2282 Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION–

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION–

48 CFR Chapter 1 –

[FAR Case 94–721]–

RIN 9000–AG30–

Federal Acquisition Regulation; Truth

in –Negotiations Act and Related

Changes

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Proposed rule.

SUMMARY: This proposed rule is issued

pursuant to the Federal Acquisition

Streamlining Act of 1994 to implement

those portions of Pub. L. 103–355 that

make specific changes to the Truth in

Negotiations Act (TINA) or that impact

other areas of the FAR that affect

contract pricing. This regulatory action

was not subject to Office of Management

and Budget review under Executive

Order 12866, dated September 30, 1993.

DATES: Comment Due Date: Comments

should be submitted on or before March

7, 1995 to be considered in the

formulation of a final rule.

Public Meeting: A public meeting will

be held on February 9, 1995, at 9:30

a.m.–

Oral/Written Statements: Views to be

presented at the public meeting should

be sent, in writing, to the FAR

Secretariat, at the address given below,

not later than February 6, 1995.

ADDRESSES: Interested parties should

submit written comments to: –General

Services Administration, FAR

Secretariat (VRS),– 18th & F Streets,

NW, Room 4037, Washington, DC

20405, Telephone: (202) 501–4755.

The public meeting will be held at:–

General Services Administration

Auditorium, 18th & F Streets, NW, First

Floor, –Washington, DC 20405.

Please cite FAR case 94–721 in all

correspondence related to this case. –

FOR FURTHER INFORMATION CONTACT: Mr.

Al Winston, Truth in Negotiations Act

(TINA) Team Leader, at (703) 602–2119

in reference to this FAR case. For

general information, contact the FAR

Secretariat, Room 4037, GSA Building,

Washington, DC 20405 (202) 501–4755.

Please cite FAR case 94–721.

SUPPLEMENTARY INFORMATION:

A. Background –

The Federal Acquisition Streamlining

Act of 1994 (Pub. L. 103–355) (the Act)

provides authorities that streamline the

acquisition process and minimize

burdensome government-unique

requirements. Major changes that can be

expected in the acquisition process as a

result of the Act’s implementation

include changes in the areas of

Commercial Item Acquisition,

Simplified Acquisition Procedures, the

Truth in Negotiations Act, and

introduction of the Federal Acquisition

Computer Network (FACNET).

Public Meeting–

The FAR Council is interested in an

exchange of ideas and opinions with

respect to the regulatory

implementation of the Act. For that

reason, the FAR Council is conducting

a series of public meetings. The public

is encouraged to furnish its views; the

FAR Council anticipates that public

comments will be very helpful in

formulating final rules. –

A public meeting will be held on

February 9, 1995, to enable the public

to present its views on this rule. This

rule will only be discussed at the public

meeting session. Any subsequent public

meetings will be devoted to other

revisions to the FAR.–

Persons or organizations wishing to

make presentations will be allowed 10

minutes each to present their views,

provided they notify the FAR Secretariat

at (202) 501–4755. Written statements

for presentation should be submitted to

the FAR Secretariat by February 6, 1995.

Persons or organizations with similar

positions are encouraged to select a

common spokesperson for presentation

of their views. This meeting, in

conjunction with the Federal Register

notice soliciting public comments on

the rule, will be the only opportunity for

the public to present its views.

FAR case 94–721

FAR case 94–721 implements

Sections 1201 through 1210 and

Sections 1251 and 1252 of the Act.

Highlights include making TINA

requirements for civilian agencies

substantially the same as those for the

Department of Defense (increasing the

threshold for submission of ‘‘cost or

pricing data’’ to $500,000 and adding

penalties for defective pricing).

Provisions are also included that

increase the threshold for cost or pricing

data submission every 5 years beginning

October 1, 1995. New exceptions are

added to the requirement for the

submission of ‘‘cost or pricing data’’ for

commercial items; approval levels for

waivers are changed, and prohibitions

are placed on acquiring ‘‘cost or pricing

data’’ when an exception applies. The

coverage includes a clear explanation of

adequate price competition as required

by the Act.

Also, FAR coverage has been included

that addresses: (1) ‘‘Information other

than cost or pricing data’’, (2)

exemptions based on established catalog

or market price, (3) inter-divisional

transfers of commercial items at price,

and (4) price competition when only

one offer has been received.

The FAR language primarily modifies

FAR Part 15, together with associated

Part 52 clauses and Part 53 forms.

However, some coverage is proposed to

address contract clauses where

threshold changes are made in Part 14

pertaining to sealed bid contracting, and

in Part 31 where the cost principle on

material costs has been amended to

address inter-divisional transfers of

commercial items at price. Additional

miscellaneous changes in Parts 4, 12,

15, 16, 31, 33, 36, 45, 46, 49, and 53

have also been included.

Upon final implementation, the

proposed FAR coverage will supersede

the earlier FAR case 94–720 that was

previously published as an interim rule

in Federal Acquisition Circular (FAC)

90–22. FAR case 94–720 provided for an

immediate increase to the threshold for

‘‘cost or pricing data’’ submission by

contractors to civilian agencies to

$500,000. The Act provided that this

requirement was effective on October

13, 1994, the date of enactment. FAC

90–22 (FAR case 94–720) also removed

the certification requirement of

commercial pricing for parts or

components for contractors doing

business with civilian agencies.

Policy for Determining Reasonableness

of Price–

Two major changes are found in the

proposed coverage. The first change

shifts the policy of FAR Part 15 with

respect to determining price

reasonableness. A hierarchical policy

preference for the types of information

to be used in assessing reasonableness

of price is established. The policy states

that no additional information should

be obtained from the contractor if there

is adequate price competition. This is

followed by allowing progressively

more intrusive types of data

requirements. Obtaining ‘‘cost or pricing

data’’ is designated as the last choice.

Use of ‘‘cost or pricing data’’ is coupled

with a reminder that unnecessarily

requiring that type of data is not

desirable and can lead to additional
Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules 2283

costs to both the government and the

contractor.–

New FAR coverage, based on the Act,

is presented that expands the exceptions

based on adequate price competition

and provides for special exceptions for

commercial items. A new section

addressing ‘‘information other than cost

or pricing data’’ is created and a

Standard Form 141X is provided for use

by contractors. –

The proposed policy at FAR 15.804–

1(b)(1)(ii), which recognizes

circumstances when it can be

determined that adequate price

competition exists even though only one

offeror has responded to the

Government’s requirement, is under

review within the executive branch of

the Government to insure the policy is

a permissible implementation of the

Act.

Defining ‘‘Cost or Pricing Data’’

The second major change

accomplished by the proposed coverage

is the clarification of the meaning of the

term ‘‘cost or pricing data.’’ Currently,

the FAR uses the term inconsistently. In

some places, ‘‘certified cost or pricing

data’’ is used and in other locations, it

states ‘‘cost or pricing data.’’ In the

proposed coverage, the term has been

clarified in the definition to mean that,

among other things, ‘‘cost or pricing

data’’ is required to be certified in

accordance with TINA and FAR 15.804–

4, and means all facts that as of the date

of agreement on price (or other mutually

agreeable date) prudent buyers and

sellers would reasonably expect to affect

the price significantly.

To avoid possible confusion, the term

‘‘certified cost or pricing data’’ has also

been defined as a subset of the more

encompassing term ‘‘cost or pricing

data.’’ The latter addition is designed to

show that ‘‘certified cost or pricing

data’’ is a subset of ‘‘cost or pricing

data’’ and serves to distinguish between

data for which a certificate has not yet

been submitted and data for which a

certificate has or should have been

submitted. If circumstances change such

that certification is not required, ‘‘cost

or pricing data’’ reverts to ‘‘information

other than cost or pricing data’’ and has

the same postaward audit value that any

other ‘‘information other than cost or

pricing data’’ would have. However,

‘‘cost or pricing data’’ is always

distinguishable from ‘‘information other

than cost or pricing data’’ before award

by its intended use. That is, ‘‘cost or

pricing data’’ should not be requested

unless the contracting officer believes it

will be necessary to rely upon it to price

the contract and that certification will

be required or should have been

required in accordance with FAR

15.804–4. Only in the very limited

circumstance where ‘‘cost or pricing

data’’ is submitted but an exception is

later found to apply would it revert to

and become ’’information other than

cost or pricing data’’ after award of the

contract. Thus, the word ‘‘certified’’

need no longer be placed in front of

‘‘cost or pricing data’’ in every location

it is used in the FAR in order for the

term to have the full meaning provided

for in TINA. Furthermore, now that the

intent of the use of the data is clear, a

bright-line distinction between ‘‘cost or

pricing data’’ and all other types of

information has been created.

‘‘Information Other Than Cost or Pricing

Data’’–

Since a bright-line test for ‘‘cost or

pricing data’’ has now been established,

it is also possible to craft a second

category of data—‘‘information other

than cost or pricing data’’—that may be

required by the contracting officer in

order to establish cost realism or price

reasonableness. This information can

include limited cost information, sales

data or pricing information. The intent

is also clear with respect to this category

of information. Because it is not ‘‘cost or

pricing data,’’ certification shall not be

required and approval to obtain this

information is vested in the contracting

officer. The proposed FAR coverage

gives a detailed discussion of

‘‘information other than cost or pricing

data’’ at 15.804–5.

B. Regulatory Flexibility Act–

This proposed rule is not expected 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 the proposed FAR revisions

reduce the instances where it is

necessary to request ‘‘cost or pricing

data’’ from contractors. However, most

contracts awarded to small entities are

awarded on a competitive, fixed-price

basis and do not require the submission

of ‘‘cost or pricing data’’. An Initial

Regulatory Flexibility Analysis has,

therefore, not been performed.

Comments from small entities

concerning the affected FAR subpart

will be considered in accordance with 5

U.S.C. 610. Such comments must be

submitted separately and should cite 5

U.S.C. 601, et seq. (FAR case 94–721),

in correspondence.

C. Paperwork Reduction Act–

The Paperwork Reduction Act, Pub. L.

96–511, is deemed to apply because the

proposed rule contains information

collection requirements. Accordingly, a

request for approval of a new

information collection requirement

concerning TINA changes is being

submitted to the Office of Management

and Budget under 44 U.S.C. 3501, et

seq. Public comments concerning this

request will be invited through a

Federal Register notice appearing in a

future issue.

List of Subjects in 48 CFR Parts 4, 12,

14, 15, 16, 31, 33, 36, 45, 46, 49, 52, and

53

Government procurement.

Dated: December 27, 1994.

Edward Loeb,

Deputy Project Manager for the

Implementation of the Federal Acquisition

Streamlining Act of 1994.

Therefore, it is proposed that 48 CFR

Chapter 1 be amended as set forth

below:

1. The authority citation for 48 CFR

Chapter 1 continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C.

chapter 137; and 42 U.S.C. 2473(c).

PART 1—FEDERAL ACQUISITION

REGULATIONS SYSTEM–

2. Section 1.105 is amended under the

‘‘FAR Segment’’ and ‘‘OMB Control

Number’’ headings by removing

‘‘52.215–32’’ and ‘‘9000–0105’’, and

adding entries, in numerical order, to

read as follows:

1.105 OMB Approval under the Paperwork

Reduction Act.

* * * * *

FAR segment OMB control No.

* * * * *

52.215–41– ................................. 9000–XXX

52.215–42– ................................. 9000–XXX

* * * * *

PART 4—ADMINISTRATIVE MATTERS

3. Section 4.803 is amended in

paragraph (a)(17) by adding before the

period at the end of the sentence ‘‘, or

information other than cost or pricing

data’’, and paragraph (b)(4) is revised to

read as follows:

4.803 Contents of contract files.

* * * * *–

(b) * * *

(4) Cost or pricing data, Certificates of

Current Cost or Pricing Data, or

information other than cost or pricing

data; cost or price analysis; and other

documentation supporting contractual
2284 Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules

actions executed by the contract

administration office.

* * * * *

PART 12—CONTRACT DELIVERY OR

PERFORMANCE

12.504 [Amended]

4. Section 12.504(d) is amended by

adding ‘‘or other information’’ before

the period at the end of the sentence.

PART 14—SEALED BIDDING–

5. Section 14.201–7 is amended in

paragraphs (b)(1) and (c)(1) by removing

‘‘$100,000, or for the Department of

Defense, the National Aeronautics and

Space Administration, and the Coast

Guard, is expected to exceed $500,000.’’

and inserting ‘‘the threshold for

submission of cost or pricing data at

15.804–2(a)(1).’’ in its place; by

redesignating (d) as (e), and adding a

new (d) to read as follows:

14.201–7 Contract clauses.

* * * * *–

(d) Contracting officers shall, if

requested by the prime contractor,

modify contracts to change the

threshold in the contract to the

threshold for submission of cost or

pricing data at 15.804–2(a)(1), without

requiring consideration. The contract

modification shall be accomplished by

inserting into the contract the current

version of clauses 52.214–27, Price

Reduction for Defective Cost or Pricing

Data—Modifications—Sealed Bidding,

and 52.214–28, Subcontractor Cost or

Pricing Data—Modifications—Sealed

Bidding. These new contract clauses

shall apply only to contract

modifications and subcontracts for

which agreement on price occurs after

the contracting officer has inserted the

new clauses.

* * * * *

14.214 [Removed]–

6. Section 14.214 is removed.

PART 15—CONTRACTING BY

NEGOTIATION

7. Section 15.106–2 is revised to read

as follows:

15.106–2 Audit—commercial items.

(a) This subsection implements 10

U.S.C. 2306a(d)(2) and (3) and 41 U.S.C.

254b(d)(2) and (3).

(b) The contracting officer shall, when

contracting by negotiation, insert clause

52.215–XX, Audit-Commercial Items, in

solicitations and contracts when

submission of cost or pricing data may

be required under 15.804–2 or exempted

under 15.804–1(a)(2).

15.406–5 [Amended]–

8. Section 15.406–5(b) is amended by

inserting the parenthetical ‘‘(See

15.804–6 and 15.804–8.)’’ at the end.–

9. Section 15.703(a)(2) is revised to

read as follows:

15.703 Acquisitions requiring make-or-buy

programs.–

(a) * * * –

(2) Qualifies for an exception from the

requirement to submit cost or pricing

data under 15.804–1; or

* * * * *–

10. Section 15.801 is amended by

revising the definition of ‘‘Cost or

pricing data’’, and adding definitions in

alphabetical order to read as follows:

15.801 Definitions.

Certified cost or pricing data is a

subset of the term ‘‘cost or pricing data’’.

The term ‘‘cost or pricing data’’ includes

the requirement for certification. The

term ‘‘certified cost or pricing data’’ may

be used to specifically indicate ‘‘cost or

pricing data’’ for which a certificate has

been, or should have been, provided in

accordance with 15.804–4.

* * * * *–

Cost or pricing data means all facts

that, as of the date of price agreement or,

if applicable, another date agreed upon

between the parties that is as close as

possible to the date of agreement on

price, prudent buyers and sellers would

reasonably expect to affect the price

significantly. Cost or pricing data shall

be certified in accordance with 15.804–

4. Cost and pricing data are factual, not

judgmental, and are therefore verifiable.

While they do not indicate the accuracy

of the prospective contractor’s judgment

about estimated future costs or

projections, they do include the data

forming the basis for that judgment. Cost

or pricing data are more than historical

accounting data; they are all the facts

that can be reasonably expected to

contribute to the soundness of estimates

of future costs and to the validity of

determinations of costs already

incurred. They also include such factors

as (a) vendor quotations; (b)

nonrecurring costs; (c) information on

changes in production methods and in

production or purchasing volume; (d)

data supporting projections of business

prospects and objectives and related

operations costs; (e) unit-cost trends

such as those associated with labor

efficiency; (f) make-or-buy decisions; (g)

estimated resources to attain business

goals; and (h) information on

management decisions that could have

a significant bearing on costs.

* * * * *–

Information other than cost or pricing

data means any type of information that

is not required to be certified in

accordance with 15.804–4, that is

necessary to determine price

reasonableness or cost realism. For

example, such information may include

pricing information, sales information,

or partial cost information, and includes

cost or pricing data for which

certification is determined inapplicable

after submission.

* * * * *

Subcontract, for purposes of this

subpart, includes a transfer of

commercial items between divisions,

subsidiaries, or affiliates of a contractor

or a subcontractor.

* * * * *–

11. Section 15.802 is revised to read

as follows:

15.802 Policy.–

Contracting officers shall—–

(a) Purchase supplies and services

from responsible sources at fair and

reasonable prices. In establishing the

reasonableness of the offered prices, the

contracting officer shall not obtain more

information than is necessary and shall

generally use the following order of

preference in determining the type of

information required:–

(1) No further information from the

offeror if the price is based on adequate

price competition.

(2) Information other than cost or

pricing data:

(i) Information related to prices (e.g.,

established catalog or market prices),

relying first on information available

within the Government, second on

information obtained from sources other

than the offeror and lastly on

information obtained from the offeror.

(ii) Limited cost information, which

does not meet the definition of cost or

pricing data at 15.801.

(3) Cost or pricing data. The

contracting officer should use every

means available to ascertain a fair and

reasonable price prior to requesting cost

or pricing data. Contracting officers

shall not unnecessarily require the

submission of cost or pricing data

because it leads to increased proposal

preparation costs, generally extends

acquisition lead-time, and wastes both

contractor and Government resources.

(b) Price each contract separately and

independently and not—

(1) Use proposed price reductions

under other contracts as an evaluation

factor, or

(2) Consider losses or profits realized

or anticipated under other contracts.

(c) Not include in a contract price any

amount for a specified contingency to

the extent that the contract provides for

a price adjustment based upon the

occurrence of that contingency.
Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules 2285

15.803 [Amended]

12. Section 15.803(a) is amended in

the last sentence by inserting ‘‘or other

information’’ after ‘‘pricing data’’.

15.804 Cost or pricing data and other

information.

13. Section 15.804, heading, is revised

to read as set forth above.–

14. Section 15.804–1 is revised to read

as follows:

15.804–1 Prohibition on obtaining cost or

pricing data.

(a) Exceptions to cost or pricing data

requirements. The contracting officer

shall not, pursuant to 10 U.S.C. 2306a

and 41 U.S.C. 254b, require submission

of cost or pricing data (but may require

other information to support a

determination of price reasonableness or

cost realism)—

(1) If the contracting officer

determines that prices agreed upon are

based on—

(i) Adequate price competition (see

paragraph (b)(1) of this section);–––

(ii) Established catalog or market

prices of commercial items (see section

2.101) sold in substantial quantities to

the general public (see paragraph (b)(2)

of this section); or–

(iii) Prices set by law or regulation

(see paragraph (b)(3) of this section).

(2) For acquisition of a commercial

item if an exception under paragraph

(a)(1) of this section does not apply, but

the contracting officer can determine the

price is fair and reasonable (see

paragraph (b)(4)(i) of this section and

15.804–5(b));

(3) For modifications to contracts/

subcontracts for commercial items, if

the basic contract/subcontract was

awarded without the submission of cost

or pricing data because the action was

exempt from cost or pricing data

requirements of 15.804–2 and the

modification does not change the

contract/subcontract to a contract/

subcontract for the acquisition of other

than a commercial item (see paragraph

(b)(4)(ii) of this section); or

(4) For exceptional cases (see

paragraph (b)(5) of this section).

(b) Standards for exceptions from cost

or pricing data requirements.

(1) Adequate price competition. A

price is based on adequate price

competition if—

(i) Two or more responsible offerors,

competing independently, submit

priced offers responsive to the

Government’s expressed requirement

and if—

(A) Award will be made to a

responsible offeror whose proposal

offers either—

(1) The greatest value (see 15.605(c))

to the Government and price is a

substantial factor in source selection; or

(2) The lowest evaluated price; and

(B) There is no finding, supported by

a statement of the facts and approved at

a level above the contracting officer, that

the price of the otherwise successful

offeror is unreasonable.

(ii) There was a reasonable

expectation, based on market analysis or

other assessment, that two or more

responsible offerors, competing

independently, would submit priced

offers responsive to the solicitation’s

expressed requirement, even though

only one offer is received from a

responsible, responsive offeror and if—

(A) Based on the offer received, the

contracting officer can reasonably

conclude that the offer was submitted

with the expectation of competition,

e.g.,—

(1) The offeror believed that at least

one other offeror was capable of

submitting a meaningful, responsive

offer.

(2) The offeror had no reason to

believe that other potential offerors did

not intend to submit an offer; and

(B) The determination is approved at

a level above the contracting officer that

the proposed price is based on adequate

price competition and is reasonable; or

(iii) Price analysis clearly

demonstrates that the proposed price is

reasonable in comparison with current

or recent prices for the same or similar

items purchased in comparable

quantities, under comparable terms and

conditions under contracts that resulted

from adequate price competition.

(2) Established catalog or market

prices—(i) Established catalog price.

Established catalog prices are prices

(including discount prices) recorded in

a catalog, price list, schedule or other

verifiable and established record that

(A) are regularly maintained by the

manufacturer or vendor; (B) are

published or otherwise available for

customer inspection, and (C) state

current or last sales price. An item will

automatically qualify for this exception

if sold in substantial quantities, and

sales at established catalog prices made

to the general public are at least onefourth of total sales of the item. If an

item does not meet these criteria, an

exception may also apply under

paragraph (b)(2)(vi) of this section.

(ii) Established market price. An

established market price is a price that

is established in the course of ordinary

and usual trade between buyers and

sellers free to bargain and that can be

substantiated by data from sources

independent of the offeror.

(iii) Based on. A price may also be

based on an established catalog or

market price if the item being purchased

is not itself a catalog or market priced

commercial item but is sufficiently

similar to the catalog or market priced

commercial item to ensure that any

difference in prices can be identified

and justified without resorting to cost

analysis. If a price is based on estimated

future sales and prices, then provision

should be made for future price

adjustment, if actual sales and prices

differ significantly from the estimated

sales and prices upon which the

contract price was based.

(iv) Sold in substantial quantities. An

item is sold in substantial quantities if

there are sales of more than a nominal

quantity based on the norm of the

industry segment. For services to be

sold in substantial quantities, they must

also be customarily provided by the

offeror, using personnel regularly

employed and equipment (if any is

necessary) regularly maintained

principally to provide the services.

(A) The method used to establish

sales for catalog priced items may be

sales order, contract, shipment, invoice,

actual recorded sales or other records,

so long as the method used is consistent

and provides an accurate indication of

sales activity. If the item would not

otherwise qualify for an exception, sales

of the item by affiliates (see 19.101 for

definition) of the offeror may be

considered in addition to sales of the

item by the offeror if—

(1) The offeror provides and

separately identifies all data required to

be submitted that are related to the sales

by the affiliate (e.g., information

required by the Standard Form (SF)

1412);

(2) The affiliate agrees in writing to

provide the same preaward and postaward access to records as is provided

by the offeror; and

(3) All sales of the item by the affiliate

are considered, not just catalog sales.

(B) An exception may apply for an

item based on the market price of the

item regardless of the quantity of sales

of the item previously made by the

offeror or the types of customers for

these sales.

(v) The general public consists of

buyers other than the U.S. Government

or its instrumentalities, e.g., U.S.

Government corporations. The general

public does not include (A) affiliates of

the offerors, (B) buyers of items for U.S.

Government end use, or (C) purchases

by the U.S. Government on behalf of

foreign governments, such as for Foreign

Military Sales.

(vi) Discretionary criteria. Even

though the criteria of paragraphs
2286 Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules

(b)(2)(i) and (ii) of this section are not

met, the contracting officer may use

other criteria to determine that the price

of the item is based on an established

catalog or market price of a commercial

item sold in substantial quantities to the

general public. For example—

(A) The item recently qualified for an

exemption but no longer qualifies due to

an unusual level of sales to the

Government; or

(B) The item is a commercial item no

longer sold to the public, but is still

required by the Government and the

proposed price can be determined

reasonable based upon consideration of

differences in quantities, terms,

conditions, or other appropriate factors

in comparison to the last price for

which an exemption was granted.

(3) Prices set by law or regulation.

Pronouncements in the form of periodic

rulings, reviews, or similar actions of a

governmental body, or embodied in the

laws are sufficient to set a price.

(4) Commercial items. (i) For

acquisitions of commercial items, if the

exceptions at 15.804–1(a)(1) do not

apply, the contracting officer shall

obtain information from the prospective

contractor or other sources regarding

prices at which the same or similar

items have been sold in the commercial

marketplace in order to determine

whether the price is fair and reasonable.

Cost or pricing data may be obtained for

such a commercial item only if the

contracting officer makes a written

determination that such information is

inadequate for performing a price

analysis and determining price

reasonableness.

(ii) For modifications of commercial

items, the exception at 15.804–1(a)(3)

applies if the modification of a

commercial item does not change the

item from a commercial item to a

noncommercial item. However, if the

modification changes the nature of the

work under the contract/subcontract

either by a change to the commercial

item or by the addition of other

noncommercial work, the contracting

officer is not prohibited from obtaining

cost or pricing data for the added work.

(5) Exceptional cases. The head of the

contracting activity may, in exceptional

cases and without power of delegation,

waive the requirement for submission of

cost or pricing data. For example, a

waiver should be considered if another

exemption does not apply but the price

can be determined to be fair and

reasonable. The authorization for the

waiver and the reasons for granting it

shall be in writing. If the head of the

contracting activity has waived the

requirement for submission of cost or

pricing data, the contractor or highertier subcontractor to whom the waiver

relates shall be considered as having

been required to make available cost or

pricing data for purposes of 15.804–

2(a)(1). Consequently, award of any

lower-tier subcontract expected to

exceed the pertinent threshold set forth

at 15.804–2(a)(1) requires the

submission of cost or pricing data

unless 15.804–1 otherwise applies to the

subcontract.

(c) Qualifying for an exception. (1) In

order to qualify for an exception based

on established catalog or market price or

prices set by law or regulation, the

offeror must request an exemption. The

contracting officer may specify one of

the following methods:

(i) Customary method—SF 1412,

Request for Exemption from Cost or

Pricing Data.

(A) It is not necessary to establish an

exemption for each line item.

Consequently, a SF 1412 may be

appropriate only for major items, i.e., if

the proposed price for the total quantity

of an item exceeds $100,000 or another

threshold specified by the contracting

officer.

(B) If none of the items has a proposed

price for its total quantity in excess of

$100,000 or another threshold specified

by the contracting officer, a SF 1412

should be obtained for the item with the

highest total proposed price.

(C) The contracting officer shall

ensure that information used to support

price negotiations is sufficiently current

to permit negotiation of a fair and

reasonable price. Requests for updated

offeror information should be limited to

information that affects the adequacy of

the proposal for negotiations, such as

changes in price lists.

(ii) Prior exemption. (A) If the U.S.

Government has acted favorably on an

exemption request for the same or

similar items, the contracting officer

may consider the prior submissions as

support for the current exemption

request. Relief from the submission of

new information does not relieve the

contracting officer from the requirement

to determine reasonableness of price on

the current acquisition.

(B) When acquiring by separate

contract an item included on an active

Federal Supply Service or Information

Resource Management Service Multiple

Award Schedule contract, the

contracting officer should grant an

exemption and not require a SF 1412 or

similar exemption documentation if the

offeror has provided as proof of the

prior exemption a copy of the Certificate

of Established Catalog or Market Price

that was provided to GSA. Price

analysis shall be performed in

accordance with 15.805–2 to determine

reasonableness of price.

(iii) Repetitive acquisitions. The

contracting officer and offeror may make

special arrangements for the submission

of exemption requests for repetitive

acquisitions of catalog items or market

items. These arrangements can take any

form as long as they set forth an

effective period and the exemption

criteria at 15.804–1(b) (2) or (3) are

satisfied. Such arrangements may be

extended to other Government offices

with their concurrence.

(iv) Other. The contracting officer may

request or agree to accept information

other than that specified in paragraphs

(c)(1)(i) through (iii) of this section.

(2) If the offeror/contractor does not

qualify for an exception under

paragraph (c)(1) of this section, an

exemption may nevertheless be

requested as a commercial item (see

paragraph (b)(4) of this section) or as an

exceptional case (see paragraph (b)(5) of

this section). The contracting officer

shall request sufficient documentation

to support the request.

15. Section 15.804–2 is revised to read

as follows:

15.804–2 Requiring Cost or Pricing

Data

(a)(1) Cost or pricing data shall be

obtained only if the contracting officer

concludes that none of the exceptions in

15.804–1 applies. However, if the

contracting officer has sufficient

information available to determine price

reasonableness, then a waiver in

accordance with 15.804–1(b)(5) should

be considered. The threshold for

obtaining cost or pricing data is

$500,000. This amount will be subject to

adjustment, effective October 1, 1995,

and every five years thereafter. Except

as provided in 15.804–1, cost or pricing

data are required before accomplishing

any of the following actions expected to

exceed the threshold in effect at time of

agreement on price or, in the case of

existing contracts, the threshold

specified in the contract—

(i) The award of any negotiated

contract (except for undefinitized

actions such as letter contracts).

(ii) The award of a subcontract at any

tier, if the contractor and each highertier subcontractor have been required to

furnish cost or pricing data. (See

15.804–1(b)(5).)

(iii) The modification of any sealed

bid or negotiated contract (whether or

not cost or pricing data were initially

required) or subcontract covered by

paragraph (a)(1)(ii) of this section. Price

adjustment amounts shall consider both

increases and decreases. (For example, a

$150,000 modification resulting from a
Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules 2287

reduction of $350,000 and an increase of

$200,000 is a pricing adjustment

exceeding $500,000.) This requirement

does not apply when unrelated and

separately priced changes for which cost

or pricing data would not otherwise be

required are included for administrative

convenience in the same modification.

(2) Contracting officers shall, if

requested by the prime contractor,

modify contracts to change the

threshold in the contract to the cost or

pricing data threshold in paragraph

(a)(1) of this section, without requiring

consideration. The contract

modification shall be accomplished by

inserting into the contract the current

version of the clauses 52.215–23, Price

Reduction for Defective Cost or Pricing

Data—Modifications, and 52.215–25,

Subcontractor Cost or Pricing Data—

Modifications, or 52.215–24,

Subcontractor Cost or Pricing Data, as

applicable. These new contract clauses

shall apply only to contract

modifications and subcontracts for

which agreement on price occurs after

the contracting officer has inserted the

new clauses.

(3) Unless prohibited by 15.804–

1(a)(1), the head of the contracting

activity, without power of delegation,

may authorize the contracting officer to

obtain cost or pricing data for pricing

actions below the pertinent threshold in

paragraph (a)(1) of this section provided

the action exceeds the simplified

acquisition threshold. The head of the

contracting activity shall justify the

requirement for cost or pricing data. The

documentation shall include a written

finding that cost or pricing data are

necessary to determine whether the

price is fair and reasonable and the facts

supporting that finding.

(b) When cost or pricing data are

required, the contracting officer shall

require the contractor or prospective

contractor to submit to the contracting

officer (and to have any subcontractor or

prospective subcontractor submit to the

prime contractor or appropriate

subcontractor tier) the following in

support of any proposal:

(1) The cost or pricing data.

(2) A certificate of current cost or

pricing data, in the format specified in

15.804–4, certifying that to the best of

its knowledge and belief, the cost or

pricing data were accurate, complete,

and current as of the date of final

agreement on price or, if applicable,

another date agreed upon between the

parties.

(c) If cost or pricing data are requested

and submitted by an offeror, but an

exception is later found to apply under

15.804–1, the data shall not be

considered cost or pricing data as

defined in 15.801 and shall not be

certified in accordance with 15.804–4.

(d) The requirements of this section

also apply to contracts entered into by

the head of an agency on behalf of a

foreign government.

15.804–3 [Reserved]

16. Section 15.804–3 is removed and

reserved.

17. Section 15.804–4 is amended by

revising paragraph (a), the double

asterisk footnote to the certification

statement following paragraph (a), and

paragraph (e) to read as follows:

15.804–4 Certificate of Current Cost or

Pricing Data

(a) When cost or pricing data are

required under 15.804–2, the

contracting officer shall require the

contractor to execute a Certificate of

Current Cost or Pricing Data, shown

following this paragraph (a), and shall

include the executed certificate in the

contract file. The certificate states that

the cost or pricing data are accurate,

complete, and current as of the date the

contractor and the Government agreed

on a price or, if applicable, another date

agreed upon between the parties.

Certificate of Current Cost or Pricing

Data

* * * * *

* * * Insert the day, month, and year

when price negotiations were concluded

and price agreement was reached or, if

applicable, another date agreed upon

between the parties.

* * * * *

(e) If cost or pricing data are requested

and submitted by an offeror, but an

exception is later found to apply under

15.804–1, the data shall not be

considered cost or pricing data and shall

not be certified in accordance with this

section.

* * * * *

18. Section 15.804–5 is added to read

as follows:

15.804–5 Requiring Information Other

Than Cost or Pricing Data

(a)(1) If cost or pricing data are not

required because an exception under

15.804–1 other than paragraph (a)(2) of

this section applies, or an action is at or

below the threshold set forth at 15.804–

2(a)(1), the contracting officer shall

make a price analysis to determine the

reasonableness of the price and any

need for further negotiation.

(2) The contracting officer may

require submission of information other

than cost or pricing data only to the

extent necessary to determine

reasonableness of the price or cost

realism. Such data shall not be certified

in accordance with 15.804–4.

(3) If cost or pricing data are not

requested in the solicitation because the

contracting officer has a reasonable

expectation that adequate price

competition as discussed at 15.804–

1(b)(1) will result, the contracting officer

may request information to determine

the cost realism of competing offers or

to evaluate competing approaches. The

contractor’s format for submitting such

information shall be used unless the

contracting officer determines that use

of a specific format is essential.

(4) When acquiring commercial items,

if the action is based on adequate price

competition, generally no additional

information is necessary to determine

the reasonableness of price. However, if

it is determined that additional

information is necessary to determine

the reasonableness of the price, the

contracting officer shall, to the

maximum extent practicable, obtain the

additional information from sources

other than the offeror.

(5) When cost or pricing data are not

required because an action is at or

below the threshold set forth at 15.804–

2(a)(1), information requested under

paragraph (a)(2) of this section shall

include, as a minimum, appropriate

information on the prices and quantities

at which the same or similar items have

previously been sold, that is adequate

for evaluating the reasonableness of the

proposed price. Partial or limited cost

information may also be required. For

example, cost information might be

necessary to support an analysis of

material costs, but not for labor and

overhead costs.

(6) When acquiring commercial items,

unless adequate information is available

from government sources, it may be

necessary to obtain from the prospective

contractor information such as that

regarding—

(i) The supplier’s marketing system

(e.g., use of jobbers, brokers, sales

agencies, or distributors);

(ii) The services normally provided

commercial purchasers (e.g.,

engineering, financing, advertising or

promotion);

(iii) Normal quantity per order;

(iv) Annual volume of sales to largest

customers;

(v) Adjustments such as rebates,

credits, or trade-ins available

commercially but not available or used

by the Government;

(vi) Additional sales inducements

such as training or extended warranty

periods provided to some customers if

not provided to the Government; or

(vii) Prices charged by the primary

source of an item offered by a reseller.
2288 Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules

(b)(1) When acquiring commercial

items for which an exception under

15.804–1(a)(2) may apply, the

contracting officer shall seek to obtain

from the offeror or contractor

information on prices at which the same

or similar items have been sold in the

commercial market, that is adequate for

evaluating, through price analysis, the

reasonableness of the price of the action.

(2) If such information is not available

from the offeror or contractor, the

contracting officer shall seek to obtain

such information from another source or

sources.

(3) Requests for sales data relating to

commercial items shall be limited to

data for the same or similar items during

a relevant time period.

(4) In requesting information from an

offeror under this paragraph (b), the

contracting officer shall, to the

maximum extent practicable, limit the

scope of the request to include only

information that is in the form regularly

maintained by the offeror in commercial

operations. The SF 1412 shall not be

used for this purpose.

(5) Any information obtained

pursuant to this paragraph (b) that is

exempt from disclosure under the

Freedom of Information Act (5 U.S.C.

552(b)) shall not be disclosed by the

Government.

(c) If, after receipt of offers, the

contracting officer concludes there is

insufficient information available to

determine price reasonableness and

none of the exceptions under 15.804–1

applies, then cost or pricing data shall

be obtained, unless a waiver is granted

(see 15.804–1(b)(5)).

19. Section 15.804–6 is amended by

revising the heading and paragraphs (a)

and (b) and amending Table 15–2 by:

(a) Revising the heading;

(b) Adding introductory text;

(c) Revising the first paragraph of item

1 and revising the ‘‘Established Catalog’’

subparagraph;––

(d) Revising item 4;

(e) Amending in Table B of item 8 by

revising the ‘‘under column (2)’’

instructions under the table and;

Adding Table 15–3 above paragraph

(c) and revising the first sentence of

paragraph (d).

The revised and added text reads as

follows:

15.804–6 Submission of Cost or Pricing

Data or Other Information–

(a) Taking into consideration the

policy at 15.802, the contracting officer

shall specify in the solicitation (see

52.215–40 and 52.215–41)—––

(1) Whether cost or pricing data are

required;––

(2) That, in lieu of submitting cost or

pricing data, the offeror may submit a

request for exemption from the

requirement to submit cost or pricing

data, as specified by the contracting

officer in accordance with 15.804–1(c);–

–

(3) Other information required, if cost

or pricing data are not necessary;––

(4) The format (see paragraph (b) of

this section) in which the cost or pricing

data or other information shall be

submitted; and––

(5) Necessary preaward or postaward

access to offeror’s records if not

provided by use of Standard Form (SF)

1411, Contract Pricing Proposal Cover

Sheet (Cost or Pricing Data Required),

Standard Form (SF) 1412, Request for

Exemption from Submission of Cost or

Pricing Data, or Standard Form (SF)

141X, Proposal Cover Sheet (Cost or

Pricing Data Not Required); or a

standard clause such as 52.214–26,

Audit and Records Sealed—Bidding,

52.215–1, Audit and Records—

Negotiation, or 52.215–XX, Audit—

Commercial Items.–

(b)(1) Cost or pricing data shall be

submitted on a SF 1411 unless required

to be submitted on one of the

termination forms specified in 48 CFR

part 49, subpart 49.6. The SF 1411 shall

not be used to submit any information

other than cost or pricing data. Contract

pricing proposals submitted on SF 1411

with supporting attachments shall be

prepared in accordance with Table 15–

2. Data supporting forward pricing rate

agreements or final indirect cost

proposals shall be submitted in a format

acceptable to the contracting officer.––

(2) If information other than cost or

pricing data is required to support price

reasonableness or cost realism, the

contracting officer may require such

information to be submitted using a SF

141X. The information is not considered

cost or pricing data in accordance with

15.804–2, and shall not be certified in

accordance with 15.804–4. Information

submitted on a SF 141X shall be

prepared following the instructions

provided in Table 15–3.

Table 15–2 Instructions for Submission of a

Contract Pricing Proposal When Cost or

Pricing Data are Required

The SF 1411 provides a cover sheet for use

by offerors to submit to the Government a

pricing proposal of estimated and/or actual

costs only when cost or pricing data are

required.

1. The pricing proposal shall be segregated

by contract line item with sufficient detail to

permit cost analysis. Attach cost-element

breakdowns, using the applicable formats

prescribed in item 8A, B, or C of this section

for each proposed line item. These

breakdowns must conform to the instructions

in the solicitation and any specific

requirements established by the contracting

officer. Furnish supporting breakdowns for

each cost element, consistent with offeror’s

cost accounting system.

* * * * *

Established Catalog or Market Prices/Prices

Set by Law or Regulation/Commercial Item

Not Covered By Another Exception—When

an exemption from the requirement to submit

cost or pricing data is requested, whether the

item was produced by others or by the

offeror, provide justification for the

exemption as required by 15.804–1(c).

* * * * *

4. There is a clear distinction between

submitting cost or pricing data and merely

making available books, records, and other

documents without identification. The

requirement for submission of cost or pricing

data is met when all accurate cost or pricing

data reasonably available to the offeror have

been submitted, either actually or by specific

identification, to the contracting officer or an

authorized representative. As later

information comes into the offeror’s

possession, it should be promptly submitted

to the contracting officer in a manner that

clearly shows how the information impacts

the offeror’s price proposal. The requirement

for submission of cost or pricing data

continues up to the time of final agreement

on price, or another date agreed upon

between the parties if applicable.

* * * * *

8. Headings for Submission of Line-Item

Summaries

* * * * *

B. Change Orders, Modifications, and

Claims.

* * * * *

Under Column (2)—Include (i) the current

estimates of the cost to complete the deleted

work not yet performed (not the original

proposal estimates), and (ii) the cost of

deleted work already performed.

* * * * *

Table 15–3 Instruction for Submission of

Information Other Than Cost or Pricing Data

SF 141X is a cover sheet for use by offerors

to submit information to the Government

when cost or pricing data are not required

but the contracting officer has requested

information to help establish price

reasonableness or cost realism. Such

information is not considered cost or pricing

data, and shall not be certified in accordance

with 15.804–4. Requests for information

should be tailored so that only necessary data

are requested.

1. The information submitted shall be at

the level of detail described in the

solicitation or specified by the contracting

officer. The offeror’s own format is

acceptable unless the contracting officer

determines that use of a specific format is

essential.

A. If adequate price competition is

expected, the information may include cost

or technical information necessary to

determine the cost realism and adequacy of

the offeror’s proposal, e.g., information

adequate to validate that the proposed costs

are consistent with the technical proposal, or

cost breakdowns to help identify

unrealistically low cost proposals.
Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules 2289

B. If the offer is expected to be at or below

the threshold set forth at 15.804–2(a)(1), and

adequate price competition is not expected,

the information may consist of data to permit

the contracting officer and authorized

representatives to determine price

reasonableness, e.g., information to support

an analysis of material costs (when sufficient

information on labor and overhead rates is

already available), or information on prices

and quantities at which the offeror has

previously sold the same or similar items.–

2. Any information submitted must

support the price proposed. Include

sufficient detail or cross references to clearly

establish the relationship of the information

provided to the price proposed. Support any

information provided by explanations or

supporting rationale as needed to permit the

contracting officer and authorized

representatives to evaluate the

documentation.

* * * * *

(d) The requirement for submission of

cost or pricing data is met if all cost or

pricing data reasonably available to the

offeror are either submitted or

specifically identified in writing by the

time of agreement on price or another

time agreed upon by the parties. * * *

* * * * *

20. Section 15.804–7 is amended by

revising paragraphs (b)(7)(i), (ii)(B), and

(iii) to read as follows:

15.804–7 Defective Cost or Pricing

Data

* * * * *

(b) * * *

(7)(i) In addition to the price

adjustment amount, the Government is

also entitled to interest on any

overpayments. The Government is also

entitled to penalty amounts on certain

of these overpayments. Overpayment

occurs only when payment is made for

supplies or services accepted by the

Government. Overpayments would not

result from amounts paid for contract

financing as defined in 32.902.

(ii) * * *

(B) Consider the date of each

overpayment (The date of overpayment

for this interest calculation shall be (1)

the date payment was made for the

related completed and accepted contract

items, or (2) for subcontract defective

pricing, the date payment was made to

the prime contractor, based on prime

contract progress billings or deliveries,

which included payments for a

completed and accepted subcontract

item); and

* * * * *

(iii) In arriving at the amount due for

penalties on contracts where the

submission of defective cost or pricing

data was a knowing submission, the

contracting officer shall obtain an

amount equal to the amount of

overpayment made. Before taking any

contractual actions concerning

penalties, the contracting officer shall

obtain the advice of counsel.

* * * * *

21. Section 15.804–8 is amended by

revising the heading and adding

paragraphs (h) and (i) to read as follows:

15.804–8 Contract Clauses and

Solicitation Provisions

* * * * *

(h) Requirements for Cost or Pricing

Data or Other Information. The

contracting officer shall insert the

provision at 52.215–41, Requirements

for Cost or Pricing Data or Other

Information, in solicitations only when

it is contemplated that cost or pricing

data or other information will be

required. Use the provision with

Alternate I to specify a format for cost

or pricing data other than the format

required by Table 15–2 of 15.804–6(b).

Use the provision with Alternate II

when copies of the proposal are to be

sent to the administrative contracting

officer and contract auditor. Use the

provision with Alternate III when

submission via electronic media is

required. Replace the basic provision

with Alternate IV when a SF 1411 will

not be required because an exception

applies, but other information is

required pursuant to 15.804–5.

(i) Requirements for Cost or Pricing

Data or Other Information—

Modifications. The contracting officer

shall insert the clause at 52.215–42,

Requirements for Cost or Pricing Data or

Other Information Modifications, in

solicitations and contracts only if it is

contemplated that cost or pricing data or

other information will be required for

modifications. Use the clause with

Alternate I to specify a format for cost

or pricing data other than the format

required by Table 15–2 of 15.804–6(b).

Use the clause with Alternate II if copies

of the proposal are to be sent to the

administrative contracting officer and

contract auditor. Use the clause with

Alternate III if submission via electronic

media is required. Replace the basic

clause with Alternate IV if a SF 1411 is

not required because an exception

applies, but other information is

required pursuant to 15.804–5.

22. Section 15.805–1 is amended by

adding paragraph (d) to read as follows:

15.805–1 General

* * * * *

(d) The Armed Services Pricing

Manual (ASPM Volume I, ’’Contract

Pricing’’, and Volume 2, ‘‘Price

Analysis’’) was issued by the

Department of Defense to guide pricing

and negotiating personnel. The ASPM

provides detailed discussion and

examples applying pricing policies to

pricing problems. ASPM is available for

use for instruction and professional

guidance. However, it is not directive

and its references to Department of

Defense forms and regulations should be

considered informational only. Copies

of ASPM Vol. 1 (Stock No. 008–000–

00457–9) and Vol. 2 (Stock No. 008–

000–00467–6) may be purchased from

the Superintendent of Documents, U.S.

Government Printing Office by

telephone (202) 512–1800 or fax (202)

512–2250, or by mail order from the

Superintendent of Documents, P.O. Box

371954, Pittsburgh, PA 15250–7954.

23. Section 15.805–2 is amended by

adding paragraph (f) to read as follows:

15.805–2 Price Analysis

* * * * *–

(f) Comparison of proposed prices

with prices for the same or similar items

obtained through market research.–

24. Section 15.806–1 is amended in

the first sentence of paragraph (a)(2) by

removing the word ‘‘claims’’ and

inserting ’’requests’’ in its place, and

revising paragraph (b) to read as follows:

15.806–1 General

* * * * *–

(b) Unless the subcontract qualifies

for an exception under 15.804–1, any

contractor required to submit cost or

pricing data also shall obtain cost or

pricing data before awarding any

subcontract or purchase order expected

to exceed the pertinent threshold set

forth at 15.804–2(a)(1), or issuing any

modification involving a price

adjustment expected to exceed the

pertinent threshold set forth at 15.804–

2(a)(1) (see example of pricing

adjustment at 15.804–2(a)(1)(iii)). To

waive subcontractor cost or pricing data,

follow the procedures at 15.804–1(b)(5).

* * * * *–

25. Section 15.806–2 is amended by

revising paragraph (a), the first sentence

of paragraph (c), and paragraph (d) to

read as follows:

15.806–2 Prospective Subcontractor

Cost or Pricing Data

(a) The contracting officer shall

require a contractor that is required to

submit to the Government (or cause

submission of) accurate, complete, and

current cost or pricing data from

prospective subcontractors in support of

each subcontract cost estimate that is (1)

$1,000,000 or more, (2) both more than

the pertinent threshold set forth at

15.804–2(a)(1) and more than 10% of

the prime contractor’s proposed price,

or (3) considered to be necessary for

adequately pricing the prime contract.
2290 Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules

These subcontract cost or pricing data

may be submitted using a Standard

Form (SF) 1411, Contract Pricing

Proposal Cover Sheet (Cost or Pricing

Data Required).

* * * * *–

(c) If the prospective contractor

satisfies the contracting officer that a

subcontract will be priced on the basis

of one of the exceptions in 15.804–1, the

contracting officer shall not require

submission of cost or pricing data to the

Government in that case. * * *–

(d) Subcontractor data shall be

accurate, complete, and current as of the

date of final price agreement or, if

applicable, another date agreed upon

between the parties, given on the

contractor’s Certificate of Current Cost

or Pricing Data. The prospective

contractor shall be responsible for

updating a prospective subcontractor’s

data.

* * * * *–

26. Section 15.808 is amended by

revising paragraphs (a) (6) and (7) to

read as follows:

15.808 Price Negotiation

Memorandum

(a) * * *

(6) If cost or pricing data were not

required in the case of any price

negotiation exceeding the thresholds set

forth at 15.804–2(a)(1), the exception

used and the basis for it.––

(7) If cost or pricing data were

required by the head of the contracting

activity under 15.804–2(a)(3), the

rationale for such requirement.

* * * * * –

27. Section 15.812–1 is amended by

revising paragraph (b) and the second

sentence of paragraph (c) to read as

follows:

15.812–1 General

* * * * *–

(b) However, the policy in paragraph

(a) of this section does not apply to any

contract or subcontract item of supply

for which the price is, or is based on,

an established catalog or market price of

a commercial item sold in substantial

quantities to the general public (see

15.804–1(b)(2)). –

(c) * * * The contracting officer shall

require similar information when

contracting by negotiation with full and

open competition if adequate price

competition is not expected (see

15.804–1(b)(1)). * * *

15.813 [Reserved] and 15.813–1

Through 15.813–7 [Removed]–

28. Section 15.813 is removed and

reserved and subsections 15.813–1

through 15.813–7 are removed.

PART 16—TYPES OF CONTRACTS

16.203–4 [Amended]–

29. Section 16.203–4 is amended in

paragraphs (a)(1)(ii) and (b)(1)(ii) by

removing ‘‘15.804–3’’ and inserting

‘‘15.804–1’’ in its place. –

30. Section 16.501(c) is amended by

revising the first sentence to read as

follows:

16.501 General

* * * * *–

(c) Indefinite-delivery contracts may

provide for firm fixed prices (see

16.202), fixed prices with economic

price adjustment (see 16.203), fixed

prices with prospective redetermination

(see 16.205), or prices based on catalog

or market prices (see 15.804–1(b)(2)).

* * *

PART 31—CONTRACT COST

PRINCIPLES AND PROCEDURES–

31. Section 31.205–26(e) is revised to

read as follows:

31.205–26 Material Costs

* * * * *–

(e) Allowance for all materials,

supplies, and services that are sold or

transferred between any divisions,

subdivisions, subsidiaries, or affiliates

of the contractor under a common

control shall be on the basis of cost

incurred in accordance with this

subpart. However, allowance may be at

a price when it is the established

practice of the transferring organization

to price interorganizational transfers at

other than cost for commercial work of

the contractor or any division,

subsidiary, or affiliate of the contractor

under a common control, and when the

item being transferred qualifies for an

exception under 15.804–1 and the

contracting officer has not determined

the price to be unreasonable.

* * * * *

PART 33—PROTESTS, DISPUTES,

AND APPEALS–

32. Section 33.207(d) is revised to

read as follows:

33.207 Contractor Certification

* * * * *–

(d) The aggregate amount of both

increased and decreased costs shall be

used in determining when the dollar

thresholds requiring certification are

met (see example in 15.804–2(a)(1)(iii)

regarding cost or pricing data).

* * * * *

PART 36—CONSTRUCTION AND

ARCHITECT ENGINEERING

CONTRACTS–

33. Section 36.402 is amended by

revising the introductory text of

paragraph (b) and paragraph (b)(1) to

read as follows:

36.402 Price Negotiation

* * * * *–

(b) The contracting officer shall

evaluate proposals and associated cost

or pricing data or other information and

shall compare them to the Government

estimate.––

(1) When submission of cost or

pricing data is not required (see 15.804–

1 and 15.804–2, and any element of

proposed cost differs significantly from

the Government estimate, the

contracting officer should request the

offeror to submit cost data concerning

that element (e.g., wage rates or fringe

benefits, significant materials,

equipment allowances, and

subcontractor costs).

* * * * *

PART 45—GOVERNMENT PROPERTY–

34. Section 45.103(b)(1) is revised to

read as follows:

45.103 Responsibility and Liability for

Government Property

* * * * *–

(b) * * *––

(1) Negotiated fixed price contracts for

which the contract price is not based

upon an exception at 15.804–1;

* * * * *–

35. Section 45.106(b)(2) is revised to

read as follows:

45.106 Government Property Clauses

* * * * *–

(b) * * *––

(2) If the contract is (i) a negotiated

fixed-price contract for which prices are

not based on an exception at 15.804–1,

or (ii) a fixed-price service contract

which is performed primarily on a

government installation, provided the

contracting officer determines it to be in

the best interest of the government (see

subpart 45.103(b)(4)), the contracting

officer shall use the clause with its

Alternate I.

* * * * *

PART 46—QUALITY ASSURANCE

46.804 [Amended]–

36. Section 46.804 is amended by

removing ‘‘(see 15.804–3(c))’’ and

inserting ‘‘(see 15.804–1(b)(2))’’ in its

place.
Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules 2291

PART 49—TERMINATION OF

CONTRACTS

49.208 [Amended]–

37. Section 49.208 is amended in the

introductory text by adding ‘‘(Cost or

Pricing Data Required)’’ before the

period at the end.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES–

38. Section 52.214–27 is amended by

revising the clause date and paragraphs

(a) and (e)(2) to read as follows:

52.214–27 Price Reduction for

Defective Cost or Pricing Data—

Modifications—Sealed Bidding

* * * * *

Price Reduction for Defective Cost or Pricing

Data—Modifications—Sealed Bidding (XXX

1995)–

(a) This clause shall become operative only

for any modification to this contract

involving aggregate increases and/or

decreases in costs, plus applicable profits, of

more than the threshold for the submission

of cost or pricing data at FAR 15.804–2(a)(1),

except that this clause does not apply to a

modification if an exception under FAR

15.804–1 applies.

* * * * *–

(e) * * *––

(2) A penalty equal to the amount of the

overpayment, if the Contractor or

subcontractor knowingly submitted cost or

pricing data which were incomplete,

inaccurate, or noncurrent.

(End of clause)

39. Section 52.214–28 is amended by

revising the clause date and paragraphs

(a), (b), and (d) to read as follows:

52.214–28 Subcontractor Cost or

Pricing Data—Modifications—Sealed

Bidding

* * * * *

Subcontractor Cost or Pricing Data—

Modifications—Sealed Bidding (XXX 1995)–

(a) The requirements of paragraphs (b) and

(c) of this clause shall (1) become operative

only for any modification to this contract

involving aggregate increases and/or

decreases in costs, plus applicable profits,

expected to exceed the threshold for

submission of cost or pricing data at FAR

15.804–2(a)(1), and (2) be limited to such

modifications.–

(b) Before awarding any subcontract

expected to exceed the threshold for

submission of cost or pricing data at FAR

15.804–2(a)(1) when entered into, or pricing

any subcontract modifications involving

aggregate increases and/or decreases in costs,

plus applicable profits, expected to exceed

the threshold for submission of cost or

pricing data at FAR 15.804–2(a)(1), the

Contractor shall require the subcontractor to

submit cost or pricing data (actually or by

specific identification in writing), unless an

exception under FAR 15.804–1 applies.

* * * * *–

(d) The Contractor shall insert the

substance of this clause, including this

paragraph (d), in each subcontract that, when

entered into, exceeds the threshold for

submission of cost or pricing data at FAR

15.804–2(a)(1).

(End of clause)

52.215–22 [Amended]–

40. Section 52.215–22 is amended by

revising the clause date to ‘‘(XXX

1995)’’, and in paragraph (d)(2) by

removing ‘‘For Department of Defense

contracts only, a’’ and inserting ‘‘A’’ in

its place.–

41. Section 52.215–23 is amended by

revising the clause date and paragraphs

(a) and (e)(2) to read as follows:

52.215–23 Price Reduction for

Defective Cost or Pricing Data—

Modifications

* * * * *

Price Reduction for Defective cost or Pricing

Data—Modifications (XXX 1995)–

(a) This clause shall become operative only

for any modification to this contract

involving a pricing adjustment expected to

exceed the threshold for submission of cost

or pricing data, at FAR 15.804–2(a)(1), except

that this clause does not apply to a

modification if an exception under FAR

15.804–1 applies.

* * * * *––

(e) * * *––––

(2) A penalty equal to the amount of the

overpayment, if the Contractor or

subcontractor knowingly submitted cost or

pricing data which were incomplete,

inaccurate, or noncurrent.

(End of clause)

42. Section 52.215–24 is amended by

revising the clause date, paragraph (a),

and the introductory text of (c) to read

as follows:

52.215–24 Subcontractor Cost or

Pricing Data

* * * * *

Subcontractor Cost or Pricing Data (XXX

1995)––

(a) Before awarding any subcontract

expected to exceed the threshold for

submission of cost or pricing data at FAR

15.804–2(a)(1), when entered into, or before

pricing any subcontract modification

involving a pricing adjustment expected to

exceed the threshold for submission of cost

or pricing data at FAR 15.804–2(a)(1), the

Contractor shall require the subcontractor to

submit cost or pricing data (actually or by

specific identification in writing), unless an

exception under FAR 15.804–1 applies.

* * * * *–

(c) In each subcontract that exceeds the

threshold for submission of cost or pricing

data at FAR 15.804–2(a)(1), when entered

into, the Contractor shall insert either—

* * * * *–

43. Section 52.215–25 is amended by

revising the clause date and paragraphs

(a), (b) and (d) to read as follows:

52.215–25 Subcontractor Cost or

Pricing Data—Modifications

* * * * *

Subcontractor Cost or Pricing Data—

Modifications (XXX 1995)–

(a) The requirements of paragraphs (b) and

(c) of this clause shall (1) become operative

only for any modification to this contract

involving a pricing adjustment expected to

exceed the threshold for submission of cost

or pricing data at FAR 15.804–2(a)(1); and (2)

be limited to such modifications.–

(b) Before awarding any subcontract

expected to exceed the threshold for

submission of cost or pricing data at FAR

15.804–2(a)(1), when entered into, or pricing

any subcontract modification involving a

pricing adjustment expected to exceed the

threshold for submission of cost or pricing

data at FAR 15.804–2(a)(1), the Contractor

shall require the subcontractor to submit cost

or pricing data (actually or by specific

identification in writing), unless an

exception under FAR 15.804–1 applies.

* * * * *––

(d) The Contractor shall insert the

substance of this clause, including this

paragraph (d), in each subcontract that

exceeds the threshold for submission of cost

or pricing data at FAR 15.804–2(a)(1), when

entered into.

(End of clause)

44. Section 52.215–26 is amended by

revising the clause date and the last

sentence in paragraph (b) to read as

follows:

52.215–26 Integrity of Unit Prices

* * * * *

Integrity of Unit Prices (XXX 1995)

* * * * *

(b) * * * A price is based on an

established catalog or market price only if the

item being purchased is sufficiently similar

to the catalog or market priced commercial

item to ensure that any difference in prices

can be identified without resort to cost

analysis.

* * * * *

52.215–32 and 52.215–37 [Removed

and Reserved)

45. Sections 52.215–32 and 52.215–37

are removed and reserved.

46. Sections 52.215–41 and 52.215–42

are added to read as follows:

52.215–41 Requirements for Cost or

Pricing Data or Other Information

As prescribed in 15.804–8(h), insert

the following provision:
2292 Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules

Requirements for Cost or Pricing Data or

Other Information (XXX 1995)

(a) In lieu of submitting cost or pricing

data, offerors may submit a written request

for exemption from the requirement for

submission of cost or pricing data by

submitting—

(1) SF 1412, Request for Exemption From

Submission of Cost or Pricing Data;

(2) Information relative to an exemption

granted for prior or repetitive acquisitions; or

(3) For commercial items not covered by

another exception, information on prices at

which the same item or similar items have

been sold in the commercial market.

(b)(1) Unless the offeror is granted an

exemption from the requirement to submit

cost or pricing data, the offeror shall submit

cost or pricing data on Standard Form (SF)

1411, Contract Pricing Proposal Cover Sheet

(Cost or Pricing Data Required), with

supporting attachments prepared in

accordance with Table 15–2 of FAR 15.804–

6(b)(2).

(2) As soon as practicable after final

agreement on price, but before contract

award (except for unpriced actions such as

letter contracts), the offeror shall submit a

Certificate of Current Cost or Pricing Data, as

prescribed by FAR 15.804–4.

(End of provision)

Alternate I (XXX 1995). As prescribed in

15.804–8(h), substitute the following

paragraph (b)(1) for paragraph (b)(1) of the

basic provision: –

(b)(1) Unless the offeror is granted an

exemption from the requirement to submit

cost or pricing data, the offeror shall submit

cost or pricing data on Standard Form (SF)

1411, Contract Pricing Proposal Cover Sheet

(Cost or Pricing Data Required), with

supporting attachments prepared in the

following format:

Alternate II (XXX 1995). As prescribed in

15.804–8(h), add the following paragraph (c)

to the basic provision:

(c) When the proposal is submitted, also

submit one copy each, including the SF 1411

and supporting attachments, to: (1) the

Administrative Contracting Officer, and (2)

the Contract Auditor.

Alternate III (XXX 1995). As prescribed in

15.804–8(h), add the following paragraph (c)

to the basic provision (if Alternate II is also

used, redesignate as paragraph (d)):

(c) Submit the cost portion of the proposal

via the following electronic media: (Insert

media format, e.g., electronic spreadsheet

format, electronic mail, etc.).

Alternate IV (XXX 1995). As prescribed in

15.804–8(h), replace the text of the basic

provision with the following:

(a) Submission of cost or pricing data is not

required.

(b) Provide information described below:

(Insert description of the information and the

format that are required, including access to

records necessary to permit an adequate

evaluation of the proposed price in

accordance with 15.804–6(a)(5). Standard

Form 141X. Proposal Cover Sheet (Cost or

Pricing Data Not Required), may be used for

information other than cost or pricing data.)

52.215–42 Requirements for Cost or

Pricing Data or Other Information—

Modifications

As prescribed in 15.804–8(i), insert

the following clause:

Requirements for Cost or Pricing Data or

Other Information—Modifications (XXX

1995)

(a) In lieu of submitting cost or pricing data

for modifications under this contract, for

price adjustments expected to exceed

threshold set forth at FAR 15.804–2(a)(1), the

Contractor may submit a written request for

exemption from the requirement for

submission of cost or pricing data by

submitting—

(1) Standard Form 1412, Request for

Exemption From Submission of Cost or

Pricing Data;

(2) Information relative to an exemption

granted for prior or repetitive acquisitions; or

(3) For commercial items not covered by

another exception, information on prices at

which the same item or similar items have

been sold in the commercial market.

(b)(1) Unless the Contractor is granted an

exemption from the requirement to submit

cost or pricing data, the Contractor shall

submit cost or pricing data on Standard Form

(SF) 1411, Contract Pricing Proposal Cover

Sheet (Cost or Pricing Data Required), with

supporting attachments prepared in

accordance with Table 15–2 of FAR 15.804–

6(b)(2).

(2) As soon as practicable after final

agreement on price, but before contract

award (except for unpriced actions such as

letter contracts), the offeror shall submit a

certificate of Current Cost or Pricing Data, as

prescribed by FAR 15.804–4.

(End of clause)

Alternate I (XXX) 1995). As prescribed in

15.804–8(i), substitute the following

paragraph (b)(1) for paragraph (b)(1) of the

basic clause.

(b)(1) Unless the Contractor is granted an

exemption from the requirement to submit

cost or pricing data, the Contractor shall

submit cost or pricing data on Standard Form

(SF) 1411, Contract Pricing Proposal Cover

Sheet (Cost or Pricing Data Required), with

supporting attachments prepared in the

following format:

Alternate II (XXX 1995). As prescribed in

15.804–8(i), add the following paragraph (c)

to the basic clause:

(c) When the proposal is submitted, also

submit one copy each, including the SF 1411

and supporting attachments, to: (1) the

Administrative Contracting Officer, and (2)

the Contract Auditor.

Alternate III (XXX 1995). As prescribed in

15.804–8(i), add the following paragraph (c)

to the basic clause (if Alternate II is also

used, redesignate as paragraph (d)):

(c) Submit the cost portion of the proposal

via the following electronic media: (Insert

media format).

Alternate IV (XXX 1995). As prescribed in

15.804–8(i), replace the text of the basic

provision with the following:

(a) Submission of cost or pricing data is not

required.

(b) Provide information described below:

(Insert description of the information and the

format that are required, including access to

records necessary to permit an adequate

evaluation of the proposed price in

accordance with 15.804–6(a)(5). Standard

Form 141X, Proposal Cover Sheet (Cost or

Pricing Data Not Required), may be used for

information other than cost or pricing data.)

47. Section 52.215–XX is added to

read as follows:

52.215–XX Audit—Commercial Items

As prescribed at 15.106–2, insert the

following clause:

Audit—Commercial Items (XXX 1995)

(a) As used in this clause, records include

books, documents, accounting procedures

and practices, and other data, regardless of

type and regardless of whether such items are

in written form, in the form of computer data,

or any other form.

(b) This paragraph applies to solicitations

and contracts/subcontracts for commercial

items that may be or have been granted an

exemption from submittal of cost or pricing

data under FAR 15.804–1(a)(2). In order to

determine the accuracy of the information on

prices at which the same or similar items

have been sold in the commercial market, the

Contracting Officer and authorized

representatives have a right to examine such

information provided by the offeror,

Contractor, or subcontractor, and all records

that directly relate to such information. This

right shall expire two years after the date of

award of the contract, or two years after the

date of any modification to the contract, with

respect to which this information is

provided.

(c) If the prime Contractor and each highertier subcontractor were required to submit

cost or pricing data, the Contractor shall

insert the substance of this clause, including

this paragraph (c), in each subcontract for

which submission of cost or pricing data was

required or was exempted under FAR

15.804–1(a)(2).

(End of clause)

52.216–2 Economic Price

Adjustment—Standard Supplies

48. Section 52.216–2(a)(2) is amended

by removing ‘‘15.804–3’’ and inserting

‘‘15.804–1’’ in its place.

49. Section 52.216–3 is amended by

revising the clause date and paragraph

(a)(2) to read as follows:

52.216–3 Economic Price

Adjustment—Semistandard Supplies

* * * * *

Economic Price Adjustment—Semistandard

Supplies (XXX 1995)

(a) * * * (2) meets the criteria of

subsection 15.804–1 of the Federal

Acquisition Regulation (FAR), and * * *

* * * * *

50. Section 52.216–5 is amended by

revising the clause date and paragraph

(d)(1)(i)(A) to read as follows:

52.216–5 Price Redetermination—

Prospective

* * * * *
Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / Proposed Rules 2293

Price Redetermination—Prospective (XXX

1995)

* * * * *

(d) * * *

(1) * * *

(i) * * *

(A) An estimate and breakdown of the

costs of these supplies or services on

Standard Form 1411, Contract Pricing

Proposal Cover Sheet (Cost or Pricing Data

Required) (or in any other form on which the

parties may agree);

* * * * *

51. Section 52.216–6 is amended by

revising the clause date and paragraph

(c)(1)(ii) to read as follows:

52.216–6 Price Redetermination—

Retroactive

* * * * *

Price Redetermination—Retroactive (XXX

1995)

* * * * *

(c) * * *

(1) * * *

(ii) A statement on Standard Form 1411,

Contract Pricing Proposal Cover Sheet (Cost

or Pricing Data Required), or in any other

form on which the parties may agree, of all

costs incurred in performing the contract;

and

* * * * *

52. Section 52.216–25, introductory

text, is revised to read as follows:

52.216–25 Contract Definitization

As prescribed in 16.603–4(b)(3), insert

the following clause in solicitations and

contracts when a letter contract is

contemplated. If, at the time of entering

into the letter contract, the contracting

officer knows that the definitive

contract will be based on adequate price

competition or will otherwise meet the

criteria of 15.804–1 for not requiring

submission of cost or pricing data, the

words ‘‘and cost or pricing data

supporting its proposal’’ may be deleted

from paragraph (a) of the clause.

* * * * *

53. Section 52.222–48 is amended by

revising the clause date and paragraph

(a)(ii) to read as follows:

52.222–48 Exemption From

Application of Service Contract Act

Provisions for Contracts for

Maintenance, Calibration, and/or

Repair of Certain ADP, Scientific and

Medical and/or Office and Business

Equipment—Contractor Certification

* * * * *

Exemption From Application of Service

Contract Act Provisions (XXX 1995)

(a) * * * (ii) The contract services are

furnished at prices which are, or are based

on, established catalog or market prices for

the maintenance, calibration, and/or repair of

certain ADP, scientific and medical and/or

office and business equipment. An

‘‘established catalog price’’ is a price

(including discount price) recorded in a

catalog, price list schedule, or other verifiable

and established record that is regularly

maintained by the manufacturer or the

Contractor, is either published or otherwise

available for inspection by customers, and

states prices at which sales are currently, or

were last, made to a significant number of

buyers constituting the general public. An

‘‘established market price’’ is a current price,

established in the course of ordinary and

usual trade between buyers and sellers free

to bargain, which can be substantiated by

data from sources independent of the

manufacturer or Contractor; and * * *

* * * * *

PART 53—FORMS

54. Section 53.215–2 is revised to read

as follows:

53.215–2 Price Negotiation (SF’s 1411,

1412, and 141X)

The following standard forms are

prescribed for use in connection with

requirements for obtaining cost or

pricing data or other information from

offerors or contractors, as specified in

15.804:

(a) SF 1411 (REV. XXX/95), Contract

Pricing Proposal Cover Sheet (Cost or

Pricing Data Required). (See 15.804–

6(b)(1).)

(b) SF 1412 (REV. XXX/95), Request

for Exemption from Submission of Cost

or Pricing Data. (See 15.804–1(e).)

(c) SF 1412A (XXX/95), Continuation

Sheet (for SF 1412). SF 1412 and SF

1412A are authorized for local

reproduction.

(d) SF 141X (XXX/95), Proposal Cover

Sheet (Cost or Pricing Data Not

Required). (See 15.804–6(b)(2).)

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[FR Doc. 95–12 Filed 1–5–95; 8:45 am]

BILLING CODE 6820–34–C