Federal Acquisition Regulation: Exception From Certified Cost or Pricing Data Requirements-Adequate Price Competition, 27494-27497 [2019-12263]

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[Federal Register Volume 84, Number 113 (Wednesday, June 12, 2019)]
[Rules and Regulations]
[Pages 27494-27497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12263]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 15

[FAC 2019-03; FAR Case 2017-006; Docket No. 2017-0006; Sequence No. 1]
RIN 9000-AN53


Federal Acquisition Regulation: Exception From Certified Cost or 
Pricing Data Requirements--Adequate Price Competition

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

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to provide guidance to DoD, NASA, 
and the Coast Guard, consistent with a section of the National Defense 
Authorization Act for Fiscal Year 2017 that addresses the exception 
from certified cost or pricing data requirements when price is based on 
adequate price competition

DATES: Effective July 12, 2019.

FOR FURTHER INFORMATION CONTACT: Mr. Michael O. Jackson, Procurement 
Analyst, at 202-208-4949 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory

[[Page 27495]]

Secretariat Division at 202-501-4755. Please cite FAC 2019-03, FAR Case 
2017-006.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA published a proposed rule at 83 FR 27303 on June 
12, 2018, to revise the standard for ``adequate price competition'' 
applicable to DoD, NASA, and the Coast Guard, as required by section 
822 of the National Defense Authorization Act (NDAA) for Fiscal Year 
(FY) 2017 (Pub. L. 114-328). Section 822 excludes from the standard for 
adequate price competition the situation in which there was an 
expectation of competition, but only one offer is received. The 
standard of adequate price competition that is based on a reasonable 
expectation of competition is now applicable only to agencies other 
than DoD, NASA, and the Coast Guard. Ten 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 and the 
changes made to the rule as a result of those comments are provided as 
follows:

A. Summary of Significant Changes

    Instead of providing a separate standard for DoD, NASA, and the 
Coast Guard, the final rule states first what is common to all 
agencies, and then makes the standard relating to expectation of 
competition applicable only to agencies other than DoD, NASA, and the 
Coast Guard. This clarification is not intended to reflect a 
substantive change from the proposed rule; rather, it is intended as a 
drafting improvement.
    For simplicity, the final rule does not use the terms 
``responsive'' and ``viable,'' but expresses the new requirements using 
the existing FAR terminology.

B. Analysis of Public Comments

1. Statutory Requirement for the Rule.
    Comment: One respondent found it unclear what problem this rule is 
trying to resolve. The respondent urged reconsideration of this 
regulation until the actual problem can be identified and targeted with 
an expected outcome that provides an acceptable solution. The 
respondent further recommended that contracting officers should be 
allowed wide latitude to exercise business judgment, and that any 
regulatory changes should be focused on training and appointment of 
contracting officers Governmentwide. Another respondent stated that the 
ability to utilize ``the expectation of competition'' is a valuable 
tool that should not be removed for DoD, NASA, and the Coast Guard.
    Response: This rule is required to partially implement section 822 
of the NDAA for FY 2017, which excludes from the standard for adequate 
price competition the situation in which there was an expectation of 
competition, but only one offer is received.
2. Applicability
a. All Federal Agencies
    Comment: One respondent recommended that the rule should also apply 
to all Federal agencies.
    Response: Section 822 of the NDAA for FY 2017 only applies to DoD, 
NASA, and the Coast Guard (see 10 U.S.C. 2306a).
b. Below Simplified Acquisition Threshold and Commercial Items
    Comment: One respondent recommended that the rule should apply to 
all noncompetitive contracts and subcontracts at or below the 
simplified acquisition threshold (SAT) and to the acquisition of 
commercial products and services.
    Response: Section 822 of the NDAA for FY 2017 only addressed when 
contractors need to provide cost or pricing data for DoD, NASA, and the 
Coast Guard. Certified cost or pricing data is not required below the 
SAT or for the acquisition of commercial products or services. See 10 
U.S.C. 2306a and 41 U.S.C. 3502 and 3503. These sections set the 
threshold at $2 million (section 811 of Pub. L. 115-91) and exempt 
commercial items.
3. Terminology
a. Responsive and Viable Offer
    Comment: Several respondents requested a definition of ``responsive 
offer.'' Another respondent stated that the term, ``responsive'' is not 
appropriate to define ``adequate price competition'' under FAR part 15. 
This respondent cited a Government Accountability Office ruling that 
responsiveness is applicable to FAR part 14 sealed bidding acquisitions 
and not FAR part 15 contracting by negotiation. Two respondents 
recommended including a definition of ``viable offer.''
    Response: The terms ``responsive'' and ``viable'' have been removed 
from the final rule. The concept is conveyed through current FAR 
language at FAR 15.403-1(c)(1), i.e., ``responsible offerors, competing 
independently, submit priced offers that satisfy the Government's 
expressed requirement.''
b. Competing Independently
    Comment: One respondent sought elaboration on the use of the phrase 
``competing independently,'' specifically if it were to be used in the 
context of a contractor's affiliate or long-term agreement holder 
entering a price competition.
    Response: The first standard for adequate price competition in FAR 
15.403-1(c)(1)(i) already includes the requirement that two or more 
responsible offerors, competing independently, submit price offers that 
satisfy the Government's expressed requirements, where award will be 
made in a best-value competition and there is no finding that the price 
of the otherwise successful offeror is unreasonable. Whether two 
offerors are competing independently is specific to the particular 
circumstances.
4. Impact on Burden and Procurement Action Lead Time
    Comment: Several respondents commented on the increased burdens 
that will result from this rule and potential impact on procurement 
action lead time (PALT). One respondent stated that this change will 
increase the burden on the contracting officer in obtaining certified 
cost or pricing data and conducting additional proposal analysis. 
Another respondent was concerned that the new statutory framework will 
likely generate costly and time-consuming rework of proposals by 
requiring a bidder to provide a second, TINA-compliant proposal when it 
is learned that they are the only responsive bidder.
    Response: This rule provides to DoD, NASA, and the Coast Guard the 
revised standard on how to determine adequate price competition. The 
principle will not have an impact on offerors/contractors or 
contracting officers until implemented at the agency level by DoD, 
NASA, and the Coast Guard. There are no projected reporting, 
recordkeeping, or other compliance requirements of this rule. However, 
the corollary of this FAR change is that DoD, NASA, and the Coast Guard 
will be required, by statute, to obtain certified cost or pricing data 
from an offeror when only one offer is received and no other exception 
applies, which will likely increase burden and PALT (e.g., see DoD 
proposed rule published under DFARS Case 2017-D009 at 83 FR 30656 on 
June 29, 2018).

[[Page 27496]]

5. Subcontracts
    Comment: Several respondents raised issues relating to 
subcontracts.
    One respondent asked whether this rule intends for subcontracts 
under DoD, NASA, and Coast Guard contracts to be competed at the same 
standard as is being applied to prime contracts.
    Another respondent was concerned that the FAR rule did not 
implement 10 U.S.C. 2306a(b)(6), which requires a prime contractor 
required to submit cost or pricing data to determine whether a 
subcontract under such contract qualifies for an exception under 
paragraph (b)(1)(A) (adequate price competition) from such requirement. 
One respondent expressed concern about restarts of subcontract 
competitions when a prime contractor receives only one offer for a 
subcontract. This respondent also speculated that prime contractors may 
take on more evaluation risks to avoid finding suppliers unacceptable, 
so as not to end up with only one responsive and viable offer.
    Response: This FAR rule lays out the general principle of what 
constitutes adequate price competition for DoD, NASA, and the Coast 
Guard. The details of applicability to subcontracts and 
responsibilities of the prime contractor will be addressed at the 
agency level (e.g., see DoD proposed rule published under DFARS Case 
2017-D009 at 83 FR 30656 on June 29, 2018). The concern about potential 
impact on subcontract awards cannot be resolved, because this change is 
required by statute.
6. Edits
    Comment: One respondent requested insertion of the word ``or'' 
between 15.403-1(c)(1)(i)(A)(2) and section (c)(1)(i)(B) to clarify 
that the two options are separate and distinct and are not both 
required to meet the standard for adequate price competition.
    Response: The language in the proposed rule text between FAR 
15.403-1(c)(1)(i)(A) and (B) is structured consistent with the FAR 
drafting convention for vertical lists of items separated by semi-
colons: Namely, in a vertical list of more than two items, the 
conjunction ``and'' or ``or'' only appears between the last two items 
in the list. However, as noted in section II.A. of this preamble, FAR 
15.403-1(c)(1) is revised in this final rule to provide a drafting 
improvement and clarification, which obviates the request to modify the 
proposed rule language.

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

    This rule does not contain any solicitation provision or contract 
clause that applies to contracts or subcontracts at or below the 
simplified acquisition threshold or contracts or subcontracts for the 
acquisition of commercial items, including commercially available off-
the-shelf items.

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 final rule is not an E.O. 13771 regulatory action, because 
this rule is not significant under E.O. 12866.

VI. 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:

    The reason for this action is to implement section 822 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 
(Pub. L. 114-328). The objective of this rule is to provide a 
separate standard for ``adequate price competition'' as the basis 
for an exception to the requirement to provide certified cost or 
pricing data. The statutory basis is 10 U.S.C. 2306a, as amended by 
section 822 of the NDAA for FY 2017.
    Section 822 modifies 10 U.S.C. 2306a, the Truth in Negotiations 
Act, which is applicable only to DoD, NASA, and the Coast Guard.
    No significant issues were raised by the public with regard to 
the initial regulatory flexibility analysis.
    This rule only provides a statement of internal guidance to DoD, 
NASA, and the Coast Guard. This principle will not have impact on 
small entities until implemented at the agency level by DoD, NASA, 
and the Coast Guard.
    There are no projected reporting, recordkeeping, or other 
compliance requirements of the rule. The rule amends the standards 
for adequate price competition for DoD, NASA, and the Coast Guard. 
However, the corollary of this FAR change is that DoD, NASA, and the 
Coast Guard will be required to obtain certified cost or pricing 
data from an offeror when only one offer is received, and no other 
exception applies.
    Since this rule does not impose a burden on small entities, DoD, 
GSA, and NASA were unable to identify any alternatives that would 
reduce burden on small business and still meet the requirements of 
the statute.

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

VII. 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 Subjects in 48 CFR Part 15

    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 are amending 48 CFR part 15 as set 
forth below:

PART 15--CONTRACTING BY NEGOTIATION

0
1. The authority citation for 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 15.305 by revising the third sentence of paragraph 
(a)(1) to read as follows:


15.305   Proposal evaluation.

    (a) * * *
    (1) * * * In limited situations, a cost analysis may be appropriate 
to establish reasonableness of the otherwise successful offeror's price 
(see 15.403-1(c)(1)(i)(C)). * * *
* * * * *

0
3. Amend section 15.403-1 by revising paragraph (c)(1) to read as 
follows:


15.403-1  Prohibition on obtaining certified cost or pricing data (10 
U.S.C. 2306a and 41 U.S.C. chapter 35).

* * * * *
    (c) * * *

[[Page 27497]]

    (1) Adequate price competition. (i) A price is based on adequate 
price competition when--
    (A) Two or more responsible offerors, competing independently, 
submit priced offers that satisfy the Government's expressed 
requirement;
    (B) Award will be made to the offeror whose proposal represents the 
best value (see 2.101) where price is a substantial factor in source 
selection; and
    (C) There is no finding that the price of the otherwise successful 
offeror is unreasonable. Any finding that the price is unreasonable 
must be supported by a statement of the facts and approved at a level 
above the contracting officer.
    (ii) For agencies other than DoD, NASA, and the Coast Guard, a 
price is also based on adequate price competition when-
    (A) There was a reasonable expectation, based on market research or 
other assessment, that two or more responsible offerors, competing 
independently, would submit priced offers in response to the 
solicitation's expressed requirement, even though only one offer is 
received from a responsible offeror and if--
    (1) Based on the offer received, the contracting officer can 
reasonably conclude that the offer was submitted with the expectation 
of competition, e.g., circumstances indicate that--
    (i) The offeror believed that at least one other offeror was 
capable of submitting a meaningful offer; and
    (ii) The offeror had no reason to believe that other potential 
offerors did not intend to submit an offer; and
    (2) The determination that the proposed price is based on adequate 
price competition and is reasonable has been approved at a level above 
the contracting officer; or
    (B) Price analysis clearly demonstrates that the proposed price is 
reasonable in comparison with current or recent prices for the same or 
similar items, adjusted to reflect changes in market conditions, 
economic conditions, quantities, or terms and conditions under 
contracts that resulted from adequate price competition.
* * * * *


15.404-1   [Amended]

0
 4. Amend section 15.404-1 by removing from paragraph (b)(2)(i) ``(see 
15.403-1(c)(1)(i))'' and adding ``(see 15.403-1(c)(1))'' in its place.

[FR Doc. 2019-12263 Filed 6-11-19; 8:45 am]
 BILLING CODE 6820-EP-P