Defense Acquisition Regulations System, Department of Defense (DoD).
DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to state that, in the interest of promoting voluntary contractor disclosures of defective pricing identified by the contractor after contract award, DoD contracting officers have discretion to request a limited-scope or full-scope audit, as appropriate for the circumstances.
Effective May 4, 2018.
Start Further Info
Start Printed Page 19646
FOR FURTHER INFORMATION CONTACT:
Mr. Mark Gomersall, telephone 571-372-6099.
End Further Info
Start Supplemental Information
DoD published a proposed rule in the Federal Register at 80 FR 72669 on November 20, 2015, to amend the DFARS to indicate that DoD contracting officers have discretion to request a limited- or full-scope audit, as appropriate for the circumstances, when contractors voluntarily disclose defective pricing after contract award. In response to the Better Buying Power 2.0 initiative on “Eliminating Requirements Imposed on Industry where Costs Outweigh Benefits,” contractors recommended several changes to 41 U.S.C. chapter 35, Truthful Cost or Pricing Data (formerly the Truth in Negotiations Act) and to the related DFARS guidance. Specifically, contractors recommended that DoD clarify policy guidance to reduce repeated submissions of certified cost or pricing data. Frequent submissions of such data are used as a defense against defective pricing claims by DoD after contract award, since data that are frequently updated are less likely to be considered outdated or inaccurate and, therefore, defective. Better Buying Power 3.0 called for a revision of regulatory guidance regarding the requirement for contracting officers to request an audit even if a contractor voluntarily discloses defective pricing after contract award.
One respondent submitted a public comment in response to the proposed rule.
II. Discussion and Analysis
DoD reviewed the public comment in the development of the final rule. A discussion of the comment and changes made to the rule as a result of the comment is provided, as follows:
A. Summary of Significant Changes From the Proposed Rule
One change was made to the rule as a result of the public comment to remove the mandatory requirement to conduct an audit in all cases of a contractor's voluntary disclosure of defective pricing.
B. Analysis of Public Comment
Comment: The respondent recommended that “shall” be replaced by the word “may” concerning the requirement to request a limited-scope audit as proposed at DFARS 215.407-1(c)(i). The respondent stated that the study entitled “Eliminating Requirements Imposed on Industry where Costs Outweigh Benefits” recommended that DoD not impose a mandatory requirement on itself to conduct an audit in all cases of a contractor's voluntary disclosure of defective pricing, because such a mandatory requirement provides no discretion for contracting officers not to request an audit if in their judgment an audit is not required by the circumstances. However, instead of removing this mandatory requirement as recommended by the study, the proposed rule would change the DFARS from “shall request an audit. . .” to “shall request a limited scope audit. . . .” Thus, the proposed language still provides a strong disincentive to contractors to voluntarily disclose defective pricing and it still imposes a mandatory requirement on contracting officers that may not be in the best interests of the DoD in all circumstances.
Response: The final rule is revised to remove the mandatory requirement to conduct an audit in all cases of a contractor's voluntary disclosure of defective pricing. However, in order to calculate appropriate price reductions as required by 10 U.S.C. 2306a(e), it is necessary that contracting officers, at a minimum, discuss the disclosure with the Defense Contract Audit Agency (DCAA) to determine the completeness of the contractor's voluntary disclosure and the accuracy of the contractor's cost impact calculation for the affected contract, and the potential impact on existing contracts, task or delivery orders, or other proposals the contractor has submitted to the Government. This discussion will assist the contracting officer in determining the involvement of DCAA, which could be a limited-scope audit (e.g., limited to the affected cost elements of the defective pricing disclosure), a full-scope audit, or technical assistance, as appropriate for the circumstances (e.g., nature or dollar amount of the defective pricing disclosure).
III. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Off-the-Shelf Items
The requirement for submission of certified cost or pricing data does not apply to contracts at or below the simplified acquisition threshold or to commercial items, including commercially available off-the-shelf items. Therefore, this rule is not applicable to those classes of contracts.
IV. 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.
This rule is not subject to E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, because this rule is not a significant regulatory action under E.O. 12866.
VI. Regulatory Flexibility Act
A final regulatory flexibility analysis (FRFA) has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 691, et seq. The FRFA is summarized as follows:
The objective of this rule is to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to indicate that, in the interest of promoting voluntary contractor disclosures of defective pricing identified by the contractor after contract award, DoD contracting officers have discretion to request a limited-scope or full-scope audit, as appropriate for the circumstances. This rule will apply to all DoD contractors, including small entities, who are required to submit certified cost or pricing data.
There were no significant issues raised by the public in response to the initial regulatory flexibility analysis.
The number of small entities affected by this rule is unknown as this information is not available in the Federal Procurement Data System or other central repository. However, DoD anticipates that this rule could have a positive economic impact. If those small entities usually submit cost or pricing data frequently in order to avoid defective pricing claims, then this rule may encourage them to reduce the number of such submissions.
There is no change to reporting or recordkeeping as a result of this rule. The rule does not duplicate, overlap, or conflict with any other Federal rules, Start Printed Page 19647and there are no known significant alternative approaches to the rule that would meet the requirements.
VII. 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).
Start List of Subjects
End List of Subjects
Amy G. Williams,
Deputy, Defense Acquisition Regulations System.
Therefore, 48 CFR part 215 is amended as follows:
PART 215—CONTRACTING BY NEGOTIATION
Start Amendment Part
1. The authority citation for part 215 continues to read as follows: End Amendment Part
Start Amendment Part
2. Add sections 215.407 and 215.407-1 to subpart 215.4 to read as follows: End Amendment Part
Special cost or pricing areas.
End Supplemental Information
Defective certified cost or pricing data.
(c)(i) When a contractor voluntarily discloses defective pricing after contract award, the contracting officer shall discuss the disclosure with the Defense Contract Audit Agency (DCAA). This discussion will assist in the contracting officer determining the involvement of DCAA, which could be a limited-scope audit (e.g., limited to the affected cost elements of the defective pricing disclosure), a full-scope audit, or technical assistance as appropriate for the circumstances (e.g., nature or dollar amount of the defective pricing disclosure). At a minimum, the contracting officer shall discuss with DCAA the following:
(A) Completeness of the contractor's voluntary disclosure on the affected contract.
(B) Accuracy of the contractor's cost impact calculation for the affected contract.
(C) Potential impact on existing contracts, task or deliver orders, or other proposals the contractor has submitted to the Government.
(ii) Voluntary disclosure of defective pricing is not a voluntary refund as defined in 242.7100 and does not waive the Government entitlement to the recovery of any overpayment plus interest on the overpayments in accordance with FAR 15.407-1(b)(7).
(iii) Voluntary disclosure of defective pricing does not waive the Government's rights to pursue defective pricing claims on the affected contract or any other Government contract.
[FR Doc. 2018-09489 Filed 5-3-18; 8:45 am]
BILLING CODE 5001-06-P