clarifies the Government's existing policy of recognizing that, where 
such vendor rating systems exist, they may be a valuable tool in the 
establishment of best value sources. This rule also provides a list of 
more definitive items for consideration in the evaluation of a 
contractor's purchasing system, if applicable, under FAR subpart 44.3.

List of Subjects in 48 CFR Parts 215 and 244 and Appendix C to 48 CFR 
Chapter 2

    Government procurement.
Claudia L. Naugle,
Deputy Director, Defense Acquisition Regulations Council.

    Therefore, it is proposed that 48 CFR Parts 215 and 244 and 
Appendix C to 48 CFR Chapter 2 are amended as follows:
    1. The authority citations for 48 CFR Parts 215 and 244 and 
Appendix C to 48 CFR Chapter 2 are revised to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 215--CONTRACTING BY NEGOTIATION

    2. Section 215.806-1(a)(1) is revised to read as follows:


215.806  Subcontract pricing considerations.


215.806-1  General.

* * * * *
    (a)(1) Contractor and subcontractor proposals may reflect the 
selection of sources whose proposals offer the greatest value to the 
Government in terms of performance and other factors. If the selection 
is based on greatest value rather than lowest price, the analysis 
supporting subcontractor selection should include a discussion of the 
factors considered in the selection. If the contractor's analysis is 
not adequate, return it for correction of deficiencies.
* * * * *

PART 244--SUBCONTRACTING POLICIES AND PROCEDURES

    3. Subpart 244.2 is added to read as follows:

Subpart 244.2--Consent to Subcontracts

Sec.
244.202  Contracting officer's evaluation.
244.202-2  Considerations.

Subpart 244.2--Consent to Subcontracts


244.202  Contracting officer's evaluation.


244.202-2  Considerations.

    (a) Where other than lowest price is the basis for subcontractor 
selection, has the contractor adequately substantiated the selection as 
offering the greatest value to the Government?

Appendix C to 48 CFR Chapter 2--Contractor Purchasing System 
Reviews

    4. Section C-207.5 is amended by revising paragraph (b) to read as 
follows:


C-207.5  Subcontractor responsibility and vendor performance rating 
system (IIG5).

    (a) * * *
    (b) Vendor performance rating systems. Contractor vendor 
performance rating systems may be a valuable element in the 
contractor's selection of subcontractors that offer the greatest value 
to the Government. State in the report whether the contractor has a 
vendor rating system. If the contractor has a system in place, evaluate 
its effectiveness in selecting sources. Consider whether the system--
    (1) Allows consistency of comparisons among competing 
subcontractors;
    (2) Protects rating information;
    (3) Provides appropriate documentation for each element rated;
    (4) Allows adequate opportunities for new subcontractor to compete;
    (5) Provides for evaluations by appropriate functional areas; and
    (6) Is kept current and accurate.

[FR Doc. 94-20223 Filed 8-17-94; 8:45 am]
BILLING CODE 5000-04-M