[Federal Register Volume 62, Number 145 (Tuesday, July 29, 1997)]
[Rules and Regulations]
[Pages 40471-40473]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19907]


-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

48 CFR Parts 204, 215, 216, 232, 239, and 252

[DFARS Case 95-D708]


Defense Federal Acquisition Regulations Supplement; Truth in 
Negotiations and Related Changes

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Director of Defense Procurement has issued a final rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to conform to amendments to the Federal Acquisition Regulation (FAR) 
pertaining to cost or pricing data requirements.

EFFECTIVE DATE: July 29, 1997.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, PDUSD (A&T) DP 
(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. 
Telephone (703) 602-0131; telefax (703) 602-1031.

SUPPLEMENTARY INFORMATION: 

A. Background

    A proposed rule was published in the Federal Register on October 
23, 1995 (60 FR 54326). The rule proposed amendments to the DFARS to 
conform to FAR amendments that implemented requirements of the Federal 
Acquisition Streamlining Act of 1994 (FASA) (Public Law 103-355) 
pertaining to the submission of cost or pricing data by offerors and 
contractors. The rule also proposed to remove DFARS language pertaining 
to work measurement systems, as Section 2201(b) of FASA repealed 10 
U.S.C. 2406, the primary statute covering work measurement systems.
    Additional changes in the final rule include--
    <bullet> Removal of the proposed language at DFARS 215.804-
1(b)(1)(B)(3) to conform to FAR standards for adequate price 
competition.
    <bullet> Amendments to DFARS 216.203-4-70 and the clauses at 
252.216-7000 and 252.216-7001 to remove obsolete FAR references.
    <bullet> Amendments to DFARS Part 239 and removal of the clauses at 
252.239-7009 and 252.239-7010 to eliminate special cost or pricing data 
and audit requirements for telecommunications services.
    <bullet> Retention of the clause at DFARS 252.215-7000, as the 
clause is considered to be a useful supplementation of the clauses at 
FAR 52.215-23, 52.215-24, and 52.215-25.
    Public comments were received from four respondents. All comments 
were considered in the development of the final rule.

B. Regulatory Flexibility Act

    DoD certifies 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 primarily consists of conforming DFARS amendments to 
reflect existing FAR requirements for submission of cost or pricing 
data, and because most prime contracts, as well as subcontracts, with 
small businesses do not require the submission of cost or pricing data.

C. Paperwork Reduction Act

    This rule does not add any new information collection requirements 
that require approval of the Office of Management and Budget (OMB) 
under 44 U.S.C. 3501, et seq. However, it is estimated that elimination 
of the clause at 252.239-7009 will reduce annual paperwork burden 
requirements by

[[Page 40472]]

4,400 hours (previously approved under OMB Clearance 0704-0187).

List of Subjects in 48 CFR Parts 204, 215, 216, 232, 239, and 252

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 204, 215, 216, 232, 239, and 252 are 
amended as follows:
    1. The authority citation for 48 CFR Parts 204, 215, 216, 232, 239, 
and 252 continues to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 204--ADMINISTRATIVE MATTERS


204.805  [Amended]

    2. Section 204.805 is amended in the first sentence of paragraph 
(5) by removing the words ``certification of''.

PART 215--CONTRACTING BY NEGOTIATION


215.801  [Removed]

    3. Section 215.801 is removed.
    4. Sections 215.804 and 215.804-1 are revised to read as follows:


215.804  Cost or pricing data and information other than cost or 
pricing data.


215.804-1  Prohibition on obtaining cost or pricing data.

    (b) Standards for exceptions from cost or pricing data 
requirements. (1) Adequate price competition. (A) An example of a price 
``based on'' adequate price competition is exercise of a priced option 
in a contract where adequate price competition existed, if the 
contracting officer has determined that the option price is reasonable 
in accordance with FAR 17.207(d);
    (B) Dual or multiple source programs.
    (1) In dual or multiple source programs, the determination of 
adequate price competition must be made on a case-by-case basis. 
Contracting officers must exercise deliberation and thorough review in 
making the determination. 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 15.805-2).
    (4) Exceptional cases.
    (A) The DoD has exempted the Canadian Commercial Corporation and 
its subcontractors from submission and certification of cost or pricing 
data on all acquisitions.
    (B) The DoD has waived certain cost or pricing data requirements 
for nonprofit organizations (including educational institutions) on 
cost-reimbursement-no-fee contracts. The contracting officer shall 
require--
    (1) Submission of information other than cost or pricing data to 
the extent necessary to determine price reasonableness and cost 
realism; and
    (2) Cost or pricing data from subcontractors that are not nonprofit 
organizations.


215.804-3  [Removed]

    5. Section 215.804-3 is removed.


215.804-6  Amended]

    6. Section 215.804-6 is amended by redesignating paragraphs 
(b)(2)(A) and (B) as paragraphs (b)(1)(A) and (B), respectively.
    7. Section 215.05-5 is amended by revising paragraph (a)(1)(A) to 
read as follows:


215.805-5  Field pricing support.

    (a)(1)(A) Contracting officers shall request field pricing reports 
for--
    (1) Fixed-price proposals exceeding the cost or pricing data 
threshold at FAR 15.804-2(a)(1);
    (2) Cost-type proposals exceeding the cost or pricing data 
threshold at FAR 15.804-2(a) (1) from offerors with significant 
estimating system deficiencies (see 215.811-70(a)(3) and (c)(2)(i); or
* * * * *
    8. Section 215.805-70 is amended by revising paragraph (b) to read 
as follows:


215.805-70  Cost realism analysis.

* * * * *
    (b) The contracting officer should determine what information other 
than cost or pricing data is necessary for the cost realism analysis 
during acquisition planning and development of the solicitation. Unless 
such information is already available from Government sources, the 
contracting officer will need to ask the offerors for it.
    (1) Request only necessary data; and
    (2) Do not request submission of cost or pricing data.
    9. Section 215.811-70 is amended by revising paragraphs (b)(2), 
(g)(3)(ii), and (h) to read as follows:


215.811-70  Disclosure, maintenance, and review requirements.

* * * * *
    (b) * * *
    (2) A large business contractor is subject to estimating system 
disclosure, maintenance, and review requirements if--
    (i) In its preceding fiscal year, the contractor received DoD prime 
contracts or subcontracts totaling $50 million or more for which cost 
or pricing data were required; or
    (ii) In its preceding fiscal year, the contractor received DoD 
prime contracts or subcontracts totaling $10 million or more (but less 
than $50 million) for which cost or pricing data were required and the 
contracting officer, with concurrence or at the request of the 
administrative contracting officer, determines it to be in the best 
interest of the Government (e.g., significant estimating problems are 
believed to exist or the contractor's sales are predominantly 
Government).
* * * * *
    (g) * * *
    (3) * * *
    (ii) Indicate a specific time or subsequent event by which the 
contractor will submit a supplemental proposal, including cost or 
pricing data, identifying the cost impact adjustment necessitated by 
the deficient estimating system;
* * * * *
    (h) Contract clause. Use the clause at 252.215-7002, Cost 
Estimating System Requirements, in all solicitations and contracts to 
be awarded on the basis of cost or pricing data.


215.872  [Removed and Reserved]

    10. Section 215.872 is removed and reserved.


215.872-1 through 215.872-4  [Removed]

    11. Sections 215.872-1 through 215.872-4 are removed.

PART 216--TYPES OF CONTRACTS


216.203-4  [Amended]

    12. Section 216.203-4 is amended in the first sentence of paragraph 
(d)(xvi) by revising the reference ``15.804-3'' to read ``15.804-1''.
    13. Section 216.203-4-70 is amended by revising paragraph (a); by 
removing paragraphs (b)(4) and (b)(6), and by redesignating paragraphs 
(b)(5) and (b)(7) as paragraphs (b)(4) and (b)(5), respectively. The 
revised text reads as follows:


216.203-4-70  Additional clauses.

    (a) Price adjustment for basic steel, aluminum, brass, bronze, or 
copper mill products.

[[Page 40473]]

    (1) The price adjustment clause at 252.216-7000, Economic Price 
Adjustment--Basic Steel, Aluminum, Brass, Bronze, or Copper Mill 
Products, may be used in fixed-price supply contracts for basic steel, 
aluminum, brass, bronze, or copper mill products, such as sheets, 
plates, and bars, when an established catalog or market price exists 
for the particular product being acquired.
     (2) The 10 percent figure in paragraph (d)(1) of the clause shall 
not be exceeded unless approval is obtained at a level above the 
contracting officer.
 * * * * *

PART 232--CONTRACT FINANCING

    14. Section 232.502-1-71 is amended by revising paragraph (b)(3) to 
read as follows:


232.502-1-71  Customary flexible progress payments.

* * * * *
    (b) * * *
    (3) Contractors who submit cost or pricing data, as defined in FAR 
15.801, for negotiated fixed-price contracts in excess of $1 million 
may request flexible progress payments.
* * * * *

PART 239--ACQUISITION OF INFORMATION TECHNOLOGY

    15. Section 239.7406 is revised to read as follows:


239.7406  Cost or pricing data and information other than cost or 
pricing data.

    (a) Common carriers are not required to submit cost or pricing data 
before award of contracts for tariffed services. Rates or preliminary 
estimates quoted by a common carrier for tariffed telecommunications 
services are considered to be prices set by regulation within the 
provisions of 10 U.S.C. 2306a. This is true even if the tariff is set 
after execution of the contract.
    (b) Rates or preliminary estimates quoted by a common carrier for 
nontariffed telecommunications services or by a noncommon carrier for 
any telecommunications service are not considered prices set by law or 
regulation.
    (c) Contracting officers shall obtain sufficient information to 
determine that the prices are reasonable. For example, cost or pricing 
data, if required in accordance with FAR 15.804-2, or information other 
than cost or pricing data, if required in accordance with FAR 15.804-5, 
may be necessary to support the reasonableness of--
    (1) Nontariffed services;
    (2) Special rates and charges not included in a tariff, whether 
filed or to be filed;
    (3) Special assembly rates and charges;
    (4) Special construction and equipment charges;
    (5) Contingent liabilities that are fixed at the outset of the 
service;
    (6) Proposed cancellation and termination charges under the clause 
at 252.239-7007, Cancellation or Termination of Orders--Common 
Carriers, and reuse arrangements under the clause at 252.239-7008, 
Reuse Arrangements;
    (7) Rates contained in voluntary tariffs filed by nondominant 
common carriers; or
    (8) A tariff, whether filed or to be filed, for new services 
installed or developed primarily for Government use.


239.7411  [Amended]

    16. Section 239.7411 is amended by removing paragraphs (a)(8) and 
(a)(9); and in paragraph (a)(7) by removing the semicolon and inserting 
a period in its place.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.215-7000  [Amended]

    17. Section 252.215-7000 is amended in the introductory text by 
revising the reference ``215.804-8(1)'' to read ``215.804-8''.


252.215-7002  [Amended]

    18. Section 252.215-7002 is amended by revising the clause date to 
read ``(JUL 1997)''; and in paragraphs (c)(1) and (c)(2)(i) by removing 
the word ``certified''.
    19. Section 252.216-7000 is amended by revising the clause date and 
paragraph (a) to read as follows:


252.216-7000  Economic Price Adjustment--Basic Steel, Aluminum, Brass, 
Bronze, or Copper Mill Products.

* * * * *

Economic Price Adjustment-Basic Steel, Aluminum, Brass, Bronze, or 
Copper Mill Products (Jul 1997)

    (a) Definitions.
    As used in this clause--
    Established price means a price which is an established catalog 
or market price for a commercial item sold in substantial quantities 
to the general public.
    Unit price excludes any part of the price which reflects 
requirements for preservation, packaging, and packing beyond 
standard commercial practice.
* * * * *
    20. Section 252.216-7001 is amended by revising the clause date; 
and in paragraph (a) by revising the definition of ``Established 
price'' to read as follows:


252.216-7001  Economic Price Adjustment--Nonstandard Steel Items.

* * * * *

Economic Price Adjustment--Nonstandard Steel Items (Jul 1997)

    (a) * * *
    Established price is--
    (1) A price which is an established catalog or market price of a 
commercial item sold in substantial quantities to the general 
public; and
    (2) The net price after applying any applicable standard trade 
discounts offered by the Contractor from its catalog, list, or 
schedule price. (But see Note 6.)
* * * * *


Sec. 252.239-7006  [Amended]

    21. Section 252.239-7006 is amended by revising the clause date to 
read ``(Jul 1997)''; and in paragraph (a)(2) by inserting a comma after 
the words ``Before filing.''


Secs. 252.239-7009 and 252.239-7010  [Removed and Reserved]

    22. Sections 252.239-7009 and 252.239-7010 are removed and 
reserved.
    23. Section 252.243-7000 is amended by revising the clause date and 
paragraph (c) to read as follows:


Sec. 252.243-7000  Engineering Change Proposals.

* * * * *

Engineering Change Proposals (Jul 1997)

* * * * *
    (c) When the price** of the engineering change is $500,000 or 
more, the Contractor shall submit--
    (1) A completed SF 1411, Contract Pricing Proposal Cover Sheet 
(Cost or Pricing Data Required); and
    (2) At the time of agreement on price*, or on another date 
agreed upon between the parties, a signed Certificate of Current 
Cost or Pricing Data.
* * * * *
[FR Doc. 97-19907 Filed 7-28-97; 8:45 am]
BILLING CODE 5000-04-M