[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]


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


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.

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

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