[Federal Register: August 2, 2007 (Volume 72, Number 148)]
[Rules and Regulations]               
[Page 42313-42315]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



Defense Acquisition Regulations System

48 CFR Parts 202, 210, 213, 215, and 219

RIN 0750-AF36

Defense Federal Acquisition Regulation Supplement; Limitations on 
Tiered Evaluation of Offers (DFARS Case 2006-D009)

AGENCY: Defense Acquisition Regulations System, Department of Defense 

ACTION: Final rule.


SUMMARY: DoD has adopted as final, with changes, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement Section 816 of the National Defense Authorization Act for 
Fiscal Year 2006. Section 816 requires DoD to prescribe guidance on the 
use of tiered evaluation of offers for contracts and for task or 
delivery orders under contracts.

DATES: Effective Date: August 2, 2007.

Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 
Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0289; 
facsimile (703) 602-7887. Please cite DFARS Case 2006-D009.


A. Background

    DoD published an interim rule at 71 FR 53042 on September 8, 2006, 
to implement Section 816 of the National Defense Authorization Act for 
Fiscal Year 2006 (Pub. L. 109-163). Section

[[Page 42314]]

816 requires DoD to prescribe guidance on the use of tiered evaluation 
of offers for contracts and for task or delivery orders under 
contracts. The guidance must include a prohibition on the use of tiered 
evaluation of offers unless the contracting officer (1) has conducted 
market research in accordance with Part 10 of the Federal Acquisition 
Regulation (FAR); (2) is unable, after conducting market research, to 
determine whether or not a sufficient number of qualified small 
businesses are available to justify limiting competition for the 
contract or order; and (3) includes in the contract file a written 
explanation of why the contracting officer was unable to make the 
    Four sources submitted comments on the interim rule. A discussion 
of the comments is provided below. In addition to the changes addressed 
in the DoD response to Comment 1, the final rule revises section 
213.106-1-70 to provide a cross-reference to section 215.203-70, 
instead of duplicating the text found in that section.
    1. Comment: The rule failed to include an explicit prohibition.
    DoD Response: While DoD believes that stating the actions that the 
contracting officer must take before using tiered evaluation is an 
implied prohibition, the final rule contains amendments at 215.203-70 
to explicitly prohibit the contracting officer from using tiered 
evaluation unless those actions have been taken.
    2. Comment: Defining the technique of tiered evaluation in the 
DFARS legitimizes the use of tiered evaluation.
    DoD Response: The statute does not completely prohibit the use of 
tiered evaluation; it requires that certain actions be taken before 
this technique may be used. To permit an understanding of the statutory 
requirements, the technique must first be defined.
    3. Comment: FAR Part 10 already requires the market research 
required by the statute, and no additional research is necessary.
    DoD Response: DoD agrees that the FAR already requires agencies to 
conduct market research appropriate to the circumstances before 
soliciting offers for acquisitions in excess of the simplified 
acquisition threshold and, when necessary and cost-effective, below the 
simplified acquisition threshold. However, DoD believes the additional 
language in DFARS Part 210 is appropriate to reinforce the statutory 
requirement for market research before conducting a tiered evaluation 
of offers.
    4. Comment: The phrase ``appropriate to the circumstances'' at 
DFARS 210.001(a)(i), with regard to requirements for conducting market 
research, should be deleted. Although the phrase is consistent with the 
FAR, it is not in the statute being implemented and creates ambiguity.
    DoD Response: The text at DFARS 210.001 is consistent with both the 
statute and FAR Part 10. The statute prohibits the use of tiered 
evaluation of offers unless, among other things, the contracting 
officer has conducted market research in accordance with Part 10 of the 
FAR. The implementing DFARS language reflects the policy in FAR Part 
10, requiring the conduct of market research ``appropriate to the 
circumstances.'' The DFARS language recognizes that there are many ways 
to conduct market research, and that the methods employed should be 
those that will be effective for the particular acquisition.
    5. Comment: The rule states that the tiered evaluation of offers 
order of precedence shall be consistent with FAR Part 19. However, FAR 
Part 19 does not provide an ``order of precedence'' among the various 
small business goals.
    DoD Response: FAR Part 19 does not specifically state an order of 
precedence. However, it does provide direction on the circumstances 
under which acquisitions may or must be set aside for various 
categories of small businesses. For example, FAR 19.1305 states that 
the contracting officer must consider HUBZone set-asides for 
acquisitions at a certain dollar level before considering small 
business set-asides. DoD believes that, in establishing an order of 
precedence in a tiered evaluation of offers, that order of precedence 
must be consistent with the direction in FAR Part 19.
    6. Comment: Guidance to the contracting officer can be addressed in 
the Procedures, Guidance, and Information (PGI), consistent with the 
    DoD Response: PGI guidance to supplement this rule is considered 
unnecessary at this time.
    7. Comment: The rule should include coverage stating that a large 
business involved in an 8(a) mentor-protege agreement shall not offer 
itself as a large business in competition against the 8(a) mentor-
protege agreement. In a recent cascading set-aside, a large business 
offered itself as a large entity, as a subcontractor to a small 
business, and as a mentor in an 8(a) mentor-protege joint venture.
    DoD Response: The issue of a mentor firm competing against a 
protege firm is not specific to tiered evaluation of offers. Therefore, 
the final rule contains no change relating to this comment.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD certifies that this final rule will not have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because the rule relates to market research and documentation 
requirements performed by the Government.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply, because the rule does 
not impose any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 202, 210, 213, 215, and 219

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.

Accordingly, the interim rule amending 48 CFR parts 202, 210, 213, 215, 
and 219, which was published at 71 FR 53042 on September 8, 2006, is 
adopted as a final rule with the following changes:
1. The authority citation for 48 CFR parts 202, 210, 213, 215, and 219 
continues to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.


2. Section 213.106-1-70 is revised to read as follows:

213.106-1-70  Soliciting competition--tiered evaluation of offers.

    See limitations on the use of tiered evaluation of offers at 


3. Section 215.203-70 is amended by revising paragraph (c) introductory 
text, paragraph (c)(1) introductory text, and paragraph (c)(2) to read 
as follows:

215.203-70  Requests for proposals--tiered evaluation of offers.

* * * * *
    (c) The contracting officer is prohibited from issuing a 
solicitation with a tiered evaluation of offers unless--
    (1) The contracting officer conducts market research, in accordance 

[[Page 42315]]

FAR Part 10 and Part 210, to determine--
* * * * *
    (2) If the contracting officer cannot determine whether the 
criteria in paragraph (c)(1) of this section are met, the contracting 
officer includes a written explanation in the contract file as to why 
such a determination could not be made (Section 816 of Public Law 109-

 [FR Doc. E7-14906 Filed 8-1-07; 8:45 am]