2011-18379. Defense Acquisition Regulations System; Defense Federal Acquisition Regulation Supplement; Only One Offer (DFARS Case 2011-D013)

AGENCY:

Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION:

Proposed rule.

SUMMARY:

DoD is proposing to amend the Defense FAR Supplement (DFARS) to address acquisitions using competitive procedures in which only one offer is received. With some exceptions, the contracting officer must resolicit for an additional period of at least 30 days, if the solicitation allowed fewer than 30 days for receipt of proposals and only one offer is received. If a period of at least 30 days was allowed for receipt of proposals, the contracting officer must determine prices to be fair and reasonable through price or cost analysis or enter negotiations with the offeror.

DATES:

Comments on the proposed rule should be submitted in writing to the address shown below on or before September 23, 2011, to be considered in the formation of the final rule.

ADDRESSES:

You may submit comments, identified by DFARS Case 2011-D013, using any of the following methods:

○ Regulations.gov. http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by inputting “DFARS Case 2011-D013” under the heading “Enter keyword or ID” and selecting “Search.” Select the link “Submit a Comment” that corresponds with “DFARS Case 2011-D013.” Follow the instructions provided at the “Submit a Comment” screen. Please include your name, company name (if any), and “DFARS Case 2011-D013” on your attached document.

○ E-mail: [e-mail]. Include DFARS Case 2011-D013 in the subject line of the message.

○ Fax: [phone].

○ Mail: Defense Acquisition Regulations System, Attn: Ms. Amy Williams, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060.

Comments received generally will be posted without change to http://www.regulations.gov,, including any personal information provided. To confirm receipt of your comment(s), please check http://www.regulations.gov approximately two to three days after submission to verify posting (except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT:

Ms. Amy Williams, [phone].

SUPPLEMENTARY INFORMATION:

I. Background

This DFARS case addresses DoD policy with regard to acquisitions using competitive procedures in which only one offer is received. This case was initiated to implement the initiative on promoting real competition that was presented by the Under Secretary of Defense for Acquisition, Technology, & Logistics in a memorandum dated November 3, 2010. This memorandum was further implemented by memoranda from the Director, Defense Procurement and Acquisition Policy, dated November 24, 2010, and April 27, 2011.

In order to promote competition, the proposed rule adds a new section at DFARS 215.371. DFARS 215.371 states the DoD policy that adequate price competition does not exist if only one offer is received. When issuing a competitive solicitation, the contracting officer must specify in the solicitation what cost or pricing data may be required if only one offer is received.

If only one offer is then received, and the solicitation allowed fewer than 30 days for receipt of offers, then the contracting officer must consider whether the statement of work should be revised to promote more competition, and then resolicit, allowing an additional period of at least 30 days for receipt of proposals.

If the solicitation allowed at least 30 days for receipt of proposals and only one offer is received, the contracting officer must obtain from the offeror, in accordance with the solicitation, any data necessary to establish a fair and reasonable price. The contracting officer shall then determine through cost or price analysis, as appropriate, that the price is fair and reasonable through price or cost analysis or enter negotiations with the offeror. The basis for these negotiations shall be either certified cost or pricing data or other than certified cost or pricing data, as appropriate (see FAR 15.403-1(c), 215.403-1(c), and FAR 15.403-3(b)). The negotiated price should not exceed the offered price.

The head of the contracting activity is authorized to waive the requirement to resolicit for an additional period of at least 30 days. This waiver authority can be delegated to a level no lower than one level above the contracting officer.

The rule proposes exceptions for acquisitions that are at or below the simplified acquisition threshold; or acquisitions that are in support of contingency, humanitarian, or peacekeeping operations, or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack. The applicability of an exception does not eliminate the need for the contracting officer to seek maximum practicable competition and to ensure that the price is fair and reasonable.

This proposed rule applies a more stringent policy for determination of adequate price competition than is allowed by FAR 15.403-1(c)(1)(ii). FAR 15.403-1(c)(1)(ii) provides that if only one offer is received, the contracting officer may nevertheless determine that there was adequate price competition, if the contracting officer can reasonably conclude that the offer was submitted with the expectation of competition and this determination is approved at a level above the contracting officer. This rule proposes that, unless an exception applies, if only one offer is received, the contracting officer shall not use the standard at FAR 15.403-1(c)(1)(ii) to determine that the offered price is based on adequate competition

The rule proposes two provisions. The provision at 252.215-70WW, Notice of Intent to Resolicit, notifies offerors that the solicitation provides offerors fewer than 30 days to submit proposals and that, in the event that only one offer is received in response to the solicitation, the contracting officer may cancel the solicitation and resolicit for an additional period of at least 30 days.

The provision at 252.215-70XX, Only One Offer, notifies offerors that if only one offer is received and the contracting officer decides to conduct negotiations, then the offeror must provide the data specified in FAR 52.215-20. The negotiated price should not exceed the offered price. These provisions must also be used in acquisitions of commercial items conducted using part 212 competitive procedures.

The proposed rule also applies to acquisitions under subpart 208.4, part 212, subpart 213.5, part 214, and subpart 216.5.

II. 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 a significant regulatory action and, therefore, was 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.

III. Regulatory Flexibility Act

DoD does 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., because this rule does not impose economic burdens on offerors or contractors. However, DoD has prepared an initial regulatory flexibility analysis, which is summarized as follows:

The objective of the rule is to promote competition by implementing DoD policy with regard to acquisitions when only one offer is received in response to a solicitation issued using competitive procedures. The purpose and effect of this rule is to promote real competition by ensuring that adequate time is allowed for receipt of offers; and ensuring that prices are fair and reasonable when adequate time has been allowed, but nevertheless, only one offer is received in response to a competitive solicitation.

The legal basis is 41 U.S.C. 1303 and 48 CFR chapter 1.

The proposed rule affects only those small entities that respond to a Federal competitive solicitation and no other offer is received.

The Federal Procurement Data System provided the following data for FY 2010 on DoD competitive awards valued above $150,000:

DoD Competitive Awards Valued Above $150,000

	All competitive > SAT	Only one offer	1 Offer/small business
New Contracts or Purchase Orders	54,240	14,747	3,542
New Orders, FSS	4,246	1,654	818
New Orders, non-FSS	12,883	2,935	788
Total	71,369	19,336	5,148

The proposed rule imposes no reporting, recordkeeping, or other information collection requirements. The submission of certified cost or pricing data or other than certified cost or pricing data is covered in FAR subpart 15.4 and associated clauses in FAR 52.215, OMB clearance number 9000-013.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

There are no known significant alternatives to the rule that would adequately implement the DoD policy. DoD has exempted acquisitions below the simplified acquisition threshold. There is no significant economic impact on small entities and any impact of this rule on small business is expected to be predominantly positive, by allowing more opportunity for competition.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2011-D013) in correspondence.

IV. Paperwork Reduction Act

The proposed rule does not impose any additional information collection requirements that require approval by the Office of Management and Budget under the Paperwork Reduction Act (5 U.S.C. chapter 35). The submission of certified cost or pricing data or other than certified cost or pricing data required for negotiation is covered in FAR 15.4 and associated clauses in FAR 52.215, OMB clearance number 9000-013.

List of Subjects in 48 CFR Parts 205, 208, 212, 213, 214, 215, 216, and 252

• Government procurement

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 205, 208, 212, 213, 214, 215, 216, and 252 are proposed to be amended as follows:

1. The authority citation for 48 CFR parts 205, 208, 212, 213, 214, 215, 216, and 252 continues to read as follows:

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

PART 205—PUBLICIZING CONTRACT ACTIONS

2. Amend section 205.203 by adding paragraph (S-70) to read as follows:

205.203

Publicizing and response time.

* * * * *

(S-70) When using competitive procedures, if a solicitation allowed fewer than 30 days for receipt of offers and resulted in only one offer, the contracting officer shall resolicit, allowing an additional period of at least 30 days for receipt of offers, except as provided in 215.371 (d) and (e).

PART 208—REQUIRED SOURCES OF SUPPLIES AND SERVICES

3. Amend section 208.405-70 by revising paragraph (c), redesignating paragraph (d) as paragraph (e), and adding new paragraph (d) to read as follows:

* * * * *

(c)(1) An order exceeding $150,000 is placed on a competitive basis only if the contracting officer provides a fair notice of the intent to make the purchase, including a description of the supplies to be delivered or the services to be performed and the basis upon which the contracting officer will make the selection, to—

(i) As many schedule contractors as practicable, consistent with market research appropriate to the circumstances, to reasonably ensure that offers will be received from at least three contractors that can fulfill the requirements, and the contracting officer—

(A)(1) Receives offers from at least three contractors that can fulfill the requirements; or

(2) Determines in writing that no additional contractors that can fulfill the requirements could be identified despite reasonable efforts to do so (documentation should clearly explain efforts made to obtain offers from at least three contractors); and

(B) Ensures all offers received are fairly considered; or

(ii) All contractors offering the required supplies or services under the applicable multiple award schedule, and affords all contractors responding to the notice a fair opportunity to submit an offer and have that offer fairly considered.

(2) If only one offer is received, follow the procedures at 215.371.

(d) Use the provisions at 252.215-70WW, Notice of Intent To Resolicit, and 252.215-70XX, Only One Offer, as prescribed at 215.408(3) and (4), respectively.

* * * * *

PART 212—ACQUISITION OF COMMERCIAL ITEMS

4. Add new section 212.205 to read as follows:

212.205

Offers.

(c) When using competitive procedures, if the solicitation allows fewer than 30 days response time and only one offer is received, the contracting officer shall follow the procedures at 215.371.

5. Amend section 212.301 by adding paragraph (f)(xvi) to read as follows:

212.301

Solicitation provisions and contract clauses for the acquisition of commercial items.

(f)* * *

(xvi) Use the provisions at 252.215-70WW, Notice of Intent To Resolicit, and 252.215-70XX, Only One Offer, as prescribed at 215.408(3) and (4), respectively.

PART 213—SIMPLIFIED ACQUISITION PROCEDURES

6. Add new section 213.003 to read as follows:

213.003

Policy.

(g)(2) For acquisitions that exceed the simplified acquisition threshold but are utilizing competitive simplified acquisition procedures under the Test Program for Certain Commercial Items, as described in FAR subpart 13.5, follow the procedures at 215.371 if only one offer is received.

PART 214—SEALED BIDDING

7. Add new section 214.201-6 to read as follows:

214.201-6

Solicitation provisions.

(2) Use the provisions at 252.215-70WW, Notice of Intent To Resolicit, and 252.215-70XX, Only One Offer, as prescribed at 215.408(3) and (4), respectively.

8. Add new section 214.209 to read as follows:

214.209

Cancellation of invitations before opening.

If an invitation for bids allowed fewer than 30 days for receipt of offers, and resulted in only one offer, the contracting officer shall cancel and resolicit, allowing an additional period of at least 30 days for receipt of offers, as provided in 215.371.

9. Revise section 214.404-1 to read as follows:

214.404-1

Cancellation of invitations after opening.

(1) The contracting officer shall make the written determinations required by FAR 14.404-1(c) and (e).

(2) If only one offer is received, follow the procedures at 215.371.

10. Add new sections 214.408 and 214.408-1 to read as follows:

214.408

Award.

214.408-1

General.

(b) For acquisitions that exceed the simplified acquisition threshold, if only one offer is received, follow the procedures at 215.371.

PART 215—CONTRACTING BY NEGOTIATION

11. Add new section 215.371 to read as follows:

215.371

Only one offer.

(a) It is DoD policy that the circumstance of “reasonable expectation that two or more offerors, competing independently, would submit priced offers,” as further described at FAR 15.403-1(c)(1)(ii), does not constitute adequate price competition if only one offer is received.

(b) Additional cost or pricing data may be required if the contracting officer only receives one offer, when two or more offers were expected. Therefore, when using competitive procedures, except as provided in paragraphs (d) and (e) of this section, the contracting officer shall—

(1) Use FAR 15.402 and 15.403, except for 15.403-(c)(1)(ii), to determine what cost or pricing data may be required if only one offer is received (see additional guidance at PGI 215.371); and

(2) Identify the data that may be needed by including FAR 52.215-20, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, in the solicitation in accordance with the clause prescription at 215.408(4)(ii).

(c) Except as provided in paragraphs (d) and (e) of this section, if competitive procedures were used and only one offer is received—

(1) If the solicitation allowed fewer than 30 days for receipt of proposals, the contracting officer shall—

(i) Consult with the requiring activity as to whether the statement of work should be revised in order to promote more competition; and

(ii) Resolicit, allowing an additional period of at least 30 days for receipt of proposals.

(2) If the solicitation allowed at least 30 days for receipt of proposals, or if the requirement of paragraph (c)(1)(ii) of this section has been waived in accordance with paragraph (d) of this section, the contracting officer shall—

(i) Obtain from the offeror any data necessary to establish a fair and reasonable price in accordance with FAR provision 52.215-20; and

(ii) Determine through cost or price analysis, as appropriate, that the offered prices are fair and reasonable or enter into negotiations with the offeror. If the contracting officer decides to enter negotiations, the negotiated price should not exceed the offered price.

(d) Waiver.

(1) The head of the contracting activity is authorized to waive the requirement of paragraph (c)(1) of this section, to resolicit for an additional period of at least 30 days.

(2) This waiver authority cannot be delegated below one level above the contracting officer.

(e) Exceptions.

(1) The requirements of this section do not apply to acquisitions—

(i) At or below the simplified acquisition threshold; or

(ii) In support of contingency, humanitarian or peacekeeping operations, or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack.

(2) The applicability of an exception in paragraph (e)(1) of this section does not eliminate the need for the contracting officer to seek maximum practicable competition and to ensure that the price is fair and reasonable.

12. Amend section 215.403-1 by revising paragraph (c) to read as follows:

215.403-1

Prohibition on obtaining cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. 254b).

* * * * *

(c) Standards for exceptions from cost or pricing data requirements.

(1) Adequate price competition.

(A) For acquisitions under dual or multiple source programs:

(1) The determination of adequate price competition must be made on a case-by-case basis. Even when adequate price competition exists, in certain cases it may be appropriate to obtain additional information to assist in price analysis.

(2) Adequate price competition normally exists when—

(i) Prices are solicited across a full range of step quantities, normally including a 0-100 percent split, from at least two offerors that are individually capable of producing the full quantity; and

(ii) The reasonableness of all prices awarded is clearly established on the basis of price analysis (see FAR 15.404-1(b)).

(B) In accordance with 215.371, if only one offer is received, the contracting officer shall not use the standard at FAR 15.403-1(c)(1)(ii) to determine that the offered price is based on adequate competition.

13. Amend section 215.408 by adding paragraphs (3) and (4) to read as follows:

215.408

Solicitation provisions and contract clauses.

* * * * *

(3) Use the provision at 252.215-70WW, Notice of Intent to Resolicit, in competitive solicitations that will be solicited for fewer than 30 days, unless the requirement is waived in accordance with 215.371(d) or an exception at 215.371(e) applies.

(4)(i) Use the provision at 252.215-70XX, Only One Offer, in competitive solicitations unless the requirement is waived in accordance with 215.371(d) or an exception at 215.371(e) applies.

(ii) In solicitations that include 252.215-70XX, Only One Offer, also include the provision at FAR 52.215-20, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, with any appropriate alternate as prescribed at FAR 15.408-1, but that provision will only take effect as specified in 252.215-70XX.

PART 216—TYPES OF CONTRACTS

14. Amend section 216.505-70 by revising paragraph (d) to read as follows:

216.505-70

Orders under multiple award contracts.

* * * * *

(d) When using the procedures in this subsection—

(1) The contracting officer should keep contractor submission requirements to a minimum;

(2) The contracting officer may use streamlined procedures, including oral presentations;

(3) If only one offer is received, the contracting officer shall follow the procedures at 215.371.

(4) The competition requirements in FAR part 6 and the policies in FAR subpart 15.3 do not apply to the ordering process, but the contracting officer shall consider price or cost under each order as one of the factors in the selection decision; and

(5) The contracting officer should consider past performance on earlier orders under the contract, including quality, timeliness, and cost control.

15. Amend section 216.506 by adding paragraph (S-70) to read as follows:

216.506

Solicitation provisions and contract clauses.

* * * * *

(S-70) Use the provisions at 252.215-70WW, Notice of Intent to Resolicit, and 252.215-70XX, Only One Offer, as prescribed at 215.408(3) and (4), respectively.

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

16. Add new section 252.215-70WW to read as follows:

252.215-70WW

Notice of Intent to Resolicit.

As prescribed at 215.408(3), use the following provision:

Notice of Intent to Resolicit (Date). This solicitation provides offerors fewer than 30 days to submit proposals. In the event that only one offer is received in response to this solicitation, the Contracting Officer may cancel the solicitation and resolicit for an additional period of at least 30 days in accordance with 215.371(c)(1)(ii).

(End of provision).

17. Add new section 252.215-70XX to read as follows:

252.215-70XX

Only One Offer.

As prescribed at 215.408(4), use the following provision:

Only One Offer (Date).

(a) The provision at FAR 52.215-20, Requirements for Certified Cost or Pricing Data and Data other Than Certified Cost or Pricing Data, with any alternate included in this solicitation, does not take effect unless the Contracting Officer notifies the offeror that only one offer was received.

(b) Upon notification that only one offer was received, the offeror shall provide any data requested by the Contracting Officer in accordance with FAR 52.215-20.

(c) If negotiations are conducted, the negotiated price should not exceed the offered price.

(End of provision).