[Comments on Federal Acquisition Circular 84-10]
Highlights
GAO was asked to comment on Federal Acquisition Circular 84-10 which amends the Federal Acquisition Regulation with respect to planning for future competition, integrity of unit prices, certificates of commercial pricing, small business subcontracting policy, and the definition of a major system. GAO had no objection to the proposed coverage but suggested an addition concerning the integrity of unit prices which would require offerers to: (1) indicate items identified as those which they will not manufacture or to which they will not contribute significant value that are also commercial items; and (2) show the difference between the commercial price paid by the offerer and the price charged to the government by the offerer. This would alert government buyers as to the amount added to the price of the item and would encourage the breakout of such commercially available items where the markup is significant.
B-219495, SEP 13, 1985, OFFICE OF GENERAL COUNSEL
FEDERAL ACQUISITION REGULATION - PROPOSED REVISION DIGEST: GAO HAS NO OBJECTION TO THE MATTERS COVERED IN FEDERAL ACQUISITION CIRCULAR 84-10, WHICH AMENDS THE FOLLOWING FEDERAL ACQUISITION REGULATION PARTS WITH RESPECT TO THE ISSUES INDICATED: (1) PART 7, PLANNING FOR FUTURE COMPETITION; (2) PART 15, CONTRACTING BY NEGOTIATION; (3) PART 19, SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS; AND (4) PART 34, MAJOR SYSTEM ACQUISITION. GAO DOES, HOWEVER, SUGGEST THAT A PROVISION BE ADDED TO FAR SECS. 15.812 AND 52.215-26 REQUIRING OFFERORS TO IDENTIFY COMMERCIAL ITEMS THEY WILL SUPPLY WHICH THEY WILL NOT MANUFACTURE OR TO WHICH THEY WILL NOT CONTRIBUTE SIGNIFICANT VALUE AND SHOW THE MARKUP ON THOSE ITEMS.
MS. MARGARET A. WILLIS:
FAR SECRETARIAT
GENERAL SERVICES ADMINISTRATION
WE REFER TO YOUR LETTER OF JULY 10, 1985, REQUESTING OUR COMMENTS ON FEDERAL ACQUISITION CIRCULAR (FAC) 84-10, WHICH AMENDS THE FEDERAL ACQUISITION REGULATION WITH RESPECT TO PLANNING FOR FUTURE COMPETITION, INTEGRITY OF UNIT PRICES, CERTIFICATES OF COMMERCIAL PRICING, SMALL BUSINESS SUBCONTRACTING POLICY, AND THE DEFINITION OF A MAJOR SYSTEM. THESE AMENDMENTS ARE INTENDED TO IMPLEMENT THE DEFENSE PROCUREMENT REFORM ACT OF 1984, TITLE XII OF THE DEPARTMENT OF DEFENSE AUTHORIZATION ACT, 1985, PUB.L. 98-525 AND THE SMALL BUSINESS AND FEDERAL PROCUREMENT COMPETITION ENHANCEMENT ACT OF 1984, PUB.L. 98 577.
WHILE WE HAVE NO OBJECTION TO THE PROPOSED COVERAGE IN FAC 84-10, WE THINK IT WOULD BE APPROPRIATE TO ADD AN ADDITIONAL REQUIREMENT TO PROPOSED FAR SEC. 15.812 AND SEC. 52.215-26, CONCERNING THE INTEGRITY OF UNIT PRICES. THE PROPOSED FAR SECTIONS STATE THAT CONTRACTING OFFICERS ARE TO REQUIRE OFFERORS TO IDENTIFY IN THEIR PROPOSALS THOSE ITEMS WHICH THEY WILL NOT MANUFACTURE OR TO WHICH THEY WILL NOT CONTRIBUTE SIGNIFICANT VALUE. ALTHOUGH NOT REQUIRED BY EITHER STATUTE IMPLEMENTED BY FAC 84-10, WE SUGGEST THAT FAR SEC. 15.812 AND THE CORRESPONDING CLAUSE AT SECTION 52.215-26 BE AMENDED TO REQUIRE OFFERORS TO INDICATE WHICH OF THE ITEMS THEY IDENTIFY AS ONES WHICH THEY WILL NOT MANUFACTURE OR TO WHICH THEY WILL NOT CONTRIBUTE SIGNIFICANT VALUE ARE ALSO COMMERCIAL ITEMS AND TO SHOW THE DIFFERENCE BETWEEN THE COMMERCIAL PRICE PAID BY THE OFFEROR AND THE PRICE CHARGED TO THE GOVERNMENT BY THE OFFEROR. THIS WOULD ALERT GOVERNMENT BUYERS AS TO HOW MUCH THE "MIDDLEMAN" HAS ADDED TO THE PRICE OF THE ITEM AND ENCOURAGE THE BREAKOUT OF SUCH COMMERCIALLY AVAILABLE ITEMS WHERE THE MARKUP IS SIGNIFICANT.