[Federal Register Volume 85, Number 128 (Thursday, July 2, 2020)]
[Rules and Regulations]
[Pages 40071-40074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12765]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 14, 15, 30, and 52

[FAC 2020-07; FAR Case 2018-005; Item IV; Docket No. FAR-2018-0006, 
Sequence No. 1]
RIN 9000-AN69


Federal Acquisition Regulation: Modifications to Cost or Pricing 
Data Requirements

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

[[Page 40072]]


ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement a section of the 
National Defense Authorization Act for Fiscal Year 2018 to increase the 
threshold for requiring certified cost or pricing data.

DATES: 
    Effective: August 3, 2020.
    Applicability: In the case of a change or modification made to a 
prime contract that was entered into before July 1, 2018, the threshold 
for obtaining certified cost or pricing data remains $750,000, with the 
following exception. Upon the request of a contractor that was required 
to submit certified cost or pricing data in connection with a prime 
contract entered into before July 1, 2018, the contracting officer 
shall modify the contract without requiring consideration to reflect a 
$2 million threshold for obtaining certified cost or pricing data from 
subcontractors. Similarly for sealed bidding, upon request by a 
contractor, the contracting officer shall modify the contract without 
requiring consideration to replace the relevant clause. (See FAR 
14.201-7(c)(1)(ii) and 15.408).

FOR FURTHER INFORMATION CONTACT: Ms. Zenaida Delgado, Procurement 
Analyst, at 202-969-7207 or [email protected] for clarification 
of content. For information pertaining to status or publication 
schedules, contact the Regulatory Secretariat Division at 202-501-4755 
or [email protected]. Please cite FAC 2020-07, FAR Case 2018-005.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA published a proposed rule on October 2, 2019, at 
84 FR 52428, to increase the threshold for requesting certified cost or 
pricing data from $750,000 to $2 million for contracts entered into 
after June 30, 2018. The threshold for Cost Accounting Standards 
applicability is required by 41 U.S.C. 1502(b)(1)(B) to be the same 
threshold as the one for requesting certified cost or pricing data.
    This FAR change implements section 811 of the National Defense 
Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L. 115-91) 
that amends 10 U.S.C. 2306a and 41 U.S.C. 3502. Cost or Pricing Data: 
Truth in Negotiations, 10 U.S.C. 2306a, and Required cost or pricing 
data and certification, 41 U.S.C. 3502, require that the Government 
obtain certified cost or pricing data for certain contract actions 
listed at 15.403-4(a)(1), such as negotiated contracts, certain 
subcontracts and certain contract modifications. Two 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 is provided 
as follows:

A. Summary of Changes

    There are no changes as a result of comments on the proposed rule.

B. Analysis of Public Comments

    Comment: One respondent opposed the proposed rule and believed it 
will result in higher prices to the Government.
    Response: This FAR change is required to implement section 811 of 
the NDAA for FY 2018 that amends 10 U.S.C. 2306a and 41 U.S.C. 3502.
    Comment: One respondent suggested revision of FAR 15.403-4(a)(3) to 
reflect the $2 million threshold for both prime contracts and 
subcontracts entered into on and after July 1, 2018, to ensure 
consistency across the entire Truth in Negotiations Act certification 
process.
    Response: The Councils cannot accept the suggestion because it is 
not consistent with the statute being implemented.

C. Other Changes

    Some changes included in the proposed rule are no longer necessary 
because of publication of the final rule under FAR Case 2018-007, FAC 
2020-006, on May 6, 2020, effective June 5, 2020.

III. Expected Impact of the Final Rule and Proposed Cost Savings

    DoD, GSA, and NASA have performed a regulatory cost analysis on 
this rule. The following is a summary of the estimated public and 
Government cost savings. This rule will impact large and small 
businesses which currently compete on solicitations issued using FAR 
part 15 negotiation procedures and are valued between $750,000 and $2 
million as these firms will no longer be required to submit certified 
cost or pricing data between those amounts. In addition, because of the 
comparable increase in the cost accounting standards threshold, fewer 
contractors will be required to comply with FAR clauses that implement 
the cost accounting standards. The following is a summary of the 
estimated cost savings calculated in 2016 dollars at a 7-percent 
discount rate and in perpetuity:

----------------------------------------------------------------------------------------------------------------
                        Summary                                Public           Government           Total
----------------------------------------------------------------------------------------------------------------
Present Value Cost Savings.............................      -$588,988,385       -$90,669,628      -$679,658,013
Annualized Cost Savings................................        -41,229,187         -6,346,874        -47,576,061
Annualized Value Cost Savings as of 2016 if Year 1 is          -31,453,549         -4,841,999        -36,295,548
 2020..................................................
----------------------------------------------------------------------------------------------------------------

    To access the full Regulatory Cost Analysis for this rule, go to 
the Federal eRulemaking Portal at www.regulations.gov, search for ``FAR 
Case 2018-005,'' click ``Open Docket,'' and view ``Supporting 
Documents.''

IV. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    The changes are not applicable to contracts at or below the 
simplified acquisition threshold or to contracts for the acquisition of 
commercial items.

V. 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 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, is 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.

VI. Executive Order 13771

    This final rule is considered to be an E.O. 13771 deregulatory 
action. The total annualized value of the cost

[[Page 40073]]

savings is -$36,295,548 (as of 2016 if Year 1 is 2020). Details on the 
estimated cost savings can be found in section III of this preamble.

VII. 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:

    This rule is required to implement section 811 of the National 
Defense Authorization Act for Fiscal Year 2018 which amends 10 
U.S.C. 2306a and 41 U.S.C. 3502 to increase the threshold for 
requesting certified cost or pricing data from $750,000 to $2 
million. The threshold for Cost Accounting Standards applicability 
is required by 41 U.S.C. 1502(b)(1)(B) to be the same threshold as 
the one for requesting certified cost or pricing data.
    There were no significant issues raised by the public in 
response to the initial regulatory flexibility analysis.
    This rule will impact small entities who compete on 
solicitations issued using FAR part 15, Contracting by Negotiation, 
valued between $750,000 and $2 million. It also impacts subcontracts 
and contract modifications, including those contracts awarded under 
sealed bidding procedures, valued between $750,000 and $2 million. 
Offerors and contractors under the revised threshold will no longer 
be required to submit ``certified cost or pricing data'' and will 
now submit ``data other than certified cost or pricing data,'' which 
takes less time to prepare.
    In order to calculate the savings due to the increased 
threshold, the same FY 2016 Federal Procurement Data System (FPDS) 
data was utilized that was used to calculate information collection 
burdens associated with submission of certified cost or pricing data 
and of data other than certified cost or pricing data under the 
Office of Management and Budget (OMB) Control Number 9000-0013, 
which was cleared in January 2018. For contracts and orders awarded 
using FAR part 15 that were valued between $750,000 and $2 million, 
reflecting the actions impacted by the increase in the threshold, 
there were 2,697 contract awards/orders issued, 636 modifications to 
contracts or orders, an estimated 1,288 subcontracts awarded, and 
592 subcontract modifications. Of these responses, 3,364 were from 
small entities. Of the 1,871 small entities that were awarded 
contracts or issued orders, 1,501 were unique small entities (about 
1.25 contracts/orders per small entity). We estimate a comparable 
ratio of actions to entities in the other categories. This ratio is 
less than the overall ratio of actions to entities because this is 
just a small slice of the total range covered by the information 
collection clearance. The cost accounting standards do not apply to 
small entities, therefore that threshold change only affects other 
than small entities.
    The rule does not include additional reporting or record keeping 
requirements.
    There are no available alternatives to the rule to accomplish 
the desired objective of the statute. However, the impact on small 
entities will be beneficial, as it will relieve them of the 
requirement to provide certified cost or pricing data when the 
acquisition is less than $2 million. Instead, in most cases they 
would submit data other than certified cost or pricing data which is 
estimated to save 40 hours of labor effort and related cost savings 
for each submission not requiring certification.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
the Small Business Administration.

VIII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. Chapter 35) does apply. The 
rule contains information collection requirements. OMB has cleared this 
information collection requirement under OMB Control Numbers: 9000-
0013, Certified Cost or Pricing Data and Data Other Than Certified Cost 
or Pricing Data, and 9000-0129, Cost Accounting Standards 
Administration. No comments were received on the revision to OMB 
Control Number 9000-0013 that was provided in the proposed rule. The 
annual reporting burden under OMB Control Number 9000-0129 was revised 
using the $2 million threshold; a 30-day notice was published on 
October 8, 2019, at 84 FR 53727.

List of Subjects in 48 CFR Parts 14, 15, 30, and 52

    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 amend 48 CFR parts 14, 15, 30, and 52 
as set forth below:

0
1. The authority citation for parts 14, 15, 30, and 52 continues to 
read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 14--SEALED BIDDING

0
2. Amend section 14.201-7 by revising paragraph (c)(1) to read as 
follows:


14.201-7   Contract clauses.

* * * * *
    (c)(1) When contracting by sealed bidding, the contracting officer 
shall--
    (i) Insert the clause at 52.214-28, Subcontractor Certified Cost or 
Pricing Data--Modifications--Sealed Bidding, in solicitations and 
contracts if the contract amount is expected to exceed the threshold 
for submission of certified cost or pricing data at 15.403-4(a)(1); or
    (ii) Upon request of a contractor in connection with a prime 
contract entered into before July 1, 2018, the contracting officer 
shall modify the contract without requiring consideration to replace 
clause 52.214-28, Subcontractor Certified Cost or Pricing Data--
Modifications--Sealed Bidding, with its Alternate I.
* * * * *

PART 15--CONTRACTING BY NEGOTIATION

0
3. Amend section 15.403-4 by--
0
a. Revising the third sentence of paragraph (a)(1) introductory text;
0
b. Revising the second sentence of paragraph (a)(1)(iii) introductory 
text; and
0
c. Adding paragraph (a)(3).
    The revisions and addition read as follows:


15.403-4   Requiring certified cost or pricing data (10 U.S.C. 2306a 
and 41 U.S.C. chapter 35).

    (a)(1) * * * The threshold for obtaining certified cost or pricing 
data is $750,000 for prime contracts awarded before July 1, 2018, and 
$2 million for prime contracts awarded on or after July 1, 2018. * * *
* * * * *
    (iii) * * * Price adjustment amounts must consider both increases 
and decreases (e.g., a $500,000 modification resulting from a reduction 
of $1,500,000 and an increase of $1,000,000 is a $2,500,000 pricing 
adjustment exceeding the $2,000,000 threshold). * * *
* * * * *
    (3) Upon the request of a contractor that was required to submit 
certified cost or pricing data in connection with a prime contract 
entered into before July 1, 2018, the contracting officer shall modify 
the contract, without requiring consideration, to reflect a $2 million 
threshold for obtaining certified cost or pricing data on subcontracts 
entered on and after July 1, 2018. See 15.408.
* * * * *

0
4. Amend section 15.408 by revising paragraphs (d) and (e) to read as 
follows:


15.408   Solicitation provisions and contract clauses.

* * * * *
    (d) Subcontractor Certified Cost or Pricing Data. The contracting 
officer shall--
    (1) Insert the clause at 52.215-12, Subcontractor Certified Cost or 
Pricing Data, in solicitations and contracts

[[Page 40074]]

when the clause prescribed in paragraph (b) of this section is 
included; or
    (2) Upon the request of a contractor that was required to submit 
certified cost or pricing data in connection with a prime contract 
entered into before July 1, 2018, the contracting officer shall modify 
the contract without requiring consideration, to replace clause 52.215-
12, Subcontractor Certified Cost or Pricing Data, with its Alternate I.
    (e) Subcontractor Certified Cost or Pricing Data--Modifications. 
The contracting officer shall--
    (1) Insert the clause at 52.215-13, Subcontractor Certified Cost or 
Pricing Data--Modifications, in solicitations and contracts when the 
clause prescribed in paragraph (c) of this section is included; or
    (2) Upon the request of a contractor that was required to submit 
certified cost or pricing data in connection with a prime contract 
entered into before July 1, 2018, the contracting officer shall modify 
the contract without requiring consideration, to replace clause 52.215-
13, Subcontractor Certified Cost or Pricing Data--Modifications, with 
its Alternate I.
* * * * *

PART 30--COST ACCOUNTING STANDARDS ADMINISTRATION


30.201-4   [Amended]

0
5. Amend section 30.201-4, in paragraph (b)(1), by removing 
``$750,000'' and adding ``$2 million'' in its place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Amend section 52.214-28 by--
0
a. Removing from the clause prescription ``14.201-7(c)'' and adding 
``14.201-7(c)(1)(i)'' in its place; and
0
b. Adding Alternate I.
    The addition reads as follows:


52.214-28   Subcontractor Certified Cost or Pricing Data--
Modifications--Sealed Bidding.

* * * * *

Subcontractor Certified Cost or Pricing Data--Modifications--Sealed 
Bidding (May 2020)

* * * * *
    Alternate I (AUG 20). As prescribed in 14.201-7(c)(1)(ii), 
substitute the following paragraph (b) in place of paragraph (b) of 
the basic clause:
    (b) Unless an exception under FAR 15.403-1(b) applies, the 
Contractor shall require the subcontractor to submit certified cost 
or pricing data (actually or by specific identification in writing), 
as part of the subcontractor's proposal in accordance with FAR 
15.408, Table 15-2 (to include any information reasonably required 
to explain the subcontractor's estimating process such as the 
judgmental factors applied and the mathematical or other methods 
used in the estimate, including those used in projecting from known 
data, and the nature and amount of any contingencies included in the 
price)--
    (1) Before modifying any subcontract that was awarded prior to 
July 1, 2018, involving a pricing adjustment expected to exceed 
$750,000; or
    (2) Before awarding any subcontract expected to exceed $2 
million on or after July 1, 2018, or modifying any subcontract that 
was awarded on or after July 1, 2018, involving a pricing adjustment 
expected to exceed $2 million.


0
7. Amend section 52.215-12 by--
0
a. Removing from the clause prescription ``15.408(d)'' and adding 
``15.408(d)(1)'' in its place; and
0
b. Adding Alternate I.
    The addition reads as follows:


52.215-12   Subcontractor Certified Cost or Pricing Data.

* * * * *

Subcontractor Certified Cost or Pricing Data (May 2020)

* * * * *
    Alternate I (AUG 20). As prescribed in 15.408(d)(2), substitute 
the following paragraph (a) in place of paragraph (a) of the basic 
clause:
    (a) Unless an exception under FAR 15.403-1 applies, the 
Contractor shall require the subcontractor to submit certified cost 
or pricing data (actually or by specific identification in writing), 
in accordance with FAR 15.408, Table 15-2 (to include any 
information reasonably required to explain the subcontractor's 
estimating process such as the judgmental factors applied and the 
mathematical or other methods used in the estimate, including those 
used in projecting from known data, and the nature and amount of any 
contingencies included in the price)--
    (1) Before modifying any subcontract that was awarded prior to 
July 1, 2018, involving a pricing adjustment expected to exceed 
$750,000; or
    (2) Before awarding any subcontract expected to exceed $2 
million on or after July 1, 2018, or modifying any subcontract that 
was awarded on or after July 1, 2018, involving a pricing adjustment 
expected to exceed $2 million.


0
8. Amend section 52.215-13 by--
0
a. Removing from the clause prescription ``15.408(e)'' and adding 
``15.408(e)(1)'' in its place; and
0
b. Adding Alternate I.
    The addition reads as follows:


52.215-13   Subcontractor Certified Cost or Pricing Data--
Modifications.

* * * * *

Subcontractor Certified Cost or Pricing Data--Modifications (May 2020)

* * * * *
    Alternate I (AUG 20). As prescribed in 15.408(e)(2), substitute 
the following paragraphs (a), (b), and (d) for paragraphs (a), (b), 
and (d) of the basic clause:
    (a) The requirements of paragraphs (b) and (c) of this clause 
shall--
    (1) Become operative only for any modification to this contract 
involving aggregate increases and/or decreases in costs, plus 
applicable profits, expected to exceed the threshold for submission 
of certified cost or pricing data at FAR 15.403-4(a)(1); and
    (2) Be limited to such modifications.
    (b) Unless an exception under FAR 15.403-1 applies, the 
Contractor shall require the subcontractor to submit certified cost 
or pricing data (actually or by specific identification in writing), 
in accordance with FAR 15.408, Table 15-2 (to include any 
information reasonably required to explain the subcontractor's 
estimating process such as the judgmental factors applied and the 
mathematical or other methods used in the estimate, including those 
used in projecting from known data, and the nature and amount of any 
contingencies included in the price)--
    (1) Before modifying any subcontract that was awarded prior to 
July 1, 2018, involving a pricing adjustment expected to exceed 
$750,000; or
    (2) Before modifying any subcontract that was awarded on or 
after July 1, 2018, involving a pricing adjustment expected to 
exceed $2 million.
    (d) The Contractor shall insert the substance of this clause, 
including this paragraph (d), in each subcontract that exceeds $2 
million.


52.230-2   [Amended]

0
9. Amend section 52.230-2 by removing from the clause prescription 
``30.201-4(a)'' and adding ``30.201-4(a)(1)'' in its place.


52.230-4   [Amended]

0
10. Amend section 52.230-4 by removing from the clause prescription 
``30.201-4(c)'' and adding ``30.201-4(c)(1)'' in its place.


52.230-5   [Amended]

0
11. Amend section 52.230-5 by removing from the clause prescription 
``30.201-4(e)'' and adding ``30.201-4(e)(1)'' in its place.

[FR Doc. 2020-12765 Filed 7-1-20; 8:45 am]
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