[Federal Register Volume 85, Number 109 (Friday, June 5, 2020)]
[Rules and Regulations]
[Pages 34530-34532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11748]
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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 Consideration of Value for the Determination of Price
(DFARS Case 2019-D027)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
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SUMMARY: DoD is issuing a final rule amending 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: Effective June 5, 2020.
FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, telephone 571-372-
6106.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 84 FR
50812 on September 26, 2019, 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 state that, to the extent necessary to support
market research for determination of the reasonableness of the price of
commercial items, the contracting officer shall use the information
submitted under 10 U.S.C. 2379(d) in the case of major weapon systems
acquired as commercial items; and in the case of other items, the
contracting officer may require the offeror to submit relevant
information. 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. One respondent submitted public comments in
response to the proposed rule.
II. Discussion and Analysis
DoD 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
The final rule removes the discussion of value analysis at DFARS
234.7002(d)(5) and the associated definition of ``value analysis'' at
DFARS 234.7001 from the proposed rule.
B. Analysis of Public Comments
Comment: The respondent supports the proposed rule, with a few
exceptions. The respondent stated that in the proposed definition of
``value analysis'' at DFARS 234.7001, ``cost''
[[Page 34531]]
should be replaced with ``price.'' According to the respondent, this is
consistent with the Contract Pricing Reference Guide, which states, ``A
value analysis estimate results from a specialized analysis of the
function of a product and its related price.''
In addition, the respondent recommended that the word
``legitimate'' should be removed from the proposed DFARS
234.7002(d)(5), because ``legitimate'' is a subjective term that cannot
be measured. According to the respondent, the policy should leave the
determination of value to the discretion of the contracting officer.
Response: The final rule deletes the discussion of the use of value
analysis and the associated definition. This discussion and definition
are not necessary for implementation of the statute, which provides
that 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 and that the contracting
officer may consider such information or analysis in addition to other
information submitted. The final rule still provides a reference to
guidance at DFARS Procedures Guidance and Information 234.7003(d)(5),
which in turn references to the Department of Defense Guidebook for
Acquiring Commercial Items, Part B, Commercial Item Pricing--the more
current guidebook.
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,
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 subject to E.O. 13771, because this rule is not
significant regulatory action under E.O. 12866.
VI. Regulatory Flexibility Act
DoD does not expect this final 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, a final
regulatory flexibility analysis has been prepared and is summarized as
follows:
This final 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 consideration of value 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.
There were no public comments in response to the initial regulatory
flexibility analysis.
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.
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.
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.
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 amended as
follows:
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1. The authority citation for 48 CFR parts 210, 212, 215, 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--
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a. In paragraph (a) introductory text removing ``, agencies shall'';
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b. Redesignating paragraphs (a)(i) and (ii) as paragraphs (a)(i)(A) and
(B), respectively;
0
c. In the newly redesignated paragraph (a)(i)(A) removing ``Conduct''
and adding ``Agencies shall conduct'' in its place;
0
d. In the newly redesignated paragraph (a)(i)(B) removing the period
and adding ``; and'' in its place; and
0
e. Adding a new paragraph (a)(ii).
The addition reads as follows:
210.001 Policy.
* * * * *
(a) * * *
(ii) Contracting officers shall 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 revising paragraph (a) to read 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--
(1) In the case of major weapon systems items acquired as
commercial items in accordance with subpart 234.70, 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.
* * * * *
[[Page 34532]]
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 determinations of price reasonableness of
major weapon systems acquired as commercial items, see 234.7002(d).
PART 234--MAJOR SYSTEM ACQUISITION
0
5. Revise section 234.7001 to read as follows:
234.7001 Definition.
As used in this subpart--
Major weapon system means a weapon system acquired pursuant to a
major defense acquisition program.
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6. Amend section 234.7002 by revising paragraph (d) introductory text
and adding paragraph (d)(5) to read as follows:
234.7002 Policy.
* * * * *
(d) * * * See 212.209(a) for requirements of 10 U.S.C. 2377 with
regard to market research.
* * * * *
(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. A contracting officer may
consider such information or analysis in addition to the information
submitted pursuant to paragraphs (d)(1) and (2) of this section. For
additional guidance see PGI 234.7002(d)(5).
[FR Doc. 2020-11748 Filed 6-4-20; 8:45 am]
BILLING CODE 5001-06-P