[Federal Register Volume 85, Number 169 (Monday, August 31, 2020)]
[Proposed Rules]
[Pages 53748-53751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18645]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 204, 209, 212, 213, and 252

[Docket 2020-0027]
RIN 0750-AK44


Defense Federal Acquisition Regulation Supplement: Use of 
Supplier Performance Risk System (SPRS) Assessments (DFARS Case 2019-
D009)

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 update the policy and procedures for 
use of the Supplier Performance Risk System.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before October 30, 2020, to be considered 
in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2019-D009, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Search for 
``DFARS Case 2019-D009.'' Select ``Comment Now'' and follow the 
instructions provided to submit a comment. Please include ``DFARS Case 
2019-D009'' on any attached document.
    [cir] Email: [email protected]. Include DFARS Case 2019-D009 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Heather 
Kitchens, 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 
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. Heather Kitchens, telephone 571-
372-6095.

SUPPLEMENTARY INFORMATION:

I. Background

    The Supplier Performance Risk System (SPRS) is a DoD enterprise 
application that retrieves quality and delivery data from Government 
systems to calculate ``on time'' delivery scores and quality 
classifications. Contracting officers will use the overall risk 
assessment generated by the SPRS module to evaluate quotes and offers 
received under all solicitations for supplies and services, including 
solicitations using part 12 procedures for the acquisition of 
commercial items. The system generates three risk assessments using the 
SPRS Evaluation Criteria and calculations at https://www.sprs.csd.disa.mil/pdf/SPRS_DataEvaluationCriteria.pdf. These risk 
assessments are described as follows:
     Item Risk. SPRS collects data to generate the probability 
that a product or service, based on intended use, will introduce 
counterfeit or nonconforming material entering the DoD supply chain, 
which can result in significant personnel safety issues, mission 
degradation, or monetary loss. SPRS ``flags'' items identified by 
Government sources as ``high risk'' and provides suggested mitigations, 
or as ``not high risk''.
     Price Risk. SPRS collects historical pricing data from 
Government sources and applies a common statistical method to calculate 
the average price paid for a product or services, generating a price 
range that contracting officers can use in the evaluation of fair and 
reasonable pricing. Price Risk determines whether ``a proposed price is 
consistent with historical prices paid for that item and is depicted by 
high, low, or within range''.
     Supplier Risk. SPRS calculates a supplier risk score, for 
contracting officers to compare competing suppliers. This score 
includes three years of relevant supplier performance information from 
existing Government data sources.

II. Discussion and Analysis

    The proposed rule amends the DFARS to: (1) Move coverage of the 
Supplier Performance Risk System (SPRS) from part 213, Simplified 
Acquisition Procedures, to a new subpart 204.7X, Supplier Performance 
Risk System; and (2) replace DFARS clause 252.213-7000, Notice to 
Prospective Suppliers on Use of Supplier Performance Risk System in 
Past Performance Evaluations, with DFARS provision 252.204-70XX, Notice 
to Prospective Suppliers on Use of Supplier Performance Risk System in 
Performance Evaluations, to enhance the use of SPRS in the evaluation 
of a supplier's performance through the introduction of SPRS system-
generated item, price, and supplier risk assessments.
    In the new subpart, at 204.7X01, definitions are added for item, 
price, and supplier risk. Section 204.7X02, Applicability, provides 
that the use of SPRS is required to be used to evaluate quotes and 
offers in response to all solicitations for supplies and services, 
including solicitations using FAR part 12 procedures for the 
acquisition of commercial items. Language is added at 204.7X03, 
Procedures, to provide guidance to the contracting officer on how SPRS 
risk assessments shall be considered during award decisions, how to 
respond to risk assessment ratings, and what mitigating strategies 
shall be considered for risk assessments prior to award. A prescription 
for use of the new solicitation provision at 252.204-70XX is added at 
204.7X04.
    The proposed rule amends the DFARS by requiring contracting 
officers to use the supplier risk assessments available in SPRS as a 
factor in determining

[[Page 53749]]

responsibility at DFARS 209.105-1, as required by 204.7X03(c)(1). The 
supplier risk assessment reduces supply chain risk as it highlights for 
the contracting officer the probability that an award made to a 
supplier may subject the procurement to the risk of unsuccessful 
performance or to supply chain risk.
    At DFARS 212.301(f), the newly proposed provision, 252.204-70XX, 
Notice to Prospective Suppliers on Use of the Supplier Performance Risk 
System in Performance Evaluations, is added to the list of clauses and 
provisions applicable to FAR part 12 acquisitions. DFARS provision 
252.213-7000, which is superseded by 252.204-70XX, is removed from the 
list.
    DFARS 213.106-2, Evaluation of quotations or offers, is amended to 
provide a cross-reference to subpart 204.7X, and expanded to require 
that SPRS data is used for evaluation of a supplier quote or offer for 
all solicitations for supplies and services, including solicitations 
using FAR part 12 procedures for the acquisition of commercial items. 
Previously, use of SPRS was limited to competitive acquisitions using 
simplified acquisition procedures that were valued at less than or 
equal to $1 million under the authority at FAR subpart 13.5. The 
language is amended to require the contracting officer to evaluate 
suppliers using all SPRS data, not just past performance data. The text 
is also amended to require that the basis for award will be based on an 
overall risk assessment, if applicable. A cross-reference is added to 
see 204.7X04 for use of the 252.204-70XX provision, while DFARS 
213.106-2-70 is removed, since DFARS provision 252.213-7000 is being 
removed.
    The new solicitation provision at DFARS 252.204-70XX, Notice to 
Prospective Suppliers on Use of Supplier Performance Risk System in 
Performance Evaluations, provides the definitions of the SPRS risk 
assessments for item, price, and supplier risk; provides a notice that 
SPRS will be used in the evaluation of suppliers' performance and adds 
a link to the SPRS web page; addresses how the SPRS risk assessments 
will be used by the contracting officer to evaluate quotes or offers 
received in response to the solicitation; and provides links to the 
SPRS User's Guide and SPRS evaluation criteria.

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

    This rule is applicable to all solicitations for supplies and 
services, including solicitations using FAR part 12 procedures for the 
acquisition of commercial items. The rule proposes to add DFARS 
provision 252.204-70XX, Notice to Prospective Suppliers on Use of 
Supplier Performance Risk System in Performance Evaluations, to replace 
DFARS provision 252.213-7000, Notice to Prospective Suppliers on Use of 
Supplier Performance Risk System in Past Performance Evaluations. The 
new provision provides notice to potential offerors that the overall 
risk assessment generated by the SPRS module will be used to evaluate 
quotes or offers received in response to the solicitation.

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 a 
significant regulatory action under E.O. 12866.

VI. Regulatory Flexibility Act

    The DoD does not expect this rule to have an 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., because the 
proposed changes made to existing DFARS text and provision merely 
reflect existing DoD practice, procedures, and systems used by DoD, 
i.e., the Supplier Performance Risk System in Performance Evaluations 
(SPRS). However, an initial regulatory flexibility analysis has been 
performed and is summarized as follows:
    DoD is proposing to revise the Defense Federal Acquisition 
Regulation Supplement to incorporate the expanded capabilities of SPRS, 
made possible by recent technical enhancements. SPRS is a DoD 
enterprise application that retrieves quality and delivery information 
performance data obtained from Government reporting systems. The system 
provides three risk assessments for contracting officer use in 
evaluations: Item, price, and supplier risk assessments.
    The objective of the proposed rule is to notify offerors that SPRS 
collects performance data from a variety of Government sources on 
awarded contracts, to develop item, price, and supplier risk 
assessments for contracting officer use during evaluation of quotations 
or offers. The proposed rule also requires contracting officers to use 
the supplier risk assessment as a factor in the evaluation of 
contractor responsibility. The legal basis for the rule is covered 
under 41 U.S.C 1707, Office of Federal Procurement Policy statute.
    The Federal Procurement Data System indicates that in FY17-FY19, 
DoD awarded 198,038 contracts (both products and services), of which 
123,217 were awarded to small businesses (approximately 62%). DoD does 
not expect small entities will be materially affected by this rule.
    The rule does not impose any additional reporting, recordkeeping, 
and other compliance requirements.
    This rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no known significant alternatives to the rule.
    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-D009), 
in correspondence.

IV. 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).

[[Page 53750]]

List of Subjects in 48 CFR Parts 204, 209, 212, 213, and 252

    Government procurement.

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

    Therefore, 48 CFR parts 204, 209, 212, 213, and 252 are proposed to 
be amended as follows:

0
1. The authority citation for 48 CFR parts 204, 209, 212, 213, and 252 
continues to read as follows:

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

PART 204--ADMINISTRATIVE AND INFORMATION MATTERS

0
2. Add subpart 204.7X to read as follows:
SUBPART 204.7X--Supplier Performance Risk System
Sec.
204.7X00 Scope of subpart.
204.7X01 Definitions.
204.7X02 Applicability.
204.7X03 Procedures.
204.7X04 Solicitation provision.
SUBPART 204.7X--Supplier Performance Risk System


204.7X00  Scope of subpart.

    This subpart provides policies and procedures for use of the 
Supplier Performance Risk System (SPRS) risk assessments in the 
evaluation of a supplier's quotation or offer.


204.7X01   Definitions.

    As used in this subpart--
    Item risk means the probability that a product or service, based on 
intended use, will introduce performance risk resulting in safety 
issues, mission degradation, or monetary loss.
    Price risk means the measure of whether a proposed price for a 
product or service is consistent with historical prices paid for that 
item or service.
    Supplier risk means the probability that an award made to a 
supplier may subject the procurement to the risk of unsuccessful 
performance or to supply chain risk (see 239.7301).


204.7X02   Applicability.

    Use of SPRS assessments is required for acquisitions using FAR part 
13 simplified acquisition procedures, including solicitations for 
supplies and services using FAR part 12 procedures for the acquisition 
of commercial items. SPRS retrieves item, price, quality, delivery, and 
supplier information on contracts from Government reporting systems in 
order to develop overall risk assessments of suppliers. SPRS is 
available at https://www.sprs.csd.disa.mil, and the SPRS user's guides 
are available at https://www.sprs.csd.disa.mil/reference.htmf.


204.7X03  Procedures.

    The contracting officer shall ensure the basis for award includes 
an evaluation of each supplier's overall risk assessment in SPRS, if 
applicable. Suppliers without an overall risk assessment in SPRS shall 
not be evaluated favorably or unfavorably under the risk assessment 
factor. Contracting officers shall use information available in SPRS on 
item risk, price risk, and supplier risk as follows:
    (a) Item risk. (1) Item risk shall be considered to determine 
whether the procurement of products or services represents a high 
performance risk to the Government. Item risk is displayed in SPRS with 
the reason(s) an item is identified as high risk.
    (2) Before issuing a solicitation and when evaluating quotations or 
offers, the contracting officer shall access the SPRS item risk report 
and review any warnings provided. If there are item risk warnings, the 
contracting officer shall consider strategies to mitigate risk, such as 
the following:
    (i) Consulting with the program office.
    (ii) Including mitigating requirements in the statement of work, as 
provided by the requiring activity.
    (iii) Applying risk mitigation strategies, including FAR and DFARS 
clauses identified in the SPRS application, as appropriate.
    (b) Price risk. (1) Price ratings shall be considered as part of 
determining if a proposed price is consistent with historical prices 
paid for an item or otherwise creates a risk to the Government.
    (2) The contracting officer shall consider strategies to mitigate 
price risk, such as the following--
    (i) Not awarding to suppliers with high price ratings unless there 
is a way to justify the price through price analysis;
    (ii) Utilizing appropriate price negotiation techniques and 
procedures; and
    (iii) Using price reasonableness or price realism techniques at FAR 
13.106 or FAR 15.4 when making award decisions.
    (c) Supplier risk. (1) The contracting officers shall consider 
supplier risk during the evaluation of a supplier's performance 
history, to assess the risk of unsuccessful performance, in award 
decisions. Supplier risk assessments in SPRS include quality, delivery, 
and other supplier performance information.
    (2) See risk mitigation strategies in paragraphs (a)(2) and (b)(2) 
of this section.


204.7X04  Solicitation provision.

    Use the provision at 252.204-70XX, Notice to Prospective Suppliers 
on the Use of the Supplier Performance Risk System in Performance 
Evaluations, in solicitations for supplies and services, including 
solicitations using FAR part 12 procedures for the acquisition of 
commercial items.

PART 209--CONTRACTOR QUALIFICATIONS

0
3. Amend section 209.105-1 by adding paragraph (3) to read as follows:


209.105-1   Obtaining information.

* * * * *
    (3) Contracting officers shall use the supplier risk assessment 
available in the Supplier Performance Risk System (SPRS) at https://www.sprs.csd.disa.mil as a factor in determining responsibility. See 
204.7X03(c)(1).

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
4. Amend section 212.301 by--
0
a. Adding paragraph (f)(ii)(K);
0
b. Removing paragraph (f)(v); and
0
c. Redesignating paragraphs (f)(vi) through (xix) as paragraphs (f)(v) 
through (xviii).
    The addition reads as follows:


212.301   Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (f) * * *
    (ii) * * *
    (K) Use the provision at 252.204-70XX, Notice to Prospective 
Suppliers on Use of the Supplier Performance Risk System in Performance 
Evaluations, as prescribed in 204.7X04.
* * * * *

PART 213--SIMPLIFIED ACQUISITION PROCEDURES

0
5. Revise section 213.106-2 to read as follows:


213.106-2   Evaluation of quotations or offers.

    (b)(i) For solicitations for supplies and services using FAR part 
13 simplified acquisition procedures, including solicitations using FAR 
part 12 procedures for the acquisition of commercial items, the 
contracting officer shall ensure--
    (A) Supplier Performance Risk System (SPRS) assessments are used 
for evaluation of a supplier's quotation or

[[Page 53751]]

offer. See subpart 204.7X. SPRS is available at https://www.sprs.csd.disa.mil, and the SPRS user's guides are available at 
https://www.sprs.csd.disa.mil/reference.htm;
    (B) The basis for award shall include an evaluation of each 
supplier's overall risk assessment in SPRS, if applicable; and
    (C) Suppliers without a risk assessment in SPRS are not evaluated 
favorably or unfavorably under the risk assessment factor.
    (D) See 204.7X04 for use of the provision at 252.204-70XX, Notice 
to Prospective Suppliers on the Use of the Supplier Performance Risk 
System in Performance Evaluations.


213.106-2-70   [Removed]

0
6. Remove section 213.106-2-70.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Add section 252.204-70XX to read as follows:


252.204-70XX   Notice to Prospective Suppliers on Use of the Supplier 
Performance Risk System in Performance Evaluations.

    As prescribed in 204.7X04, use the following provision: NOTICE TO 
PROSPECTIVE SUPPLIERS ON USE OF THE SUPPLIER PERFORMANCE RISK SYSTEM IN 
PERFORMANCE EVALUATIONS (DATE)

    (a) Definitions. As used in this provision--
    Item risk means the probability that a product or service, based 
on intended use, will introduce performance risk resulting in safety 
issues, mission degradation, or monetary loss.
    Price risk means a measure of whether a proposed price for a 
product or service is consistent with historical prices paid for 
that item or service.
    Supplier risk means the probability that an award made to a 
supplier may subject the procurement to the risk of unsuccessful 
performance or to supply chain risk (see Defense Federal Acquisition 
Regulation Supplement 239.7301).
    (b) The Supplier Performance Risk System (SPRS), available at 
https://www.sprs.csd.disa.mil, will be used in the evaluation of 
suppliers' performance for acquisitions using Federal Acquisition 
Regulation (FAR) part 13 simplified acquisition procedures, 
including solicitations using FAR part 12 procedures for the 
acquisition of commercial items. SPRS retrieves item, price, 
quality, delivery, and supplier information on contracts from 
Government reporting systems in order to develop overall risk 
assessments.
    (c) SPRS risk assessments will be used by the Contracting 
Officer during the evaluation of quotations or offers received in 
response to this solicitation as follows:
    (1) Item risk shall be considered to determine whether the 
procurement represents a high performance risk to the Government.
    (2) Price risk shall be considered as part of determining if a 
proposed price is consistent with historical prices paid for an item 
or otherwise creates a risk to the Government.
    (3) Supplier risk, including but not limited to quality and 
delivery, shall be considered during the evaluation of a supplier's 
performance history to assess the risk of unsuccessful performance 
and supply chain risk.
    (d) SPRS risk assessments are generated daily for each supplier. 
Suppliers are able to access their risk assessment by following the 
access instructions in the SPRS user's guide available at https://www.sprs.csd.disa.mil/reference.htm. Suppliers are granted access to 
SPRS for their own risk assessment classifications only. SPRS 
reporting procedures and risk assessment methodology are detailed in 
the SPRS user's guide. The method to challenge a rating generated by 
SPRS is also provided in the user's guide. SPRS evaluation criteria 
are available from the reference at https://www.sprs.csd.disa.mil/pdf/SPRS_DataEvaluationCriteria.pdf.
    (e) The Contracting Officer may consider any other available and 
relevant information when evaluating a quotation or an offer.
    (End of provision)


252.213-7000   [Removed]

0
8. Remove section 252.213-7000.

[FR Doc. 2020-18645 Filed 8-28-20; 8:45 am]
BILLING CODE 5001-06-P