DoD Issues Final Rules: (1) Amended DFARS To Implement Additional Requirements for Submission of Other Than Certified Cost or Pricing Data; and (2) Repealed Rule Requiring Preference for Fixed-Price Contracts

On Oct. 28, 2022, the Department of Defense (DoD) issued final rules implementing Sections 803 and 817 of the National Defense Authorization Act (NDAA) for Fiscal Years (FY) 2020 and FY 2022, respectively.

Section 803

The final rule implementing Section 803 now prohibits contracting officers from determining that the price of a contract or subcontract is fair and reasonable based solely on historical pricing data. The amendment also makes offerors ineligible for an award if (i) an offeror fails to make a good faith attempt to submit data other than certified cost or pricing data in response to a reasonable request and (ii) the contracting officer is unable to determine if the offeror’s prices are fair and reasonable by other means. The primary exception to this is where the head of the contracting activity (HCA) makes a public interest exception.

The final rule amended DFARS parts 215 and 242 to incorporate these changes.

Before issuing the final rule, DoD reviewed public comments on the proposed rule and made certain changes. Specifically, DoD revised DFARS 215.403-3 to include the word “subcontract” to clarify that the rule also applies to subcontractors. DoD revised DFARS 215.403-3(a)(4) to include the requirement that offerors make a good faith effort to comply with the government’s reasonable request to furnish data other than certified cost or pricing data.

Section 817

Previously, Section 829 of the FY 2017 NDAA required contracting officers to show a preference for fixed-price contracts, traditionally used to aid in managing cost risk associated with contract performance, when assigning a contract type. Section 817 of the FY 2022 NDAA repeals Section 829.

DFARS 216.102(1) previously required contracting officers to consider fixed-price contracts, to include fixed-price incentive contracts, before making a final determination of contract type. Additionally, the use of cost-reimbursement contracts in excess of $25 million was prohibited unless certain requirements were met and the contracting officer obtained approval from the HCA. The Section 829 final rule also removes this requirement.

The final rule removes references, policies, and limitations related to Section 829 at DFARS Sections 216.102(1), 216.301-3(2), 216.401(d), and 235.006(b)(i). DoD is not required to publish this rule for public comment because it simply updates internal DoD operating procedures.

No new solicitation provisions or contract clauses were created as a result of either rule.

Both rules were published on Oct. 28, 2022.