[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:
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Summary Public Government Total
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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..................................................
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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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