Air Force Materiel Command

Transcription

1 Air Force Materiel Command Legislative Impacts on Commercial Pricing Janice Muskopf HQ AFMC/PKF Deliver and Support Agile War-Winning Capabilities 1

2 Briefing Overview Site Picture Significant changes - FY16 NDAA Significant changes - FY17 NDAA Implications 2

3 Site Picture Strong concern from Industry regarding previous DFARS commercial pricing case that was designed to implement FY13 NDAA Congress has made sweeping changes in the FY16 NDAA Major emphasis on procurement of commercial items, e.g. even restricting PCO ability to change from commercial designation to non-commercial OSD leadership focus on obtaining new technology via attracting new companies Further changes have been made in the FY17 NDAA 3

4 FY16 NDAA Commercial FY16 NDAA impacts commercial item acquisition policy & data we can obtain to determine F&R Will be codified in DFARS, also amends TINA What s Remained the Same FAR Commercial Item Definition DFARS 212 Prescription for CID Idea that PCO may require offeror to provide data (BUT with restrictions) PCO still has to determine F&R What s Changed Process for overturning prior CID CID & price reasonableness for maj. weapon system decoupled Reliance on prior Government prices paid Converting from FAR 12 to FAR 15 - high standards Treatment of Nontraditional defense contractor 4

5 FY16 NDAA Summary - Key Sections Section 851 Procurement of Commercial Items Secretary of Defense shall Establish centralized capability to oversee creation of CIDS & provide public access to determinations Establishes process for overturning prior CID PCO may presume prior CID by military/dod shall serve as determination for subsequent procurements If PCO does not make presumption stated above, must Request HCA review CID; HCA has 30 days to confirm prior CID or issue revised determination with basis for revision Nothing in this section shall preclude PCO from requiring Contractor to supply data to determine price reasonableness, regardless of whether or not they were required to provide it on earlier procurement 5

6 FY16 NDAA Summary - Key Sections Section 852 Modification to information required to be submitted by offeror - major weapon systems PCO no longer has to determine adequate data as part of CID Provides hierarchy for requiring data from offeror: Prices paid for same/similar commercial items w/similar T&C s by both Government & commercial customers If PCO determines offeror can t provide the above, can require: Prices for same/similar items sold under different T&Cs Prices for similar levels of work or effort on related products/services Prices for alternative solutions or approaches; and Other relevant info that can serve as basis for price assessment If PCO determines above insufficient, can require other relevant information regarding basis for price/cost, including labor cost, material costs, and overhead rates Precludes PCO from asking for cost data for COTS; requires HCA written determination that cost data is necessary if items were developed exclusively at private expense 6

7 FY16 NDAA Summary - Key Sections Section 853 Use of Recent Prices Paid by Gov t in Determining Price Reasonableness PCO shall consider evidence provided by offeror of recent Government prices paid for same/similar commercial items in establishing price reasonableness if satisfied prior price is still valid reference for comparison PCO must consider totality of other relevant factors including time elapsed since prior purchase & any differences in quantities purchased or applicable terms and conditions Section 855 Head of agency may not enter into contract over simplified acq threshold (SAT) for Info Tech (IT) that isn t commercial unless determines no commercial items suitable and conducts market research to inform price reasonableness 7

8 FY16 NDAA Summary - Key Sections Section 856 Limitation on Conversion of Procurements from Commercial Acq. Procedures Prior to converting procurement of commercial items/services >$1M from FAR Part 12 to 15, PCO shall determine in writing Earlier use of Part 12 was in error based on inadequate info, and DOD will realize cost savings compared to using commercial procedures Requires HCA approval for conversions >$100M - approval provided to OUSD (AT&L) Determination must consider at minimum Estimated cost of R&D spent by contractor to improve future products Transaction cost for DOD/Contractor in responding to data requests to support conversion Changes in purchase quantities Cost associated with procurement delays due to conversion 8

9 FY16 NDAA Summary - Key Sections Section 857 Treatment of Goods & Services Provided by Nontraditional Defense Contractors as Commercial Items & services by nontraditional defense contractors (as defined in section 2302(9) of this title) may be treated as commercial 9

10 FY 16 NDAA Summary Significant Impacts Approval to overturn prior CIDS Price Reasonableness separate determination from CID Hierarchy of data Process for conversion from FAR Part 12 to 15 DFARS Commercial Pricing Case in work DPAP Guidance from 2 Sep 16 Use of DCMA Commercial Item Centers of Excellence (CoEs) COs should adopt practice of recognizing prior known determinations and if prior determination was without foundation or in error, engage both chain of command and DCMA CoE Defense Pricing & DCMA working advance agreements with individual companies IT over SAT should be commercial 10

11 FY17 NDAA Summary - Key Sections Section 871 Market Research for Determination of Price Reasonableness in acquisition of commercial items Procurement officials shall conduct/obtain market research to support determination of price reasonableness of price for commercial items Section 872 Value Analysis for Determination of Price Reasonableness Offeror may submit info/analysis relating to value to aid in determination of price reasonableness which may be considered by CO 11

12 FY17 NDAA Summary - Key Sections Section 873 Clarification of Requirements Relating to Commercial Item Determinations Establish/maintain centralized capability with expertise/resources in providing assistance to military departments & defense agencies in making commercial item determinations, conducting market research, and performing analysis of price reasonableness Provide access to previous CIDs, market research, and analysis used to determine price reasonableness Section 874 Inapplicability of certain laws and regulations to acquisition of com items and COTS DFARS shall include a list of defense-unique provisions of law and clauses inapplicable to contracts and subcontracts for the procurement of commercial items and COTS 12

13 FY17 NDAA Summary - Key Sections Section 875 Use of Commercial or non- Government standards in lieu of military specifications and standards Mil specs shall only be used to define exact design solution when there is no acceptable commercial or non-government standard Section 876 Preference for commercial services May not enter into contracts over $10M for facilities-related services, knowledge based services (except eng services), construction services, medical or transportation services that are not commercial unless service acquisition exec determines in writing no suitable commercial services to meet agency need 13

14 FY17 NDAA Summary - Key Sections Section 877 Treatment of Commingled items purchased by contractors as commercial items Items valued at less than $10,000 that are purchased by a contractor for use in the performance of multiple contracts with the DoD and other parties and are not identifiable to any particular contract shall be treated as a commercial item. 14

15 FY17 NDAA Summary - Key Sections Section 878 Treatment of Services provided by nontraditional contractors as commercial items Services provided by a business unit that is a nontraditional defense contractor shall be treated as commercial items to the extent that such services use the same pool of employees as used for commercial customers and are priced using methodology similar to methodology used for commercial pricing 15

16 FY17 NDAA Summary - Key Sections Section 879 Defense Pilot Program to acquire innovative commercial items, technologies and services using general solicitation competitive procedures and peer review of proposals - Contracts shall be Fixed Price, including Fixed Price Incentive Fee (assume this is firm) contracts - Items, technologies and services acquired shall be treated as commercial items - No later than six months after the enactment of this Act, the Secretary shall issue guidance for the implementation of the pilot program 16

17 Commercial Item Determinations Implications DoD needs to be consistent in commercial item determinations CO s should not overreact by calling things commercial that clearly shouldn t be CO s should not overreact by calling things non-commercial that probably should be considered commercial because of precedent CO s should not make decisions in a vacuum important to know what others are doing DCMA Commercial Item Group can help provide insight 17

18 Implications Primary focus should be on price reasonableness as opposed to whether an item is commercial Lack of sales data does not drive whether an item is commercial - it means CO may have a challenge determining a reasonable price in a sole source environment COs need to figure out how to determine F&R without cost data We can t go straight to requesting cost data due to lack of sales data We need to concentrate on using value based price evaluation COs need to focus on market research before engaging with the contractor to provide information Why can t the item be competed? Encourage primes to compete subcontracted items Competition is the ultimate solution to price reasonableness issues What has the Government paid in the past and is that a reasonable price? What do others charge for same/similar items? Theoretically, if it is commercial there is something similar out there go after that information and expect prime contractors to do the same type of research for commercial subcontracted items 18

19 Implications Primary focus should be on price reasonableness as opposed to whether an item is commercial (continued) COs need to clearly document requests for information Make requests via letter or in order to ensure there is a record of the request Be specific in terms of scope (e.g., all sales data, or define a representative sample), time period (e.g., last 3 years), etc. Cost Data is a last resort Contractor refusals to provide data should be elevated to leadership 19