83 FR 19645 - Defense Federal Acquisition Regulation Supplement: Promoting Voluntary Post-Award Disclosure of Defective Pricing (DFARS Case 2015-D030)
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System Federal Register Volume 83, Issue 87 (May 4, 2018)
Defense Acquisition Regulations System
Federal Register Volume 83, Issue 87 (May 4, 2018)
| Page Range | 19645-19647 | |
| FR Document | 2018-09489 |
[Federal Register Volume 83, Number 87 (Friday, May 4, 2018)] [Rules and Regulations] [Pages 19645-19647] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-09489] ----------------------------------------------------------------------- DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Part 215 [Docket DARS-2015-0051] RIN 0750-AI75 Defense Federal Acquisition Regulation Supplement: Promoting Voluntary Post-Award Disclosure of Defective Pricing (DFARS Case 2015- D030) AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to state that, in the interest of promoting voluntary contractor disclosures of defective pricing identified by the contractor after contract award, DoD contracting officers have discretion to request a limited-scope or full-scope audit, as appropriate for the circumstances. DATES: Effective May 4, 2018. [[Page 19646]] FOR FURTHER INFORMATION CONTACT: Mr. Mark Gomersall, telephone 571-372- 6099. SUPPLEMENTARY INFORMATION: I. Background DoD published a proposed rule in the Federal Register at 80 FR 72669 on November 20, 2015, to amend the DFARS to indicate that DoD contracting officers have discretion to request a limited- or full- scope audit, as appropriate for the circumstances, when contractors voluntarily disclose defective pricing after contract award. In response to the Better Buying Power 2.0 initiative on ``Eliminating Requirements Imposed on Industry where Costs Outweigh Benefits,'' contractors recommended several changes to 41 U.S.C. chapter 35, Truthful Cost or Pricing Data (formerly the Truth in Negotiations Act) and to the related DFARS guidance. Specifically, contractors recommended that DoD clarify policy guidance to reduce repeated submissions of certified cost or pricing data. Frequent submissions of such data are used as a defense against defective pricing claims by DoD after contract award, since data that are frequently updated are less likely to be considered outdated or inaccurate and, therefore, defective. Better Buying Power 3.0 called for a revision of regulatory guidance regarding the requirement for contracting officers to request an audit even if a contractor voluntarily discloses defective pricing after contract award. One respondent submitted a public comment in response to the proposed rule. II. Discussion and Analysis DoD reviewed the public comment in the development of the final rule. A discussion of the comment and changes made to the rule as a result of the comment is provided, as follows: A. Summary of Significant Changes From the Proposed Rule One change was made to the rule as a result of the public comment to remove the mandatory requirement to conduct an audit in all cases of a contractor's voluntary disclosure of defective pricing. B. Analysis of Public Comment Comment: The respondent recommended that ``shall'' be replaced by the word ``may'' concerning the requirement to request a limited-scope audit as proposed at DFARS 215.407-1(c)(i). The respondent stated that the study entitled ``Eliminating Requirements Imposed on Industry where Costs Outweigh Benefits'' recommended that DoD not impose a mandatory requirement on itself to conduct an audit in all cases of a contractor's voluntary disclosure of defective pricing, because such a mandatory requirement provides no discretion for contracting officers not to request an audit if in their judgment an audit is not required by the circumstances. However, instead of removing this mandatory requirement as recommended by the study, the proposed rule would change the DFARS from ``shall request an audit. . .'' to ``shall request a limited scope audit. . . .'' Thus, the proposed language still provides a strong disincentive to contractors to voluntarily disclose defective pricing and it still imposes a mandatory requirement on contracting officers that may not be in the best interests of the DoD in all circumstances. Response: The final rule is revised to remove the mandatory requirement to conduct an audit in all cases of a contractor's voluntary disclosure of defective pricing. However, in order to calculate appropriate price reductions as required by 10 U.S.C. 2306a(e), it is necessary that contracting officers, at a minimum, discuss the disclosure with the Defense Contract Audit Agency (DCAA) to determine the completeness of the contractor's voluntary disclosure and the accuracy of the contractor's cost impact calculation for the affected contract, and the potential impact on existing contracts, task or delivery orders, or other proposals the contractor has submitted to the Government. This discussion will assist the contracting officer in determining the involvement of DCAA, which could be a limited-scope audit (e.g., limited to the affected cost elements of the defective pricing disclosure), a full-scope audit, or technical assistance, as appropriate for the circumstances (e.g., nature or dollar amount of the defective pricing disclosure). III. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Off-the-Shelf Items The requirement for submission of certified cost or pricing data does not apply to contracts at or below the simplified acquisition threshold or to commercial items, including commercially available off- the-shelf items. Therefore, this rule is not applicable to those classes of contracts. IV. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. V. Executive Order 13771 This rule is not subject to E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, because this rule is not a significant regulatory action under E.O. 12866. VI. Regulatory Flexibility Act A final regulatory flexibility analysis (FRFA) has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 691, et seq. The FRFA is summarized as follows: The objective of this rule is to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to indicate that, in the interest of promoting voluntary contractor disclosures of defective pricing identified by the contractor after contract award, DoD contracting officers have discretion to request a limited-scope or full-scope audit, as appropriate for the circumstances. This rule will apply to all DoD contractors, including small entities, who are required to submit certified cost or pricing data. There were no significant issues raised by the public in response to the initial regulatory flexibility analysis. The number of small entities affected by this rule is unknown as this information is not available in the Federal Procurement Data System or other central repository. However, DoD anticipates that this rule could have a positive economic impact. If those small entities usually submit cost or pricing data frequently in order to avoid defective pricing claims, then this rule may encourage them to reduce the number of such submissions. There is no change to reporting or recordkeeping as a result of this rule. The rule does not duplicate, overlap, or conflict with any other Federal rules, [[Page 19647]] and there are no known significant alternative approaches to the rule that would meet the requirements. VII. Paperwork Reduction Act The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). List of Subjects in 48 CFR Part 215 Government procurement. Amy G. Williams, Deputy, Defense Acquisition Regulations System. Therefore, 48 CFR part 215 is amended as follows: PART 215--CONTRACTING BY NEGOTIATION 0 1. The authority citation for part 215 continues to read as follows: Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. 0 2. Add sections 215.407 and 215.407-1 to subpart 215.4 to read as follows: 215.407 Special cost or pricing areas. 215.407-1 Defective certified cost or pricing data. (c)(i) When a contractor voluntarily discloses defective pricing after contract award, the contracting officer shall discuss the disclosure with the Defense Contract Audit Agency (DCAA). This discussion will assist in the contracting officer determining the involvement of DCAA, which could be a limited-scope audit (e.g., limited to the affected cost elements of the defective pricing disclosure), a full-scope audit, or technical assistance as appropriate for the circumstances (e.g., nature or dollar amount of the defective pricing disclosure). At a minimum, the contracting officer shall discuss with DCAA the following: (A) Completeness of the contractor's voluntary disclosure on the affected contract. (B) Accuracy of the contractor's cost impact calculation for the affected contract. (C) Potential impact on existing contracts, task or deliver orders, or other proposals the contractor has submitted to the Government. (ii) Voluntary disclosure of defective pricing is not a voluntary refund as defined in 242.7100 and does not waive the Government entitlement to the recovery of any overpayment plus interest on the overpayments in accordance with FAR 15.407-1(b)(7). (iii) Voluntary disclosure of defective pricing does not waive the Government's rights to pursue defective pricing claims on the affected contract or any other Government contract. [FR Doc. 2018-09489 Filed 5-3-18; 8:45 am] BILLING CODE 5001-06-P
![Federal Register / Vol. 83, No. 87 / Friday, May 4, 2018 / Rules and Regulations 19645
office. The Defense Contract Management and Budget under the ■ a. Removing the clause date ‘‘(DEC
Management Agency (DCMA) performs Paperwork Reduction Act (44 U.S.C. 2017)’’ and adding ‘‘(MAY 2018)’’ in its
approximately 128 CPSRs per year. In chapter 35). place;
addition, the contract administration ■ b. In paragraph (b) introductory text,
List of Subjects in 48 CFR Parts 212,
office validates about 256 purchasing removing ‘‘(Pub. L. 113–291)’’ and
246, and 252
systems per year. There is also a quality adding ‘‘(Pub. L. 113–291 and section
management system audit of the Government procurement. 885 of the National Defense
purchasing system, which is performed Amy G. Williams, Authorization Act for Fiscal Year 2016
on a risk-based basis at least once every (Pub. L. 114–92))’’ in its place; and
Deputy, Defense Acquisition Regulations
three years. There are approximately System. ■ c. Revising paragraph (b)(2)(iii).
3,292 higher-level quality contractors, The revision reads as follows:
resulting in 1,097 possible reviews per Therefore, 48 CFR parts 212, 246, and
year. Adding the purchasing system 252 are amended as follows: 252.246–7008 Sources of Electronic Parts.
reviews and the quality management ■ 1. The authority citation for parts 212, * * * * *
system audits totals 1,481 reviews (128 246, and 252 continues to read as (b) * * *
+ 256 + 1097). However, DCMA follows: (2) * * *
estimates that it is likely that contractors (iii) The Contractor’s selection of such
Authority: 41 U.S.C. 1303 and 48 CFR
using ‘‘contractor-approved’’ sources, chapter 1. contractor-approved suppliers is subject
would be limited to 10 percent or less to review, audit, and approval by the
of the contractors subject to these audits PART 212—ACQUISITION OF Government, generally in conjunction
and reviews, i.e. not more than 148 COMMERCIAL ITEMS with a contractor purchasing system
contractors. DCMA further estimates review or other surveillance of
that of those using ‘‘contractor- 212.301 [Amended] purchasing practices by the contract
approved’’ sources, not more than 15 ■ 2. In section 212.301, amend administration office, or if the
(10 percent) per year would result in paragraph (f)(xix)(C) by removing ‘‘(Pub. Government obtains credible evidence
issues or disapprovals by the L. 113–291)’’ and adding ‘‘(Pub. L. 113– that a contractor-approved supplier has
Government. 291 and section 885 of the National provided counterfeit parts. The
This rule does not impose any Defense Authorization Act for Fiscal Contractor may proceed with the
reporting, recordkeeping, or other Year 2016 (Pub. L. 114–92))’’ in its acquisition of electronic parts from a
compliance requirements other than place. contractor-approved supplier unless
being subject to approval by DoD if the otherwise notified by DoD; or
contractor or subcontractor identifies a PART 246—QUALITY ASSURANCE * * * * *
contractor-approved supplier of [FR Doc. 2018–09491 Filed 5–3–18; 8:45 am]
electronic parts and the Government 246.870–0 [Amended]
BILLING CODE 5001–06–P
selects the contractor for review and ■ 3. Amend section 246.870–0, by
audit. Since contractor selection of removing ‘‘(Pub. L. 113–291)’’ and
contractor-approved sources was adding ‘‘(Pub. L. 113–291 and section DEPARTMENT OF DEFENSE
already subject of review and audit, 885 of the National Defense
addition of ‘‘and approval’’ does not Authorization Act for Fiscal Year 2016 Defense Acquisition Regulations
change much, because if the (Pub. L. 114–92))’’ in its place. System
Government reviewed and audited a ■ 4. In section 246.870–2, revise
source and found a serious problem, the paragraph (a)(1)(ii)(C) to read as follows: 48 CFR Part 215
Government would require corrective
action to prevent entry of such 246.870–2 Policy. [Docket DARS–2015–0051]
electronic parts into the supply chain. (a) * * * RIN 0750–AI75
Furthermore, the contractor may (1) * * *
proceed with the acquisition of (ii) * * * Defense Federal Acquisition
electronic parts from a contractor- (C) The selection of such contractor- Regulation Supplement: Promoting
approved supplier unless otherwise approved suppliers is subject to review, Voluntary Post-Award Disclosure of
notified by DoD. audit, and approval by the Government, Defective Pricing (DFARS Case 2015–
DoD was unable to identify any generally in conjunction with a D030)
significant alternatives that would contractor purchasing system review or
reduce the economic impact on small other surveillance of purchasing AGENCY: Defense Acquisition
entities and still fulfill the requirements practices by the contract administration Regulations System, Department of
of the statute. However, DoD does not office, or if the Government obtains Defense (DoD).
expect this rule to have any significant credible evidence that a contractor- ACTION: Final rule.
economic impact on small entities, approved supplier has provided
because it does not impose any new counterfeit parts. The contractor may SUMMARY: DoD is issuing a final rule
requirements on contractors or proceed with the acquisition of amending the Defense Federal
subcontractors. Contractors may electronic parts from a contractor- Acquisition Regulation Supplement
proceed with the acquisition of approved supplier unless otherwise (DFARS) to state that, in the interest of
electronic parts from a contractor- notified by DoD. promoting voluntary contractor
disclosures of defective pricing
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approved supplier unless otherwise * * * * *
notified by DoD. identified by the contractor after
PART 252—SOLICITATION contract award, DoD contracting officers
VII. Paperwork Reduction Act have discretion to request a limited-
PROVISIONS AND CONTRACT
The rule does not contain any CLAUSES scope or full-scope audit, as appropriate
information collection requirements that for the circumstances.
require the approval of the Office of ■ 5. Amend section 252.246–7008 by— DATES: Effective May 4, 2018.
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![Federal Register / Vol. 83, No. 87 / Friday, May 4, 2018 / Rules and Regulations 19647
and there are no known significant defined in 242.7100 and does not waive Cir. 2017). The National Railroad
alternative approaches to the rule that the Government entitlement to the Passenger Corporation (Amtrak) and
would meet the requirements. recovery of any overpayment plus certain passenger organizations filed
interest on the overpayments in petitions for certiorari with the U.S.
VII. Paperwork Reduction Act
accordance with FAR 15.407–1(b)(7). Supreme Court, which declined to
The rule does not contain any (iii) Voluntary disclosure of defective review the Eighth Circuit’s ruling.
information collection requirements that pricing does not waive the The Board’s rule is therefore invalid
require the approval of the Office of Government’s rights to pursue defective and 49 CFR part 1040 will be removed.
Management and Budget under the pricing claims on the affected contract Because this action is based on a final
Paperwork Reduction Act (44 U.S.C. or any other Government contract. court determination that the rule being
chapter 35). [FR Doc. 2018–09489 Filed 5–3–18; 8:45 am] eliminated is invalid, the Board finds
List of Subjects in 48 CFR Part 215 BILLING CODE 5001–06–P good cause to dispense with notice and
Government procurement. comment under the Administrative
Procedure Act (APA). See 5 U.S.C.
Amy G. Williams, SURFACE TRANSPORTATION BOARD 553(b)(B).
Deputy, Defense Acquisition Regulations The Regulatory Flexibility Act (RFA),
System. 49 CFR Part 1040 as amended by the Small Business
Therefore, 48 CFR part 215 is Regulatory Enforcement Fairness Act of
amended as follows: [Docket No. EP 726]
1996, 5 U.S.C. 601–612, generally
On-Time Performance Under Section requires an agency to prepare a
PART 215—CONTRACTING BY
213 of The Passenger Rail Investment regulatory flexibility analysis of any rule
NEGOTIATION
and Improvement Act of 2008 subject to notice and comment
■ 1. The authority citation for part 215 rulemaking requirements, unless the
continues to read as follows: AGENCY: Surface Transportation Board. agency certifies that the rule will not
ACTION: Final rule. have a significant economic impact on
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
a substantial number of small entities.
SUMMARY: The Surface Transportation Because the Board has determined that
■ 2. Add sections 215.407 and 215.407– Board (Board) is removing its final rule notice and comment are not required
1 to subpart 215.4 to read as follows: concerning on-time performance of under the APA for this rulemaking, the
215.407 Special cost or pricing areas. intercity passenger rail service because requirements of the RFA do not apply.
it was invalidated upon judicial review. This final rule does not contain a new
215.407–1 Defective certified cost or DATE: This final rule is effective May 4,
pricing data.
or amended information collection
2018. requirement subject to the Paperwork
(c)(i) When a contractor voluntarily Reduction Act of 1995, 44 U.S.C. 3501–
FOR FURTHER INFORMATION CONTACT:
discloses defective pricing after contract 3521.
Scott M. Zimmerman: (202) 245–0386.
award, the contracting officer shall
Federal Information Relay Service
discuss the disclosure with the Defense List of Subjects in 49 CFR Part 1040
(FIRS) for the hearing impaired: (800)
Contract Audit Agency (DCAA). This
877–8339. Mass transportation, Railroads.
discussion will assist in the contracting
officer determining the involvement of SUPPLEMENTARY INFORMATION: On May It is ordered:
DCAA, which could be a limited-scope 15, 2015, the Board instituted a 1. Part 1040 is removed and notice
audit (e.g., limited to the affected cost rulemaking proceeding in this docket to will be published in the Federal
elements of the defective pricing define ‘‘on-time performance’’ for Register.
disclosure), a full-scope audit, or intercity passenger trains for purposes
2. This decision is effective on May 4,
technical assistance as appropriate for of Section 213 of the Passenger Rail
2018.
the circumstances (e.g., nature or dollar Investment and Improvement Act of
2008 (PRIIA), 49 U.S.C. 24308(f). See 80 Decided: April 30, 2018.
amount of the defective pricing
FR 28928. The Board adopted its final By the Board, Board Members Begeman
disclosure). At a minimum, the and Miller.
contracting officer shall discuss with rule in 49 CFR part 1040 on July 28,
2016, and the rule took effect on August Jeffrey Herzig,
DCAA the following:
(A) Completeness of the contractor’s 27, 2016. See 81 FR 51343. Clearance Clerk.
voluntary disclosure on the affected Petitions for judicial review of the
final rule were filed in the U.S. Courts PART 1040 [REMOVED AND
contract.
(B) Accuracy of the contractor’s cost of Appeals for the Eighth Circuit and the RESERVED]
impact calculation for the affected District of Columbia Circuit, and were
ultimately consolidated in the Eighth ■ For the reasons set forth in the
contract.
(C) Potential impact on existing Circuit. The Court of Appeals found that preamble, and under the authority of 49
contracts, task or deliver orders, or other the Board lacked authority to U.S.C. 1321(a), the Surface
proposals the contractor has submitted promulgate a final rule defining on-time Transportation Board removes and
to the Government. performance under PRIIA and vacated reserves 49 CFR part 1040.
(ii) Voluntary disclosure of defective the Board’s rule. See Union Pac. R.R. v. [FR Doc. 2018–09558 Filed 5–3–18; 8:45 am]
pricing is not a voluntary refund as Surface Transp. Bd., 863 F.3d 816 (8th BILLING CODE 4915–01–P
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Document Created: 2018-11-02 09:52:34
Document Modified: 2018-11-02 09:52:34
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | Effective May 4, 2018. | |
| Contact | Mr. Mark Gomersall, telephone 571-372- 6099. | |
| FR Citation | 83 FR 19645 | |
| RIN Number | 0750-AI75 |
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