DoD Proposes Changes To DFARS Rules On Pricing Reasonableness and Pricing Data Requests

Late last month, on August 30 2021, the U.S. Department of Defense (DoD) issued a proposed rule that makes three changes in the Defense Federal Acquisition Regulation Supplement (DFARS) to the regulations concerning contract pricing reasonableness and contract pricing data requests.

First, under the proposed rule, for purposes of determining that the price of a defense agency contract or subcontract is fair and reasonable, contracting officers are prohibited from basing that determination solely on historical prices paid by the Government.  Thus, contracting officers are implicitly directed to examine other sources of pricing information such as market and catalog pricing and contractor cost and pricing data to determine fairness and reasonableness.

Second, and relatedly, the proposed rule requires a contracting activity to consider new factors contained in DFARS rather than factors found in the Federal Acquisition Regulation (FAR) when determining that a defense agency should make a contract award to a contractor that fails to make a good faith effort to comply with a reasonable request for non-certified cost or pricing data.  As set forth in the generally applicable rules in FAR at 15.403-3(a)(4), an offeror that does not comply with a request to submit data for a contract or subcontract is ineligible for an award unless the head of the contracting activity determines that it is in the best interest of the Government to make the award, based on the following three factors:

1. The effort made to obtain the data.
2. The need for the item or service.
3. Increased cost or significant harm to the Government if award is not made.

As amended under the proposed rule, DFARS requires a defense agency contracting activity to, instead, make a determination to award a contract to a non-compliant offeror based on the following six factors that DoD believes are more relevant to defense contracts:

1. The effort to obtain the data.
2. Availability of other sources of supply of the item or service.
3. The urgency or criticality of the Government's need for the item or service.
4. Reasonableness of the price of the contract, subcontract, or modification of the contract or subcontract based on information available to the contracting officer.
5. Rationale or justification made by the offeror for not providing the requested data.
6. Risk to the Government if award is not made.

Lastly, as amended by the proposed rule, DFARS now requires defense agencies to include a notation in the Contractor Performance Assessment Reporting System (CPARS) on contractors that have denied multiple requests for submission of non-certified cost or pricing data over the preceding 3-year period and that, nevertheless, received a contract award.

Comments to the proposed rule are due by October 29, 2021.  To read the proposed DFARS Rule go here. 

To read other articles from The GovCon Bulletin™ go here.