Show Me the Value: DFARS Proposes Rule on Market Research and Value-Based Price Reasonableness Determination

On September 26, 2019, the DoD issued a proposed rule to implement Sections 871 and 872 of the NDAA for FY 2017, both of which address price reasonableness when acquiring commercial items. 

To implement Section 871, the proposed rule revises DFARS 212.209(a) to reflect Section 871’s focus that agencies must conduct market research to support the determination of price reasonableness for commercial items (the current version simply indicates that market research must be used, where appropriate, to inform price reasonableness determinations). The proposed rule also would add a provision directing contracting officers to use the information submitted under DFARS 234.7002(d) when acquiring major weapon systems as commercial items; or, in the case of other items, other relevant information as described in DFARS 212.209. 

To implement Section 872, the proposed rule would revise DFARS subpart 234.70, which addresses the acquisition of major weapon systems as commercial items, by adding a new paragraph permitting offerors to submit information or analysis relating to the value of a commercial item, to aid in the determination of the reasonableness of the item’s price. Relatedly, the proposed rule adds the definition of “value analysis” to clarify that such reasonableness determination is focused on ensuring optimum value based on objective evaluation of the function of the product and its related costs.

Comments are due on or before November 25, 2019.