Federal Acquisition Regulation: Evaluation Factors for Multiple-Award Contracts, 40068-40071 [2020-12764]

Agencies

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

[Federal Register Volume 85, Number 128 (Thursday, July 2, 2020)]
[Rules and Regulations]
[Pages 40068-40071]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12764]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 4, 13, 15, and 16

[FAC 2020-07; FAR Case 2017-010; Item III; Docket No. FAR-2017-0010; 
Sequence No. 1]
RIN 9000-AN54


Federal Acquisition Regulation: Evaluation Factors for Multiple-
Award Contracts

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 implement a section of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017.

DATES: Effective: August 3, 2020.

FOR FURTHER INFORMATION CONTACT: Mr. Michael O. Jackson, Procurement 
Analyst, at 202-208-4949 or [email protected] for clarification 
of content. For information pertaining to status or publication 
schedules, contact the Regulatory Secretariat Division at 202-501-4755. 
Please cite FAC 2020-07, FAR Case 2017-010.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA published a proposed rule at 83 FR 48271 on 
September 24, 2018, to implement section 825 of the NDAA for FY 2017 
(Pub. L. 114-328). Section 825 of the NDAA for FY 2017 amends 10 U.S.C. 
2305(a)(3) to modify the requirement to consider price or cost as an 
evaluation factor for the award of certain multiple-award task-order 
contracts issued by DoD, NASA, and the Coast Guard. Section 825 
provides that, at the Government's discretion, solicitations for 
multiple-award contracts that will be awarded for the same or similar 
services and state the Government intends to award a contract to each 
qualifying offeror do not require price or cost as an evaluation factor 
for contract award. This exception does not apply to solicitations for 
multiple-award contracts that provide for sole-source orders pursuant 
to 8(a) of the Small Business Act (15 U.S.C. 637(a)). When price or 
cost is not evaluated during contract award, the contracting officer 
shall consider price or cost as a factor for the award of each order 
under the contract. In accordance with statute, the rule specifies 
that, when using the authority of section 825, the solicitation must be 
for the ``same or similar services.'' This language aligns with the 
guidance at FAR 16.504(c)(1)(i), which requires contracting officers, 
to the maximum extent practicable, to give preference to making 
multiple awards of indefinite-quantity contracts under a single 
solicitation for the same or similar supplies or services to two or 
more sources. By ensuring that a solicitation using the authority of 
section 825 is for the ``same or similar services,'' the contracting 
officer will avoid situations in which awardees specialize exclusively 
in one or a few areas within the statement of work, thus creating the 
likelihood that orders in those areas will be awarded on a sole-source 
basis (FAR 16.504(c)(1)(ii)(A)) and, in turn, negating the purpose of 
the statute to obtain price competition at the task order level-where 
service requirements are apt to be more definite and offers more 
meaningfully comparable.
    Section 825 also amends 10 U.S.C. 2304c(b) to add the exceptions 
for the use of other than full and open competition found in FAR 6.302 
to the list of exceptions to the fair opportunity process at FAR 
16.505(b)(2) when placing an order under a multiple-award contract. 
Contracting officers shall still follow all of the applicable 
justification documentation, approval, and posting requirements of part 
16.5 when providing an exception to the fair opportunity process and 
using one of the exceptions of FAR 6.302.
    Five 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. No significant changes were made to the 
rule as a result of public comments. Changes were made to the final 
rule to clarify the intent of section 825 and the rule text, as a 
result of public comments. A change is made in the final rule to make 
the guidance in FAR subpart 4.10 consistent with section 825. A change 
is made to a sentence in FAR 16.504 to make the text consistent with 
the policy in FAR part 13. Changes were made to the format of the rule 
text to enhance readability. The definition of ``qualifying offeror'' 
is moved from FAR 13.106-1 and FAR 15.304 to FAR part 2. Discussion of 
the edits and comments are provided as follows:

A. Summary of Changes

    FAR subpart 4.10, Uniform Use of Line Items, is amended to align 
guidance on the information required for a contract line item with 
usage of the rule. Currently, FAR 4.1005 requires price or cost to be 
included for each contract line item or subline item. In order to 
conform the subpart with section 825, the rule amends FAR 4.1005-2 to 
permit the omission of cost or price at the contract line item or 
subline item level when awarding multiple-award IDIQ contracts in 
accordance with the authority of section 825, provided that a total 
contract minimum and maximum is stated, in accordance with FAR subpart 
16.5. This addition does not change the intent of the rule; instead, it 
conforms internal Government procedures to facilitate use of the rule.
    In FAR subpart 16.5, section 16.504, Indefinite-Delivery Contracts, 
is amended to make the policy for the use of the multiple-award 
approach consistent with the policy in FAR part 13. Currently, FAR 
16.504(c)(1)(ii)(B)(5) states that contracting officers must not use 
the multiple award approach if the estimated value of the contract is 
``less than'' the simplified acquisition threshold (SAT). This 
statement was included in FAR 16.504 to comply with the policy in FAR 
13.003, which requires the use of simplified acquisition procedures 
(SAP), to the maximum extent practicable, for purchases not exceeding 
the SAT. This rule changes the text of FAR 16.504 from ``less than'' 
the SAT to ``at or below'' the SAT, to be consistent with the policy of 
FAR part 13. Paragraph (G) at FAR 16.505(b)(2)(i) of the proposed

[[Page 40069]]

rule added the exceptions permitting other than full and open 
competition to the list of exceptions to the fair opportunity process.
    At FAR 13.106-1(a)(2)(iv), paragraph (A) of the proposed rule is 
restructured stating the action contracting officers may take when 
using the authority of section 825, and adding subparagraphs (1)-(3), 
identifying the requirements a solicitation must meet before a 
contracting officer can take the action in paragraph (A); at paragraph 
(C), the definition of ``qualifying offeror'' is deleted and moved to 
part 2, with the addition of text clarifying the parts to which the 
definition is applicable; and the text of renumbered subparagraph (B) 
was modified to use the statutory language that ``if'' price or cost 
was not an evaluation factor for award, as opposed to ``whether or 
not'' price or cost was evaluated. Similar changes are made at FAR 
15.304(c)(1)(ii). These revisions simply clarify the intent, 
readability, and applicability of the rule and section 825.

B. Analysis of Public Comments

    Comment: A respondent expressed concern that the rule is not 
compliant with the implementing statute, because the rule does not 
include the term ``qualifying offeror,'' as used in section 825.
    Response: The definition of ``qualifying offeror'' is taken 
directly from the statute and included in the final rule at FAR 2.101, 
13.106-1(a)(2)(iv)(A)(3), and 15.304(c)(1)(ii)(A)(3). This requirement 
helps to ensure there will be sufficient contract holders submitting 
offers for task orders.
    Comment: A respondent advised that use of the term ``head of the 
agency'' in section 825 makes the statute impractical for use by the 
contracting community, because the ``head of the agency'' does not 
typically issue solicitations. The respondent recommended amending the 
statutory language to implement section 825 effectively.
    Response: Section 825 is implemented in the FAR effectively without 
a change to the statutory language. Unless otherwise stated in statute, 
the head of the agency may delegate procurement responsibilities to 
another officer or official in the same agency (see FAR 1.108(b)). FAR 
1.102-4(b) further requires decision-making authority to be delegated 
to the lowest level within the FAR System, consistent with law. As 
section 825 does not prohibit delegation by the head of the agency, 
this rule delegates this authority to the contracting officer in 
accordance with FAR 1.108(b) and 1.102-4(b).
    Comment: A respondent advised that the definition of a ``qualifying 
offer'' in the rule does not align with the statute. The rule requires 
that the proposal be ``technically acceptable,'' which is not required 
by the statute.
    Response: The section 825 definition of a ``qualifying offeror'' 
includes language that the offeror ``submits a proposal that conforms 
to the requirements of the solicitation.'' The rule refers to a 
``qualifying offeror'' as an offeror that ``submits a technically 
acceptable proposal that conforms to the solicitation.'' The terms 
``technically acceptable'' and ``conforms'' have different meanings to 
Government contracting personnel. A proposal can conform to the 
requirements for the solicitation (e.g., meeting a required page limit 
or proposal format), but not demonstrate that the offeror can meet the 
stated technical requirements (e.g., having necessary certifications or 
offering the requisite services) of the Government. This clarification 
ensures contracting officers, when using the authorities in section 
825, also evaluate whether a proposal meets the minimum technical 
requirements stated in the solicitation.
    Comment: A respondent expressed concern that the rule is requiring 
the evaluation of price or cost in every source selection at FAR 
15.304(c)(1)(i).
    Response: FAR 15.304(c)(1) currently states that price or cost 
shall be evaluated in every source selection conducted under the 
negotiated acquisition procedures of FAR part 15. The cited language 
was already in the FAR. The rule relocates the text at FAR 15.304(c)(1) 
to a new subparagraph (i) with a reference to the new subparagraph 
(ii)(A), which includes the exception to considering price or cost when 
DoD, NASA, or the Coast Guard are using the authority of section 825.
    Comment: A respondent suggested that the rule be expanded to 
include the authority granted under section 876 of the NDAA for FY 
2019.
    Response: Section 876 of the John S. McCain National Defense 
Authorization Act for Fiscal Year 2019 amends Title 41 of United States 
Code to provide executive agencies with the discretionary authority not 
to include price as an evaluation factor in certain solicitations for 
multiple-award and Federal Supply Schedule contracts, when specific 
conditions are met. Section 825 amends Title 10 of the U.S.C. to 
implement a similar, but not the same, authority for DoD, NASA, and the 
Coast Guard. The authority and applicability of these sections are 
different; as such, FAR Case 2018-014, Increasing Task Order Level 
Competition, implements section 876.
    Comment: A respondent requested clarification regarding the 
inclusion of language that limits the application of the rule to 
multiple-award task-order contracts with a value above the simplified 
acquisition threshold (SAT).
    Response: Currently, FAR 16.504(c)(1)(ii)(B)(5) does not permit the 
use of a multiple-award approach if the total estimated value of the 
IDIQ contract is less than the SAT; therefore, the rule applies the 
authority of section 825 to solicitations valued above the SAT. 
Additionally, this rule changes the text of FAR 16.504 from ``less 
than'' the SAT to ``at or below'' the SAT, to be consistent with the 
policy of FAR part 13, which requires the use of SAP for acquisitions 
valued at or below the SAT.
    Comment: A respondent expressed support for establishing fair and 
reasonable rates at the time of contract award. The respondent 
recommends modifying the rule to require an evaluation of fair and 
reasonable pricing when awarding an IDIQ contract. The respondent 
advises that establishing maximum thresholds for price or cost at the 
time of contract award would still allow for competition at the task-
order level, while assuring that the Government will subsequently 
receive fair and reasonably priced offers for requirements at the task- 
and delivery-order level. Another respondent expressed concern about 
the increased time and labor to be expended by a contracting officer 
placing an order under a multi-agency contract (MAC) awarded using the 
authority of section 825, as certain pricing information will no longer 
be available to support market research activities and associated 
acquisition decisions.
    Response: The rule implements the intent of the statute. Section 
825 provides DoD, NASA, and Coast Guard contracting officers with the 
ability not to include price or cost as an evaluation factor in certain 
solicitations for multiple-award contracts, if specific conditions are 
met. When determining whether to use the authority of section 825 or 
place an order under a resulting contract, a contracting officer must 
consider all of the circumstances and available information relating to 
the acquisition to decide the most appropriate procurement approach. 
Contracting officers are not required to use the authority of section 
825 and may, instead, use the current solicitation, evaluation, and 
award procedures, which require that price be determined fair and 
reasonable prior to contract award.

[[Page 40070]]

    In regard to the applicability of the rule to MACs, a MAC is a 
task-order or delivery-order contract established by one agency for use 
by Government agencies to obtain supplies and services, consistent with 
the Economy Act. This rule applies to multiple award contracts, which 
are: Contracts issued under the Multiple Award Schedule (MAS) authority 
described in FAR part 38; multiple-award task-order or delivery-order 
contracts issued in accordance with FAR subpart 16.5; or other 
indefinite-delivery indefinite-quantity contracts entered into with two 
or more sources pursuant to the same solicitation. A multiple award 
contract may also be a MAC, but the two terms are not interchangeable 
in identifying the same set of contracts. To avoid any potential 
confusion when applying section 825, some paragraphs of the rule text 
are renumbered to reinforce their applicability to section 825 and make 
the text more readable.

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

    This rule does not contain any solicitation provisions or contract 
clauses that apply to contracts at or below the SAT, or contracts for 
the acquisition of commercial items, including commercially available 
off-the-shelf items.

IV. Expected Cost Savings

    Currently, contracting officers must evaluate price or cost as a 
factor in the selection decision for both the award of the multiple-
award contract and each order placed against the multiple-award 
contract. When applied to applicable multiple-award solicitations, this 
rule alleviates offerors' need to gather and analyze internal cost or 
pricing information or propose a price or cost for each line item in 
the solicitation. Subsequently, contracting officers do not need to 
review, analyze, and determine in writing that the proposed costs and 
prices are fair and reasonable for the award of the multiple-award 
contracts. When used, this rule impacts all offerors responding to a 
solicitation for a multiple-award contract for the same or similar 
services issued by the DoD, NASA, or the Coast Guard.
    The Government has performed a regulatory cost analysis on this 
rule. The following is a summary of the estimated public cost savings 
in millions, which are calculated in 2016 dollars at a 7 percent 
discount rate:

 
 
 
Present Value Costs.....................................     -$4,813,740
Annualized Costs........................................        -336,962
Annualized Value Costs as of 2016 if Year 1 is 2019.....        -275,061
 

    To access the full regulatory cost analysis for this rule, go to 
the Federal eRulemaking Portal at www.regulations.gov, search for ``FAR 
case 2017-010,'' click ``Open Docket,'' and view ``Supporting 
Documents.''

V. Executive Orders 12866 and 13563

    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.

VI. 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. However, this rule is 
considered to be a deregulatory action. Details on the estimated cost 
savings can be found in Section IV of this rule.

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this rule to 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. 
However, a Final Regulatory Flexibility Analysis (FRFA) has been 
prepared and is summarized as follows:

    The reason for this action is to implement section 825 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 
(Pub. L. 114-328). The objective of this rule is to permit 
contracting officers to omit price or cost as an evaluation factor 
for award in certain solicitations for multiple-award contracts, if 
certain conditions are met. When applied to applicable multiple-
award solicitations, this rule alleviates offerors' need to gather 
and analyze internal cost or pricing information or propose a price 
or cost for each line item in the solicitation.
    No public comments were received in response to the initial 
regulatory flexibility analysis.
    DoD, GSA, and NASA do not have data on the total number of small 
business entities that respond to multiple-award solicitations for 
the same or similar services. However, the Federal Procurement Data 
System (FPDS) provides information on the number of small business 
entities that received an award resulting from a multiple-award 
solicitation for services issued by DoD, NASA, and the Coast Guard. 
According to data from FPDS for FY 2015 through 2017, DoD, NASA, and 
the Coast Guard awarded an average of 1,905 multiple-award 
indefinite-delivery indefinite-quantity (IDIQ) contracts for 
services, and of those 1,905 contracts, an average of 1,292 
contracts were awarded to 1,144 unique small business entities 
annually. The Government expects the number of small business 
entities impacted by the rule to be slightly larger than this 
estimate, as the data does not capture the small business entities 
that submit offers to applicable solicitations, but do not receive 
an award. This rule impacts all entities that submit offers in 
response to multiple-award solicitations for services that utilize 
the authority of section 825 issued by DoD, NASA, and the Coast 
Guard.
    This rule does not include any new reporting, recordkeeping, or 
other compliance requirements. There are no known significant 
alternative approaches to the rule that would meet the requirements 
of the applicable statute.

    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.

VIII. 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 Parts 2, 4, 13, 15, and 16

    Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 4, 13, 15, and 
16 as set forth below:

0
1. The authority citation for 48 CFR parts 2, 4, 13, 15, and 16 
continues to read as follows:

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

PART 2--DEFINITIONS OF WORDS AND TERMS

0
2. In section 2.101, amend paragraph (b) by adding the defined term 
``Qualifying offeror'' in alphabetical order to read as follows:


2.101  Definitions.

* * * * *

[[Page 40071]]

    (b) * * *
    Qualifying offeror, as used in 13.106-1 and 15.304, means an 
offeror that is determined to be a responsible source, submits a 
technically acceptable proposal that conforms to the requirements of 
the solicitation, and the contracting officer has no reason to believe 
would be likely to offer other than fair and reasonable pricing (10 
U.S.C. 2305(a)(3)(D)).
* * * * *

PART 4--ADMINISTRATIVE AND INFORMATION MATTERS

0
3. Amend section 4.1005-2 by revising paragraph (a)(2) to read as 
follows:


4.1005-2  Exceptions.

    (a) * * *
    (2) Indefinite-delivery indefinite-quantity (IDIQ) and requirements 
contracts. (i) IDIQ and requirements contracts may omit the quantity at 
the line item level for the base award provided that the total contract 
minimum and maximum, or the estimate, respectively, is stated.
    (ii) Multiple-award IDIQ contracts awarded using the procedures at 
13.106-1(a)(2)(iv)(A) or 15.304(c)(1)(ii)(A) may omit price or cost at 
the line item or subline item level for the contract award, provided 
that the total contract minimum and maximum is stated (see 
16.504(a)(1)).
* * * * *

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

0
4. Amend section 13.106-1 by revising paragraph (a)(2) to read as 
follows:


13.106-1  Soliciting competition.

    (a) * * *
    (2)(i) When soliciting quotations or offers, the contracting 
officer shall notify potential quoters or offerors of the basis on 
which award will be made (price alone or price and other factors, e.g., 
past performance and quality).
    (ii) Contracting officers are encouraged to use best value.
    (iii) Solicitations are not required to state the relative 
importance assigned to each evaluation factor and subfactor, nor are 
they required to include subfactors.
    (iv) In accordance with 10 U.S.C. 2305(a)(3), for DoD, NASA, and 
the Coast Guard--
    (A) The contracting officer may choose not to include price or cost 
as an evaluation factor for award when a solicitation--
    (1) Has an estimated value above the simplified acquisition 
threshold;
    (2) Will result in multiple-award contracts (see subpart 16.5) that 
are for the same or similar services; and
    (3) States that the Government intends to make an award to each and 
all qualifying offerors (see 2.101).
    (B) If the contracting officer chooses not to include price or cost 
as an evaluation factor for the contract award, in accordance with 
paragraph (a)(2)(iv)(A) of this section, the contracting officer shall 
consider price or cost as one of the factors in the selection decision 
for each order placed under the contract.
    (C) The exception in paragraph (a)(2)(iv)(A) of this section shall 
not apply to solicitations for multiple-award contracts that provide 
for sole source orders pursuant to section 8(a) of the Small Business 
Act (15 U.S.C. 637(a)).

PART 15--CONTRACTING BY NEGOTIATION

0
5. Amend section 15.304 by revising paragraph (c)(1) and paragraph (e) 
introductory text to read as follows:


15.304  Evaluation factors and significant subfactors.

* * * * *
    (c) * * *
    (1)(i) Price or cost to the Government shall be evaluated in every 
source selection (10 U.S.C. 2305(a)(3)(A)(ii) and 41 U.S.C. 
3306(c)(1)(B)) (also see part 36 for architect-engineer contracts), 
subject to the exception listed in paragraph (c)(1)(ii)(A) of this 
section for use by DoD, NASA, and the Coast Guard.
    (ii) In accordance with 10 U.S.C. 2305(a)(3), for DoD, NASA, and 
the Coast Guard--
    (A) The contracting officer may choose not to include price or cost 
as an evaluation factor for award when a solicitation--
    (1) Has an estimated value above the simplified acquisition 
threshold;
    (2) Will result in multiple-award contracts (see subpart 16.5) that 
are for the same or similar services; and
    (3) States that the Government intends to make an award to each and 
all qualifying offerors (see 2.101).
    (B) If the contracting officer chooses not to include price or cost 
as an evaluation factor for the contract award, in accordance with 
paragraph (c)(1)(ii)(A) of this section, the contracting officer shall 
consider price or cost as one of the factors in the selection decision 
for each order placed under the contract.
    (C) The exception in paragraph (c)(1)(ii)(A) of this section shall 
not apply to solicitations for multiple-award contracts that provide 
for sole source orders pursuant to section 8(a) of the Small Business 
Act (15 U.S.C. 637(a)).
* * * * *
    (e) Unless the exception at paragraph (c)(1)(ii)(A) of this section 
applies, the solicitation shall also state, at a minimum, whether all 
evaluation factors other than cost or price, when combined, are--
* * * * *

PART 16--TYPES OF CONTRACTS


16.504  [Amended]

0
6. Amend section 16.504 by removing from paragraph (c)(1)(ii)(B)(5) 
``is less than the simplified'' and adding ``is at or below the 
simplified'' in its place.

0
7. Amend section 16.505 by adding paragraph (b)(2)(i)(G); and removing 
from paragraph (b)(2)(ii)(B)(10) ``(b)(2)(i)(A) through (E) of'' and 
adding ``(b)(2)(i)(A) through (E) and (G) of'' in its place.
    The addition reads as follows:


16.505  Ordering.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (G) For DoD, NASA, and the Coast Guard, the order satisfies one of 
the exceptions permitting the use of other than full and open 
competition listed in 6.302 (10 U.S.C. 2304c(b)(5)). The public 
interest exception shall not be used unless Congress is notified in 
accordance with 10 U.S.C. 2304(c)(7).
* * * * *
[FR Doc. 2020-12764 Filed 7-1-20; 8:45 am]
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