Federal Acquisition Regulation: Reverse Auction Guidance

<RULE> DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION <CFR>48 CFR Parts 2, 3, 7, 13, 15, 17, and 52</CFR> <DEPDOC>[FAC 2024-06; FAR Case 2015-038, Item I; Docket No. FAR-2015-0038; Sequence No. 1]</DEPDOC> <RIN>RIN 9000-AN31</RIN> <SUBJECT>Federal Acquisition Regulation: Reverse Auction Guidance</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to provide guidance on the use of reverse auctions. </SUM> <DATES> <HD SOURCE="HED">DATES:</HD> Effective August 29, 2024. </DATES> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For clarification of content, contact Mr. Michael O. Jackson, Procurement Analyst, at 202-208-4949 or by email at <E T="03">michaelo.jackson@gsa.gov</E> . For information pertaining to status or publication schedules contact the Regulatory Secretariat Division at 202-501-4755 or <E T="03">GSARegSec@gsa.gov</E> . Please cite FAC 2024-06, FAR Case 2015-038. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> DoD, GSA, and NASA published a proposed rule in the <E T="04">Federal Register</E> at 85 FR 78815 on December 7, 2020, in response to Government Accountability Office (GAO) report GAO-14-108, Reverse Auctions: Guidance is Needed to Maximize Competition and Achieve Cost Savings, dated December 2013, and GAO report 18-446, Reverse Auctions: Additional Guidance Could Help Increase Benefits and Reduce Fees, dated July 2018. GAO recommended that the Director of the Office of Management and Budget amend the FAR to address agencies' use of reverse auctions and issue Governmentwide guidance to maximize competition and savings when using reverse auctions. In response, the Office of Federal Procurement Policy issued a memorandum on June 1, 2015, entitled Effective Use of Reverse Auctions. The preamble to the proposed rule contained a detailed description of Reverse Auctions and the use of a reverse auction to obtain competitive prices for an acquisition. This final rule addresses concerns reported in both GAO reports and implements the resulting OFPP policy memorandum. Twenty-three respondents submitted comments on the proposed rule. <HD SOURCE="HD1">II. Discussion and Analysis</HD> The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows: <HD SOURCE="HD2">A. Summary of Significant Changes</HD> Several changes were made to the final rule as a result of public comments. New definitions are added at FAR 17.801 for Government data and Government-related data to identify the information subject to the access, use, and disclosure limitations on reverse auction providers added to the final rule. Conforming changes are made in the contract clause, FAR 52.217-12, Reverse Auction Services. The final rule provides new guidance at FAR 17.802(c)(4) for contracting officers to ensure offerors and reverse auction service providers are aware of the Government's access, use, and disclosure requirements. Conforming changes are made in the contract clause, FAR 52.217-12, Reverse Auction Services. Guidance at FAR 17.802(d)(5)(iii) is revised to remove text that required all documentation received from offerors in response to a reverse auction be removed from the reverse auction service provider's business and computer systems upon completion of the reverse auction. Instead, contracting officers shall provide disposition instructions in a solicitation and resulting contract for reverse auction services, see FAR 17.802(c)(4). A prohibition on the use of reverse auctions for procurements of architect-engineer (A/E) services that are subject to the Brooks Act (40 U.S.C. chapter 11) is added to FAR 17.803, Applicability, because reverse auctions do not comply with the qualifications-based selection processes required by statute and implemented at FAR subpart 36.6. The point of contact requirements at FAR 17.804(c)(1) are revised to clarify that a contracting officer's name and email address are required for every reverse auction. The contract clause, FAR 52.217-12, Reverse Auction Services, is revised to incorporate the new definitions at FAR 17.801, and the Government's access, use, disclosure and disposition requirements. <HD SOURCE="HD2">B. Analysis of Public Comments</HD> <HD SOURCE="HD3">1. Support for the Rule</HD> <E T="03">Comment:</E> Several respondents voiced support for the proposed rule. <E T="03">Response:</E> The Councils acknowledge support for the rule. <HD SOURCE="HD3">2. Removal of Reverse Auction Data</HD> <E T="03">Comment:</E> Several respondents were concerned that the proposed FAR changes requiring the removal of all documentation received from offerors in response to the reverse auction from its business and computer systems will impact the Government's ability to carry out audits and other activities. The respondents believed that the data received and housed by the service providers is essential to conventional investigations and in the use of data analytics. <E T="03">Response:</E> The final rule is revised to address concerns regarding contractor use and access to Government data and Government-related data. The text that required the removal of the reverse auction information is deleted. New text is added to provide guidance to contracting officers on the use, access, disclosure, and disposition of Government data and Government-related data at FAR 17.802(c)(4) and (d)(4). FAR clause 52.217-12 is revised to clarify direction to contractors. <E T="03">Comment:</E> A respondent asserted that reverse auction service providers should be able to do basic spend analysis. <E T="03">Response:</E> The final rule protects against the unauthorized use of Government data and Government-related data. A reverse auction service provider may be able to conduct basic spend analysis for an agency if the contracting officer specifically authorizes such analysis in the terms of the contract, task order, or delivery order (see FAR 52.217-12(b)(3)(i) and (b)(4)). This authority is specific to the issuing agency data and may not be used for comparison to other Government agencies. <HD SOURCE="HD3">3. Applicability of Reverse Auctions</HD> <E T="03">Comment:</E> Several respondents requested that the rule not apply to construction and construction-related services in accordance with the prohibitions in HR 133, Consolidated Appropriations Act, 2021, Title IV, Construction Consensus Procurement Improvement Act of 2020. <E T="03">Response:</E> Subsequent to the proposed rule, section 402 of the Construction Consensus Procurement Improvement Act of 2020 (Pub. L. 116-260, December 27, 2020) was enacted. However, the Construction Consensus Procurement Act of 2021 (Pub. L. 117-28, July 26, 2021) superseded the 2020 statute. The new statute requires rulemaking to establish a definition for complex, specialized, or substantial design and construction services to include many of the original prohibitions from the 2020 statute and limits the prohibition to procurements valued above the simplified acquisition threshold. The Councils have opened a new FAR case 2023-003, Prohibition on the Use of Reverse Auctions for Complex, Specialized, or Substantial Design and Construction Services, to implement the 2021 statute. <E T="03">Comment:</E> Some respondents requested the rule prohibit the use of reverse auctions for A/E services including for surveying and mapping, as these are subject to the qualifications-based selection process codified in the Brooks Act (40 U.S.C. chapter 11) and implemented at FAR subpart 36.6. A respondent recommended a revision at FAR 17.803, Applicability. <E T="03">Response:</E> The final rule is revised to exclude A/E professional services subject to 40 U.S.C. chapter 11 from FAR 17.803, Applicability. <HD SOURCE="HD3">4. Expansion of Reverse Auctions</HD> <E T="03">Comment:</E> Some respondents requested that the rule be expanded to allow the reverse auctioning of construction projects and materials, in addition to personal protective equipment (PPE), asserting that these products/services have been successfully reverse auctioned. A respondent suggested the rule could contain an exception that allows reverse auctions at the discretion of the contracting officer. Another respondent, however, supported the prohibition on PPE because of concerns associated with the medical supply chain. <E T="03">Response:</E> The final rule is revised to prohibit the use of reverse auctions for certain construction and A/E services to comply with existing statute. New FAR case 2023-003 has been opened to implement new statutory prohibitions and guidance regarding the use of reverse auctions for construction services. Sections 813 and 814 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328), as amended by section 882 of the NDAA for FY 2018 (Pub. L. 115-91), and section 880 of the John S. McCain National Defense Authorization Act for FY 2019 (Pub. L. 115-232, 41 U.S.C. 3701 note) prohibit the use of reverse auctions for PPE. <HD SOURCE="HD3">5. Market Research</HD> <E T="03">Comment:</E> Some respondents were concerned that the requirement at FAR 17.804(a) to conduct market research and execute a determination and finding when considering the use of a reverse auction service provider will c ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 51k characters. 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