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bob7947

Section 822: Enhanced Competition Requirements.

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I am analyzing the National Defense Authorization Act for Fiscal Year 2017 and I am on section 822 of the bill.  I have added the changes the bill will make to the current law in bold italics.  This new section changes parts of  10 U.S. Code § 2306a - Cost or pricing data: truth in negotiations.

What do you think of the language used for the changes?

The change directly below in (a) only adds the bold italic phrase.

Quote

(a)Required Cost or Pricing Data and Certification.—

(1)The head of an agency shall require offerors, contractors, and subcontractors to make cost or pricing data available as follows:
(A)An offeror for a prime contract under this chapter to be entered into using procedures other than sealed-bid procedures that is only expected to receive one bid shall be required to submit cost or pricing data before the award of a contract if—
(i)
in the case of a prime contract entered into after December 5, 1990, the price of the contract to the United States is expected to exceed $500,000; and
(ii)
in the case of a prime contract entered into on or before December 5, 1990, the price of the contract to the United States is expected to exceed $100,000.

The change directly below in (b) crosses out the current language and adds the bold italic language.

Quote

(b)Exceptions.—

(1)In general.—Submission of certified cost or pricing data shall not be required under subsection (a) in the case of a contract, a subcontract, or modification of a contract or subcontract—
(A)for which the price agreed upon is based on—
(i)
adequate price competition competition that results in at least two or more responsive and viable competing bids; or
(ii)
prices set by law or regulation

At the end of (b) a new section is added below.

Quote

(6) DETERMINATION BY PRIME CONTRACTOR.—A prime contractor required to submit certified cost or pricing data under subsection (a) with respect to a prime contract shall be responsible for determining whether a subcontract under such contract qualifies for an exception under paragraph (1)(A) from such requirement.

The House and Senate conferees explain that the purpose of the changes are: 

Quote

to clarify the definition of competition and the role of the prime contractor in determining whether a subcontract meets the competitive or commercial test under the section. 

The conferees recognize that the government retains the right to review determinations made by prime contractors. 
 

 

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To get the ball rolling, I offer the following comments from a Supplier Management view:

(a) – Seems awkward to me that a statute appears to conditions compliance with certified cost or pricing data based on knowledge whether the bid request is per a procedure under which only one bid is expected. I suppose FAR could require that Government and prime contractors/subcontractors make it known in such bid requests that only one bid is expected. I would expect a change to FAR 52.215-12 Subcontractor Certified Cost or Pricing Data.    

(b)  FAR 15.403-1 competition exception from certified cost or pricing data was “responsible” and “competing independently” and “satisfy express requirements.” It appears like it will be changed to “responsive and viable competing bids.”  Supplier Management will eventually need command media to define the changed criteria.   

(b)(6) I do not really understand the background behind this change. To me, current FAR 52.215-12 implicitly requires that Contractor determine whether an exception applies to a subcontractor bid response. Perhaps there were cases, for example, where some Contractors relied too heavily solely on supplier assertions in permitting an exception, and (b)(6) clarifies that they need to exercise independent judgment.

    

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1. Note the inconsistent use of "cost or pricing data" in (a) and "certified cost or pricing data" in (b).

2. Note the use of the word "bid" in (a)(1)(A). "Bid" should be proposal.

3. Note the sloppy construction in (a)(1)(A): "using procedures... that is only expected to receive one bid.... Better would be: using procedures... in which only one bid is expected to be received....

4. Note in (b)(1)(A)(1) the inappropriate use of "responsive and viable competing bids" in the context of negotiated procedures. Better would be: two or more acceptable competitive proposals.

5. The new section 6 is problematical. Is the prime now to be responsible instead of the contracting officer, or does the contracting officer still have the final say?

So Congress is incompetent. The question is whether, if the president signs the legislation, the FAR councils will fix these (and other) problems or simply quote the statute. 

 

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On ‎12‎/‎17‎/‎2016 at 10:49 AM, bob7947 said:

(A)for which the price agreed upon is based on—

(i)
adequate price competition competition that results in at least two or more responsive and viable competing bids; or

 

Isn't it better to just say "at least two responsive and viable competing bids"?  ('m ignoring "viable" and "bids" for the moment)

Why say "or more"?  "At least two" is "two or more" right?  Sounds redundant . . .  

If you put the sentence together in one place it looks like this:

Quote

Submission of certified cost or pricing data shall not be required under subsection (a) in the case of a contract, a subcontract, or modification of a contract or subcontract for which the price agreed upon is based on 

competition that results in at least two or more responsive and viable competing bids.

 

 

Does the green section apply to each element in the red?  Or just subcontracts?  How about the purple?  If the purple reaches back and affects all the elements in the red section that certainly helps.  I hate this sentence.  They obviously want the green to apply to each element in the red, but it seems ambiguous.  Someone should run a contest to rewrite it . . . (Pepe?)

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Vern:

Since this section applies to Title 10, the Civilian Agency Acquisition Council may tell the Defense Acquisition Regulations Council:

You go your way and I'll go mine.

They might say that quite a bit this year.  Whatever happens, It will take time to sort out the NDAA for FY 2017.  I'm still working on Title VIII and hope to finish by the end of the week.

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Vern:

The last bills were signed on December 16, 2016.  It takes a few days for the White House to update the legislation page.  I remember waiting for last year's NDAA and it seemed to take forever.  Give it a few more days.  Maybe they are waiting for the Grinch to deliver it.

So far, it does look like the conferees were amending the original legislation quite a bit during the conference.  I've seen only one section that applies to other than DoD so far. 

I think we are looking at, not only a hefty NDAA, but a historic piece of garbage.  There is a lot that affects systems acquisition.  However, a good deal affects procurement.  Title VIII has about 100 sections and some of them are quite long.  If I ever get through Title VIII, I hope to skim the other sections.  I know DOE has some goodies and probably the Coast Guard too in other Titles.

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FYI, I learned at the Nash & Cibinic Roundtable that the 2017 National Defense Authorization Act (NDAA) includes a DoD recommendation to allow all agencies to select contractors for multiple award contracts without considering price. The consideration of price is deferred to the evaluation of task and delivery orders under the MACs.

This will be a significant, beneficial change.

Quote

SEC. 825. EXCEPTION TO REQUIREMENT TO INCLUDE COST OR PRICE TO THE GOVERNMENT AS A FACTOR IN THE EVALUATION OF PROPOSALS FOR CERTAIN MULTIPLE-AWARD TASK OR DELIVERY ORDER CONTRACTS.

(a) Exception To Requirement To Include Cost Or Price As Factor.—Section 2305(a)(3) of title 10, United States Code, is amended—

(1) in subparagraph (A)—

(A) in clause (i), by inserting “(except as provided in subparagraph (C))” after “shall”; and

(B) in clause (ii), by inserting “(except as provided in subparagraph (C))” after “shall”; and

(2) by adding at the end the following new subparagraphs:

“(C) If the head of an agency issues a solicitation for multiple task or delivery order contracts under section 2304a(d)(1)(B) of this title for the same or similar services and intends to make a contract award to each qualifying offeror—

“(i) cost or price to the Federal Government need not, at the Government’s discretion, be considered under clause (ii) of subparagraph (A) as an evaluation factor for the contract award; and

“(ii) if, pursuant to clause (i), cost or price to the Federal Government is not considered as an evaluation factor for the contract award—

“(I) the disclosure requirement of clause (iii) of subparagraph (A) shall not apply; and

“(II) cost or price to the Federal Government shall be considered in conjunction with the issuance pursuant to section 2304c(b) of this title of a task or delivery order under any contract resulting from the solicitation.

“(D) In subparagraph (C), the term ‘qualifying offeror’ means an offeror that—

“(i) is determined to be a responsible source;

“(ii) submits a proposal that conforms to the requirements of the solicitation; and

“(iii) the contracting officer has no reason to believe would likely offer other than fair and reasonable pricing.

“(E) Subparagraph (C) shall not apply to multiple task or delivery order contracts if the solicitation provides for sole source task or delivery order contracts pursuant to section 8(a) of the Small Business Act (15 U.S.C. 637(a)).”.

Unquote

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Vern:

I just completed a search for latest action and sent to President at congress.gov.  The NDAA and H.R.5798 a bill To designate the facility of the United States Postal Service located at 1101 Davis Street in Evanston, Illinois, as the "Abner J. Mikva Post Office Building" are the only two bills that were sent to the President and not yet signed.

Neither one has yet to appear as pending legislation at the White House.  They will appear when we have given up looking.

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LA Times reported that delay may be due to a provision in the bill that permits space based missile defense, which the Obama administration previously strongly objected to.

 


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I have added Wifcon.com's 17th Annual Analysis of the National Defense Authorization Act for Fiscal Year 2017.  So far, I have limited it to Title VIII because that is the annual contracting Title and because it is so long and took so much time to set up.

I still have to clean some things up on it but I'm just trying to finish.

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This is from Section 893 defining what is a covered contract for application of requirements for contractor business systems.  I am sure H2H will appreciate this language covered contract "means a contractor that has covered contracts with the United States Government accounting for greater than 1 percent of its total gross revenue, except that the term does not include any contractor that is exempt, under section 1502 [CAS] of title 41, United States Code, or regulations implementing that section, from using full cost accounting standards established in that section.”
 

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On 12/24/2016 at 10:04 AM, Retreadfed said:

This is from Section 893 defining what is a covered contract for application of requirements for contractor business systems.  I am sure H2H will appreciate this language covered contract "means a contractor that has covered contracts with the United States Government accounting for greater than 1 percent of its total gross revenue, except that the term does not include any contractor that is exempt, under section 1502 [CAS] of title 41, United States Code, or regulations implementing that section, from using full cost accounting standards established in that section.”
 

The mind whirls with possibilities ... as to just what in the blue blazes the drafters were thinking.

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On 12/24/2016 at 9:02 AM, bob7947 said:

Take a look at Section 837 and the dates.  Some of you may understand what that was about.

That seems weirdly specific. Especially including the dollar amount cited. Somebody needs to tell this story.

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H_2_H:

There are really 2 sections:

Section 837, I believe, is specific to either General Dynamics (Electric Boat) or Newport News.  I originally posted a link to Electric Boat but I noticed from a 1984 hearing that Newport News was building nuclear submarines at that time. 

Section 836 covers defense contracts with defense contractors.  The years that covered contracts were awarded is different.  Section 837 probably involves contracts involved in the shipbuilding claims era.  

Both sections are reminiscent of some language from P. L. 85-804.  Maybe the writers in the Senate were aware of it.

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Bob, thanks for your analysis. Where there any provisions that were not enacted?  I will have to look but I thought I saw some in previous years' analysis. 

Thanks. 

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3 hours ago, bob7947 said:

Joel:

I thought I saw it.  Then I couldn't find it.  Now, I am waiting to compete the analysis.

Thanks, Bob. 

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On ‎12‎/‎21‎/‎2016 at 6:53 AM, Vern Edwards said:

I wonder if the Pentagon is pressing the White House to veto because of the some of the reorganization.

Can you point me to the Title/Section that discusses the reorganization? I've looked and I cannot find it.

Thanks

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