Defense Federal Acquisition Regulation Supplement: Data Requirements for Commercial Products for Major Weapon Systems (DFARS Case 2023-D010), 46805-46811 [2024-11515]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 89, Number 105 (Thursday, May 30, 2024)]
[Rules and Regulations]
[Pages 46805-46811]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11515]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 215, 234, and 252

[Docket DARS-2023-0047]
RIN 0750-AL83


Defense Federal Acquisition Regulation Supplement: Data 
Requirements for Commercial Products for Major Weapon Systems (DFARS 
Case 2023-D010)

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 
James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 
that clarifies the data to be provided for certain procurements related 
to major weapon systems.

DATES: Effective May 30, 2024.

FOR FURTHER INFORMATION CONTACT: Ms. Jeanette Snyder, telephone 703-
508-7524.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 88 FR 
88554 on December 22, 2023, to implement section 803 of the James M. 
Inhofe National Defense Authorization Act (NDAA) for Fiscal Year (FY) 
2023 (Pub. L. 117-263). Section 803 modifies 10 U.S.C. 3455 to provide 
additional guidance regarding data requirements to support a 
determination of commerciality and price reasonableness for certain 
procurements associated with major weapon systems. Two 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

    There are no significant changes from the proposed rule.

B. Analysis of Public Comments

1. Negative Impacts of the Rule
    Comment: One respondent indicated that the requirement to provide 
expanded data in support of commercial products added by section 803 
presents a significant burden and risk to contractors. Many defense 
industrial base suppliers are commercial companies that also offer 
their products and services to DoD. For these suppliers, the statutory 
obligation to comply with the expanded data requirements will force 
commercial businesses to implement a compliance infrastructure to 
segregate and archive business data. The additional cost associated 
with this cannot be offset by raising product prices in a competitive 
commercial marketplace and is of no value to commercial buyers. As 
such, many of these suppliers may simply forgo the opportunity to enter 
into contracts with DoD. In addition, the requirements for disclosure 
increase the risk that highly sensitive commercial sales data will be 
disclosed to competitors, which creates a significant business risk for 
small and medium-sized suppliers.
    Response: This rule implements the additional guidance provided in 
section 803 of the NDAA for FY 2023 regarding data requirements to 
support a determination of commerciality and a determination of price 
reasonableness for certain procurements associated with major weapon 
systems. For the commerciality determination, section 803, as 
implemented in this rule, allows contractors to, for example, identify 
the comparable commercial product it sells or that is sold in the 
commercial market and provide the contracting officer a comparison 
between the physical characteristics and functionality of such a 
product and the subsystem, component, or spare part, if available. For 
the price reasonableness determination, section 803, as implemented in 
this rule, allows the offeror to provide or give the contracting 
officer access to a representative sample of prices paid for the same 
or similar commercial products under comparable terms and conditions 
and, if not feasible, to provide the prices paid for the same or 
similar commercial products sold under different terms and conditions. 
In addition, offerors may redact customer information, which alleviates 
any business risk. This information should be readily available to 
commercial companies via their sales records, so companies should not 
need to establish a compliance infrastructure to segregate and archive 
business data. Therefore, this rule does not impose additional 
administrative costs or recordkeeping burdens on commercial companies 
that would cause them to no longer be willing to do business with DoD.
    Comment: One respondent indicated that the significant compliance 
burden and business risk levied by section 803 will give commercial 
companies a choice of: (1) establishing and maintaining separate 
production lines for commercial and defense products; or (2) exiting 
the defense industrial base. Isolating defense production from 
commercial production requires substantial upfront investment in 
facilities and workforce and drives significant inefficiency in 
production. Given recent instability in DoD's budget processes and 
timing, expanding capacity in this way may be unfeasible for many 
companies in today's defense industrial base. The cause and effect of 
the changes made by section 803 will likely not only result in 
protracted acquisition cycle times but also adversely affect the cost 
of products sold to DoD and industry's ability to deliver timely 
requirements in support of the warfighters. In addition, it is likely 
to increase sole-source suppliers and compound DoD's current challenges 
in accessing the most innovative technologies, products, and services, 
which is not in the interest of the taxpayer, the warfighter, or the 
industrial base.
    Response: Section 803 of the NDAA for FY 2023 provides additional 
guidance regarding data requirements to support a determination of 
commerciality and a determination of price reasonableness for certain

[[Page 46806]]

procurements associated with major weapon systems. The additional 
guidance provides clarity to offerors and contracting officers 
regarding what is required for such determinations to simplify and 
expedite procurements. This information should be readily available to 
commercial companies via their product information and sales records, 
so commercial companies should not need to establish separate 
production lines or exit the DoD market. This rule should not result in 
an increase in sole-source suppliers, nor should it affect DoD's 
ability to access innovative technologies, products, and services.
    Comment: One respondent indicated that section 803 struck sections 
of law (10 U.S.C. 3455(d)(1)(B)(i-iv)) that provide for an incremental 
approach to seeking data to determine reasonableness of price for 
commercial products. In determining price reasonableness, this long-
standing framework required contracting officers to start with the 
least expensive and most reliable, relevant data (e.g., price data) and 
move down the spectrum to data that is most expensive and time-
consuming to collect and analyze (e.g., cost data). This incremental 
approach was intended to keep acquisitions efficient, prices low, and 
decisions unbiased. In striking this incremental approach, section 803 
sets conditions for contracting officers to start the process with an 
immediate demand for cost data, likely leading to increased acquisition 
cycle times, as well as increased tensions during contract 
negotiations, not only between DoD and the contractor but also between 
the contractor and their suppliers.
    Response: Section 803, as implemented in this rule at DFARS 
234.7002(e)(1) and (2), continues to require contracting officers to 
first request price data. DFARS 234.7002(e)(3) directs contracting 
officers to only request additional information from the offeror if the 
price data is insufficient to determine price reasonableness and 
approval to do so has been obtained. As such, this rule maintains the 
long-standing framework for contracting officers to first request price 
data from offerors and, therefore, should not affect acquisition cycle 
time or contract negotiations.
    Comment: One respondent indicated that implementation of section 
803 will likely compound DoD's current challenges in leveraging multi-
use technologies, stimulating expansion of domestic production and 
investment in advanced manufacturing technologies, and potentially 
accelerate growing fragility of suppliers, particularly small 
businesses. As noted in the National Defense Industrial Strategy, DoD-
unique requirements make DoD an unattractive customer, particularly for 
small businesses and nontraditional defense contractors, thus impeding 
competition and increasing the likelihood of sole-source situations. 
The respondent indicated that the compliance cost and the risk of 
exposure of business-sensitive data jeopardizes the ability of small 
businesses, in particular, to remain viable in the commercial 
marketplace. This may leave them no choice but to exit the defense 
market, which will increase the fragility of the defense industrial 
base. The loss of these suppliers will also lead to time-consuming and 
expensive processes to requalify new vendors if they can be found. 
Aerospace prime contractors would be uniquely impacted by such 
departures, as many suppliers are subject to specific airworthiness 
standards and Federal Aviation Administration qualifications. As such, 
the increased burden, compliance cost and risk of exposure imposed by 
the implementation of section 803 may result in the need to identify 
and qualify new suppliers, which may increase costs on current 
programs, drive delays in the delivery of critical capability to the 
warfighter, and impede DoD's efforts to meet increased contracting 
small business goals.
    Response: Section 803 of the NDAA for FY 2023 provides additional 
guidance that clarifies to offerors and contracting officers as to what 
is required to be submitted to simplify and expedite procurements. This 
information should be readily available to small businesses via their 
sales data; therefore, it should not impose an additional burden to the 
extent that businesses would exit the defense market or that prime 
contractors would need to locate new qualified subcontractors. In 
addition, any business risk is alleviated, as the rule also allows 
offerors to redact sensitive customer information. This rule should not 
affect DoD's ability to leverage multi-use technologies, stimulate the 
expansion of domestic production and investment in advanced 
manufacturing technologies, or meet its small business goals.
    Comment: One respondent indicated that 10 U.S.C. 3455, unlike the 
Truth in Negotiations Act (10 U.S.C. chapter 271), does not provide a 
waiver and the only exception for data submission is for commercially 
available off-the-shelf (COTS) items. Accordingly, some suppliers may 
only be willing to provide COTS-based solutions to remain clear of the 
requirements imposed by section 803. This will result in the loss of 
benefit of modern manufacturing capability to perform in-line 
modifications of commercial aircraft to meet DoD needs. Instead of a 
commercial derivative military aircraft being assembled on a commercial 
production line, the alternative is a complete COTS aircraft being 
disassembled, modified, and reassembled. This will result in a 
significant increase in cost to DoD and a significant delay in delivery 
of capability to the warfighter.
    Response: FAR 15.403-1(b)(1) and (2) provide exceptions to the 
requirement to provide data to support a determination of price 
reasonableness as specified in this rule at DFARS 234.7002(e)(1). 
Section 803 allows the offeror to provide, or give the contracting 
officer access to, a representative sample of prices paid for the same 
or similar commercial products under comparable terms and conditions 
and, if not feasible, to provide, or give the contracting officer 
access to, the prices paid for the same or similar commercial products 
sold under different terms and conditions. Since this rule allows 
offerors to give contracting officers access to this information, it 
should actually reduce any contractor burden. This information should 
be readily available to offerors via their sales records; therefore, it 
should not impose an additional burden to the extent that contractors 
would be willing to only provide COTS items to DoD. Since this rule 
clarifies the data offerors are to provide to the contracting officer 
to determine price reasonableness, the rule may expedite contract 
negotiations, decrease acquisition cycle time, and expedite delivery of 
capability to the warfighter.
2. Clarifications
    Comment: One respondent indicated the proposed rule DFARS text 
referencing ``subsystems of major weapon systems and components and 
spare parts of major weapon systems and subsystems'' is awkward and 
confusing. It appears that the language is referring to ``subsystems of 
major weapon systems'' and ``components and spare parts of major weapon 
systems and of subsystems of major weapon systems.''
    Response: The text at DFARS 212.102(a)(iii)(A), 212.209(a)(1), and 
215.403-1(c)(3)(A) has been amended to incorporate the recommended 
change.
    Comment: One respondent indicated that the proposed rule text at 
DFARS 234.7002(d)(4)(ii) makes no sense. If the offeror does not sell a 
comparable commercial product, then how can the

[[Page 46807]]

offeror provide a comparison of the comparable commercial product. The 
comparison should be between the product being offered and the most 
comparable commercial product in the commercial marketplace.
    Response: The text at DFARS 234.7002(d)(4)(ii) has been amended to 
require the offeror to provide the contracting officer a comparison 
between the physical characteristics and functionality of the most 
comparable commercial product in the commercial market and the 
subsystem, component, or spare part, if available.
    Comment: One respondent indicated the proposed rule text at DFARS 
234.7002(e)(3) is incomplete. The ``if/then'' statement is missing the 
``then'' portion. The respondent asked why the DAR Council had removed 
the rest of the language in paragraph (3), which states ``. . . the 
contracting officer shall request the offeror to submit other relevant 
information, including uncertified cost data. However, no uncertified 
cost data may be required in any case in which there are sufficient 
non-Government sales of the same item to establish reasonableness of 
price.''
    Response: The text at DFARS 234.7002(e)(3)(i) and (ii) has been 
moved to 234.7002(e)(3) to include the ``if/then'' statement in one 
paragraph for clarity. Regarding the deletion of the language in 
paragraph (e)(3), the proposed rule text at DFARS 234.7002(e)(1) 
clarifies the data to be submitted by offerors and, as such, replaces 
the existing text at DFARS 234.7002(e)(3) that was removed in the 
proposed rule.

C. Other Changes

    The text at DFARS 234.7002(d)(4) is amended to add the following to 
the end of the phrase for clarity: ``then the offeror is required to''. 
Paragraph (b)(1)(ii) of the basic and alternate I of the provision at 
DFARS 252.215-7010 is amended to clarify that the information to be 
provided by the offeror pursuant to this paragraph is also for purposes 
of determining commerciality. Paragraph (d)(3) of the basic and 
alternate I of the provision at DFARS 252.215-7010 is also amended to 
add a cross reference to DFARS 234.7002(e) for clarity. In addition, 
minor editorial changes are made in the basic and alternate I of the 
provision.

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

    This final rule amends the provision at DFARS 252.215-7010, 
Requirements for Certified Cost or Pricing Data and Data Other Than 
Certified Cost or Pricing Data. However, this proposed rule does not 
impose any new requirements on contracts at or below the SAT, for 
commercial products including COTS items, or for commercial services. 
The provision will continue to not apply to acquisitions at or below 
the SAT and will continue to apply to acquisitions of commercial 
products, excluding COTS items, and to acquisitions of commercial 
services.

IV. Expected Impact of the Rule

    DoD does not expect this final rule to have a significant impact on 
the Government or offerors because it merely clarifies the data an 
offeror is required to provide to the contracting officer when a 
subsystem of a major weapon system or a component or spare part of a 
major weapon system or of a subsystem of a major weapon system is 
proposed as a commercial product. Specifically, this rule clarifies the 
data an offeror is required to provide to support the contracting 
officer's determination of price reasonableness and commerciality. This 
rule will also allow an offeror to give the contracting officer access 
to the data, in lieu of submitting it, and to redact certain customer 
information from such data.
    This rule is expected to result in the timely submission of data, 
which may decrease the time it takes for a contracting officer to 
determine a product to be commercial, to determine price 
reasonableness, and to award a contract.

V. 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, as amended.

VI. 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.

VII. 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:
    This rule is necessary to implement section 803 of the James M. 
Inhofe National Defense Authorization Act (NDAA) for Fiscal Year (FY) 
2023. The objective of this rule is to implement section 803, which 
modifies 10 U.S.C. 3455 to clarify the data an offeror is required to 
provide to the contracting officer to support a commerciality 
determination and a price reasonableness determination when a subsystem 
of a major weapon system or a component or spare part of a major weapon 
system or of a subsystem of a major weapon system is proposed as a 
commercial product.
    No significant issues were raised by the public comments in 
response to the initial regulatory flexibility analysis.
    Based on data from the Federal Procurement Data System for fiscal 
years 2021 through 2023, DoD awarded an average of approximately 50,260 
commercial contracts related to major weapon systems to an average of 
2,685 unique small entities per year. Therefore, this rule is expected 
to apply to approximately 2,685 small entities per fiscal year.
    This rule does not impose any new reporting, recordkeeping, or 
other compliance requirements for small entities. The information being 
collected falls under the currently approved information collection 
requirements under Office of Management and Budget (OMB) Control Number 
0704-0574, Defense Federal Acquisition Regulation Supplement (DFARS) 
Part 215; Only One Offer and Related Clauses in DFARS 252.

[[Page 46808]]

    There are no known alternatives that would accomplish the stated 
objectives of the applicable statute.

VIII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies to this 
final rule. However, these changes to the DFARS do not impose 
additional information collection requirements to the paperwork burden 
previously approved by OMB under OMB Control Number 0704-0574, Defense 
Federal Acquisition Regulation Supplement (DFARS) Part 215; Only One 
Offer and Related Clauses in DFARS 252.

List of Subjects in 48 CFR Parts 212, 215, 234, and 252

    Government procurement.

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

    Therefore, 48 CFR parts 212, 215, 235, and 252 are amended as 
follows:

0
1. The authority citation for parts 212, 215, 234, and 252 continues to 
read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL 
SERVICES

0
2. Amend section 212.102 by revising paragraph (a)(iii)(A) to read as 
follows:


212.102  Applicability.

    (A) * * *
    (iii) * * *
    (A) Determine in writing that the acquisition meets the 
``commercial product'' or ``commercial service'' definition in FAR 
2.101. See 234.7002(b) and (c) for subsystems of major weapon systems 
and components and spare parts of major weapon systems and of 
subsystems of major weapon systems;
* * * * *

0
3. Amend section 212.209 by revising paragraph (a)(1) to read as 
follows:


212.209  Determination of price reasonableness.

    (a) * * *
    (1) In the case of major weapon systems, for subsystems of major 
weapon systems and components and spare parts of major weapon systems 
and of subsystems of major weapon systems acquired as commercial 
products in accordance with subpart 234.70, shall use information 
submitted under 234.7002(e); and
* * * * *

PART 215--CONTRACTING BY NEGOTIATION

0
4. Amend section 215.403-1 by revising paragraph (c)(3)(A) to read as 
follows:


215.403-1  Prohibition on obtaining certified cost or pricing data (10 
U.S.C. chapter 271 and 41 U.S.C. chapter 35).

* * * * *
    (c) * * *
    (3) * * *
    (A) Follow the procedures at PGI 215.403-1(c)(3) for pricing 
commercial products or commercial services, except see 234.7002(e) for 
pricing commercial subsystems of major weapon systems and components 
and spare parts of major weapon systems and of subsystems of major 
weapon systems.
* * * * *


215.403-3  [Amended]

0
5. Amend section 215.403-3 in paragraph (c) by removing ``234.7002(d)'' 
and adding ``234.7002(e)'' in its place.

PART 234--MAJOR SYSTEM ACQUISITION

0
6. Amend section 234.7002 by--
0
a. Revising paragraph (b)(2);
0
b. Adding paragraph (b)(3);
0
c. Revising paragraphs (c)(1)(ii), (c)(2) and (d); and
0
e. Adding a paragraph (e); and
    The revisions and additions read as follows:


234.7002  Policy.

* * * * *
    (b) * * *
    (2) The contracting officer determines in writing that the 
subsystem is a commercial product in accordance with 212.102(a)(iii). 
For a subsystem of a major weapon system proposed as a commercial 
product that has not previously been determined to be a commercial 
product (see 212.102(a)(ii)), follow the procedures in paragraph (d) of 
this section.
    (3) This paragraph (b) shall apply only to subsystems of major 
weapon systems that are acquired by DoD through a--
    (i) Prime contract;
    (ii) Modification to a prime contract; or
    (iii) Subcontract under a prime contract for the acquisition of a 
subsystem proposed as a commercial product that has not previously been 
determined to be a commercial product (see 212.102(a)(ii)).
    (c) * * *
    (1) * * *
    (ii) The contracting officer determines in writing that the 
component or spare part is a commercial product in accordance with 
212.102(a)(iii). For a component or spare part proposed as a commercial 
product that has not previously been determined to be a commercial 
product (see 212.102(a)(ii)), follow the procedures in paragraph (d) of 
this section.
    (2) This paragraph (c) shall apply only to components and spare 
parts that are acquired by DoD through a--
    (i) Prime contract;
    (ii) Modification to a prime contract; or
    (iii) Subcontract under a prime contract for the acquisition of a 
component or spare part proposed as a commercial product that has not 
previously been determined to be a commercial product (see 
212.102(a)(ii)).
    (d) Commerciality determination. To the extent necessary to make a 
commercial product determination in accordance with 212.102(a)(iii) 
that relies on paragraph (1), (2), (3), (4), or (5) of the ``commercial 
product'' definition at FAR 2.101 for a subsystem, component, or spare 
part as described in paragraphs (b) and (c) of this section, the 
provision at 252.215-7010, Requirements for Certified Cost or Pricing 
Data and Data Other Than Certified Cost or Pricing Data, requires the 
offeror to--
    (1) Identify the comparable commercial product the offeror sells to 
the general public or nongovernmental entities for other than 
governmental purposes;
    (2) Provide a comparison between the physical characteristics and 
functionality of the comparable commercial product and the subsystem, 
component, or spare part, including--
    (i) For products under paragraph (3)(i) of the ``commercial 
product'' definition at FAR 2.101, a description of the modification 
and documentation to support that the modification is customarily 
available in the marketplace; or
    (ii) For products under paragraph (3)(ii) of the ``commercial 
product'' definition at FAR 2.101, a detailed description of the 
modification and detailed technical data to demonstrate that the 
modification is minor (e.g., information on production processes and 
material differences); and
    (3) Provide the national stock number (NSN) for the comparable 
commercial product, if one is assigned, and the NSN for the subsystem, 
component, or spare part, if one is assigned; or
    (4) If the offeror does not sell a comparable commercial product to 
the general public or nongovernmental entities for other than 
governmental

[[Page 46809]]

purposes, then the offeror is required to--
    (i) Notify the contracting officer in writing that it does not sell 
such a comparable product; and
    (ii) Provide the contracting officer a comparison between the 
physical characteristics and functionality of the most comparable 
commercial product in the commercial market and the subsystem, 
component, or spare part, if available.
    (e) Relevant information to determine price reasonableness. For 
products relying on paragraph (3)(ii) of the ``commercial product'' 
definition at FAR 2.101, see FAR 15.403-1(c)(3)(iii)(C). See 212.209(a) 
for requirements of 10 U.S.C. 3453 with regard to market research.
    (1) Unless an exception at FAR 15.403-1(b)(1) or (2) applies--
    (i) To the extent necessary to make a determination of price 
reasonableness, the contracting officer shall require the offeror to 
submit to or provide the contracting officer access to a representative 
sample, as determined by the contracting officer, of prices paid for 
the same or similar commercial products under comparable terms and 
conditions by both Government and commercial customers and the terms 
and conditions of such sales; or
    (ii) If the contracting officer determines that the offeror cannot 
provide or give access to sufficient information described in this 
paragraph (e)(1) to determine the reasonableness of price, the 
contracting officer shall require the offeror to submit or provide the 
contracting officer access to a representative sample, as determined by 
the contracting officer, of the prices paid for the same or similar 
commercial products sold under different terms and conditions and the 
terms and conditions of such sales.
    (2) The contracting officer shall allow the offeror to redact only 
information provided pursuant to paragraph (e)(1) of this section that 
identifies the customer, if the offeror certifies in writing for each 
sale that the customer is a--
    (i) Government customer (e.g., Federal, State, local, or foreign 
government);
    (ii) Commercial customer purchasing the product for governmental 
purposes; or
    (iii) Commercial customer purchasing the product for a commercial, 
mixed, or unknown purpose.
    (3) If the contracting officer determines that the information 
submitted pursuant to paragraph (e)(1) of this section is not 
sufficient to determine the reasonableness of price because the 
comparable commercial product provided by the offeror is not a valid 
basis for price analysis or the proposed price is not reasonable after 
evaluating sales data, then the contracting officer shall obtain 
approval from an official one level above the contracting officer, 
without power of delegation, and require the offeror to submit other 
relevant information regarding the basis for price or cost, including 
information on labor costs, material costs, and overhead rates.
    (4) An offeror shall not be required to submit information 
described in paragraph (e)(1) of this section with regard to a 
commercially available off-the-shelf item. An offeror may be required 
to submit such information with regard to any other item that was 
developed exclusively at private expense only after the head of the 
contracting activity determines in writing that the information 
submitted pursuant to paragraph (e)(1) of this section is not 
sufficient to determine the reasonableness of price.
    (5) An offeror may submit information or analysis relating to the 
value of a commercial product to aid in the determination of the 
reasonableness of the price of such commercial product. A contracting 
officer may consider such information or analysis in addition to the 
information submitted pursuant to paragraph (e)(1) of this section. For 
additional guidance see PGI 234.7002(e)(5).

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Amend section 252.215-7010--
0
a. By removing the provision date ``JAN 2023'' and adding ``MAY 2024'' 
in its place;
0
b. In paragraph (a) by revising the definition of ``Sufficient non-
Government sales'';
0
c. By revising and republishing paragraphs (b) and (d);
0
d. In Alternate I--
0
i. By revising the provision title and date;
0
ii. In paragraph (a) by revising the definition of ``Sufficient non-
Government sales''; and
0
iii. By revising and republishing paragraphs (b) and (d).
    The additions, revisions and republications read as follows:


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

* * * * *
    (a) * * *
    Sufficient non-Government sales means relevant sales data that 
reflects market pricing and contains enough information to make 
adjustments covered by Federal Acquisition Regulation (FAR) 15.404-
1(b)(2)(ii)(B).
* * * * *
    (b) Exceptions from certified cost or pricing data. (1) In lieu of 
submitting certified cost or pricing data, the Offeror may submit a 
written request for exception by submitting the information described 
in paragraphs (b)(1)(i) and (ii) of this provision. The Contracting 
Officer may require additional supporting information, but only to the 
extent necessary to determine whether an exception should be granted 
and whether the price is fair and reasonable.
    (i) Exception for prices set by law or regulation--Identification 
of the law or regulation establishing the prices offered. If the prices 
are controlled under law by periodic rulings, reviews, or similar 
actions of a governmental body, attach a copy of the controlling 
document, unless it was previously submitted to the contracting office.
    (ii) Commercial product or commercial service exception. For a 
commercial product or commercial service exception, the Offeror shall 
submit, at a minimum, information that is adequate for determining 
commerciality and evaluating the reasonableness of the price for this 
acquisition, including prices at which the same product or service or 
similar products or services have been sold in the commercial market. 
Such information shall include--
    (A) For products or services previously determined to be 
commercial, the contract number and military department, defense 
agency, or other DoD component that rendered such determination, and if 
available, a Government point of contact;
    (B) For subsystems of a major weapon system and components and 
spare parts of a major weapon system or subsystem of a major weapon 
system that have not previously been determined to be commercial--
    (1) The comparable commercial product the Offeror sells to the 
general public or nongovernmental entities;
    (2) A comparison between the physical characteristics and 
functionality of the comparable commercial product and the subsystem, 
component, or spare part, including--
    (i) For products under paragraph (3)(i) of the ``commercial 
product'' definition at FAR 2.101, a description of the modification 
and documentation to support that the modification is customarily 
available in the marketplace; or
    (ii) For products under paragraph (3)(ii) of the ``commercial 
product''

[[Page 46810]]

definition at FAR 2.101, a detailed description of the modification and 
detailed technical data to demonstrate that the modification is minor 
(e.g., information on production processes and material differences); 
and
    (3) The national stock number (NSN) for the comparable commercial 
product, if one is assigned, and the NSN for the subsystem, component, 
or spare part, if one is assigned; or
    (4) If the Offeror does not sell a comparable commercial product to 
the general public or nongovernmental entities for purposes other than 
government purposes, the Offeror shall--
    (i) Notify the Contracting Officer in writing that it does not sell 
such a comparable product; and
    (ii) Provide the Contracting Officer with a comparison of the 
physical characteristics and functionality of the most comparable 
commercial product in the commercial market.
    (C) For items priced based on a catalog--
    (1) A copy of or identification of the Offeror's current catalog 
showing the price for that item; and
    (2) If the catalog pricing provided with this proposal is not 
consistent with all relevant sales data, a detailed description of 
differences or inconsistencies between or among the relevant sales 
data, the proposed price, and the catalog price (including any related 
discounts, refunds, rebates, offsets, or other adjustments);
    (D) For items priced based on market pricing, a description of the 
nature of the commercial market, the methodology used to establish a 
market price, and all relevant sales data. The description shall be 
adequate to permit the DoD to verify the accuracy of the description;
    (E) For items included on an active Federal Supply Service Multiple 
Award Schedule contract, proof that an exception has been granted for 
the schedule item; or
    (F) For items provided by nontraditional defense contractors, a 
statement that the entity is not currently performing and has not 
performed, for at least the 1-year period preceding the solicitation of 
sources by DoD for the procurement or transaction, any contract or 
subcontract for DoD that is subject to full coverage under the cost 
accounting standards prescribed pursuant to 41 U.S.C. 1502 and the 
regulations implementing such section.
* * * * *
    (d) Requirements for data other than certified cost or pricing 
data. (1) Data other than certified cost or pricing data submitted in 
accordance with this provision shall include the minimum information 
necessary to permit a determination that the proposed price is fair and 
reasonable, to include the requirements in Defense Federal Acquisition 
Regulation Supplement (DFARS) 215.402(a)(i), 215.404-1(b), and 
234.7002(e).
    (2) In cases in which uncertified cost data is required, the 
information shall be provided in the form in which it is regularly 
maintained by the Offeror or prospective subcontractor in its business 
operations.
    (3) If the Offeror redacts data that identifies the customer (see 
DFARS 234.7002(e)(2)), then the Offeror shall include, for each sale, 
the following signed statement with the data submitted:
    ``By submission of this data, the Offeror [Offeror insert company 
name] certifies that the customer was [Offeror insert one or more of 
the following as applicable: a government customer; a commercial 
customer purchasing the same or similar product for governmental 
purposes (e.g., Federal, state, local, or foreign government); or a 
commercial customer purchasing the same or similar product for a 
commercial, mixed, or unknown purpose].''
    (4) Within 10 days of a written request from the Contracting 
Officer for additional information to permit an adequate evaluation of 
the proposed price in accordance with FAR 15.403-3 or DFARS 
234.7002(e), the Offeror shall provide either the requested 
information, or a written explanation for the inability to fully 
comply.
    (5) Subcontract price evaluation. (i) Offerors shall obtain from 
subcontractors the minimum information necessary to support a 
determination of price reasonableness, as described in FAR part 15 and 
DFARS part 215.
    (ii) No cost data may be required from a prospective subcontractor 
in any case in which there are sufficient non-Government sales of the 
same item to establish reasonableness of price.
    (iii) If the Offeror relies on relevant sales data for similar 
items to determine the price is reasonable, the Offeror shall obtain 
only that technical information necessary--
    (A) To support the conclusion that items are technically similar; 
and
    (B) To explain any technical differences that account for variances 
between the proposed prices and the sales data presented.
* * * * *
    Alternate I. * * *

Requirements for Certified Cost or Pricing Data and Data Other Than 
Certified Cost or Pricing Data--Alternate I (MAY 2024)

    (a) * * *
    Sufficient non-Government sales means relevant sales data that 
reflects market pricing and contains enough information to make 
adjustments covered by Federal Acquisition Regulation (FAR) 15.404-
1(b)(2)(ii)(B).
* * * * *
    (b) Exceptions from certified cost or pricing data. (1) In lieu of 
submitting certified cost or pricing data, the Offeror may submit a 
written request for exception by submitting the information described 
in paragraphs (b)(1)(i) and (ii) of this provision. The Contracting 
Officer may require additional supporting information, but only to the 
extent necessary to determine whether an exception should be granted 
and whether the price is fair and reasonable.
    (i) Exception for price set by law or regulation--Identification of 
the law or regulation establishing the price offered. If the price is 
controlled under law by periodic rulings, reviews, or similar actions 
of a governmental body, attach a copy of the controlling document, 
unless it was previously submitted to the contracting office.
    (ii) Commercial product or commercial service exception. For a 
commercial product or commercial service exception, the Offeror shall 
submit, at a minimum, information that is adequate for determining 
commerciality and evaluating the reasonableness of the price for this 
acquisition, including prices at which the same product or service or 
similar products or services have been sold in the commercial market. 
Such information shall include--
    (A) For products or services previously determined to be 
commercial, the contract number and military department, defense 
agency, or other DoD component that rendered such determination, and if 
available, a Government point of contact;
    (B) For subsystems of a major weapon system and components and 
spare parts of a major weapon system or subsystem of a major weapon 
system that have not previously been determined to be commercial--
    (1) The comparable commercial product the Offeror sells to the 
general public or nongovernmental entities;
    (2) A comparison between the physical characteristics and 
functionality of the comparable commercial product and the subsystem, 
component, or spare part, including--

[[Page 46811]]

    (i) For products under paragraph (3)(i) of the ``commercial 
product'' definition at FAR 2.101, a description of the modification 
and documentation to support that the modification is customarily 
available in the marketplace; or
    (ii) For products under paragraph (3)(ii) of the ``commercial 
product'' definition at FAR 2.101, a detailed description of the 
modification and detailed technical data to demonstrate that the 
modification is minor (e.g., information on production processes and 
material differences); and
    (3) The national stock number (NSN) for the comparable commercial 
product, if one is assigned, and the NSN for the subsystem, component, 
or spare part; or
    (4) If the Offeror does not sell a comparable commercial product to 
the general public or nongovernmental entities for purposes other than 
government purposes, the Offeror shall--
    (i) Notify the Contracting Officer in writing that it does not sell 
such a comparable product; and
    (ii) Provide the Contracting Officer with a comparison of the 
physical characteristics and functionality of the most comparable 
commercial product in the commercial market.
    (C) For items priced based on a catalog--
    (1) A copy of or identification of the Offeror's current catalog 
showing the price for that item; and
    (2) If the catalog pricing provided with this proposal is not 
consistent with all relevant sales data, a detailed description of 
differences or inconsistencies between or among the relevant sales 
data, the proposed price, and the catalog price (including any related 
discounts, refunds, rebates, offsets, or other adjustments);
    (D) For items priced based on market pricing, a description of the 
nature of the commercial market, the methodology used to establish a 
market price, and all relevant sales data. The description shall be 
adequate to permit the DoD to verify the accuracy of the description;
    (E) For items included on an active Federal Supply Service Multiple 
Award Schedule contract, proof that an exception has been granted for 
the schedule item; or
    (F) For items provided by nontraditional defense contractors, a 
statement that the entity is not currently performing and has not 
performed, for at least the 1-year period preceding the solicitation of 
sources by the DoD for the procurement or transaction, any contract or 
subcontract for the DoD that is subject to full coverage under the cost 
accounting standards prescribed pursuant to 41 U.S.C. 1502 and the 
regulations implementing such section.
    (2) The Offeror grants the Contracting Officer or an authorized 
representative the right to examine, at any time before award, books, 
records, documents, or other directly pertinent records to verify any 
request for an exception under this provision, and to determine the 
reasonableness of price.
* * * * *
    (d) Requirements for data other than certified cost or pricing 
data. (1) Data other than certified cost or pricing data submitted in 
accordance with this provision shall include all data necessary to 
permit a determination that the proposed price is fair and reasonable, 
to include the requirements in Defense Federal Acquisition Regulation 
Supplement (DFARS) 215.402(a)(i), 215.404-1(b), and 237.7002(e).
    (2) In cases in which uncertified cost data is required, the 
information shall be provided in the form in which it is regularly 
maintained by the Offeror or prospective subcontractor in its business 
operations.
    (3) If the Offeror redacts data that identifies the customer (see 
DFARS 234.7002(e)(2)), then the Offeror shall include, for each sale, 
the following signed statement with the data submitted:
    ``By submission of this data, the Offeror [Offeror insert company 
name] certifies that the customer was [Offeror insert one or more of 
the following as applicable: a government customer (e.g., Federal, 
state, local, or foreign government); a commercial customer purchasing 
the same or similar product for governmental purposes; or a commercial 
customer purchasing the same or similar product for a commercial, 
mixed, or unknown purpose].''
    (4) The Offeror shall provide information described as follows: 
[Insert description of the data and the format that are required, 
including access to records necessary to permit an adequate evaluation 
of the proposed price in accordance with FAR 15.403-3 or DFARS 
234.7002(e).]
    (5) Within 10 days of a written request from the Contracting 
Officer for additional information to support proposal analysis, the 
Offeror shall provide either the requested information, or a written 
explanation for the inability to fully comply.
    (6) Subcontract price evaluation. (i) Offerors shall obtain from 
subcontractors the information necessary to support a determination of 
price reasonableness, as described in FAR part 15 and DFARS part 215.
    (ii) No cost information may be required from a prospective 
subcontractor in any case in which there are sufficient non-Government 
sales of the same item to establish reasonableness of price.
    (iii) If the Offeror relies on relevant sales data for similar 
items to determine the price is reasonable, the Offeror shall obtain 
only that technical information necessary--
    (A) To support the conclusion that items are technically similar; 
and
    (B) To explain any technical differences that account for variances 
between the proposed prices and the sales data presented.
* * * * *
[FR Doc. 2024-11515 Filed 5-29-24; 8:45 am]
BILLING CODE 6001-FR-P