Wednesday, June 13, 2018

New Definition for "Adequate Price Competition" Coming

The FAR (Federal Acquisition Regulation) Councils are proposing a change to the definition of "adequate price competition" applicable to DoD contracts only. This change is mandated by the 2017 NDAA (National Defense Authorization Act). As everyone knows, contracts awarded based on adequate price competition is exempt from the requirement to submit certified cost or pricing data. But a lot of people get tied up in knots trying to figure whether adequate price competition exists or existed. The is new definition should clear up a lot of confusion, as least insofar as DoD contracts go.

The current definition reads life this: Adequate price competition exists if two or more responsible offerors, competing independently, submit priced offers that satisfy the Government's expressed requirement and if award will be made to the offeror whose proposal represents the best value where price is a substantial factor in source selection and there is no finding that the price of the otherwise successful offeror is unreasonable. Or, there was a reasonable expectation, based on market research or other assessment, that two or more responsible offerors, competing independent, would submit priced offers in response to the solicitation's expressed requirement, even though only one offer is received from a responsible offeror and if based on the offer received, the contracting officer can reasonably conclude that the offer was submitted with the expectation of competition.

So you can see, with the "reasonable expectation that two or more offerors would submit offers" provision, a high degree of judgment is involved on the part the contracting officer. The Inspector General and GAO have, at various times, second-guessed these determinations.

The new definition is much simpler and removes the subjective element in determining whether adequate price competition exists. It reads as follows:
For DoD, NASA, and the Coast Guard, a price is based on adequate price competition only if two or more responsible offerors, competing independently, submit responsive and viable offers.
So, to have adequate price competition, contracting officers must have two or more proposals in hand - no more "reasonable expectation" that two or more offers would respond. This takes the guesswork out of the equation.

The old definition still applies to all other Government agencies.

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