[Federal Register Volume 85, Number 128 (Thursday, July 2, 2020)]
[Rules and Regulations]
[Pages 40068-40071]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12764]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 4, 13, 15, and 16
[FAC 2020-07; FAR Case 2017-010; Item III; Docket No. FAR-2017-0010;
Sequence No. 1]
RIN 9000-AN54
Federal Acquisition Regulation: Evaluation Factors for Multiple-
Award Contracts
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 implement a section of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017.
DATES: Effective: August 3, 2020.
FOR FURTHER INFORMATION CONTACT: Mr. Michael O. Jackson, Procurement
Analyst, at 202-208-4949 or [email protected] for clarification
of content. For information pertaining to status or publication
schedules, contact the Regulatory Secretariat Division at 202-501-4755.
Please cite FAC 2020-07, FAR Case 2017-010.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a proposed rule at 83 FR 48271 on
September 24, 2018, to implement section 825 of the NDAA for FY 2017
(Pub. L. 114-328). Section 825 of the NDAA for FY 2017 amends 10 U.S.C.
2305(a)(3) to modify the requirement to consider price or cost as an
evaluation factor for the award of certain multiple-award task-order
contracts issued by DoD, NASA, and the Coast Guard. Section 825
provides that, at the Government's discretion, solicitations for
multiple-award contracts that will be awarded for the same or similar
services and state the Government intends to award a contract to each
qualifying offeror do not require price or cost as an evaluation factor
for contract award. This exception does not apply to solicitations for
multiple-award contracts that provide for sole-source orders pursuant
to 8(a) of the Small Business Act (15 U.S.C. 637(a)). When price or
cost is not evaluated during contract award, the contracting officer
shall consider price or cost as a factor for the award of each order
under the contract. In accordance with statute, the rule specifies
that, when using the authority of section 825, the solicitation must be
for the ``same or similar services.'' This language aligns with the
guidance at FAR 16.504(c)(1)(i), which requires contracting officers,
to the maximum extent practicable, to give preference to making
multiple awards of indefinite-quantity contracts under a single
solicitation for the same or similar supplies or services to two or
more sources. By ensuring that a solicitation using the authority of
section 825 is for the ``same or similar services,'' the contracting
officer will avoid situations in which awardees specialize exclusively
in one or a few areas within the statement of work, thus creating the
likelihood that orders in those areas will be awarded on a sole-source
basis (FAR 16.504(c)(1)(ii)(A)) and, in turn, negating the purpose of
the statute to obtain price competition at the task order level-where
service requirements are apt to be more definite and offers more
meaningfully comparable.
Section 825 also amends 10 U.S.C. 2304c(b) to add the exceptions
for the use of other than full and open competition found in FAR 6.302
to the list of exceptions to the fair opportunity process at FAR
16.505(b)(2) when placing an order under a multiple-award contract.
Contracting officers shall still follow all of the applicable
justification documentation, approval, and posting requirements of part
16.5 when providing an exception to the fair opportunity process and
using one of the exceptions of FAR 6.302.
Five respondents submitted comments on the proposed rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the public comments in the
development of the final rule. No significant changes were made to the
rule as a result of public comments. Changes were made to the final
rule to clarify the intent of section 825 and the rule text, as a
result of public comments. A change is made in the final rule to make
the guidance in FAR subpart 4.10 consistent with section 825. A change
is made to a sentence in FAR 16.504 to make the text consistent with
the policy in FAR part 13. Changes were made to the format of the rule
text to enhance readability. The definition of ``qualifying offeror''
is moved from FAR 13.106-1 and FAR 15.304 to FAR part 2. Discussion of
the edits and comments are provided as follows:
A. Summary of Changes
FAR subpart 4.10, Uniform Use of Line Items, is amended to align
guidance on the information required for a contract line item with
usage of the rule. Currently, FAR 4.1005 requires price or cost to be
included for each contract line item or subline item. In order to
conform the subpart with section 825, the rule amends FAR 4.1005-2 to
permit the omission of cost or price at the contract line item or
subline item level when awarding multiple-award IDIQ contracts in
accordance with the authority of section 825, provided that a total
contract minimum and maximum is stated, in accordance with FAR subpart
16.5. This addition does not change the intent of the rule; instead, it
conforms internal Government procedures to facilitate use of the rule.
In FAR subpart 16.5, section 16.504, Indefinite-Delivery Contracts,
is amended to make the policy for the use of the multiple-award
approach consistent with the policy in FAR part 13. Currently, FAR
16.504(c)(1)(ii)(B)(5) states that contracting officers must not use
the multiple award approach if the estimated value of the contract is
``less than'' the simplified acquisition threshold (SAT). This
statement was included in FAR 16.504 to comply with the policy in FAR
13.003, which requires the use of simplified acquisition procedures
(SAP), to the maximum extent practicable, for purchases not exceeding
the SAT. This rule changes the text of FAR 16.504 from ``less than''
the SAT to ``at or below'' the SAT, to be consistent with the policy of
FAR part 13. Paragraph (G) at FAR 16.505(b)(2)(i) of the proposed
[[Page 40069]]
rule added the exceptions permitting other than full and open
competition to the list of exceptions to the fair opportunity process.
At FAR 13.106-1(a)(2)(iv), paragraph (A) of the proposed rule is
restructured stating the action contracting officers may take when
using the authority of section 825, and adding subparagraphs (1)-(3),
identifying the requirements a solicitation must meet before a
contracting officer can take the action in paragraph (A); at paragraph
(C), the definition of ``qualifying offeror'' is deleted and moved to
part 2, with the addition of text clarifying the parts to which the
definition is applicable; and the text of renumbered subparagraph (B)
was modified to use the statutory language that ``if'' price or cost
was not an evaluation factor for award, as opposed to ``whether or
not'' price or cost was evaluated. Similar changes are made at FAR
15.304(c)(1)(ii). These revisions simply clarify the intent,
readability, and applicability of the rule and section 825.
B. Analysis of Public Comments
Comment: A respondent expressed concern that the rule is not
compliant with the implementing statute, because the rule does not
include the term ``qualifying offeror,'' as used in section 825.
Response: The definition of ``qualifying offeror'' is taken
directly from the statute and included in the final rule at FAR 2.101,
13.106-1(a)(2)(iv)(A)(3), and 15.304(c)(1)(ii)(A)(3). This requirement
helps to ensure there will be sufficient contract holders submitting
offers for task orders.
Comment: A respondent advised that use of the term ``head of the
agency'' in section 825 makes the statute impractical for use by the
contracting community, because the ``head of the agency'' does not
typically issue solicitations. The respondent recommended amending the
statutory language to implement section 825 effectively.
Response: Section 825 is implemented in the FAR effectively without
a change to the statutory language. Unless otherwise stated in statute,
the head of the agency may delegate procurement responsibilities to
another officer or official in the same agency (see FAR 1.108(b)). FAR
1.102-4(b) further requires decision-making authority to be delegated
to the lowest level within the FAR System, consistent with law. As
section 825 does not prohibit delegation by the head of the agency,
this rule delegates this authority to the contracting officer in
accordance with FAR 1.108(b) and 1.102-4(b).
Comment: A respondent advised that the definition of a ``qualifying
offer'' in the rule does not align with the statute. The rule requires
that the proposal be ``technically acceptable,'' which is not required
by the statute.
Response: The section 825 definition of a ``qualifying offeror''
includes language that the offeror ``submits a proposal that conforms
to the requirements of the solicitation.'' The rule refers to a
``qualifying offeror'' as an offeror that ``submits a technically
acceptable proposal that conforms to the solicitation.'' The terms
``technically acceptable'' and ``conforms'' have different meanings to
Government contracting personnel. A proposal can conform to the
requirements for the solicitation (e.g., meeting a required page limit
or proposal format), but not demonstrate that the offeror can meet the
stated technical requirements (e.g., having necessary certifications or
offering the requisite services) of the Government. This clarification
ensures contracting officers, when using the authorities in section
825, also evaluate whether a proposal meets the minimum technical
requirements stated in the solicitation.
Comment: A respondent expressed concern that the rule is requiring
the evaluation of price or cost in every source selection at FAR
15.304(c)(1)(i).
Response: FAR 15.304(c)(1) currently states that price or cost
shall be evaluated in every source selection conducted under the
negotiated acquisition procedures of FAR part 15. The cited language
was already in the FAR. The rule relocates the text at FAR 15.304(c)(1)
to a new subparagraph (i) with a reference to the new subparagraph
(ii)(A), which includes the exception to considering price or cost when
DoD, NASA, or the Coast Guard are using the authority of section 825.
Comment: A respondent suggested that the rule be expanded to
include the authority granted under section 876 of the NDAA for FY
2019.
Response: Section 876 of the John S. McCain National Defense
Authorization Act for Fiscal Year 2019 amends Title 41 of United States
Code to provide executive agencies with the discretionary authority not
to include price as an evaluation factor in certain solicitations for
multiple-award and Federal Supply Schedule contracts, when specific
conditions are met. Section 825 amends Title 10 of the U.S.C. to
implement a similar, but not the same, authority for DoD, NASA, and the
Coast Guard. The authority and applicability of these sections are
different; as such, FAR Case 2018-014, Increasing Task Order Level
Competition, implements section 876.
Comment: A respondent requested clarification regarding the
inclusion of language that limits the application of the rule to
multiple-award task-order contracts with a value above the simplified
acquisition threshold (SAT).
Response: Currently, FAR 16.504(c)(1)(ii)(B)(5) does not permit the
use of a multiple-award approach if the total estimated value of the
IDIQ contract is less than the SAT; therefore, the rule applies the
authority of section 825 to solicitations valued above the SAT.
Additionally, this rule changes the text of FAR 16.504 from ``less
than'' the SAT to ``at or below'' the SAT, to be consistent with the
policy of FAR part 13, which requires the use of SAP for acquisitions
valued at or below the SAT.
Comment: A respondent expressed support for establishing fair and
reasonable rates at the time of contract award. The respondent
recommends modifying the rule to require an evaluation of fair and
reasonable pricing when awarding an IDIQ contract. The respondent
advises that establishing maximum thresholds for price or cost at the
time of contract award would still allow for competition at the task-
order level, while assuring that the Government will subsequently
receive fair and reasonably priced offers for requirements at the task-
and delivery-order level. Another respondent expressed concern about
the increased time and labor to be expended by a contracting officer
placing an order under a multi-agency contract (MAC) awarded using the
authority of section 825, as certain pricing information will no longer
be available to support market research activities and associated
acquisition decisions.
Response: The rule implements the intent of the statute. Section
825 provides DoD, NASA, and Coast Guard contracting officers with the
ability not to include price or cost as an evaluation factor in certain
solicitations for multiple-award contracts, if specific conditions are
met. When determining whether to use the authority of section 825 or
place an order under a resulting contract, a contracting officer must
consider all of the circumstances and available information relating to
the acquisition to decide the most appropriate procurement approach.
Contracting officers are not required to use the authority of section
825 and may, instead, use the current solicitation, evaluation, and
award procedures, which require that price be determined fair and
reasonable prior to contract award.
[[Page 40070]]
In regard to the applicability of the rule to MACs, a MAC is a
task-order or delivery-order contract established by one agency for use
by Government agencies to obtain supplies and services, consistent with
the Economy Act. This rule applies to multiple award contracts, which
are: Contracts issued under the Multiple Award Schedule (MAS) authority
described in FAR part 38; multiple-award task-order or delivery-order
contracts issued in accordance with FAR subpart 16.5; or other
indefinite-delivery indefinite-quantity contracts entered into with two
or more sources pursuant to the same solicitation. A multiple award
contract may also be a MAC, but the two terms are not interchangeable
in identifying the same set of contracts. To avoid any potential
confusion when applying section 825, some paragraphs of the rule text
are renumbered to reinforce their applicability to section 825 and make
the text more readable.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf (COTS) Items
This rule does not contain any solicitation provisions or contract
clauses that apply to contracts at or below the SAT, or contracts for
the acquisition of commercial items, including commercially available
off-the-shelf items.
IV. Expected Cost Savings
Currently, contracting officers must evaluate price or cost as a
factor in the selection decision for both the award of the multiple-
award contract and each order placed against the multiple-award
contract. When applied to applicable multiple-award solicitations, this
rule alleviates offerors' need to gather and analyze internal cost or
pricing information or propose a price or cost for each line item in
the solicitation. Subsequently, contracting officers do not need to
review, analyze, and determine in writing that the proposed costs and
prices are fair and reasonable for the award of the multiple-award
contracts. When used, this rule impacts all offerors responding to a
solicitation for a multiple-award contract for the same or similar
services issued by the DoD, NASA, or the Coast Guard.
The Government has performed a regulatory cost analysis on this
rule. The following is a summary of the estimated public cost savings
in millions, which are calculated in 2016 dollars at a 7 percent
discount rate:
Present Value Costs..................................... -$4,813,740
Annualized Costs........................................ -336,962
Annualized Value Costs as of 2016 if Year 1 is 2019..... -275,061
To access the full regulatory cost analysis for this rule, go to
the Federal eRulemaking Portal at www.regulations.gov, search for ``FAR
case 2017-010,'' click ``Open Docket,'' and view ``Supporting
Documents.''
V. Executive Orders 12866 and 13563
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.
VI. Executive Order 13771
This rule is not subject to E.O. 13771, because this rule is not a
significant regulatory action under E.O. 12866. However, this rule is
considered to be a deregulatory action. Details on the estimated cost
savings can be found in Section IV of this rule.
VII. Regulatory Flexibility Act
DoD, GSA, and NASA do 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.
However, a Final Regulatory Flexibility Analysis (FRFA) has been
prepared and is summarized as follows:
The reason for this action is to implement section 825 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017
(Pub. L. 114-328). The objective of this rule is to permit
contracting officers to omit price or cost as an evaluation factor
for award in certain solicitations for multiple-award contracts, if
certain conditions are met. When applied to applicable multiple-
award solicitations, this rule alleviates offerors' need to gather
and analyze internal cost or pricing information or propose a price
or cost for each line item in the solicitation.
No public comments were received in response to the initial
regulatory flexibility analysis.
DoD, GSA, and NASA do not have data on the total number of small
business entities that respond to multiple-award solicitations for
the same or similar services. However, the Federal Procurement Data
System (FPDS) provides information on the number of small business
entities that received an award resulting from a multiple-award
solicitation for services issued by DoD, NASA, and the Coast Guard.
According to data from FPDS for FY 2015 through 2017, DoD, NASA, and
the Coast Guard awarded an average of 1,905 multiple-award
indefinite-delivery indefinite-quantity (IDIQ) contracts for
services, and of those 1,905 contracts, an average of 1,292
contracts were awarded to 1,144 unique small business entities
annually. The Government expects the number of small business
entities impacted by the rule to be slightly larger than this
estimate, as the data does not capture the small business entities
that submit offers to applicable solicitations, but do not receive
an award. This rule impacts all entities that submit offers in
response to multiple-award solicitations for services that utilize
the authority of section 825 issued by DoD, NASA, and the Coast
Guard.
This rule does not include any new reporting, recordkeeping, or
other compliance requirements. There are no known significant
alternative approaches to the rule that would meet the requirements
of the applicable statute.
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.
VIII. Paperwork Reduction Act
The rule does not contain any information collection requirements
that require the approval of the Office of Management and Budget under
the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 2, 4, 13, 15, and 16
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 4, 13, 15, and
16 as set forth below:
0
1. The authority citation for 48 CFR parts 2, 4, 13, 15, and 16
continues to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
PART 2--DEFINITIONS OF WORDS AND TERMS
0
2. In section 2.101, amend paragraph (b) by adding the defined term
``Qualifying offeror'' in alphabetical order to read as follows:
2.101 Definitions.
* * * * *
[[Page 40071]]
(b) * * *
Qualifying offeror, as used in 13.106-1 and 15.304, means an
offeror that is determined to be a responsible source, submits a
technically acceptable proposal that conforms to the requirements of
the solicitation, and the contracting officer has no reason to believe
would be likely to offer other than fair and reasonable pricing (10
U.S.C. 2305(a)(3)(D)).
* * * * *
PART 4--ADMINISTRATIVE AND INFORMATION MATTERS
0
3. Amend section 4.1005-2 by revising paragraph (a)(2) to read as
follows:
4.1005-2 Exceptions.
(a) * * *
(2) Indefinite-delivery indefinite-quantity (IDIQ) and requirements
contracts. (i) IDIQ and requirements contracts may omit the quantity at
the line item level for the base award provided that the total contract
minimum and maximum, or the estimate, respectively, is stated.
(ii) Multiple-award IDIQ contracts awarded using the procedures at
13.106-1(a)(2)(iv)(A) or 15.304(c)(1)(ii)(A) may omit price or cost at
the line item or subline item level for the contract award, provided
that the total contract minimum and maximum is stated (see
16.504(a)(1)).
* * * * *
PART 13--SIMPLIFIED ACQUISITION PROCEDURES
0
4. Amend section 13.106-1 by revising paragraph (a)(2) to read as
follows:
13.106-1 Soliciting competition.
(a) * * *
(2)(i) When soliciting quotations or offers, the contracting
officer shall notify potential quoters or offerors of the basis on
which award will be made (price alone or price and other factors, e.g.,
past performance and quality).
(ii) Contracting officers are encouraged to use best value.
(iii) Solicitations are not required to state the relative
importance assigned to each evaluation factor and subfactor, nor are
they required to include subfactors.
(iv) In accordance with 10 U.S.C. 2305(a)(3), for DoD, NASA, and
the Coast Guard--
(A) The contracting officer may choose not to include price or cost
as an evaluation factor for award when a solicitation--
(1) Has an estimated value above the simplified acquisition
threshold;
(2) Will result in multiple-award contracts (see subpart 16.5) that
are for the same or similar services; and
(3) States that the Government intends to make an award to each and
all qualifying offerors (see 2.101).
(B) If the contracting officer chooses not to include price or cost
as an evaluation factor for the contract award, in accordance with
paragraph (a)(2)(iv)(A) of this section, the contracting officer shall
consider price or cost as one of the factors in the selection decision
for each order placed under the contract.
(C) The exception in paragraph (a)(2)(iv)(A) of this section shall
not apply to solicitations for multiple-award contracts that provide
for sole source orders pursuant to section 8(a) of the Small Business
Act (15 U.S.C. 637(a)).
PART 15--CONTRACTING BY NEGOTIATION
0
5. Amend section 15.304 by revising paragraph (c)(1) and paragraph (e)
introductory text to read as follows:
15.304 Evaluation factors and significant subfactors.
* * * * *
(c) * * *
(1)(i) Price or cost to the Government shall be evaluated in every
source selection (10 U.S.C. 2305(a)(3)(A)(ii) and 41 U.S.C.
3306(c)(1)(B)) (also see part 36 for architect-engineer contracts),
subject to the exception listed in paragraph (c)(1)(ii)(A) of this
section for use by DoD, NASA, and the Coast Guard.
(ii) In accordance with 10 U.S.C. 2305(a)(3), for DoD, NASA, and
the Coast Guard--
(A) The contracting officer may choose not to include price or cost
as an evaluation factor for award when a solicitation--
(1) Has an estimated value above the simplified acquisition
threshold;
(2) Will result in multiple-award contracts (see subpart 16.5) that
are for the same or similar services; and
(3) States that the Government intends to make an award to each and
all qualifying offerors (see 2.101).
(B) If the contracting officer chooses not to include price or cost
as an evaluation factor for the contract award, in accordance with
paragraph (c)(1)(ii)(A) of this section, the contracting officer shall
consider price or cost as one of the factors in the selection decision
for each order placed under the contract.
(C) The exception in paragraph (c)(1)(ii)(A) of this section shall
not apply to solicitations for multiple-award contracts that provide
for sole source orders pursuant to section 8(a) of the Small Business
Act (15 U.S.C. 637(a)).
* * * * *
(e) Unless the exception at paragraph (c)(1)(ii)(A) of this section
applies, the solicitation shall also state, at a minimum, whether all
evaluation factors other than cost or price, when combined, are--
* * * * *
PART 16--TYPES OF CONTRACTS
16.504 [Amended]
0
6. Amend section 16.504 by removing from paragraph (c)(1)(ii)(B)(5)
``is less than the simplified'' and adding ``is at or below the
simplified'' in its place.
0
7. Amend section 16.505 by adding paragraph (b)(2)(i)(G); and removing
from paragraph (b)(2)(ii)(B)(10) ``(b)(2)(i)(A) through (E) of'' and
adding ``(b)(2)(i)(A) through (E) and (G) of'' in its place.
The addition reads as follows:
16.505 Ordering.
* * * * *
(b) * * *
(2) * * *
(i) * * *
(G) For DoD, NASA, and the Coast Guard, the order satisfies one of
the exceptions permitting the use of other than full and open
competition listed in 6.302 (10 U.S.C. 2304c(b)(5)). The public
interest exception shall not be used unless Congress is notified in
accordance with 10 U.S.C. 2304(c)(7).
* * * * *
[FR Doc. 2020-12764 Filed 7-1-20; 8:45 am]
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