[Federal Register Volume 84, Number 187 (Thursday, September 26, 2019)]
[Proposed Rules]
[Pages 50812-50814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20558]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 210, 212, 215, and 234

[Docket DARS-2019-0050]
RIN 0750-AK65


Defense Federal Acquisition Regulation Supplement: Market 
Research and Value Analysis for the Determination of Price 
Reasonableness (DFARS Case 2019-D027)

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

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to implement several sections of the 
National Defense Authorization Act for Fiscal Year 2017 to address how 
contracting officers may require the offeror to submit relevant 
information to support market research for price analysis and allow an 
offeror to submit information relating to the value of a commercial 
item to aid in the determination of the reasonableness of the price of 
such item.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before November 25, 2019, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2019-D027, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2019-D027'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2019-D027.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please ``DFARS Case 2019-D027'' on any attached 
documents.
    [cir] Email: [email protected]. Include DFARS Case 2019-D027 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy 
G. Williams, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To

[[Page 50813]]

confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, telephone 571-
372-6106.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is proposing to revise the DFARS to implement sections 871 and 
872 of the National Defense Authorization Act for Fiscal Year 2017 
(Pub. L. 114-328). Section 871 modifies 10 U.S.C. 2377, Preference for 
acquisition of commercial items, to address how contracting officers 
may require the offeror to submit relevant information to support 
market research for price analysis for the acquisition of commercial 
items. Section 872 modifies 10 U.S.C. 2379, Requirement for 
determination by Secretary of Defense and notification to Congress 
before procurement of major weapon systems as commercial items, to 
allow an offeror to submit information or analysis relating to the 
value of a commercial item.

II. Discussion and Analysis

    This proposed rule implements the requirements of section 871 at 
DFARS 212.209(a), which addresses the determination of price 
reasonableness when acquiring commercial items. The focus of this 
requirement is that agencies shall conduct market research to support 
the determination of price reasonableness for commercial items. The 
rule proposes to add the reference to 10 U.S.C. 2377 and directs 
contracting officers to use: The information submitted under DFARS 
234.7002(d) when acquiring major weapon systems as commercial items in 
accordance with 10 U.S.C. 2379; or, in the case of other items, other 
relevant information as described in DFARS 212.209.
    This proposed rule implements the requirements of section 872 in 
DFARS subpart 234.70, which addresses the acquisition of major weapon 
systems as commercial items. DFARS 234.7002(d) addresses the relevant 
information necessary to make a determination of price reasonableness. 
To implement section 872, this rule proposes a new paragraph (d)(5) at 
DFARS 234.7002, which does not impose a requirement, but allows an 
offeror to submit information or analysis relating to the value of a 
commercial item, to aid in the determination of the reasonableness of 
the price of such item. A contracting officer may consider such 
information or analysis in addition to the information submitted 
pursuant to other paragraphs in DFARS 234.7002(d). To assist in 
understanding value analysis, a definition of ``value analysis'' is 
added at DFARS 234.7001. A cross-reference is also added at DFARS 
210.001.
    This rule does not impose additional requirements on offerors. The 
information required is consistent with the existing requirement at 
DFARS 215.404-1(b)(iii)(D), which requires an offeror to submit other 
relevant information that can serve as the basis for determining the 
reasonableness of price. The DFARS provision 252.215-7010, Requirements 
for Certified Cost or Pricing Data and Data other Than Certified Cost 
or Pricing Data, is the existing mechanism for obtaining the minimum 
information necessary to permit a determination that the proposed price 
is fair and reasonable, to include the requirements of DFARS 215.404-
1(b).

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 propose to add or modify any provisions or 
clauses or the prescriptions for any provisions or clauses.

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 rule is not expected to be an E.O. 13771 regulatory action, 
because this rule is not significant under E.O. 12866.

VI. Regulatory Flexibility Act

    DoD does not expect this proposed rule 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. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    This proposed rule is issued in order to implement sections 871 and 
872 of the National Defense Authorization Act (NDAA) for Fiscal Year 
(FY) 2017 (Pub. L. 114-328).
    The objective of this rule is to address the use of market research 
and value analysis to support the determination of price reasonableness 
when acquiring commercial items. The legal basis of the rule is 
sections 871 and 872 of the NDAA for FY 2017.
    Based on data from the Federal Procurement Data System, DoD awarded 
38,000 new commercial contracts to 16,429 small entities in FY 2018. 
There are an additional unknown number of small entities that submitted 
offers and did not receive awards (estimated at several thousand).
    This rule does not impose any new reporting, recordkeeping, or 
other compliance requirements on small entities. DFARS 252.215-7010, 
Requirements for Certified Cost or Pricing Data, and Data Other Than 
Certified Cost or Pricing Data, already requires offerors to provide 
information necessary to determine that the price is fair and 
reasonable. Offerors are allowed, but not required, to submit 
information or analysis relating to the value of a commercial item for 
consideration by the contracting officer in determining price 
reasonableness.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    DoD did not identify any significant alternatives that would 
minimize or reduce the significant economic impact, because there is no 
significant impact on small entities.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C 610 (DFARS Case 2019-D027), in 
correspondence.

VII. Paperwork Reduction Act

    The rule does not contain any new 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) or 
impact any existing information collection requirements.

[[Page 50814]]

List of Subjects in 48 CFR Parts 210, 212, 215 and 234

    Government procurement.

Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 210, 212, 215, and 234 are proposed to be 
amended as follows:

0
1. The authority citation for 48 CFR parts 210, 212, and 234 continues 
to read as follows:

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

PART 210--MARKET RESEARCH

0
2. Amend section 210.001 by adding paragraph (a)(iii) to read as 
follows:


210.001  Policy.

    (a) * * *
    (iii) Use market research, where appropriate, to inform price 
reasonableness determinations (see 212.209 and 234.7002).

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
3. Amend section 212.209 by--
0
a. Revising paragraph (a); and
0
b. In paragraph (b), removing ``market research pursuant to paragraph 
(a) of this section,'' and adding ``market research'' in its place.
    The revision reads as follows:


212.209  Determination of price reasonableness.

    (a) In accordance with 10 U.S.C. 2377(d), agencies shall conduct or 
obtain market research to support the determination of the 
reasonableness of price for commercial items contained in any bid or 
offer submitted in response to an agency solicitation. To the extent 
necessary to support such market research, the contracting officer for 
the solicitation--
    (1) In the case of major weapon systems items acquired under 10 
U.S.C. 2379, shall use information submitted under 234.7002(d); and
    (2) In the case of other items, may require the offeror to submit 
other relevant information as described in this section.
* * * * *

PART 215--CONTRACTING BY NEGOTIATION

0
4. Amend section 215.403-3 by adding paragraph (c) to read as follows:


215.403-3  Requiring data other than certified cost or pricing data.

* * * * *
    (c) Commercial items. For determination of price reasonableness of 
major weapon systems acquired as commercial items, see 234.7002(d).

PART 234--MAJOR SYSTEMS ACQUISITION

0
5. Revise section 234.7001 to read as follows:


234.7001  Definitions.

    As used in this subpart--
    Major weapon system means a weapon system acquired pursuant to a 
major defense acquisition program.
    Value analysis means a systematic and objective evaluation of the 
function of a product and its related costs, whose purpose is to ensure 
optimum value.
0
6. Amend section 234.7002 by--
0
a. Revising the paragraph (d) introductory text; and
0
b. Adding a new paragraph (d)(5).
    The revision and addition read as follows:


234.7002  Policy.

* * * * *
    (d) Relevant information. This section implements 10 U.S.C. 2379. 
See also DFARS 212.209(a).
* * * * *
    (5) An offeror may submit information or analysis relating to the 
value of a commercial item to aid in the determination of the 
reasonableness of the price of such item. Value analysis is used to 
understand what features or characteristics of a given product or 
service, or offered terms and conditions warrant consideration as 
having legitimate value to the Government. A contracting officer may 
consider such information or analysis in addition to the information 
submitted pursuant to paragraphs (d)(1) and (d)(2) of this section. For 
additional guidance on use of value analysis see PGI 234.7002(d)(5).
[FR Doc. 2019-20558 Filed 9-25-19; 8:45 am]
 BILLING CODE 5001-06-P