[Federal Register Volume 62, Number 1 (Thursday, January 2, 1997)]
[Rules and Regulations]
[Pages 257-261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-33209]
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DEPARTMENT OF DEFENSE
48 CFR Parts 4, 12, 15, 16, 25, 31, 46, and 52
[FAC 90-45; FAR Case 96-306; Item V]
RIN 9000-AH16
Federal Acquisition Regulation; Exceptions to Requirements for
Certified Cost or Pricing Data
AGENCIES: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council have agreed on a final rule to amend
the Federal Acquisition Regulation (FAR) to implement Section 4201 of
the Federal Acquisition Reform Act of 1996. This regulatory action was
not subject to Office of Management and Budget review under Executive
Order 12866, dated September 30, 1993, and is not a major rule under 5
U.S.C. 804.
EFFECTIVE DATE: January 1, 1997.
FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Olson at (202) 501-3221 in
reference to this FAR case. For general information, contact the FAR
Secretariat, Room 4035, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-45, FAR case 96-306.
SUPPLEMENTARY INFORMATION:
A. Background
This final FAR rule implements changes to the Truth in Negotiations
Act (TINA) contained in Section 4201 of the Clinger-Cohen Act of 1996
(Pub. L. 104-106) and--
Simplifies obtaining a TINA exception for commercial items by
eliminating the distinction between catalog or market-priced commercial
items and all other commercial items;
Eliminates the subordination of the commercial item exception to
the traditional exceptions of adequate price competition, catalog or
market-priced commercial items, or prices set by law or regulation,
which previously was required by the Federal Acquisition Streamlining
Act of 1994 (Pub. L. 103-355) (FASA);
Eliminates the criteria established by FASA for the commercial item
exception (i.e., an exception could not be granted unless price
reasonableness could be determined based on specific information
requirements) and deletes the authority to obtain cost or pricing data
for commercial item acquisitions when the criteria is not met; and
Eliminates the clause for postaward audit of information submitted
to support the pricing of commercial item contracts.
The Federal Acquisition Reform Act of 1996 was subsequently named
the Clinger-Cohen Act of 1996.
A proposed rule was published on August 7, 1996 (61 FR 41214).
Sixteen comments were received from seven respondents. All comments
were considered in the development of the final rule.
B. Regulatory Flexibility Act
The Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not 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 most contracts awarded
to small entities use simplified acquisition procedures or are awarded
on a competitive, fixed-price basis and do not require the submission
of cost or pricing data.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose recordkeeping or information collection
requirements, or collections of information from offerors, contractors,
or members of the public which require the approval of the Office of
Management and Budget under 44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Parts 4, 12, 15, 16, 25, 31, 46, and 52
Government procurement.
Dated: December 24, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Therefore, 48 CFR Parts 4, 12, 15, 16, 25, 31, 46, and 52 are
amended as set forth below:
1. The authority citation for 48 CFR Parts 4, 12, 15, 16, 25, 31,
46, and 52 continues to read as follows:
[[Page 258]]
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 4--ADMINISTRATIVE MATTERS
4.702 [Amended]
2. Section 4.702 is amended by removing paragraph (a)(3).
PART 12--ACQUISITION OF COMMERCIAL ITEMS
3. Section 12.209 is revised to read as follows:
12.209 Determination of price reasonableness when contracting by
negotiation.
When contracting by negotiation for commercial items, the policies
and procedures in subpart 15.8 shall be used to establish the
reasonableness of prices.
PART 15--CONTRACTING BY NEGOTIATION
4. Section 15.106 is revised to read as follows:
15.106 Contract clause.
(a) This section implements 10 U.S.C. 2313, 41 U.S.C. 254d, and OMB
Circular No. A-133.
(b) The contracting officer shall, if contracting by negotiation,
insert the clause at 52.215-2, Audit and Records--Negotiation, in
solicitations and contracts except those--
(1) Not exceeding the simplified acquisition threshold;
(2) For commercial items exempted under 15.804-1; or
(3) For utility services at rates not exceeding those established
to apply uniformly to the general public, plus any applicable
reasonable connection charge.
(c) In facilities contracts, the contracting officer shall use the
clause with its Alternate I. In cost-reimbursement contracts with
educational institutions and other nonprofit organizations, the
contracting officer shall use the clause with its Alternate II. If the
examination of records by the Comptroller General is waived in
accordance with 25.901, the contracting officer shall use the clause
with its Alternate III.
15.106-1 and 15.106-2 [Removed]
5. Sections 15.106-1 and 15.106-2 are removed.
15.802 [Amended]
6. Section 15.802 is amended in the third sentence of paragraph (a)
introductory text by revising ``15.804-5(b)'' to read ``15.804-5'', and
in paragraph (a)(1) by revising ``15.804-5(a)(3)'' to read ``15.804-
5(b)''.
7. Section 15.804-1 is amended by revising paragraph (a); removing
(b)(2); redesignating (b)(3) through (b)(6) as (b)(2) through (b)(5),
respectively, and revising newly designated (b)(3) and (b)(5); and by
removing paragraphs (c) and (d). The revised text reads as follows:
15.804-1 Prohibition on obtaining cost or pricing data.
(a) Exceptions to cost or pricing data requirements. The
contracting officer shall not, pursuant to 10 U.S.C. 2306a and 41
U.S.C. 254b, require submission of cost or pricing data (but may
require information other than cost or pricing data to support a
determination of price reasonableness or cost realism)--
(1) If the contracting officer determines that prices agreed upon
are based on--
(i) Adequate price competition (see exception standards at
paragraph (b)(1) of this subsection; or
(ii) Prices set by law or regulation (see exception standards at
paragraph (b)(2) of this subsection).
(2) For acquisition of a commercial item (see exception standards
at paragraph (b)(3) of this subsection).
(3) For exceptional cases where a waiver has been granted (see
exception standards at paragraph (b)(4) of this subsection).
(4) For modifications to contracts or subcontracts for commercial
items, if the basic contract or subcontract was awarded without the
submission of cost or pricing data because the action was granted an
exception from cost or pricing data requirements under paragraph (a)(1)
or (a)(2) of this subsection and the modification does not change the
contract or subcontract to a contract or subcontract for the
acquisition of other than a commercial item (see exception standards at
paragraph (b)(5) of this subsection).
(b) * * *
(3) Commercial items. An acquisition for an item that meets the
commercial item definition in 2.101 is excepted from the requirement to
obtain cost or pricing data.
* * * * *
(5) Modifications. This exception applies when the original
contract or subcontract was exempt from cost or pricing data based on
adequate price competition, price set by law or regulation, or was a
contract or subcontract for the acquisition of a commercial item
(15.804-1(a)(1) or (a)(2)). For modifications of contracts or
subcontracts for commercial items, the exception at 15.804-1(a)(4)
applies if the modification does not change the item from a commercial
item to a noncommercial item. However, if the modification to a
contract or a subcontract changes the nature of the work under the
contract or subcontract either by a change to the commercial item or by
the addition of other noncommercial work, the contracting officer is
not prohibited from obtaining cost or pricing data for the changed or
added work.
8. Section 15.804-2 is amended in the second sentence of paragraph
(a)(1), introductory text, by removing ``15.804-1 (b)(5)'' and
inserting ``15.804-1(b)(4)''; and in paragraph (a)(1)(ii) by removing
``15.804-1(b)(5)'' and inserting ``15.804-1(b)(4)'' in its place; and
by revising paragraph (a)(2) to read as follows:
15.804-2 Requiring cost or pricing data.
(a) * * *
(2) Unless prohibited because an exception at 15.804-1 (a)(1) or
(a)(2) applies, the head of the contracting activity, without power of
delegation, may authorize the contracting officer to obtain cost or
pricing data for pricing actions below the pertinent threshold in
paragraph (a)(1) of this subsection provided the action exceeds the
simplified acquisition threshold. The head of the contracting activity
shall justify the requirement for cost or pricing data. The
documentation shall include a written finding that cost or pricing data
are necessary to determine whether the price is fair and reasonable and
the facts supporting that finding.
* * * * *
9. Section 15.804-5 is revised to read as follows:
15.804-5 Requiring information other than cost or pricing data.
(a) General. (1) If cost or pricing data are not required because
an exception applies, or an action is at or below the cost or pricing
data threshold, the contracting officer shall perform a price analysis
to determine the reasonableness of the price and any need for further
negotiation.
(2) The contracting officer shall require submission of information
other than cost or pricing data only to the extent necessary to
determine reasonableness of the price or cost realism. Unless an
exception under 15.804-1(a)(1) applies, the contracting officer shall
obtain, at a minimum, appropriate information on the prices at which
the same item or similar items have previously been sold that is
adequate for evaluating the reasonableness of the price.
(3) The contractor's format for submitting such information shall
generally be used (see 15.804-5(c)(2)).
[[Page 259]]
(4) The contracting officer shall ensure that information used to
support price negotiations is sufficiently current to permit
negotiation of a fair and reasonable price. Requests for updated
offeror information should be limited to information that affects the
adequacy of the proposal for negotiations, such as changes in price
lists. Such data shall not be certified in accordance with 15.804-4.
(b) Adequate price competition. When an acquisition is based on
adequate price competition, generally no additional information is
necessary to determine the reasonableness of price. However, if it is
determined that additional information is necessary to determine the
reasonableness of the price, the contracting officer shall, to the
maximum extent practicable, obtain the additional information from
sources other than the offeror. In addition, the contracting officer
may request information to determine the cost realism of competing
offers or to evaluate competing approaches.
(c) Limitations relating to commercial items. (1) Requests for
sales data relating to commercial items shall be limited to data for
the same or similar items during a relevant time period.
(2) The contracting officer shall, to the maximum extent
practicable, limit the scope of the request for information relating to
commercial items to include only information that is in the form
regularly maintained by the offeror in commercial operations.
(3) Any information relating to commercial items obtained pursuant
to this paragraph (c) that is prohibited from disclosure by 24.202(a)
or exempt from disclosure under the Freedom of Information Act (5
U.S.C. 552(b)) (see 24.202(b)) shall not be disclosed by the
Government.
10. Section 15.804-6 is amended in paragraph (a)(5) by removing the
words ``or postaward'' and in Table 15-2 by revising the fourth
paragraph of Item 1 entitled ``Established Catalog or Market Prices or
Prices Set by Law or Regulation or Commercial Items Not Covered By
Another Exception'' to read as follows:
15.804-6 Instructions for submission of cost or pricing data or
information other than cost or pricing data.
* * * * *
Prices Set by Law or Regulation or Commercial Item Exception--When
an exception from the requirement to submit cost or pricing data is
requested, whether the item was produced by others or by the offeror,
provide justification for the exception.
* * * * *
11. Section 15.812-1 is amended by revising paragraph (b) and the
fourth sentence of paragraph (c) to read as follows:
15.812-1 General.
* * * * *
(b) However, the policy in paragraph (a) of this subsection does
not apply to any contract or subcontract for acquisition of a
commercial item.
(c) * * * The information shall not be requested for commercial
items. * * *
12. Section 15.812-2 is amended by revising paragraphs (a)(3) and
(a)(5); and adding (a)(6) to read as follows:
15.812-2 Contract clause.
(a) * * *
(3) Utility services under part 41;
* * * * *
(5) Acquisitions of commercial items; and
(6) Contracts for petroleum products.
* * * * *
PART 16--TYPES OF CONTRACTS
13. Section 16.203-4 is amended by revising paragraphs (a)(1)(ii)
and (b)(1)(ii) to read as follows:
16.203-4 Contract clauses.
(a)(1) * * *
* * * * *
(ii) The requirement is for standard supplies that have an
established catalog or market price.
* * * * *
(b)(1) * * *
* * * * *
(ii) The requirement is for semistandard supplies for which the
prices can be reasonably related to the prices of nearly equivalent
standard supplies that have an established catalog or market price.
* * * * *
PART 25--FOREIGN ACQUISITION
25.901 [Amended]
14. Section 25.901 is amended in the first sentence of paragraph
(b) by removing ``15.106-1(b)'' and inserting ``15.106(b)'' in its
place.
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES
15. Section 31.205-26 is amended by revising paragraph (f) to read
as follows:
31.205-26 Material costs.
* * * * *
(f) When a commercial item under paragraph (e) of this subsection
is transferred at a price based on a catalog or market price, the price
should be adjusted to reflect the quantities being acquired and may be
adjusted to reflect the actual cost of any modifications necessary
because of contract requirements.
PART 46--QUALITY ASSURANCE
46.804 [Amended]
16. Section 46.804 is amended in the second sentence by removing
``(see 15.804-1(b)(2))''.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
52.215-2 [Amended]
17. Section 52.215-2 is amended in the introductory text by
removing ``15.106-1(b)'' and inserting ``15.106(b)'' in its place; in
Alternates I, II and III, by revising the Alternate dates to read
``(JAN 1997)'' and removing ``15.106-1(c)'' and inserting ``15.106(c)''
in its place.
18. Section 52.215-26 is revised to read as follows:
52.215-26 Integrity of Unit Prices.
As prescribed in 15.812-2, insert the following clause:
INTEGRITY OF UNIT PRICES (JAN 1997)
(a) Any proposal submitted for the negotiation of prices for
items of supplies shall distribute costs within contracts on a basis
that ensures that unit prices are in proportion to the items' base
cost (e.g., manufacturing or acquisition costs). Any method of
distributing costs to line items that distorts unit prices shall not
be used. For example, distributing costs equally among line items is
not acceptable except when there is little or no variation in base
cost. Nothing in this paragraph requires submission of cost or
pricing data not otherwise required by law or regulation.
(b) The Offeror/Contractor shall also identify those supplies
which it will not manufacture or to which it will not contribute
significant value when requested by the Contracting Officer.
(End of clause)
Alternate I (JAN 1997). As prescribed in 15.812-2(b), substitute
the following paragraph (b) for paragraph (b) of the basic clause:
(b) The Offeror/Contractor shall also identify those supplies
which it will not manufacture or to which it will not contribute
significant value.
19. Section 52.215-41 is amended by revising the provision and
Alternates II and III to read as follows:
52.215-41 Requirements for Cost or Pricing Data or Information Other
Than Cost or Pricing Data.
* * * * *
REQUIREMENTS FOR COST OR PRICING DATA OR INFORMATION OTHER THAN COST OR
PRICING DATA (JAN 1997)
(a) Exceptions from cost or pricing data. (1) In lieu of
submitting cost or pricing data,
[[Page 260]]
offerors may submit a written request for exception by submitting
the information described in the following subparagraphs. The
Contracting Officer may require additional supporting information,
but only to the extent necessary to determine whether an exception
should be granted, and whether the price is fair and reasonable.
(i) Identification of the law or regulation establishing the
price offered. If the price is controlled under law by periodic
rulings, reviews, or similar actions of a governmental body, attach
a copy of the controlling document, unless it was previously
submitted to the contracting office.
(ii) For a commercial item exception, the offeror shall submit,
at a minimum, information on prices at which the same item or
similar items have previously been sold that is adequate for
evaluating the reasonableness of the price for this acquisition.
Such information may include--
(A) For catalog items, a copy of or identification of the
catalog and its date, or the appropriate pages for the offered
items, or a statement that the catalog is on file in the buying
office to which the proposal is being submitted. Provide a copy or
describe current discount policies and price lists (published or
unpublished), e.g., wholesale, original equipment manufacturer, or
reseller. Also explain the basis of each offered price and its
relationship to the established catalog price, including how the
proposed price relates to the price of recent sales in quantities
similar to the proposed quantities.
(B) For market-priced items, the source and date or period of
the market quotation or other basis for market price, the base
amount, and applicable discounts. In addition, describe the nature
of the market.
(C) For items included on an active Federal Supply Service
Multiple Award Schedule contract, proof that an exception has been
granted for the schedule item.
(2) The offeror grants the Contracting Officer or an authorized
representative the right to examine, at any time before award,
books, records, documents, or other directly pertinent records to
verify any request for an exception under this provision, and the
reasonableness of price. Access does not extend to cost or profit
information or other data relevant solely to the offeror's
determination of the prices to be offered in the catalog or
marketplace.
(b) Requirements for cost or pricing data. If the offeror is not
granted an exception from the requirement to submit cost or pricing
data, the following applies:
(1) The offeror shall submit cost or pricing data on Standard
Form (SF) 1411, Contract Pricing Proposal Cover Sheet (Cost or
Pricing Data Required), with supporting attachments prepared in
accordance with Table 15-2 of FAR 15.804-6(b)(2).
(2) As soon as practicable after agreement on price, but before
contract award (except for unpriced actions such as letter
contracts), the offeror shall submit a Certificate of Current Cost
or Pricing Data, as prescribed in FAR 15.804-4.
(End of provision)
* * * * *
Alternate II (JAN 1997). As prescribed in 15.804-8(h), add the
following paragraph (c) to the basic provision:
(c) When the proposal is submitted, also submit one copy each,
including the SF 1411 and supporting attachments, to (1) the
Administrative Contracting Officer, and (2) the Contract Auditor.
Alternate III (JAN 1997). As prescribed in 15.804-8(h), add the
following paragraph (c) to the basic provision (if Alternate II is
also used, redesignated as paragraph (d)):
(c) Submit the cost portion of the proposal via the following
electronic media: (Insert media format, e.g., electronic spreadsheet
format, electronic mail, etc.).
* * * * *
20. Section 52.215-42 is amended by revising the clause; and
revising the date and the last sentence in paragraph (b) of Alternate
IV to read as follows:
52.215-42 Requirements for Cost or Pricing Data or Information Other
Than Cost or Pricing Data--Modifications.
* * * * *
REQUIREMENTS FOR COST OR PRICING DATA OR INFORMATION OTHER THAN COST OR
PRICING DATA--MODIFICATIONS (JAN 1997)
(a) Exceptions from cost or pricing data. (1) In lieu of
submitting cost or pricing data for modifications under this
contract, for price adjustments expected to exceed the threshold set
forth at FAR 15.804-2(a)(1) on the date of the agreement on price or
the date of the award, whichever is later, the Contractor may submit
a written request for exception by submitting the information
described in the following subparagraphs. The Contracting Officer
may require additional supporting information, but only to the
extent necessary to determine whether an exception should be
granted, and whether the price is fair and reasonable.
(i) Identification of the law or regulation establishing the
price offered. If the price is controlled under law by periodic
rulings, reviews, or similar actions of a governmental body, attach
a copy of the controlling document, unless it was previously
submitted to the contracting office.
(ii) Information on modifications of contracts or subcontracts
for commercial items.
(A) If (1) the original contract or subcontract was granted an
exception from cost or pricing data requirements because the price
agreed upon was based on adequate price competition, or prices set
by law or regulation, or was a contract or subcontract for the
acquisition of a commercial item, and (2) the modification (to the
contract or subcontract) is not exempted based on one of these
exceptions, then the Contractor may provide information to establish
that the modification would not change the contract or subcontract
from a contract or subcontract for the acquisition of a commercial
item to a contract or subcontract for the acquisition of an item
other than a commercial item.
(B) For a commercial item exception, the Contractor shall
provide, at a minimum, information on prices at which the same item
or similar items have previously been sold that is adequate for
evaluating the reasonableness of the price of the modification. Such
information may include:
(1) For catalog items, a copy of or identification of the
catalog and its date, or the appropriate pages for the offered
items, or a statement that the catalog is on file in the buying
office to which the proposal is being submitted. Provide a copy or
describe current discount policies and price lists (published or
unpublished), e.g., wholesale, original equipment manufacturer, or
reseller. Also explain the basis of each offered price and its
relationship to the established catalog price, including how the
proposed price relates to the price of recent sales in quantities
similar to the proposed quantities.
(2) For market-priced items, the source and date or period of
the market quotation or other basis for market price, the base
amount, and applicable discounts. In addition, describe the nature
of the market.
(3) For items included on an active Federal Supply Service
Multiple Award Schedule contract, proof that an exception has been
granted for the schedule item.
(2) The Contractor grants the Contracting Officer or an
authorized representative the right to examine, at any time before
award, books, records, documents, or other directly pertinent
records to verify any request for an exception under this clause,
and the reasonableness of price. Access does not extend to cost or
profit information or other data relevant solely to the Contractor's
determination of the prices to be offered in the catalog or
marketplace.
(b) Requirements for cost or pricing data. If the Contractor is
not granted an exception from the requirement to submit cost or
pricing data, the following applies:
(1) The Contractor shall submit cost or pricing data on Standard
Form (SF) 1411, Contract Pricing Proposal Cover Sheet (Cost or
Pricing Data Required), with supporting attachments prepared in
accordance with Table 15-2 of FAR 15.804-6(b)(2).
(2) As soon as practical after agreement on price, but before
award (except for unpriced actions), the Contractor shall submit a
Certificate of Current Cost or Pricing Data, as prescribed by FAR
15.804-4.
(End of clause)
* * * * *
Alternate IV (JAN 1997) * * *
(b) * * * Standard Form 1448, Proposal Cover Sheet (Cost or
Pricing Data Not Required), may be used for information other than
cost or pricing data.)
52.215-43 [Removed]
21. Section 52.215-43 is removed.
22. Section 52.216-2 is amended by revising the introductory
paragraph, the clause date, and the third sentence in paragraph (a)
to read as follows:
52.216-2 Economic Price Adjustment--Standard Supplies.
As prescribed in 16.203-4(a), insert the following clause. The
clause may be modified by increasing the 10 percent limit on aggregate
increases specified in subparagraph (c)(1), upon approval by the chief
of the contracting office.
[[Page 261]]
ECONOMIC PRICE ADJUSTMENT--STANDARD SUPPLIES (JAN 1997)
(a) * * * The term ``established price'' means a price that (1)
is an established catalog or market price for a commercial item sold
in substantial quantities to the general public, and (2) is the net
price after applying any standard trade discounts offered by the
Contractor.
* * * * *
23. Section 52.216-3 is amended by revising the introductory
paragraph, the clause date, and the second sentence of paragraph (a) to
read as follows:
52.216-3 Economic Price Adjustment--Semistandard Supplies.
As prescribed in 16.203-4(b), insert the following clause. The
clause may be modified by increasing the 10 percent limit on aggregate
increases specified in subparagraph (c)(1), upon approval by the chief
of the contracting office.
ECONOMIC PRICE ADJUSTMENT--STANDARD SUPPLIES (JAN 1997)
(a) * * * The term ``established price'' means a price that (1)
is an established catalog or market price for a commercial item sold
in substantial quantities to the general public, and (2) is the net
price after applying any standard trade discounts offered by the
Contractor. * * *
[FR Doc. 96-33209 Filed 12-31-96; 8:45 am]
BILLING CODE 6820-EP-P