GOVERNMENT CONTRACTS

DOD Issues Report Entitled Defense Contracts: DOD’s Request for Information from Contractors to Assess Prices

The Department of Defense (DOD) has issued a report entitled Defense Contracts: DOD’s Requests for Information from Contractors to Assess Prices. The report was issued pursuant to Section 831 of the National Defense Authorization Act (NDAA) for Fiscal Year 2013, which required DOD to issue guidance and provide training related to the information contracting officers may request to determine the reasonableness of contract prices. The NDAA also included a provision for the Government Accountability Office (GAO) to review contracts awarded between January 2013 and January 2015 and report on the extent DOD needed cost data from the contractors to assess the reasonableness of prices. The report addresses: 1) DOD's actions to develop guidance and training on determining price reasonableness, and 2) circumstances under which DOD requested contractor cost or pricing information for determining price reasonableness.

The GAO reviewed regulations and policies and interviewed DOD officials. GAO also reviewed a random, nongeneralizable sample of 32 noncompetitive commercial contracts from the four DOD components that spent the most on contracts during the 2-year period specified in the mandate. The report concluded that DOD is taking several steps to develop guidance and training related to determining the reasonableness of prices. The steps taken thus far are: 1) DOD has issued a policy memo to provide guidance to contracting officers on the determination of price reasonableness for commercial items; 2) DOD plans to revise the Department of Defense Federal Acquisition Regulation Supplement (DFARS) and provide guidance to contracting officers on requesting cost or pricing information from contractors. DOD published the proposed rule for public comment in early August 2015; 3) DOD is developing training to complement the guidance and is establishing a group of cost and pricing experts to assist contracting officers.

Since the guidance, regulation, and training plans have not yet been implemented, it is too early to determine the effectiveness of these initiatives on determining the reasonableness of proposed prices. Additionally, the GAO concluded that DOD contracting officials requested cost or pricing information from contractors to determine the reasonableness of proposed prices for 12 of 32 commercial contracts in GAO’s sample. Overall, the GAO concluded that contracting officials face challenges when determining price reasonableness, such as data currency and contractor reluctance to share data.

NASA Issues Proposed Rule to Amend NASA FAR Supplements: Safety, Health Measures and Mishap Reporting

The National Aeronautics and Space Administration (NASA) issued a proposed rule to amend the NASA FAR Supplement (NFS) to revise a current clause related to safety and health measures and mishaps reporting by narrowing the application of the clause, resulting in a decrease in the reporting burden on contractors while reinforcing the measures contractors at NASA facilities must take to protect the safety of their workers, NASA employees, the public, and high value assets, 80 Fed. Reg. 48282. The revision to this proposed rule is part of NASA's retrospective plan under Executive Order (EO) 13563 completed in August 2011. Comments on the proposed rule are due October 13, 2015. 

OMB Releases Draft Guidance on Improving Cybersecurity in Government Acquisitions

The Office of Management and Budget (OMB) released draft guidance on improving cybersecurity in government acquisitions and is seeking public comment on the types of contract clauses agencies should use in securing contractor information systems. OMB’s draft guidance includes recommendations for 1) minimum security controls, 2) cyber incident reporting, 3) information system security assessments, 4) continuous monitoring, and 5) business due diligence. The guidance calls for amendments to the Federal Acquisition Regulation that will write in contract clauses that address the first four recommendations, as part of OMB’s effort to standardize cybersecurity for contractor information systems. Comments are due September 10, 2015. 

GAO Issues Report Entitled Federal Supply Schedules: More Attention Needed to Competition and Prices

The GAO has issued a report entitled Federal Supply Schedules: More Attention Needed to Competition and Prices. The report addresses 1) how and to what extent the government is using the Federal Supply Schedule (FSS) program, 2) factors influencing the degree of competition for FSS orders, and (3) the extent to which agencies examine prices to be paid for FSS orders. The GAO analyzed data from the Federal Procurement Data System-Next Generation on obligations through the FSS program for fiscal years 2010-2014 and reviewed a non-generalizable sample of 60 FSS orders awarded in fiscal year 2013 by DOD, HHS and GSA, the agencies with the highest use of the FSS program. The analysis of publicly reported federal procurement data showed that federal use of the FSS program has declined from $31.8 billion in 2010 to $25.7 billion in 2014, a 19% inflation-adjusted decrease,  a decrease consistent with the decline in overall federal contracting obligations. The FSS portion of total federal contracting obligations remained steady between 5 and 6%. The GAO found that most FSS obligations were competed in fiscal year 2014, but only 40% of obligations were on orders for which the government received three or more quotes. Additionally, the GAO concluded that agencies are paying insufficient attention to prices when using FSS, and that ordering agencies did not consistently seek discounts from schedule prices, even when required to do so by the FAR. Lastly, the GAO found cases in which officials did not assess prices for certain items, as required, or had insufficient information to assess prices. 

NOTICES

80 Fed. Reg. 47474, August 7, 2015, to add products (Envelope, Transparent, Large; Non-rechargeable, 9V alkaline battery) and a service (Janitorial Service, USDA Forest Service White Mountain National Forest Headquarters, 71 White Mountain Drive, Campton, NH) to the Procurement List.  The additions will become effective September 7, 2015. 

80 Fed. Reg. 47475, August 7, 2015, proposing to delete a service (Rebuilding Auto Components Service, Federation Employment and Guidance Service, Inc., New York, NY) from the Procurement List. Comments on the proposed deletion are due September 7, 2015.