Defense Federal Acquisition Regulation Supplement: Requiring Data Other Than Certified Cost or Pricing Data (DFARS Case 2020-D008), 65502-65504 [2022-23276]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 87, Number 208 (Friday, October 28, 2022)]
[Rules and Regulations]
[Pages 65502-65504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23276]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 215 and 242

[Docket DARS-2021-0015]
RIN 0750-AK95


Defense Federal Acquisition Regulation Supplement: Requiring Data 
Other Than Certified Cost or Pricing Data (DFARS Case 2020-D008)

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 implement a section of the 
National Defense Authorization Act for Fiscal Year 2020 that provides 
additional requirements relating to the submission of data other than 
cost or pricing data.

DATES: Effective October 28, 2022.

FOR FURTHER INFORMATION CONTACT: David E. Johnson, telephone 202-913-
5764.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 86 FR 
48368 on August 30, 2021, to implement section 803 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020 (Pub. L. 
116-92). Section 803 amends 10 U.S.C. 2306a(d) (redesignated as 10 
U.S.C. 3705) to prohibit contracting officers from determining that the 
price of a contract or subcontract is fair and reasonable based solely 
on historical prices paid by the Government and to state that an 
offeror is ineligible for award if the contracting officer is unable to 
determine proposed prices are fair and reasonable by any other means, 
when an offeror fails to make a good faith effort to comply with a 
reasonable request to submit data other than certified cost or pricing 
data, unless the head of the contracting activity (HCA) determines that 
it is in the best interest of the Government to make the award to that 
offeror. Five 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 and the changes made to the rule as 
a result of those comments is provided, as follows:

A. Summary of Significant Changes From the Proposed Rule

    DoD revised DFARS 215.403-3(a)(1) to include the word 
``subcontract'' to clarify that, in accordance with section 803 of the 
NDAA for FY 2020, the rule applies to subcontractors. One respondent 
suggested this revision.
    DoD revised DFARS 215.403-3(a)(4) to include, in accordance with 
section 803 of the NDAA for FY 2020, the requirement that offerors make 
a good faith effort to comply with the Government's reasonable requests 
to furnish data other than certified cost or pricing data. Two 
respondents suggested this revision.

B. Analysis of Public Comments

1. Clarification of the Requirement Not To Base Price-Reasonableness 
Solely on Historical Prices Paid by the Government
    Comment: Three respondents expressed confusion with the requirement 
not to base price reasonableness solely on historical prices paid by 
the Government. Multiple respondents requested clarification on the 
restriction of use of previously performed cost and price analysis. 
Another respondent expressed concern with inclusion of the requirement 
in multiple sections and recommended that the requirement should be 
clearly connected to other relevant factors such as time elapsed since 
prior purchase, and any differences in quantities purchased as part of 
the price reasonableness determination.
    Response: The rule does not prohibit contracting officers from 
utilizing prior cost or price analyses, nor does it absolutely prohibit 
contracting officers from utilizing historical prices paid by the 
Government to determine prices fair and reasonable. Rather, the rule 
prohibits contracting officers from determining the price of a contract 
to be fair and reasonable based solely on historical prices paid by the 
Government. Under this rule, historical prices paid by the Government 
cannot properly comprise the only factor when determining prices fair 
and reasonable, but rather may be used as one factor among several. 
Inclusion of the requirement in DFARS 215.403-3 was intentional to 
ensure the contracting officer is aware of the requirement in the event 
that prior prices paid by the Government are the only information 
available, and other than certified cost or pricing data will likely 
have to be

[[Page 65503]]

obtained. The respondents' recommendation to clearly connect the 
requirement to other relevant factors was not incorporated as it 
already exists in DFARS 215.404-1(b)(ii). Accordingly, no changes to 
the rule are necessary as a result of these comments.
2. Application of the Rule to Subcontracts and Flowdown Requirements
    Comment: Four respondents questioned whether the requirement flowed 
down to subcontracts. One respondent questioned whether or not the 
contractor would need to develop a package for the contracting officer 
to submit to the HCA for a determination that the purchase is in the 
best interest of the Government, or if the determination that the 
purchase is in the best interest of the Government could be made by an 
official of the contractor. Another respondent inquired whether 
contracting officers would be required to provide previous prices paid 
to contractors, and if there would be a requirement that contractors be 
prohibited from making a price reasonableness determination based 
solely on historical prices paid by the contractor. Further, another 
respondent questioned whether the contractors would be required to 
track information about subcontractors providing cost data, similar to 
the Contractor Performance Assessment Reporting System (CPARS).
    Response: The rule does apply to subcontracts, and DoD concurs with 
adding the word ``subcontract'' to 215.403-3(a)(4) to reflect the 
statutory language at section 803 of the NDAA for FY 2020. The 
contractor would not need to develop a package for the contracting 
officer to submit to the HCA. The HCA would be making that decision 
based upon the inputs from the Government team, whether it was at the 
prime or subcontract level, and any inputs from the contractor would be 
limited to providing supporting data to the contracting officer. The 
Government would not be able to disclose price information unless the 
contractors involved agreed to the release of the data. The contracting 
officer would be responsible to assess and evaluate the analysis 
performed by the prime on their subcontractors to ensure they 
considered additional data aside from the previous prices paid. 
Contractors will not be required to track information about 
subcontractors providing cost data similar to CPARS. The contracting 
officer would be responsible for tracking this information for prime 
contractors and subcontractors.
3. Further Changes To Effect the Intent of the Rule
    Comment: One respondent recommended augmenting DFARS 252.215-7010 
with additional requirements intended to maximize cooperation from 
offerors when contracting officers make data requests.
    Response: The respondent's recommendation is outside the scope of 
this rule.
4. Further Changes To Maximize Consistency
    Comment: One respondent recommended amending DFARS 215.404-
1(b)(v)(C) to change the term ``customer,'' to ``type of customer.''
    Response: DoD does not concur with this recommendation because it 
is not required to implement the statute.
5. Inclusion of the Requirement for ``Good Faith'' Efforts To Comply 
With a Reasonable Request To Furnish Data Other Than Certified Cost or 
Pricing Data
    Comment: Two respondents recommended revising the final rule at 
DFARS 215.403-3(a)(4), to include, in accordance with section 803 of 
the NDAA for FY 2020, the requirement that offerors make good faith 
efforts when complying with the Government's reasonable requests to 
furnish data other than certified cost or pricing data.
    Response: DoD concurs with this recommendation and has revised 
DFARS 215.403-3(a)(4) to include ``make a good faith effort to comply 
with a reasonable request''.

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

    This rule does not create any new solicitation provisions or 
contract clauses. It does not impact any existing solicitation 
provisions or contract clauses or their applicability to contracts 
valued at or below the SAT, for commercial services, or for commercial 
products including COTS 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.

V. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD will submit a copy of 
the interim or final rule with the form, Submission of Federal Rules 
under the Congressional Review Act, to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the United States. A 
major rule under the Congressional Review Act cannot take effect until 
60 days after it is published in the Federal Register. The Office of 
Information and Regulatory Affairs has determined that this rule is not 
a major rule as defined by 5 U.S.C. 804.

VI. Regulatory Flexibility Act

    A final regulatory flexibility analysis has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
and is summarized as follows:
    The objective of this rule is to implement section 803 of the 
National Defense Authorization Act for Fiscal Year 2020. Section 803 
provides additional requirements for contracting officers and the head 
of the contracting activity relating to obtaining data other than 
certified cost or pricing data.
    DoD received no public comments in response to the initial 
regulatory flexibility analysis.
    This rule does not directly impose requirements on small entities. 
The section 803 requirement making certain offerors ineligible for 
award is already in the Federal Acquisition Regulation. This rule 
impacts (1) the contracting officer's need for data other than 
historical prices paid by the Government, unless there is adequate 
price competition; and (2) the criteria for the head of the contracting 
activity's determination to make an award. In some cases, the 
contracting officer's need for data other than historical prices paid 
by the Government may result in a request for additional data from an 
offeror. Based on data from the Federal Procurement Data System for FY 
2018 through FY 2020, DoD estimates that 1,672 small entities may 
receive a request for additional data.
    This rule entails no new reporting, recordkeeping, or other 
compliance requirements on small entities. There are no known 
alternative approaches to

[[Page 65504]]

the rule that would meet the stated objectives of the statute.

VII. Paperwork Reduction Act

    This 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 215 and 242

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 215 and 242 are amended as follows:

0
1. The authority citation for parts 215 and 242 continues to read as 
follows:

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

PART 215--CONTRACTING BY NEGOTIATION

0
2. Amend section 215.403-3 by adding paragraph (a) to read as follows:


215.403-3   Requiring data other than certified cost or pricing data.

* * * * *
    (a) In accordance with 10 U.S.C. 2306a(d)--
    (1) Contracting officers shall not determine the price of a 
contract or subcontract to be fair and reasonable based solely on 
historical prices paid by the Government (see PGI 215.403-3(4)); and
    (4) In lieu of the factors for consideration listed in FAR 15.403-
3(a)(4), a determination by the head of the contracting activity (see 
PGI 215.403-3(7)) that it is in the best interest of the Government to 
make the award to an offeror that does not make a good faith effort to 
comply with a reasonable request to submit data other than certified 
cost or pricing data shall be based on consideration of pertinent 
factors, including the following:
    (i) The effort to obtain the data.
    (ii) Availability of other sources of supply of the item or 
service.
    (iii) The urgency or criticality of the Government's need for the 
item or service.
    (iv) Reasonableness of the price of the contract, subcontract, or 
modification of the contract or subcontract based on information 
available to the contracting officer.
    (v) Rationale or justification made by the offeror for not 
providing the requested data.
    (vi) Risk to the Government if award is not made.
* * * * *

0
3. Amend section 215.404-1 by revising paragraph (b)(ii) and paragraph 
(b)(v) introductory text to read as follows:


215.404-1  Proposal analysis techniques.

* * * * *
    (b) * * *
    (ii) If the contracting officer determines that the information 
obtained through market research is insufficient to determine the 
reasonableness of price, the contracting officer shall consider 
information submitted by the offeror of recent purchase prices paid by 
the Government and commercial customers for the same or similar 
commercial items under comparable terms and conditions in establishing 
price reasonableness on a subsequent purchase if the contracting 
officer is satisfied that the prices previously paid remain a valid 
reference for comparison. Price reasonableness shall not be based 
solely on historical prices paid by the Government (see 215.403-
3(a)(1)). The contracting officer shall consider the totality of other 
relevant factors such as the time elapsed since the prior purchase and 
any differences in the quantities purchased (10 U.S.C. 2306a(b)(5)).
* * * * *
    (v) When evaluating pricing data, the contracting officer shall 
consider materially differing terms and conditions, quantities, and 
market and economic factors (see PGI 215.404-1(b)(v)). For similar 
items, the contracting officer shall also consider material differences 
between the similar item and the item being procured (see FAR 15.404-
1(b)(2)(ii)(B)). Material differences are those that could reasonably 
be expected to influence the contracting officer's determination of 
price reasonableness. The contracting officer shall consider the 
following factors when evaluating the relevance of the information 
available:
* * * * *

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
4. Revise section 242.1502 to read as follows:


242.1502   Policy.

    (g) Past performance evaluations in the Contractor Performance 
Assessment Reporting System--
    (i) Shall include an assessment of the contractor's performance 
against, and efforts to achieve, the goals identified in its 
comprehensive small business subcontracting plan when the contract 
contains the clause at 252.219-7004, Small Business Subcontracting Plan 
(Test Program); and
    (ii) Shall, unless exempted by the head of the contracting 
activity, include a notation on contractors that have denied multiple 
requests for submission of data other than certified cost or pricing 
data over the preceding 3-year period, but nevertheless received an 
award (10 U.S.C. 2306a(d)(2)(B)(ii)).

[FR Doc. 2022-23276 Filed 10-27-22; 8:45 am]
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