Conform Certain Statutory Requirements for Civilian Agencies to Those of Defense Agencies Background Three statutory requirements formerly applied governmentwide have been repealed or amended only for defenserelated agencies. They are: -- The requirement to obtain commercial pricing certificates when other than full and open competition is used. The law requires that offerors certify that prices offered for parts or components are not more than their lowest commercial prices, or submit a written statement specifying the amount of the difference between their lowest commercial price for the parts of components and the prices offered.1 -- The limitation on accepting an initial offer and awarding a contract to other than the offeror submitting the lowest priced offer.2 -- The requirement to obtain certified cost or pricing data before awarding a negotiated contract that exceeds $100,000. In addition, DOD has been given authority to enter into cooperative agreements to conduct advanced research projects, primarily through the Advanced Research Projects Agency, but civilian agencies have not been given similar authority. Procurement contracts are often not well suited for research and development projects because they involve support, stimulation, and cooperation. Cooperative agreements provide the flexibility and innovation required. In research and development, government funding is often more like an investment. Need for Change The DOD Inspector General found that the commercial pricing certificate was not costeffective because the government was paying the lowest commercial price for items of supply procured even when the certificate was not obtained. Its continued use imposed a burden on the procurement process without a beneficial return. As a result, Congress repealed the requirement.3 This should be logically extended governmentwide. DOD may make contract awards to other than the lowest priced acceptable offeror based on an initial offer without discussions. When an offeror who is not the low offeror clearly provides the best technical proposal at a reasonable price, it may be in the government's best interest to award to that offeror without discussions. Award without discussions is appropriate in this circumstance when neither technical nor price improvements are expected to result from a round of discussions with offerors and when a superior proposal will not be significantly improved. This avoids unnecessary administrative costs for the offerors and the government. The threshold for obtaining cost and pricing data was increased to $500,000 for DOD, NASA, and the Coast Guard, but kept at $100,000 for civilian agencies. The current statute provides that the $500,000 threshold will be reduced to $100,000 for contracts or subcontracts awarded, or modifications made, after December 31, 1995. In addition, defense agencies have statutory authority to levy penalties on contractors who knowingly submit defective pricing, whereas civilian agencies may not take such punitive action.4 The $100,000 threshold for submission of certified cost or pricing data, which was established in 1962, equates to $520,000 in 1992 dollars when adjusted for inflation. Raising the threshold for civilian agencies and maintaining the $500,000 for defense agencies will significantly reduce the paperwork burden on the government and contractors and will make the threshold consistent with the threshold for the Cost Accounting Standards, which was raised to $500,000 in 1988. The Acquisition Law Advisory Panel to the United States Congress on Streamlining Defense Acquisition Law (Section 800 Panel) recommended that the $500,000 threshold be maintained for DOD. In making its recommendation, the panel stressed that the $500,000 threshold takes into account inflation, since the threshold was originally established in 1962.5 Civilian agencies that conduct advanced research projects have a need for the same flexibility as DOD.6 The additional flexibility will provide for more supportive and innovative arrangements for research. In order to maintain a common governmentwide approach to the acquisition of property and services, statutory changes must be made to ensure consistency in the requirements for civilian and defense agencies. The current inconsistency in the statutory requirements causes inconsistent governmentwide application.7 f Defense. Endnotes 1. 41 U.S.C. 253e. 2. 40 U.S.C. 253b. 3. National Defense Authorization Act, Fiscal Year 1990. 4. Truth in Negotiations Act (10 U.S.C. 2306a). 5. Acquisition Law Advisory Panel to the United States Congress, Streamlining Defense Acquisition Law, Executive Summary (January 1993), p. 42. 6. 10 U.S.C. 2371. 7. Truth in Negotiations Act, 1962.
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