Defense Federal Acquisition Regulation Supplement: Only One Offer (DFARS Case 2017-D009), 30947-30950 [2019-13739]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 84, Number 125 (Friday, June 28, 2019)]
[Rules and Regulations]
[Pages 30947-30950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13739]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 215 and 252

[Docket DARS-2018-0008]
RIN 0750-AJ19


Defense Federal Acquisition Regulation Supplement: Only One Offer 
(DFARS Case 2017-D009)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to partially implement a 
section of the National Defense Authorization Act for Fiscal Year 2017 
that addresses the requirement for additional cost or pricing data when 
only one offer is received in response to a competitive solicitation.

DATES: Effective July 31, 2019.

FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, telephone 571-
372-6106.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 83 FR 
30656 on June 29, 2018, to partially implement section 822 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 
(Pub. L. 114-328) to: (1) Address the potential requirement for 
additional cost or pricing data when only one offer is received in 
response to a competitive solicitation; and (2) make prime contractors 
responsible for determining whether a subcontract qualifies for an 
exception from the requirement for submission of certified cost based 
on adequate price competition. This DFARS rule supplements the Federal 
Acquisition Regulation (FAR) final rule published under FAR Case 2017-
006, which modified the standards for adequate price competition at FAR 
15.403-1(c) for DoD, National Air and Space Administration (NASA), and 
the Coast Guard (FAC 2019-03, 84 FR 27494). 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. Three respondents submitted public comments in response to 
the proposed rule.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments is provided, as follows:

A. Summary of Significant Changes From the Proposed Rule

    There are no significant changes from the proposed rule in the 
final rule in response to the public comments. However, changes were 
required at 252.215-7010, in order to conform to changes in the FAR 
final rule relating to elimination of the terms ``responsive'' and 
``viable.''

B. Analysis of Public Comments

1. Effectiveness and Efficiency of the Acquisition Process
    Comment: Several respondents indicated that the requirement for 
certification of cost or pricing data and potential submission of 
additional data when only one offer is received in response to a 
competitive solicitation would burden the effectiveness and efficiency 
of the acquisition process and delay timely execution. This may also 
delay subcontract competitions, requiring restart of the procurement 
process when only one offer is received for a subcontract.
    Response: This rule is implementing the requirements of section 822 
of the NDAA for FY 2017. DoD has no flexibility to remove the 
certification requirement from the rule, since it is required by 
statute.
2. Competition
    Comment: One respondent noted that it is the expectation of offers 
that produces the competitive environment.
    Response: This rule is implementing the requirements of section 822 
of the NDAA for FY 2017. The Government cannot project with certainty 
which solicitations will receive multiple offers or only one offer. 
Furthermore, even though a solicitation is issued competitively, the 
Government does not know whether the single offeror expected 
competition.

[[Page 30948]]

3. Evaluation of Subcontractors
    Comment: One respondent was concerned that contractors may take on 
more evaluation risks to avoid finding suppliers unacceptable, in order 
to avoid a situation in which only one viable and responsible offer is 
received.
    Response: DoD has no flexibility to change the basic requirements 
of the rule, since it is required by statute. Furthermore, such 
behavior would indicate poor business judgment. If the contract 
contains the clause at FAR 52.244-2, Subcontracts, then the contractor 
must also comply with the clause at DFARS 252.244-7001, Contractor 
Purchasing System Administration, which includes the following 
requirements:
     Paragraph (c)(10) requires timely and adequate cost or 
price analysis and technical evaluation for each subcontractor and 
supplier proposal or quote to ensure fair and reasonable subcontract 
prices.
     Paragraph (c)(20) requires that the contractor provide for 
an organizational and administrative structure that ensures effective 
and efficient procurement of required quality materials and parts at 
the best value from responsible and reliable sources.
4. Commercial Items
    Comment: One respondent stated that paragraph (3) of the clause at 
DFARS 252.215-7010 should also state that the offeror is responsible 
for determining the commercial item exception at FAR 15.403-1(c)(3), 
because the Conference Report for section 822 stated that the Senate 
Bill contained a provision that would clarify the definition of 
competition and the role of the prime contractor in determining whether 
a subcontract meets the competitive or commercial test under the 
section.
    Response: DoD has fully implemented the law as enacted. Section 822 
does not address determinations with regard to commercial items.
    Comment: Another respondent stated that the proposed rule should 
apply to contracts and subcontracts for commercial item acquisitions.
    Response: Both the provisions at DFARS 252.215-7009 and 252.215-
7010, are prescribed for use in solicitations using FAR part 12 
procedures for the acquisition of commercial items. However, the 
changes required in this rule will not affect acquisition of commercial 
items, because 10 U.S.C. 2306a(b)(1)(B) provides that submission of 
certified cost or pricing data shall not be required in the case of a 
contract, a subcontract, or modification of a contract or subcontract 
for the acquisition of a commercial item. Determination of whether 
items are commercial items is outside the scope of this rule.
5. Only Expected To Receive One Bid
    Comment: One respondent stated that the rule was a step in the 
right direction, but considered that the rule did not implement the 
statutory language stating that certified cost or pricing data must be 
supplied by contractors in circumstances where DoD ``only expected to 
receive one bid.'' The respondent was concerned that shifting the focus 
of the rule to ``if only one offer is received'' could prevent DoD from 
obtaining that vital information during the award phase and could 
create obstacles to obtaining the information at a later date.
    Response: Section 822 added the phrase ``that is only expected to 
receive one bid'' at 10 U.S.C. 2306a(a)(1)(A), which now reads as 
follows: ``An offeror for a prime contract under this chapter to be 
entered into using procedures other than sealed-bid procedures that is 
only expected to receive one bid shall be required to submit cost or 
pricing data before the award of a contract if--. . .'' [followed by 
cost or pricing data thresholds]. The exceptions at 10 U.S.C. 2306a(b) 
still apply, including the exception for adequate price competition. 
Section 822 also modified the standard for adequate price competition, 
an exception to the requirement for certified cost or pricing data, to 
require that the agreed upon price is based on adequate competition 
that results in at least two or more responsive and viable competing 
bids.
    This DFARS rule must be read in conjunction with the changes made 
under FAR Case 2017-006, Exception from Certified Cost or Pricing Data 
Requirements--Adequate Price Competition. That final FAR rule made 
amendments to the standards for adequate price competition at FAR 
15.403-1(b), stating first what is common to all agencies, and then 
making the standard relating to expectation of competition applicable 
only to agencies other than DoD, NASA, and Coast Guard. In stating the 
common requirements, the final FAR rule also did not use the terms 
``responsive'' and ``viable,'' but expressed the requirements using the 
existing FAR terminology, i.e., ``Two or more responsible offerors, 
competing independently, submit priced offers that satisfy the 
Government's expressed requirement.''
    FAR 15.403-4 requires as follows: ``Unless an exception applies, 
certified cost or pricing data are required before accomplishing any of 
the following actions expected to exceed the current threshold . . . 
The award of any negotiated contract. . .''. Adding ``If the 
contracting officer only expects one bid, unless an exception applies. 
. .'' would be without effect, because whether or not the contracting 
officer expects one bid or multiple bids, if only one bid is received, 
that is determinative of the requirement for submission of certified 
cost or pricing data. If multiple bids were received from two or more 
responsible offerors, competing independently, that satisfy the 
Government's expressed requirement in accordance with FAR 15.403-
1(c)(i), despite an erroneous expectation to the contrary, then that 
would constitute an exception (on the basis of adequate price 
competition) and no certified cost or pricing data would be required. 
The offeror does not provide the certificate of current cost or pricing 
data until agreement on price is reached, at which time it would be 
known how many offers had been received. According to FAR 15.406-2(e), 
if certified cost or pricing data are requested by the Government and 
submitted by an offeror, but an exception is later found to apply, the 
data shall not be considered certified cost or pricing data and shall 
not be certified.

C. Other Changes

    This final DFARS rule has made changes from the proposed rule at 
DFARS 252.215-7010(c)(3) in both the basic clause and Alternate I. For 
simplicity, the final FAR rule does not use the terms ``responsive'' 
and ``viable,'' but expresses the requirements of section 822 using 
existing FAR terminology, as a requirement that is applicable to all 
agencies at 15.403-1(c)(1)(i)(A), i.e., ``Two or more responsible 
offerors, competing independently, submit priced offers that satisfy 
the Government's expressed requirement.'' In addition, due to the 
restructuring of FAR 15.403-1(c)(1), the FAR reference at both cites 
was changed to FAR 403-1(c)(1)(i).

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 create a new provision, but amends the existing 
provisions at DFARS 252.215-7008 and 252.215-7010. Although the 
existing provisions apply to solicitations for the acquisition of 
commercial items, including commercially available off-the-shelf (COTS) 
items, the changes due to this rule do not impact the

[[Page 30949]]

acquisition of commercial item, including COTS items, because the rule 
retains the exceptions to the requirements for certified cost or 
pricing data relating to acquisition of commercial items. In addition, 
DFARS 252.215-7010 already applies to contracts valued at or below the 
simplified acquisition threshold, while DFARS 252.215-7008 does not.

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 subject to E.O. 13771, because this rule is 
not a significant regulatory action under E.O. 12866.

VI. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    The reason for this rule is to further implement section 822 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 
(Pub. L. 114-328) to address the potential requirement for certified 
cost or pricing data when only one offer is received in response to a 
competitive solicitation, if no other exception to the requirements for 
certified cost or pricing data applies. This DFARS rule supplements the 
final rule published under FAR Case 2017-006 (FAC 2019-03, 84 FR 
27494), which modified the standards for adequate price competition at 
FAR 15.403-1(c) for DoD, NASA, and the Coast Guard.
    The objective of this rule is to implement the new more restrictive 
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.
    There were no significant issues raised by the public in response 
to the initial regulatory flexibility analysis.
    According to data for FY 2016 from the Federal Procurement Data 
System, for DoD, there were 918 noncommercial, competitive new awards 
valued at greater than $750,000 (the certified cost or pricing data 
threshold) that were awarded on the basis of a solicitation that 
received only one offer. Of the 918 awards, 549 were awarded to small 
businesses and 369 were awarded to other than small businesses. DoD 
estimated the number of small entities to which the rule will apply as 
follows:
     Of these awards, all will require certification, but only 
75 percent (277) may require additional data.
     When additional certified cost or pricing data are 
requested from the prime contractor, it will impact 1,836 subcontract 
awards; 1,505 to small businesses.
     75 percent of the subcontract awards to small business 
(1,129) will be required to provide new certified cost or pricing data, 
and 25 percent (376) will only be required to certify the cost or 
pricing data previously provided.
    DoD will now be required to obtain certified cost or pricing data 
from an offeror when only one offer is received, and no other exception 
applies. DoD estimates 1.3 responses per respondent, with an average of 
55.5 hours per response. The average level of the entities completing 
these responses is estimated as equivalent to a Government General 
Schedule 12, step 5 employee.
    DoD was unable to identify any alternatives that would reduce 
burden on small business and still meet the requirements of the 
statute. Impact on small businesses is lessened, because the 
requirement for certified cost or pricing data only applies to 
acquisitions that exceed $750,000 and there is an exception for the 
acquisition of commercial items, including COTS items.

VII. Paperwork Reduction Act

    This rule contains information collection requirements that have 
been approved by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act (44 U.S.C. chapter 35). This information 
collection requirement has been assigned OMB Control Number 0704-0574, 
entitled ``Defense Federal Acquisition Regulation Supplement (DFARS) 
Part 215; Only One Offer and Related Clauses at 252.215.''

List of Subjects in 48 CFR Parts 215 and 252

    Government procurement.

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

    Therefore, 48 CFR parts 215 and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 215 and 252 continues to 
read as follows:

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

PART 215--CONTRACTING BY NEGOTIATION

0
2. Revise section 215.371-3 to read as follows:


215.371-3   Fair and reasonable price and the requirement for 
additional cost or pricing data.

    For acquisitions that exceed the simplified acquisition threshold, 
if only one offer is received when competitive procedures were used and 
it is not necessary to resolicit in accordance with 215.371-2(a), then 
then the contracting officer shall comply with the following:
    (a) If no additional cost or pricing data are required to determine 
through cost or price analysis that the offered price is fair and 
reasonable, the contracting officer shall require that any cost or 
pricing data provided in the proposal be certified if the acquisition 
exceeds the certified cost or pricing data threshold and an exception 
to the requirement for certified cost or pricing data at FAR 15.403-
1(b)(2) through (5) does not apply.
    (b) Otherwise, the contracting officer shall obtain additional cost 
or pricing data to determine a fair and reasonable price. If the 
acquisition exceeds the certified cost or pricing data threshold and an 
exception to the requirement for certified cost or pricing data at FAR 
15.403-1(b)(2) through (5) does not apply, the cost or pricing data 
shall be certified.
    (c) If the contracting officer is still unable to determine that 
the offered price is fair and reasonable, the contracting officer shall 
enter into negotiations with the offeror to establish a fair and 
reasonable price. The negotiated price should not exceed the offered 
price.
    (d) If the contracting officer is unable to negotiate a fair and 
reasonable price, see FAR 15.405(d).

0
3. Amend section 215.408 by--
0
a. Revising paragraph (3);
0
b. In paragraph (5) introductory text, removing ``required'' and adding

[[Page 30950]]

``required or when using the provision at 252.215-7008'' in its place; 
and
0
c. In paragraph (7) introductory text, removing ``FAR 52.215-20'' and 
adding ``252.215-7010'' in its place.
    The revision reads as follows:


215.408   Solicitation provisions and contract clauses.

* * * * *
    (3) Use the provision at 252.215-7008, Only One Offer, in 
competitive solicitations that exceed the simplified acquisition 
threshold, including solicitations using FAR part 12 procedures for the 
acquisition of commercial items.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
4. Amend section 252.215-7008 by--
0
a. Removing the provision date ``(OCT 2013)'' and adding ``(JUN 2019)'' 
in its place;
0
b. Revising paragraph (a);
0
c. Removing paragraphs (b) and (d);
0
d. Redesignating paragraph (c) as paragraph (b);
0
e. In the newly redesignated paragraph (b), adding a paragraph heading 
and removing ``225.870-4(c)'' and adding ``DFARS 225.870-4(c)'' in its 
place; and
0
f. Adding a new paragraph (c).
    The revision and additions read as follows:


252.215-7008   Only One Offer.

* * * * *
    (a) Cost or pricing data requirements. After initial submission of 
offers, if the Contracting Officer notifies the Offeror that only one 
offer was received, the Offeror agrees to--
    (1) Submit any additional cost or pricing data that is required in 
order to determine whether the price is fair and reasonable or to 
comply with the statutory requirement for certified cost or pricing 
data (10 U.S.C. 2306a and FAR 15.403-3); and
    (2) Except as provided in paragraph (b) of this provision, if the 
acquisition exceeds the certified cost or pricing data threshold and an 
exception to the requirement for certified cost or pricing data at FAR 
15.403-1(b)(2) through (5) does not apply, certify all cost or pricing 
data in accordance with paragraph (c) of DFARS provision 252.215-7010, 
Requirements for Certified Cost or Pricing Data and Data Other Than 
Certified Cost or Pricing Data, of this solicitation.
    (b) Canadian Commercial Corporation. * * *
    (c) Subcontracts. Unless the Offeror is the Canadian Commercial 
Corporation, the Offeror shall insert the substance of this provision, 
including this paragraph (c), in all subcontracts exceeding the 
simplified acquisition threshold defined in FAR part 2.
* * * * *

0
5. Amend section 252.215-7010 by--
0
a. In the basic provision--
0
i. Removing the provision date of ``(JAN 2018)'' and adding ``(JUN 
2019)'' in its place; and
0
ii. Adding paragraph (c)(3);
0
b. In the Alternate I clause--
0
i. Removing the provision date of ``(JAN 2018)'' and adding ``(JUN 
2019)'' in its place; and
0
ii. Adding paragraph (c)(3).
    The additions read as follows:


252.215-7010   Requirements for Certified Cost or Pricing Data and Data 
Other Than Certified Cost or Pricing Data.

* * * * *
    (c) * * *
    (3) The Offeror is responsible for determining whether a 
subcontractor qualifies for an exception from the requirement for 
submission of certified cost or pricing data on the basis of adequate 
price competition, i.e., two or more responsible offerors, competing 
independently, submit priced offers that satisfy to Government's 
expressed requirement in accordance with FAR 15.403-1(c)(1)(i).
* * * * *
    Alternate I. * * *
    (c) * * *
    (3) The Offeror is responsible for determining whether a 
subcontractor qualifies for an exception from the requirement for 
submission of certified cost or pricing data on the basis of adequate 
price competition, i.e., two or more responsible offerors, competing 
independently, submit priced offers that satisfy the Government's 
expressed requirement in accordance with FAR 15.403-1(c)(1)(i).
* * * * *
[FR Doc. 2019-13739 Filed 6-27-19; 8:45 am]
 BILLING CODE 5001-06-P