[Federal Register Volume 84, Number 113 (Wednesday, June 12, 2019)]
[Rules and Regulations]
[Pages 27494-27497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12263]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 15
[FAC 2019-03; FAR Case 2017-006; Docket No. 2017-0006; Sequence No. 1]
RIN 9000-AN53
Federal Acquisition Regulation: Exception From Certified Cost or
Pricing Data Requirements--Adequate Price Competition
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the
Federal Acquisition Regulation (FAR) to provide guidance to DoD, NASA,
and the Coast Guard, consistent with a section of the National Defense
Authorization Act for Fiscal Year 2017 that addresses the exception
from certified cost or pricing data requirements when price is based on
adequate price competition
DATES: Effective July 12, 2019.
FOR FURTHER INFORMATION CONTACT: Mr. Michael O. Jackson, Procurement
Analyst, at 202-208-4949 for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
[[Page 27495]]
Secretariat Division at 202-501-4755. Please cite FAC 2019-03, FAR Case
2017-006.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a proposed rule at 83 FR 27303 on June
12, 2018, to revise the standard for ``adequate price competition''
applicable to DoD, NASA, and the Coast Guard, as required by section
822 of the National Defense Authorization Act (NDAA) for Fiscal Year
(FY) 2017 (Pub. L. 114-328). Section 822 excludes from the standard for
adequate price competition the situation in which there was an
expectation of competition, but only one offer is received. The
standard of adequate price competition that is based on a reasonable
expectation of competition is now applicable only to agencies other
than DoD, NASA, and the Coast Guard. Ten respondents submitted comments
on the proposed rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the public comments in the
development of the final rule. A discussion of the comments and the
changes made to the rule as a result of those comments are provided as
follows:
A. Summary of Significant Changes
Instead of providing a separate standard for DoD, NASA, and the
Coast Guard, the final rule states first what is common to all
agencies, and then makes the standard relating to expectation of
competition applicable only to agencies other than DoD, NASA, and the
Coast Guard. This clarification is not intended to reflect a
substantive change from the proposed rule; rather, it is intended as a
drafting improvement.
For simplicity, the final rule does not use the terms
``responsive'' and ``viable,'' but expresses the new requirements using
the existing FAR terminology.
B. Analysis of Public Comments
1. Statutory Requirement for the Rule.
Comment: One respondent found it unclear what problem this rule is
trying to resolve. The respondent urged reconsideration of this
regulation until the actual problem can be identified and targeted with
an expected outcome that provides an acceptable solution. The
respondent further recommended that contracting officers should be
allowed wide latitude to exercise business judgment, and that any
regulatory changes should be focused on training and appointment of
contracting officers Governmentwide. Another respondent stated that the
ability to utilize ``the expectation of competition'' is a valuable
tool that should not be removed for DoD, NASA, and the Coast Guard.
Response: This rule is required to partially implement section 822
of the NDAA for FY 2017, which excludes from the standard for adequate
price competition the situation in which there was an expectation of
competition, but only one offer is received.
2. Applicability
a. All Federal Agencies
Comment: One respondent recommended that the rule should also apply
to all Federal agencies.
Response: Section 822 of the NDAA for FY 2017 only applies to DoD,
NASA, and the Coast Guard (see 10 U.S.C. 2306a).
b. Below Simplified Acquisition Threshold and Commercial Items
Comment: One respondent recommended that the rule should apply to
all noncompetitive contracts and subcontracts at or below the
simplified acquisition threshold (SAT) and to the acquisition of
commercial products and services.
Response: Section 822 of the NDAA for FY 2017 only addressed when
contractors need to provide cost or pricing data for DoD, NASA, and the
Coast Guard. Certified cost or pricing data is not required below the
SAT or for the acquisition of commercial products or services. See 10
U.S.C. 2306a and 41 U.S.C. 3502 and 3503. These sections set the
threshold at $2 million (section 811 of Pub. L. 115-91) and exempt
commercial items.
3. Terminology
a. Responsive and Viable Offer
Comment: Several respondents requested a definition of ``responsive
offer.'' Another respondent stated that the term, ``responsive'' is not
appropriate to define ``adequate price competition'' under FAR part 15.
This respondent cited a Government Accountability Office ruling that
responsiveness is applicable to FAR part 14 sealed bidding acquisitions
and not FAR part 15 contracting by negotiation. Two respondents
recommended including a definition of ``viable offer.''
Response: The terms ``responsive'' and ``viable'' have been removed
from the final rule. The concept is conveyed through current FAR
language at FAR 15.403-1(c)(1), i.e., ``responsible offerors, competing
independently, submit priced offers that satisfy the Government's
expressed requirement.''
b. Competing Independently
Comment: One respondent sought elaboration on the use of the phrase
``competing independently,'' specifically if it were to be used in the
context of a contractor's affiliate or long-term agreement holder
entering a price competition.
Response: The first standard for adequate price competition in FAR
15.403-1(c)(1)(i) already includes the requirement that two or more
responsible offerors, competing independently, submit price offers that
satisfy the Government's expressed requirements, where award will be
made in a best-value competition and there is no finding that the price
of the otherwise successful offeror is unreasonable. Whether two
offerors are competing independently is specific to the particular
circumstances.
4. Impact on Burden and Procurement Action Lead Time
Comment: Several respondents commented on the increased burdens
that will result from this rule and potential impact on procurement
action lead time (PALT). One respondent stated that this change will
increase the burden on the contracting officer in obtaining certified
cost or pricing data and conducting additional proposal analysis.
Another respondent was concerned that the new statutory framework will
likely generate costly and time-consuming rework of proposals by
requiring a bidder to provide a second, TINA-compliant proposal when it
is learned that they are the only responsive bidder.
Response: This rule provides to DoD, NASA, and the Coast Guard the
revised standard on how to determine adequate price competition. The
principle will not have an impact on offerors/contractors or
contracting officers until implemented at the agency level by DoD,
NASA, and the Coast Guard. There are no projected reporting,
recordkeeping, or other compliance requirements of this rule. However,
the corollary of this FAR change is that DoD, NASA, and the Coast Guard
will be required, by statute, to obtain certified cost or pricing data
from an offeror when only one offer is received and no other exception
applies, which will likely increase burden and PALT (e.g., see DoD
proposed rule published under DFARS Case 2017-D009 at 83 FR 30656 on
June 29, 2018).
[[Page 27496]]
5. Subcontracts
Comment: Several respondents raised issues relating to
subcontracts.
One respondent asked whether this rule intends for subcontracts
under DoD, NASA, and Coast Guard contracts to be competed at the same
standard as is being applied to prime contracts.
Another respondent was concerned that the FAR rule did not
implement 10 U.S.C. 2306a(b)(6), which requires a prime contractor
required to submit cost or pricing data to determine whether a
subcontract under such contract qualifies for an exception under
paragraph (b)(1)(A) (adequate price competition) from such requirement.
One respondent expressed concern about restarts of subcontract
competitions when a prime contractor receives only one offer for a
subcontract. This respondent also speculated that prime contractors may
take on more evaluation risks to avoid finding suppliers unacceptable,
so as not to end up with only one responsive and viable offer.
Response: This FAR rule lays out the general principle of what
constitutes adequate price competition for DoD, NASA, and the Coast
Guard. The details of applicability to subcontracts and
responsibilities of the prime contractor will be addressed at the
agency level (e.g., see DoD proposed rule published under DFARS Case
2017-D009 at 83 FR 30656 on June 29, 2018). The concern about potential
impact on subcontract awards cannot be resolved, because this change is
required by statute.
6. Edits
Comment: One respondent requested insertion of the word ``or''
between 15.403-1(c)(1)(i)(A)(2) and section (c)(1)(i)(B) to clarify
that the two options are separate and distinct and are not both
required to meet the standard for adequate price competition.
Response: The language in the proposed rule text between FAR
15.403-1(c)(1)(i)(A) and (B) is structured consistent with the FAR
drafting convention for vertical lists of items separated by semi-
colons: Namely, in a vertical list of more than two items, the
conjunction ``and'' or ``or'' only appears between the last two items
in the list. However, as noted in section II.A. of this preamble, FAR
15.403-1(c)(1) is revised in this final rule to provide a drafting
improvement and clarification, which obviates the request to modify the
proposed rule language.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This rule does not contain any solicitation provision or contract
clause that applies to contracts or subcontracts at or below the
simplified acquisition threshold or contracts or subcontracts for the
acquisition of commercial items, including commercially available off-
the-shelf items.
IV. 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 not a significant regulatory action and, therefore, was not
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.
V. Executive Order 13771
This final rule is not an E.O. 13771 regulatory action, because
this rule is not significant under E.O. 12866.
VI. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared a Final Regulatory Flexibility
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA is summarized as follows:
The reason for this action is to implement section 822 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017
(Pub. L. 114-328). The objective of this rule is to provide a
separate standard for ``adequate price competition'' as the basis
for an exception to the requirement to provide certified cost or
pricing data. The statutory basis is 10 U.S.C. 2306a, as amended by
section 822 of the NDAA for FY 2017.
Section 822 modifies 10 U.S.C. 2306a, the Truth in Negotiations
Act, which is applicable only to DoD, NASA, and the Coast Guard.
No significant issues were raised by the public with regard to
the initial regulatory flexibility analysis.
This rule only provides a statement of internal guidance to DoD,
NASA, and the Coast Guard. This principle will not have impact on
small entities until implemented at the agency level by DoD, NASA,
and the Coast Guard.
There are no projected reporting, recordkeeping, or other
compliance requirements of the rule. The rule amends the standards
for adequate price competition for DoD, NASA, and the Coast Guard.
However, the corollary of this FAR change is that DoD, NASA, and the
Coast Guard will be required to obtain certified cost or pricing
data from an offeror when only one offer is received, and no other
exception applies.
Since this rule does not impose a burden on small entities, DoD,
GSA, and NASA were unable to identify any alternatives that would
reduce burden on small business and still meet the requirements of
the statute.
Interested parties may obtain a copy of the FRFA from the
Regulatory Secretariat Division. The Regulatory Secretariat has
submitted a copy of the FRFA to the Chief Counsel for Advocacy of the
Small Business Administration.
VII. Paperwork Reduction Act
The 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 15
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA and NASA are amending 48 CFR part 15 as set
forth below:
PART 15--CONTRACTING BY NEGOTIATION
0
1. The authority citation for part 15 continues to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
0
2. Amend section 15.305 by revising the third sentence of paragraph
(a)(1) to read as follows:
15.305 Proposal evaluation.
(a) * * *
(1) * * * In limited situations, a cost analysis may be appropriate
to establish reasonableness of the otherwise successful offeror's price
(see 15.403-1(c)(1)(i)(C)). * * *
* * * * *
0
3. Amend section 15.403-1 by revising paragraph (c)(1) to read as
follows:
15.403-1 Prohibition on obtaining certified cost or pricing data (10
U.S.C. 2306a and 41 U.S.C. chapter 35).
* * * * *
(c) * * *
[[Page 27497]]
(1) Adequate price competition. (i) A price is based on adequate
price competition when--
(A) Two or more responsible offerors, competing independently,
submit priced offers that satisfy the Government's expressed
requirement;
(B) Award will be made to the offeror whose proposal represents the
best value (see 2.101) where price is a substantial factor in source
selection; and
(C) There is no finding that the price of the otherwise successful
offeror is unreasonable. Any finding that the price is unreasonable
must be supported by a statement of the facts and approved at a level
above the contracting officer.
(ii) For agencies other than DoD, NASA, and the Coast Guard, a
price is also based on adequate price competition when-
(A) There was a reasonable expectation, based on market research or
other assessment, that two or more responsible offerors, competing
independently, would submit priced offers in response to the
solicitation's expressed requirement, even though only one offer is
received from a responsible offeror and if--
(1) Based on the offer received, the contracting officer can
reasonably conclude that the offer was submitted with the expectation
of competition, e.g., circumstances indicate that--
(i) The offeror believed that at least one other offeror was
capable of submitting a meaningful offer; and
(ii) The offeror had no reason to believe that other potential
offerors did not intend to submit an offer; and
(2) The determination that the proposed price is based on adequate
price competition and is reasonable has been approved at a level above
the contracting officer; or
(B) Price analysis clearly demonstrates that the proposed price is
reasonable in comparison with current or recent prices for the same or
similar items, adjusted to reflect changes in market conditions,
economic conditions, quantities, or terms and conditions under
contracts that resulted from adequate price competition.
* * * * *
15.404-1 [Amended]
0
4. Amend section 15.404-1 by removing from paragraph (b)(2)(i) ``(see
15.403-1(c)(1)(i))'' and adding ``(see 15.403-1(c)(1))'' in its place.
[FR Doc. 2019-12263 Filed 6-11-19; 8:45 am]
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