Thursday, August 11, 2016

DoD Proposing to Amend Rules on Commercial Pricing

The Department of Defense issued a proposal to amend it DFARS (DoD FAR Supplement) to, essentially, make it more difficult for contracting officers to request certified cost or pricing data or data other than certified cost or pricing data in lieu of awarding contracts based on commercial item determinations. The proposed regulations were required by sections of the NDAAs (National Defense Authorization Acts) from fiscal years 2013 and 2016.

One of the key provision should alleviate many contractor frustrations. Under the proposed regulations, contracting officers may presume that a prior commercial item determination made by a military department, a defense agency, or another component of DoD shall serve as a determination for subsequent procurements of such items. Too many times, contractors have to prove over and over again that the items it sells to the Government are commercial items. Now if that happens, contractors should be able to direct the contracting officer to prior determinations and satisfy the requirement.

Unfortunately, some contracting officers believe that they alone possess the holy grain of commercial item determinations and do not want to rely on what some other person has done. The new regulations answers that situation by stepping the determination up a level:
If the contracting officer does not make the presumption  and instead chooses to proceed with a procurement of an item previously determined to be a commercial item using procedures other than the procedures authorized for the procurement of a commercial item, the contracting officer shall request a review of the commercial item determination by the head of the contracting activity that will conduct the procurement.
Perhaps that will work, perhaps not. Another key provision of the proposed regulations are new definitions of "market research" and "nontraditional defense contractors". These read as follows:

Market research means a review of existing systems, subsystems, capabilities, and technologies that are available or could be made available to meet the needs of DoD in whole or in part. The review may include any of the techniques for conducting market research provided in section 10.002(b)(2) of the FAR and shall include, at a minimum, contacting knowledgeable individuals in Government and industry regarding existing market capabilities (section 855 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92)). 
Nontraditional defense contractor means an entity that is not currently performing and has not performed any contract or subcontract for DoD that is subject to full coverage under the cost accounting standards prescribed pursuant to 41 U.S.C. 1502 and the regulations implementing such section, for at least the 1-year period preceding the solicitation of sources by DoD for the procurement or transaction (10 U.S.C. 2302(9)).
You can read the full text of the proposed regulations here.

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