[Federal Register Volume 78, Number 120 (Friday, June 21, 2013)]
[Rules and Regulations]
[Pages 37690-37692]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-14615]
[[Page 37690]]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 15
[FAC 2005-67; FAR Case 2012-018; Item VI; Docket 2012-0018, Sequence 1]
RIN 9000-AM27
Federal Acquisition Regulation; Price Analysis Techniques
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 clarify and give a precise
reference in the use of a price analysis technique in order to
establish a fair and reasonable price.
DATES: Effective Date: July 22, 2013.
FOR FURTHER INFORMATION CONTACT: Mr. Edward N. Chambers, Procurement
Analyst, at 202-501-3221, for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at 202-501-4755. Please cite FAC 2005-67, FAR Case 2012-
018.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 77 FR 40552 on July 10, 2012, to clarify and pinpoint a
reference used in FAR 15.404-1(b)(2)(i). FAR 15.404-1(b)(2) addresses
various price analysis techniques and procedures that the Government
may use to ensure a fair and reasonable price. One of those techniques
at FAR 15.404-1(b)(2)(i) describes the comparison of proposed prices
received in response to a solicitation as an example of such techniques
and procedures. In its discussion, FAR 15.404-1(b)(2)(i) references
15.403-1(c)(1), which sets forth the various standards of adequate
price competition (for exceptions from certified cost or pricing data
requirements). However, only FAR 15.403-1(c)(1)(i) (rather than all of
15.403-1(c)(1)) actually addresses the situation when two or more
responsible offerors, competing independently, submit priced offers
that satisfy the Government's expressed requirement. Since FAR 15.404-
1(b)(2)(i) deals only with the price analysis technique of comparing
proposed prices received in response to a solicitation, the reference
in this section is more appropriately identified as 15.403-1(c)(1)(i),
which is more precise (and addresses adequate price competition when
proposed prices are received from multiple offerors), in lieu of the
existing reference, 15.403-1(c)(1), which is more generalized (and
addresses various standards for adequate price competition, including
the receipt of proposed prices from multiple offerors).
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the comments in the
development of the final rule. A discussion of the comments and the
changes made to the rule as a result of those comments are provided as
follows:
A. Summary of Significant Changes
FAR 15.404-1(b)(2)(i) is amended to change the reference in this
FAR section from 15.403-1(c)(1) to 15.403-1(c)(1)(i). This change
ensures that the revised reference is more precise and directly related
to the topic covered in 15.404-1(b)(2)(i).
Based on a review of the public comments, discussed below, the
Councils have concluded that no change to the proposed rule is
necessary.
B. Analysis of Public Comments
The Regulatory Secretariat received responses from two respondents
to the proposed rule, which are discussed below:
1. Determination That a Price Is Fair and Reasonable
Comment: One respondent believed that removing the reference to FAR
15.403-1(c)(1) and replacing it with 15.403-1(c)(1)(i) would mean that
only one of the three prongs of the definition of adequate price
competition could be used to establish that a price is fair and
reasonable.
Response: FAR 15.404-1(b)(2) delineates the various price analysis
techniques to ensure a fair and reasonable price; 15.404-1(b)(2)(i)
describes one of those price analysis techniques, the comparison of
proposed prices received in response to a solicitation, and refers to
15.403-1(c)(1) therein. The current reference (to FAR 15.403-1(c)(1))
in this section (15.404-1(b)(1)(2)(i)) was too broad; therefore, this
rule changes this reference to 15.403-1(c)(1)(i), which precisely
aligns the price analysis technique of comparing multiple proposed
prices received in response to a solicitation described in 15.404-
1(b)(2)(i) with the adequate price competition standard (for exceptions
from certified cost or pricing data requirements) of comparing proposed
prices submitted by multiple independent offerors. The other two
alternative standards for establishing adequate price competition
within the generalized reference FAR 15.403-1(c)(1) (for exceptions
from certified cost or pricing data requirements) at 15.403-1(c)(1)(ii)
and (iii) do not involve any comparison of proposed prices submitted by
multiple offerors. Furthermore, it was illogical to rely on the other
two alternative standards of adequate price competition (for exceptions
from certified cost or pricing data requirements at FAR 15.403-
1(c)(1)(ii) and (iii)) to determine a fair and reasonable price using
price analysis techniques and procedures (per the prescription at
15.404-1(b)(2(i)). This is because the determination that the price is
fair and reasonable itself is required for these two alternative
standards at FAR 15.403-1(c)(1)(ii) and (iii) in order to determine
that adequate price competition exists. These two alternative standards
of adequate price competition can be used to meet the exceptions from
certified cost or pricing data requirements, but only after some form
of cost or price analysis has been applied to determine that the price
is fair and reasonable; i.e., these two alternative standards of
adequate price competition are insufficient by themselves to be used to
establish fair and reasonable prices in accordance with price analysis
techniques and procedures (per FAR 15.404-1(b)(2)).
2. Justification for Changing FAR Price Analysis Techniques
Comment: One respondent stated that no justification has been
provided to support this proposed change to the FAR price analysis
techniques. The respondent stated they did not know what supposed
problem the proposed rule is intended to address.
Response: The Councils note that this rule does not change the
availability of the various price analysis techniques available to the
contracting officer. The current FAR reference (to 15.403-1(c)(1)) is a
FAR section that discusses various standards for adequate price
competition (for exceptions from certified cost or pricing data
requirements), including the price analysis technique of comparing two
or more proposed prices. The rule simply pinpoints the reference
associated with the price analysis technique of comparing proposed
prices (described at
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15.404-1(b)(2)(i) for determining a fair and reasonable price) with the
FAR section (15.403-1(c)(1)(i)) that discusses the comparison of
proposed prices submitted by two or more responsible offerors (for
determining adequate price competition, one of the standards for
exception from certified cost or pricing data requirements).
Additionally, it eliminates a possible inconsistency. The current
reference (to FAR 15.403-1(c)(1)) in the discussion on price analysis
techniques to ensure a fair and reasonable price (at 15.404-1(b)(2)(i))
could be interpreted to mean that the other two alternative standards
for adequate price competition (for exceptions from certified cost or
pricing data requirements described at 15.403-1(c)(1)(ii) and (iii))
could be used to determine a fair and reasonable price, when, in fact,
they cannot. See response to Comment 1, Determination that a price is
fair and reasonable.
3. The Promotion of Competition
Comment: One respondent believed that the proposed rule would
discourage contracting officers from promoting competition.
Response: This rule does not discourage contracting officers from
promoting competition. 10 U.S.C. 2304 and 41 U.S.C. 3301 require, with
certain limited exceptions, that contracting officers shall promote and
provide for full and open competition in soliciting offers and awarding
Government contracts (see FAR 6.101). This rule has no effect on those
statutory requirements. Furthermore, there is great emphasis within the
Government on obtaining competition, because competition generally
results in cost savings to the Government.
4. Expansion of Cost or Pricing Data Requests
Comment: Although one respondent acknowledged that this rule does
not alter the current FAR requirements regarding the requesting of
certified cost or pricing data, the respondent believed that this FAR
change will inevitably lead to contracting officers requesting data
other than certified cost or pricing data for a greater number of
procurements. According to the respondent, this will impose substantial
costs on prospective offerors who will be forced to compile
comprehensive cost or pricing data to meet the Government's expansive
definition of that term. Compiling these data will also be time
consuming which will delay procurements. The respondent also stated
that there is no reasonable basis to revert to the broad requirements
for submission of cost or pricing data that existed prior to the
statutory reforms of the 1990s, including the Federal Acquisition
Streamlining Act of 1994.
Response: This rule should not impact the requesting of data other
than certified cost or pricing data. FAR 15.403-1(c)(1)(ii) and (iii)
already requires determination that the price is reasonable in order
for adequate price competition to exist. According to the pricing
policy at 15.402, which remains unchanged, contracting officers are
directed to obtain only the minimum amount of data necessary to
establish a fair and reasonable price, and are directed at FAR 15.403-
3(b) to obtain any necessary additional data from sources other than
the offeror to the maximum extent practicable.
5. Significant Regulatory Action
Comment: One respondent stated that this proposed rule is a
significant regulatory action and should have been subject to review by
the Office of Information and Regulatory Affairs (OIRA). The respondent
stated that the proposed rule will have an annual effect on the economy
of $100 million or will adversely affect a sector of the economy in a
material way. The respondent believed that by indicating that the
proposed rule merely ``clarifies'' FAR 15.404-1(b)(2)(i), the Councils
are subverting the OFPP Act requirements to solicit and provide an
opportunity for public comment. The Councils should issue another
Federal Register notice that explains the nature and effect of the
proposed changes that reasonably solicits public comments on those
changes.
Response: The Councils met the requirements of the OFPP Act by
publishing the proposed rule and its supporting rationale in the
Federal Register for public comment. Furthermore, DoD, GSA, and NASA
submit all FAR rules to OIRA for clearance to publish. OIRA determined
that the rule was not a significant rule and cleared it for publication
without subjecting it to the formal coordination and review under
section 6(b) of E.O. 12866. OIRA also concurred that this is not a
major rule under 5 U.S.C. 804.
6. Distinction Between Adequate Competition and Adequate Price
Competition
Comment: One respondent commented that a reasonableness
determination and comparison of prices based upon two or more offers
are two different things that require a distinction. The respondent
further stated that a price found reasonable is not suitable in all
cases to be used for comparison and that this was an opportunity for
the FAR to make explicit such a distinction. The respondent recommended
that adequate competition be distinguished from adequate price
competition.
Response: The Councils take no position on this comment because it
is outside the scope of this case, which was limited to clarifying a
FAR reference relative to a particular price analysis technique.
III. 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.
IV. Regulatory Flexibility Act
DoD, GSA, and NASA do not expect this final 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. because this rule merely clarifies and pinpoints the reference at
FAR 15.404-1(b)(2)(i), a discussion on the price analysis technique of
comparing two or more proposed prices received in response to the
solicitation in order to establish a fair and reasonable price. The
original, more generalized reference (to FAR 15.403-1(c)(1)), which
describes various standards for adequate price competition (for
exceptions from certified cost or pricing data requirements, including
comparing proposals from multiple offerors), is changed to the more
precise reference, 15.403-1(c)(1)(i), which describes the receipt of
multiple offers in response to the solicitation as a standard for
adequate price competition. Nevertheless DoD, GSA, and NASA have
prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with
the Regulatory Flexibility Act, 5.U.S.C. 601, et seq. The FRFA is
summarized as follows:
FAR 15.404-1(b)(2) addresses various price analysis techniques
and procedures the Government may use to ensure a fair and
[[Page 37692]]
reasonable price. FAR 15.404-1(b)(2)(i) discusses the comparison of
proposed prices received in response to a solicitation as an example
of such techniques and procedures. In this discussion of price
analysis techniques, FAR 15.404-1(b)(2)(i) references 15.403-
1(c)(1), which sets forth the various standards of adequate price
competition (for exceptions from certified cost or pricing data
requirements). However, only FAR 15.403-1(c)(1)(i) addresses the
situation when two or more responsible offerors, competing
independently, submit priced offers that satisfy the Government's
expressed requirement, a situation which is consistent with the
price analysis technique of comparing proposed prices from multiple
offerors. Therefore, the reference in FAR 15.404-1(b)(2)(i) is more
appropriately identified as 15.403-1(c)(1)(i), which describes the
standard comparing proposed prices received from multiple offerors,
rather than the generalized 15.403-1(c)(1), which is broader in
scope with various additional standards of adequate price
competition.
One comment from an interested party was submitted in response
to the Regulatory Flexibility Act request under the proposed rule.
The respondent believed that this rule was a significant regulatory
action under E.O. 12866 based upon the respondent's interpretation
that the rule would constitute a significant change to the pricing
regulations in FAR subpart 15.4. However, FAR 15.404-1(b)(2)
delineates the various price analysis techniques; 15.404-1(b)(2)(i)
describes the comparison of proposed prices received in response to
a solicitation. The current reference in this section (to FAR
15.403-1(c)(1)) was too broad; therefore, this rule changes this
generalized reference to 15.403-1(c)(1)(i), which precisely aligns
the price analysis technique of comparing proposed prices from
multiple offerors in 15.404-1(b)(2)(i) (for determining a fair and
reasonable price) with the adequate price competition standard of
comparing two or more offerors' proposed prices (for exceptions from
certified cost or pricing data requirements). The designation of a
rule as significant regulatory action under E.O. 12866 is made by
the Office of Information and Regulatory Affairs within the Office
of Management and Budget, which declined to designate this rule as
requiring official review. No comments were filed by the Chief
Counsel for Advocacy of the Small Business Administration in
response to the rule and no changes were made to the rule.
It is not expected that this rule will 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.;
this rule merely clarifies that in order to establish a fair and
reasonable price, the reference at FAR 15.404-1(b)(2)(i) (which
describes the pricing technique of comparing proposed prices from
multiple offerors) shall be the more precise FAR 15.403-1(c)(1)(i)
(which describes the standard for adequate price competition when
proposed prices are submitted by multiple offerors), rather than the
more generalized 15.403-1(c)(1) (which describes various standards
for adequate price competition, including comparing proposed prices
from multiple offerors).
There are no projected reporting, recordkeeping, or other
compliance requirements projected for this rule.
The approach described in the final rule is the most practical
and beneficial for both Government and industry.
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.
V. Paperwork Reduction Act
The final 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 Subject in 48 CFR Part 15
Government procurement.
Dated: June 13, 2013.
William Clark,
Acting Director, Office of Governmentwide Acquisition Policy, Office of
Acquisition Policy, Office of Governmentwide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR part 15 as set forth
below:
PART 15--CONTRACTING BY NEGOTIATION
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1. The authority citation for 48 CFR part 15 is revised to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
15.404-1 [Amended]
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2. Amend section 15.404-1 by removing from paragraph (b)(2)(i)
``15.403-1(c)(1)'' and adding ``15.403-1(c)(1)(i)'' in its place.
[FR Doc. 2013-14615 Filed 6-20-13; 8:45 am]
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