[Federal Register Volume 76, Number 182 (Tuesday, September 20, 2011)]
[Unknown Section]
[Pages 58150-58152]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23949]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 215

RIN 0750-AG82


Defense Federal Acquisition Regulations Supplement; Discussions 
Prior to Contract Award (DFARS Case 2010-D013)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD is amending the Defense Federal Acquisition Regulation 
Supplement (DFARS) to strongly encourage discussions prior to award for 
source selections of procurements estimated at $100 million or more.

DATES: Effective Date: September 20, 2011.

FOR FURTHER INFORMATION CONTACT: Mr. Dustin Pitsch, telephone 703-602-
0289.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule at 75 FR 71647 on November 24, 2010, 
to implement the recommendation of the DoD Source Selection Joint 
Analysis Team (JAT) to strongly encourage the use of discussions in all 
competitive negotiated procurements over $100 million. The period for 
public comment closed on January 24, 2011, and three respondents 
provided comments.
    The rule proposed to amend DFARS part 215 to strongly recommend, 
for acquisitions of more than $100 million, that contracting officers 
hold discussions rather than use the authority at FAR 52.215-1 to award 
on initial offers without discussions.

II. Discussion and Analysis

A. Proposed rule is excessive

    Comment: One respondent said that the proposed rule is 
``overkill.''
    Response: No change was made in the final rule in response to this 
comment. The JAT advises that data shows that the number of protests 
filed against the award of competitive negotiated contracts and orders 
over $100 million is substantially higher when discussions are not 
held. A preference for holding

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discussions is recognition of a best practice.

B. Negative effects possible

    Comment: One respondent wrote that requiring discussions could have 
negative effects, such as added Government and industry cost due to the 
significant increase in the source selection schedule and reduced 
solicitation and proposal quality due to a mindset that problems can be 
fixed during discussions.
    Response: The JAT data demonstrates that procurement lead time is 
significantly extended when protests occurred. The second concern 
raised by the respondent, that proposals will be of lower quality, is 
unrealistic because the offeror that chooses to submit an inferior 
proposal always runs the risk of not making the competitive range and 
therefore not being considered for award.

C. Change reference

    Comment: A respondent wanted to change the reference from 215.203-
71 to 215.306(d) because the latter deals with discussions, which are 
covered at FAR 15.306(d).
    Response: DoD agrees with the recommendation. The statement about 
holding discussions for actions of $100 million or more is relocated in 
the final rule to DFARS subpart 215.306(c) from 215.2.

D. Remove ``competitive range'' limitation

    Comment: A respondent proposed deleting the phrase ``with offerors 
in the competitive range'' at the end of the sentence ``(F)or source 
selections when the procurement is $100 million or more, contracting 
officers should conduct discussions with offerors in the competitive 
range.'' The respondent noted that FAR 15.306(c)(1) and (d), read 
together, require the conduct of discussions with all offerors in the 
competitive range in every case.
    Response: DoD agrees with respondent that the FAR already mandates 
discussions with all offerors whose proposals have been selected for 
the competitive range. The intent of this rule is to expand the 
situations in which discussions are held beyond those situations where 
they may be already mandated. The language in the proposed rule at 
DFARS 215.203-71 is relocated to 215.306(c)(1) in the final rule and 
revised to state ``For source selections, when the procurement is $100 
million or more, contracting officers should conduct discussions. 
Follow the procedures at FAR 15.306(c) and (d).''

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under Section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD does not expect 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 the final rule does not add to or delete existing 
regulations on discussions for DoD procurements under $100 million, the 
majority of DoD procurements. For procurements of at least $100 
million, any increase in discussions is anticipated to benefit all 
offerors, including small businesses, by providing them an opportunity 
to explain details of the offer and address their particular 
capabilities.
    A final regulatory flexibility analysis was performed and is 
summarized as follows. This rule was initiated at the request of the 
Director, Defense Procurement and Acquisition Policy, to implement a 
recommendation of the Department of Defense (DoD) Source Selection 
Joint Analysis Team (JAT). The JAT, which was tasked to revise the DoD 
Source Selection Procedures, determined that there is a significant 
positive correlation between high-dollar source selections conducted 
without discussions and the number of protests sustained. In order to 
improve the quality of high-dollar, complex source selections, and 
reduce turbulence and inefficiency resulting from sustained protests, 
the policy is changed to strongly encourage discussions prior to the 
award of source selections estimated at $100 million or more.
    DoD research has indicated that meaningful discussions with 
industry prior to contract award on high-dollar, complex requirements 
improves both industry's understanding of solicitation requirements and 
the Government's understanding of industry issues. By identifying and 
discussing these issues prior to submission of final proposals, the 
Government is often able to issue clarifying language. The modified 
requirements documentation allows industry to tailor proposals and 
better describe the offeror's intended approach, increases the 
probability that the offeror's proposal satisfies the Government 
requirements, and often results in better contract performance. Asking 
contracting officers to conduct discussions with industry provides a 
reasonable approach to recognizing and addressing valid industry 
concerns and a constructive alternative to protests resulting from 
industry frustration over misunderstood requirements. The legal basis 
is 41 U.S.C. 1303 and 48 CFR chapter 1.
    Data were reviewed for the most recent year available, Fiscal Year 
2009. While there is no data source available that tabulates the number 
of offers received from small businesses, DoD determined that 620 new 
contracts and 252 new task orders or delivery orders of $100 million or 
more were awarded to small businesses during Fiscal Year 2009. 
Therefore, DoD estimates that at least 872 small businesses could 
benefit from this policy change.
    There is no reporting, recordkeeping, or other compliance 
requirement associated with the proposed rule. Therefore, there is no 
impact, positive or negative, on small businesses in this area. Thus, 
there are no additional professional skills necessary on the part of 
small businesses in this area. There are no direct costs to small 
business firms to comply with this rule. Conversely, small businesses 
that might have previously filed a protest against an award when 
discussions were not held may now be able to avoid the costs associated 
with protesting.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no practical alternatives that will accomplish the 
objectives of the proposed rule. When a solicitation includes the 
provision at FAR 52.215-1, Instructions to Offerors--Competitive 
Acquisitions, paragraph (f)(4) of the clause states that the 
``Government intends to evaluate proposals and award a contract without 
discussions.'' If, however, the solicitation includes FAR 52.215-1 with 
its Alternate I, then the revised paragraph (f)(4) states that the 
``Government intends to evaluate proposals and award a contract after 
conducting discussions with offerors whose proposals have been 
determined to be within the competitive range.'' Use of the clause 
without Alternate I will not accomplish the stated objectives;

[[Page 58152]]

only the clause with its Alternate I will accomplish the purpose of 
this case.
    No comments were received from small entities on this rule.

V. Paperwork Reduction Act.

    The final rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Part 215

    Government procurement.

Mary Overstreet,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 215 is amended as follows:

PART 215--CONTRACTING BY NEGOTIATION

0
1. The authority citation for 48 CFR part 215 continues to read as 
follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.


0
2. Section 215.209 is added as follows:


215.209  Solicitation provisions and contract clauses.

    (a) For source selections when the procurement is $100 million or 
more, contracting officers should use the provision at FAR 52.215-1, 
Instructions to Offerors--Competitive Acquisition, with its Alternate 
I.
0
3. Section 215.306 is added as follows:


215.306  Exchanges with offerors after receipt of proposals.

    (c) Competitive range.
    (1) For acquisitions with an estimated value of $100 million or 
more, contracting officers should conduct discussions. Follow the 
procedures at FAR 15.306(c) and (d).

[FR Doc. 2011-23949 Filed 9-19-11; 8:45 am]
BILLING CODE 5001-08-P