Federal Acquisition Regulation; Review and Justification of Pass-Through Contracts, 26424-26426 [2015-11029]

Download as PDF 26424 Federal Register / Vol. 80, No. 88 / Thursday, May 7, 2015 / Rules and Regulations With regard to equal opportunity for individuals with disabilities, DOL estimated that its rule impacts 20,490 Federal contractors with between 50 and 500 employees (approximately 44% of Federal contractors may be impacted). This FAR rule does not add any new reporting, recordkeeping, or other compliance burdens. The FAR rule makes contracting officers and contractors aware of the DOL requirements. DoD, GSA, and NASA are not aware of any significant alternatives which would accomplish the stated objectives of implementing the DOL final rules, while minimizing impact on small entities. DoD, GSA, and NASA do not have the flexibility of changing the DOL rules, which have been published for public comment and are in effect as final rules. There is no significant impact on small entities imposed by the FAR rule. Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The Regulatory Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration. V. Paperwork Reduction Act The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; however, these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved for the DOL regulations under OMB Control Numbers 1250–0004, OFCCP Recordkeeping and Reporting Requirements—38 U.S.C. 4212, Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended; 1250–0005, OFCCP Recordkeeping and Reporting Requirements—Section 503 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. 703; and 1293–0005, Federal Contractor Veterans’ Employment Report, VETS–100/VETS–100A. List of Subjects in 48 CFR Parts 1, 22, and 52 Government procurement. Dated: April 30, 2015. William Clark, Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy. mstockstill on DSK4VPTVN1PROD with RULES2 Interim Rule Adopted as Final Without Change Accordingly, the interim rule amending 48 CFR parts 1, 22, and 52, which was published in the Federal Register at 79 FR 43575 on July 25, 2014, is adopted as a final rule without change. [FR Doc. 2015–11028 Filed 5–6–15; 8:45 am] BILLING CODE 6820–EP–P VerDate Sep<11>2014 19:21 May 06, 2015 Jkt 235001 DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Part 15 [FAC 2005–82; FAR Case 2013–012; Item II; Docket No. 2013–0012; Sequence No. 1] RIN 9000–AM57 Federal Acquisition Regulation; Review and Justification of PassThrough Contracts Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Final rule. AGENCY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement section 802 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013. This section provides additional requirements relative to the review and justification of pass-through contracts. DATES: Effective: June 8, 2015. FOR FURTHER INFORMATION CONTACT: Ms. Kathy J. Hopkins, Procurement Analyst, at 202–969–7226 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202–501–4755. Please cite FAC 2005– 82, FAR Case 2013–012. SUPPLEMENTARY INFORMATION: SUMMARY: I. Background DoD, GSA, and NASA published a proposed rule in the Federal Register at 79 FR 39361 on July 10, 2014 to implement section 802 of the NDAA for FY 2013 (Pub. L. 112–239) which provided for additional requirements relative to the review and justification of pass-through contracts. Specifically, in those instances where an offeror for a contract, task order, or delivery order informs the agency pursuant to FAR 52.215–22 of its intention to award subcontracts for more than 70 percent of the total cost of work to be performed under the contract, task order, or delivery order, section 802 requires the contracting officer to (1) consider the availability of alternative contract vehicles and the feasibility of contracting directly with a subcontractor or subcontractors that will perform the bulk of the work; (2) make a written determination that the contracting approach selected is in the PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 best interest of the Government; and (3) document the basis for such determination. These statutory requirements are being implemented in FAR 15.404–1(h). For consistency, this rule is applicable to all of the agencies subject to the FAR, even though section 802 only applied to the Department of Defense, the Department of State, and the United States Agency for International Development. Contract actions under section 46 of the Small Business Act (15 U.S.C. 657s) are exempt from the requirements under section 802 of the NDAA for FY 2013. 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 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 This final rule makes two changes from the proposed rule. The first change revises FAR 15.404–1(h)(2) to make clear that competition requirements still apply if the contracting officer selects alternative approaches. The second change revises FAR 15.404–1(h)(3) to clarify that the requirements of this rule do not apply to small business set-aside contracts. B. Analysis of Public Comments The Regulatory Secretariat Division received responses from two respondents to the proposed rule which are discussed below: 1. Application of Rule to FAR Part 36 Comment: One respondent requested that the final rule ensure that this new requirement take into consideration the requirements found in FAR 36.501, which addresses performance of work by prime construction contractors. Response: The statute does not exempt the contracting officer from making a written determination that the contracting approach selected is in the best interest of the Government under FAR part 36 acquisitions. The contracting officer shall take into consideration industry practices in making this determination. 2. Conflict With FAR 52.219–14 Comment: One respondent stated that FAR clause 52.219–14, Limitations on Subcontracting, could also conflict with the new requirements of this rule. E:\FR\FM\07MYR2.SGM 07MYR2 Federal Register / Vol. 80, No. 88 / Thursday, May 7, 2015 / Rules and Regulations Response: FAR clause 52.219–14, Limitations on Subcontracting, applies only to contracts that have been set aside for small business concerns or 8(a) concerns. Section 1615 of the NDAA for FY 2014 (Pub. L. 113–66) exempts contract actions subject to Section 46 of the Small Business Act (15 U.S.C. 657s). The text at FAR 15.404–1(h)(3) has been revised to clarify that contract actions awarded pursuant to FAR subparts 19.5, 19.8, 19.13, 19.14, or 19.15 are exempt from the requirements of this rule. Therefore, the requirements of this rule do not conflict with FAR clause 52.219– 14. mstockstill on DSK4VPTVN1PROD with RULES2 3. Potential Increase in Bid Protests Comment: One respondent stated that by requiring contracting officers to consider direct award to a subcontractor that will perform more than 70 percent of the work, those subcontractors could become interested parties for bid protest purposes. This could open the door to a substantial number of bid protests and significantly impact the ability of agencies to make timely awards. Response: The statute requires that the contracting officer consider the availability of alternative contract vehicles and the feasibility of contracting directly with a subcontractor or subcontractors that will perform the bulk of the work, make a determination that the contracting approach selected is in the best interest of the Government, and document the basis for such determination. By following these requirements and adhering to the established solicitation procedures in the FAR, contracting officers will mitigate the risk of protests. This rule does not change existing competition requirements, nor does it change the status of subcontractors in the bid protest process. 4. Subcontractors Lacking Prime Contractor Experience Comment: One respondent stated that direct award to subcontractors that do not have sufficient prime experience can severely impact procurements and result in a substantial increase in workload for both the contractor and the Government (i.e. additional audits and business system reviews). Response: The statute requires that contracting officers consider direct award to subcontractors and the purpose of this rule is to amend the FAR to implement that requirement. However, it should be noted that both the statute and the rule only require that the contracting officer consider direct award. Contracting officers shall continue to ensure that purchases shall be made from, and contracts shall be VerDate Sep<11>2014 19:21 May 06, 2015 Jkt 235001 awarded to, responsible prospective contractors only, in accordance with FAR 9.103. 5. Subcontractors Contracting Directly With the Government Comment: One respondent opined that prime contractors will try to avoid the impact of this rule by using contract provisions that prohibit subcontractors from entering into a direct contract with the agency. So, if this rule is going to work, a clause preventing primes from including a restrictive provision in a teaming arrangement and/or subcontract needs to be included in the rule. Response: FAR clause 52.203–6 ‘‘Restrictions on Subcontractor Sales to the Government’’ precludes prime contractors from including such restrictions in their agreements with actual or prospective subcontractors. For acquisitions of commercial items, the prohibition applies only to the extent that any agreement restricting sales by subcontractors results in the Federal Government being treated differently from any other prospective purchaser for the sale of the commercial item(s). 6. Subcontractor Pricing and Participation in Negotiations Comment: One respondent stated that in many cases, the prime contractors do not allow subcontractors to see the final version of the prime’s proposal sent in response to the Government’s RFP or allow subcontractors to participate in negotiations. As such, the subcontractor pricing that the Government sees in the prime contractor’s proposal or during negotiations may not be accurate. This issue can be resolved by revising the proposed clause in the rule to require the prime contractor to obtain the signed approval of the subcontractor’s portion of the final offer submitted to the Government and allowing subcontractors that will perform 70 percent or more work to participate in negotiations. Response: FAR 15.404–3 already provides requirements for evaluating subcontractor pricing and obtaining certified cost or pricing data as required. Prime contractors are responsible for managing their subcontractors and appropriately evaluating subcontractor cost or pricing data in accordance with FAR subpart 15.4. III. 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 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 26425 (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. IV. Regulatory Flexibility Act The Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration certify that this final rule will not 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., because the rule augments the current responsibilities of contracting officers relative to the review and justification of pass-through contracts and does not initiate or impose any new administrative or performance requirements on contractors. In addition, contract actions awarded pursuant to FAR subparts 19.5, 19.8, 19.13, 19.14, or 19.15 are exempt from the requirements of this rule. V. 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). List of Subject in 48 CFR Part 15 Government procurement. Dated: April 30, 2015. William 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 part 15 as set forth below: PART 15—CONTRACTING BY NEGOTIATION 1. The authority citation for 48 CFR part 15 continues to read as follows: ■ Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113. 2. Amend section 15.404–1 by adding paragraph (h) to read as follows: ■ 15.404–1 * E:\FR\FM\07MYR2.SGM * Proposal analysis techniques. * 07MYR2 * * 26426 Federal Register / Vol. 80, No. 88 / Thursday, May 7, 2015 / Rules and Regulations (h) Review and justification of passthrough contracts. (1) The requirements of this paragraph (h) are applicable to all agencies. The requirements apply by law to the Department of Defense, the Department of State, and the United States Agency for International Development, per section 802 of the National Defense Authorization Act (NDAA) for Fiscal Year 2013. The requirements apply as a matter of policy to other Federal agencies. (2) Except as provided in paragraph (h)(3) of this section, when an offeror for a contract or a task or delivery order informs the contracting officer pursuant to 52.215–22 that it intends to award subcontracts for more than 70 percent of the total cost of work to be performed under the contract, task or delivery order, the contracting officer shall— (i) Consider the availability of alternative contract vehicles and the feasibility of contracting directly with a subcontractor or subcontractors that will perform the bulk of the work. If such alternative approaches are selected, any resulting solicitations shall be issued in accordance with the competition requirements under FAR part 6; (ii) Make a written determination that the contracting approach selected is in the best interest of the Government; and (iii) Document the basis for such determination. (3) Contract actions awarded pursuant to subparts 19.5, 19.8, 19.13, 19.14, or 19.15 are exempt from the requirements of this paragraph (h) (see section 1615 of the National Defense Authorization Act for Fiscal Year 2014 (Pub. L. 113– 66)). [FR Doc. 2015–11029 Filed 5–6–15; 8:45 am] BILLING CODE 6820–EP–P ACTION: Final rule. DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to accommodate the recent merger of the Architect-Engineer Contract Administration Support System (ACASS) and the Construction Contractor Appraisal Support System (CCASS) modules within the Contractor Performance Assessment Reporting System (CPARS) database. DATES: Effective: June 8, 2015. FOR FURTHER INFORMATION CONTACT: Mr. Curtis E. Glover, Sr., Procurement Analyst, at 202–501–1448, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202–501–4755. Please cite FAC 2005–82, FAR Case 2014–010. SUPPLEMENTARY INFORMATION: SUMMARY: I. Background DoD, GSA, and NASA published a proposed rule in the Federal Register at 79 FR 54949 on September 15, 2014, to standardize the past performance reporting requirements under the CPARS database in FAR subpart 42.15. One respondent 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 and the changes made to the rule as a result of those comments are provided as follows: A. Summary of Changes There are no changes made in the final rule as a result of the public comments. DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION B. Public Comments 1. Continue To Use ACASS NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Part 42 [FAC 2005–82; FAR Case 2014–010; Item III; Docket No. 2014–0010, Sequence No. 1] mstockstill on DSK4VPTVN1PROD with RULES2 RIN 9000–AM79 Federal Acquisition Regulation; Enhancements to Past Performance Evaluation Systems Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). AGENCY: VerDate Sep<11>2014 19:21 May 06, 2015 Jkt 235001 Comment: The respondent requests that ACASS continue to be utilized because the ratings are more descriptive and appropriate to the design professionals than those in CPARS. Response: ACASS will not continue to be utilized since the ACASS module was merged into CPARS on July 1, 2014. Appendix 3 of the ‘‘Guidance for Contractor Performance Assessment Reporting System (CPARS),’’ dated July 2014, provides specific instructions on describing the different aspects of the quality of the contractor’s work and the contractor’s management of a quality control program in the narrative of a PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 CPARS evaluation for an ArchitectEngineer contract or order. This guidance is accessible electronically at https://www.cpars.gov/cparsfiles/pdfs/ CPARS-Guidance.pdf. 2. ‘‘Overall Rating’’ Added to CPARS Comment: The respondent requests an ‘‘Overall Rating’’ be added to the CPARS rating system, similar to the ACASS system. Response: An overall rating of contractor performance in CPARS is not advantageous, because the weight of the specific evaluation areas (quality, schedule, cost control, management, utilization of small business and regulatory compliance) is different for each contract being evaluated and each solicitation in which the offeror’s past performance is being evaluated. 3. Interim Evaluations Comment: The respondent suggests that the interim evaluation in CPARS be superseded by the final evaluation. Response: The final evaluation is the last rating provided to date on a contract. Interim evaluations, combined with the final evaluation (or last evaluation to date), remain available in order to provide the entire picture of contractor performance under the contract for future source selection purposes. C. Other Changes For clarity, the final rule adds a reference to the past performance thresholds at paragraphs (b) through (f) of section 42.1502. III. 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. IV. Regulatory Flexibility Act DoD, GSA, and NASA certify that this final rule will not have a significant economic impact on a substantial number of small entities within the E:\FR\FM\07MYR2.SGM 07MYR2

Agencies

[Federal Register Volume 80, Number 88 (Thursday, May 7, 2015)]
[Rules and Regulations]
[Pages 26424-26426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-11029]


-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 15

[FAC 2005-82; FAR Case 2013-012; Item II; Docket No. 2013-0012; 
Sequence No. 1]
RIN 9000-AM57


Federal Acquisition Regulation; Review and Justification of Pass-
Through Contracts

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

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement section 802 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013. 
This section provides additional requirements relative to the review 
and justification of pass-through contracts.

DATES: Effective: June 8, 2015.

FOR FURTHER INFORMATION CONTACT: Ms. Kathy J. Hopkins, Procurement 
Analyst, at 202-969-7226 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat Division at 202-501-4755. Please cite FAC 2005-82, FAR Case 
2013-012.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 79 FR 39361 on July 10, 2014 to implement section 802 of 
the NDAA for FY 2013 (Pub. L. 112-239) which provided for additional 
requirements relative to the review and justification of pass-through 
contracts. Specifically, in those instances where an offeror for a 
contract, task order, or delivery order informs the agency pursuant to 
FAR 52.215-22 of its intention to award subcontracts for more than 70 
percent of the total cost of work to be performed under the contract, 
task order, or delivery order, section 802 requires the contracting 
officer to (1) consider the availability of alternative contract 
vehicles and the feasibility of contracting directly with a 
subcontractor or subcontractors that will perform the bulk of the work; 
(2) make a written determination that the contracting approach selected 
is in the best interest of the Government; and (3) document the basis 
for such determination. These statutory requirements are being 
implemented in FAR 15.404-1(h). For consistency, this rule is 
applicable to all of the agencies subject to the FAR, even though 
section 802 only applied to the Department of Defense, the Department 
of State, and the United States Agency for International Development. 
Contract actions under section 46 of the Small Business Act (15 U.S.C. 
657s) are exempt from the requirements under section 802 of the NDAA 
for FY 2013.
    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 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

    This final rule makes two changes from the proposed rule. The first 
change revises FAR 15.404-1(h)(2) to make clear that competition 
requirements still apply if the contracting officer selects alternative 
approaches. The second change revises FAR 15.404-1(h)(3) to clarify 
that the requirements of this rule do not apply to small business set-
aside contracts.

B. Analysis of Public Comments

    The Regulatory Secretariat Division received responses from two 
respondents to the proposed rule which are discussed below:
1. Application of Rule to FAR Part 36
    Comment: One respondent requested that the final rule ensure that 
this new requirement take into consideration the requirements found in 
FAR 36.501, which addresses performance of work by prime construction 
contractors.
    Response: The statute does not exempt the contracting officer from 
making a written determination that the contracting approach selected 
is in the best interest of the Government under FAR part 36 
acquisitions. The contracting officer shall take into consideration 
industry practices in making this determination.
2. Conflict With FAR 52.219-14
    Comment: One respondent stated that FAR clause 52.219-14, 
Limitations on Subcontracting, could also conflict with the new 
requirements of this rule.

[[Page 26425]]

    Response: FAR clause 52.219-14, Limitations on Subcontracting, 
applies only to contracts that have been set aside for small business 
concerns or 8(a) concerns. Section 1615 of the NDAA for FY 2014 (Pub. 
L. 113-66) exempts contract actions subject to Section 46 of the Small 
Business Act (15 U.S.C. 657s). The text at FAR 15.404-1(h)(3) has been 
revised to clarify that contract actions awarded pursuant to FAR 
subparts 19.5, 19.8, 19.13, 19.14, or 19.15 are exempt from the 
requirements of this rule. Therefore, the requirements of this rule do 
not conflict with FAR clause 52.219-14.
3. Potential Increase in Bid Protests
    Comment: One respondent stated that by requiring contracting 
officers to consider direct award to a subcontractor that will perform 
more than 70 percent of the work, those subcontractors could become 
interested parties for bid protest purposes. This could open the door 
to a substantial number of bid protests and significantly impact the 
ability of agencies to make timely awards.
    Response: The statute requires that the contracting officer 
consider the availability of alternative contract vehicles and the 
feasibility of contracting directly with a subcontractor or 
subcontractors that will perform the bulk of the work, make a 
determination that the contracting approach selected is in the best 
interest of the Government, and document the basis for such 
determination. By following these requirements and adhering to the 
established solicitation procedures in the FAR, contracting officers 
will mitigate the risk of protests. This rule does not change existing 
competition requirements, nor does it change the status of 
subcontractors in the bid protest process.
4. Subcontractors Lacking Prime Contractor Experience
    Comment: One respondent stated that direct award to subcontractors 
that do not have sufficient prime experience can severely impact 
procurements and result in a substantial increase in workload for both 
the contractor and the Government (i.e. additional audits and business 
system reviews).
    Response: The statute requires that contracting officers consider 
direct award to subcontractors and the purpose of this rule is to amend 
the FAR to implement that requirement. However, it should be noted that 
both the statute and the rule only require that the contracting officer 
consider direct award. Contracting officers shall continue to ensure 
that purchases shall be made from, and contracts shall be awarded to, 
responsible prospective contractors only, in accordance with FAR 9.103.
5. Subcontractors Contracting Directly With the Government
    Comment: One respondent opined that prime contractors will try to 
avoid the impact of this rule by using contract provisions that 
prohibit subcontractors from entering into a direct contract with the 
agency. So, if this rule is going to work, a clause preventing primes 
from including a restrictive provision in a teaming arrangement and/or 
subcontract needs to be included in the rule.
    Response: FAR clause 52.203-6 ``Restrictions on Subcontractor Sales 
to the Government'' precludes prime contractors from including such 
restrictions in their agreements with actual or prospective 
subcontractors. For acquisitions of commercial items, the prohibition 
applies only to the extent that any agreement restricting sales by 
subcontractors results in the Federal Government being treated 
differently from any other prospective purchaser for the sale of the 
commercial item(s).
6. Subcontractor Pricing and Participation in Negotiations
    Comment: One respondent stated that in many cases, the prime 
contractors do not allow subcontractors to see the final version of the 
prime's proposal sent in response to the Government's RFP or allow 
subcontractors to participate in negotiations. As such, the 
subcontractor pricing that the Government sees in the prime 
contractor's proposal or during negotiations may not be accurate. This 
issue can be resolved by revising the proposed clause in the rule to 
require the prime contractor to obtain the signed approval of the 
subcontractor's portion of the final offer submitted to the Government 
and allowing subcontractors that will perform 70 percent or more work 
to participate in negotiations.
    Response: FAR 15.404-3 already provides requirements for evaluating 
subcontractor pricing and obtaining certified cost or pricing data as 
required. Prime contractors are responsible for managing their 
subcontractors and appropriately evaluating subcontractor cost or 
pricing data in accordance with FAR subpart 15.4.

III. 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.

IV. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not 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., because the rule augments the 
current responsibilities of contracting officers relative to the review 
and justification of pass-through contracts and does not initiate or 
impose any new administrative or performance requirements on 
contractors. In addition, contract actions awarded pursuant to FAR 
subparts 19.5, 19.8, 19.13, 19.14, or 19.15 are exempt from the 
requirements of this rule.

V. 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).

List of Subject in 48 CFR Part 15

    Government procurement.

    Dated: April 30, 2015.
William 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 part 15 as set forth 
below:

PART 15--CONTRACTING BY NEGOTIATION

0
1. The authority citation for 48 CFR part 15 continues to read as 
follows:

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


0
2. Amend section 15.404-1 by adding paragraph (h) to read as follows:


15.404-1  Proposal analysis techniques.

* * * * *

[[Page 26426]]

    (h) Review and justification of pass-through contracts. (1) The 
requirements of this paragraph (h) are applicable to all agencies. The 
requirements apply by law to the Department of Defense, the Department 
of State, and the United States Agency for International Development, 
per section 802 of the National Defense Authorization Act (NDAA) for 
Fiscal Year 2013. The requirements apply as a matter of policy to other 
Federal agencies.
    (2) Except as provided in paragraph (h)(3) of this section, when an 
offeror for a contract or a task or delivery order informs the 
contracting officer pursuant to 52.215-22 that it intends to award 
subcontracts for more than 70 percent of the total cost of work to be 
performed under the contract, task or delivery order, the contracting 
officer shall--
    (i) Consider the availability of alternative contract vehicles and 
the feasibility of contracting directly with a subcontractor or 
subcontractors that will perform the bulk of the work. If such 
alternative approaches are selected, any resulting solicitations shall 
be issued in accordance with the competition requirements under FAR 
part 6;
    (ii) Make a written determination that the contracting approach 
selected is in the best interest of the Government; and
    (iii) Document the basis for such determination.
    (3) Contract actions awarded pursuant to subparts 19.5, 19.8, 
19.13, 19.14, or 19.15 are exempt from the requirements of this 
paragraph (h) (see section 1615 of the National Defense Authorization 
Act for Fiscal Year 2014 (Pub. L. 113-66)).

[FR Doc. 2015-11029 Filed 5-6-15; 8:45 am]
 BILLING CODE 6820-EP-P