2011-5557. Federal Acquisition Regulation; Use of Commercial Services Item Authority

AGENCIES:

Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION:

Final rule.

SUMMARY:

DoD, GSA, and NASA have adopted as final, without change, an interim rule amending the Federal Acquisition Regulation (FAR) to implement section 868 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009. Section 868 provides that the FAR shall be amended with respect to the procurement of commercial services, specifically services that are not offered and sold competitively in substantial quantities in the commercial marketplace, but are of a type offered and sold competitively in substantial quantities in the commercial marketplace. These services may be considered commercial items only if the contracting officer has determined in writing that the offeror has submitted sufficient information to evaluate, through price analysis, the reasonableness of the price for such services. The rule details the information the contracting officer may consider in order to make this determination.

DATES:

Effective Date: March 16, 2011.

FOR FURTHER INFORMATION CONTACT:

Mr. Edward N. Chambers, Procurement Analyst, at [phone] for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at [phone]. Please cite FAC 2005-50, FAR Case 2008-034.

SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA published an interim rule in the Federal Register at 74 FR 52852 on October 14, 2009, to implement section 868 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009. The comment period closed on December 14, 2009. Four respondents submitted comments on the interim rule.

II. Discussion/Analysis

The analysis of public comments by the Defense Acquisition Regulations Council and the Civilian Agency Acquisition Council (the Councils) follows:

A. Agree With the Rule

Comment: One respondent agreed with the interim rule. The respondent believes including “services of a type” provides the Government with flexibility to access a wide variety of services with beneficial contracting methods.

Response: The Councils acknowledge the respondent's agreement with the interim rule.

B. “Services of a Type”

Comment: One respondent suggests adding a definition for “services of a type” and/or providing examples of “services of a type.”

Response: The Councils do not agree that definitions or examples are necessary to implement this case. The FAR definition of a “commercial item” adequately addresses what is and is not a commercial item. The contracting officer's determination that a service is considered a “service of a type” is a determination made based on the circumstances surrounding a particular acquisition and is made on a case-by-case basis.

C. Sold in the Commercial Marketplace

Comment: One respondent also suggests qualifying the two references to the “commercial marketplace” in FAR 15.403-1(c)(3)(ii)(A) as follows. The first reference would be followed by “by the offeror,” while the second reference would be followed by “by others than the offeror.”

Response: The respondent's suggested language changes go beyond the statute.

D. Establishing Price Reasonableness

1. Determination that the offeror has submitted sufficient information (15.403-1(c)(3)(ii)(A)).

Comment: One respondent suggests that requiring a contracting officer determination that the offeror has submitted sufficient information to evaluate the reasonableness of the offered price will increase the contracting officer's workload, may result in lengthy and unnecessary delays, and could reduce competition.

Response: The determination is required by statute.

2. Other relevant information (15.403-1(c)(3)(ii)(C)).

Comment: One respondent believes that if a service is “of a type” sold in the commercial market place, but price reasonableness cannot be established, then that service would not benefit from the Truth in Negotiations Act exception for commercial items, and that such an outcome would cause tremendous confusion among contracting officers and potential offerors of commercial items.

Response: If price reasonableness cannot be determined based on prices for similar commercial services, the services “of a type” cannot be determined to be commercial items (see 15.403-1(c)(3)(ii)(A)). In that case, the contracting officer would need to determine price reasonableness by requesting relevant cost or pricing data from the contractor.

Comment: One respondent suggests that the requirement to provide cost information other than cost or pricing data could prove difficult for industry vendors, which may diminish the field of vendors.

Response: Current FAR 15.402 policy requires that the contracting officer determine price reasonableness. This cost information can come in many forms (sales data, vendor quotations, historical data, etc.) and is usually on hand for a contractor. Consequently, providing this cost information will not present a burden sufficient to discourage industry vendors from seeking Government contracts.

Comment: One respondent believes that if the contracting officer can request cost data, this additional work could result in significant delays in contract award, contract delivery schedule problems and higher prices.

Response: The Councils acknowledge the respondent's concern; however, the contracting officer is required to request appropriate cost or pricing data sufficient to determine price reasonableness.

E. Location of Coverage

Comment: One respondent suggested that this FAR change should be in FAR 15.403-3 in lieu of 15.403-1.

Response: The Councils believe the language belongs in FAR 15.403-1, since it is more closely aligned with the prohibition on obtaining cost or pricing data than the FAR section requiring information other than cost or pricing data. It is noted that these two sections complement each other and are often used congruently.

III. Executive Order 12866

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 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

The Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration certify that this final rule will not 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 the rule does not impose any additional requirements on small businesses. This rule impacts the Government by requiring a new written determination by the contracting officer. The rule details the information the contracting officer may consider in order to make this determination. In addition, since the current FAR 15.403-3(a)(1) provides for contracting officers to obtain the relevant information necessary to determine price reasonableness, this final rule places no additional requirements on contractors.

V. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; however these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 9000-0013, titled: Cost or Pricing Data Exemption.

List of Subjects in 48 CFR Part 15

• Government procurement

Dated: March 4, 2011.

Millisa Gary,

Acting Director, Office of Governmentwide Acquisition Policy.

Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR part 15, which was published in the Federal Register at 74 FR 52852 on October 14, 2009, is adopted as a final rule without change.