Section 1 Short title
This Act may be cited as the “Fair Pricing with Cost Transparency Act of 2022”.
Fair Pricing with Cost Transparency Act of 2022
A BILL
To amend title 10 and 41, United States Code, to strengthen requirements for Government contractors to submit certified and uncertified cost or pricing data and information supporting commercial product determinations, and for other purposes.
Sec. 2 Submission of uncertified cost data to contracting officers
Submission of uncertified cost data to civilian agencies— Section 3505 of title 41, United States Code, is amended—
in subsection (a)—
by striking “data other than certified” and inserting “uncertified”; and
by inserting after “the procurement.” the following: “If the contracting officer determines that the uncertified pricing data submitted by the offeror, contractor, or subcontractor is not adequate for evaluating the reasonableness of the price of the contract, subcontract, or modification of the contract or subcontract, the offeror, contractor, or subcontractor shall submit to the contracting officer uncertified cost data to the extent necessary to determine the reasonableness of such price.”;
by redesignating subsection (b) as subsection (c); and
by inserting after subsection (a) the following new subsection:
“(b) Ineligibility for award
“(1) In the event the contracting officer is unable to determine proposed prices are fair and reasonable by any other means, an offeror who fails to make a good faith effort to comply with a reasonable request to submit data in accordance with subsection (a) is ineligible for award unless the head of the contracting activity, or the designee of the head of the contracting activity, determines that it is in the best interest of the Government to make the award to that offeror, based on consideration of pertinent factors, including the following:
“(A) The effort to obtain the data.
“(B) Availability of other sources of supply of the item or service.
“(C) The urgency or criticality of the Government’s need for the product or service.
“(D) Reasonableness of the price of the contract, subcontract, or modification of the contract or subcontract based on information available to the contracting officer.
“(E) Rationale or justification made by the offeror for not providing the requested data.
“(F) Risk to the Government if award is not made.
“(2)
“(A) Any new determination made by the head of the contracting activity under paragraph (1) shall be reported to the senior procurement executive on a periodic basis.
“(3) Report
“(A) Annual report—The senior procurement executive, or a designee, shall submit an annual report to the Administrator of the Office of Federal Procurement Policy identifying offerors that have denied multiple requests for submission of uncertified cost or pricing data over the preceding three-year period, but nevertheless received an award. The report shall identify products or services offered by such offerors that should undergo should-cost analysis.
“(B) Notation—The contracting officer may include a notation on such offerors in the system used by the Federal Government to monitor or record contractor past performance.
“(C) Assessment—The senior procurement executive shall—
“(i) assess the extent to which these offerors are sole source providers; and
“(ii) develop strategies to incentivize new entrants to increase the availability of other sources of supply for the product or service.”
Submission of uncertified cost data to contracting officers— Section 3705 of title 10, United States Code, is amended—
in subsection (a)—
by striking “data other than certified” and inserting “uncertified”; and
by inserting after “a fair and reasonable price.” the following: “If the contracting officer determines that the uncertified pricing data submitted by the offeror, contractor, or subcontractor is not adequate for evaluating the reasonableness of the price of the contract, subcontract, or modification of the contract or subcontract, the offeror, contractor, or subcontractor shall submit to the contracting officer uncertified cost data to the extent necessary to determine the reasonableness of such price.”; and
in subsection (b)(1)—
in the matter preceding subparagraph (A), by striking “head of contracting” and inserting “head of the contracting”; and
in subparagraph (B), by striking “item” and inserting “product”.
Application— The amendments made by subsections (a) and (b) shall apply with respect to contracts awarded on or after the date that is one year after the date of the enactment of this Act.
Sec. 3 Discretion to Require Certified Cost or Pricing Data on Below-Threshold Contracts
Discretion— Section 3504(a) of title 41, United States Code, is amended by inserting before “In any case” the following: “The head of the procuring activity should consider making such a determination when a contractor, offeror, or subcontractor has previously failed to provide adequate uncertified cost or pricing data when requested or required, or other significant risk factors impede the Government’s ability to determine the reasonableness of price.”.
Cost or pricing data on below-Threshold contracts— Section 3704(a) of title 10, United States Code, is amended by inserting before “In any case” the following: “The head of the procuring activity may consider making such a determination when a contractor, offeror, or subcontractor has previously failed to provide adequate uncertified cost or pricing data when requested or required, or other significant risk factors impede the ability of the Government to determine the reasonableness of price.”.
Sec. 4 Data requirements for commercial product pricing not based on adequate price competition
Section 3705 of title 10, United States Code, is amended—
by redesignating subsections (b) and (c) as subsections (c) and (d), respectively; and
by inserting after subsection (a) the following new subsection (b):
“(b) Authority To require submission of information for commercial products of a type customarily used by general public or nongovernmental entities
“(1) Data to support commercial product determination—For products proposed as commercial as defined in section 103(1) of title 41, and that have not previously been determined commercial in accordance with section 3703(d) of this title, or to the extent necessary to perform a periodic review of a commercial product determination in accordance with section 3703(e) of this title, the offeror shall be required to identify the comparable commercial product that is customarily used by the general public or nongovernmental entities that serves as the basis for the “of a type” assertion. The offeror shall submit a comparison of the essential physical characteristics and functionality between the proposed “of a type” product and the comparable commercial product in support of the “of a type” assertion. The offeror shall also provide the National Stock Numbers for both the comparable commercial product used by the general public, if one is assigned, and the product proposed to meet the Government’s requirement, if one is assigned.
“(2) Data to support price reasonableness—When procurements that include products proposed as commercial as defined in 103(1) of title 41 and are not covered by the exceptions in section 3703(a)(1) of this title, and the contracting officer determines data available from within the Government and outside sources are insufficient to determine price reasonableness or the contracting officer determines the proposed price is not reasonable, the offeror shall be required to provide data to support price reasonableness for a contract, subcontract, or modification of a contract or subcontract as follows:
“(A) If the offeror sells the commercial product that is customarily used by the general public or nongovernmental entities, the offeror shall provide the contracting officer access to all unredacted sales data or purchase order history for the commercial product so the contracting officer can review unredacted sales to the general public or nongovernmental entities. If the contracting officer determines the proposed price is not reasonable after evaluating the sales data, the offeror shall be required to provide the contracting officer with cost data, including information on labor cost, material cost, and overhead rates, for the purpose of establishing price reasonableness.
“(B) If the offeror does not sell the commercial product that is customarily used by the general public or nongovernmental entities for purposes other than governmental purposes that serves as the basis for its “of a type” assertion for the proposed product, the offeror shall provide the contracting officer with cost data, including information on labor cost, material cost, and overhead rates, for the purpose of establishing price reasonableness.”
Sec. 5 Periodic review of commercial product determinations
in subsection (d)(1), by inserting after “such product or service” the following: “, subject to the limitation in subsection (e)”;
by redesignating subsections (e) and (f) as subsections (f) and (g), respectively; and
by inserting after subsection (d) the following new subsection:
“(e) Periodic review of certain commercial product determinations
“(1) Commercial product determinations shall be periodically reviewed, no less frequently than every five years, to ensure that the initial decision was appropriate and that the market conditions continue to support the designation, if—
“(A) the product is not regularly sold in substantial quantities in the commercial marketplace in essentially the same form; and
“(B) the product has not been subject to adequate competition, as defined in subsection (a)(1)(A), from a different product or products since the determination was made, unless the procurement is subject to the exception in subsection (a)(1)(B).
“(2) Reviews of commercial product determinations shall be approved at a level above the contracting officer. The Director of the Defense Contract Management Agency, the Director of the Defense Contract Audit Agency, or other appropriate experts in the Department may support such reviews upon request, consistent with section 3456(b)(1)(A) of this title.”
Commercial product and commercial service determinations by Department of Defense— Section 3456(c) of title 10, United States Code, is amended—
in paragraph (1), by inserting after “this chapter” the following: “subject to periodic reviews of certain commercial product determinations as set forth in section 3703(e) of this title, or”; and
in paragraph (2)—
in the heading, by striking “Limitation” and inserting “Limitations”;
in subparagraph (A), by inserting “and (C)” after “subparagraph (B)”; and
by inserting at the end the following new subparagraph:
“(C) The limitation under subparagraph (A) does not apply to the periodic review of commercial product determinations as set forth in 3703(e) of this title.”
Sec. 6 GAO review and report on Government contractors using distributors to avoid scrutiny
Review required—
In general— The Comptroller General of the United States shall conduct a review of the prevalence and trends of contractors of executive agencies using distributors or other intermediaries as a means of avoiding legal or regulatory requirements, such as requirements to provide certified or uncertified cost or pricing data.
Additional contents of review— In conducting the review under paragraph (1), the Comptroller General shall consider—
any effects of this practice on the ability of the Government to—
acquire needed goods at reasonable prices; and
avoid waste, fraud, and abuse in the procurement process; and
how executive agencies may differentiate between the legitimate business purposes for the use of distributor relationships, compared to situations where the distributors largely serve to avoid legal and regulatory requirements.
Report required— Not later than one year after the date of the enactment of this Act, the Comptroller General shall submit a report containing the results of the review required by subsection (a) to—
the Committees on Armed Services of the Senate and the House of Representatives;
the Committee on Oversight and Reform of the House of Representatives; and
the Committee on Homeland Security and Governmental Affairs of the Senate.
Executive agency defined— In this section, the term “executive agency” has the meaning given that term in section 133 of title 41, United States Code.