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DoD Proposes Changes to Cost or Pricing Data Rules for Small Businesses

On August 30, the Department of Defense (“DoD”) issued a proposed rule to implement a section of the National Defense Authorization Act for fiscal year 2016 that provides exceptions from the certified cost and pricing data requirements, and from the records examination requirement for certain awards to small businesses or nontraditional defense contractors.

The proposed rule would amend the Defense Federal Acquisition Regulation Supplement (“DFARS”) to provide an exception from cost or pricing data for contracts, subcontracts, or modifications of contracts or subcontracts valued at less than $7.5 million. This exception would be applicable to small businesses or “nontraditional” defense contractors, and additionally pursuant to a technical, merit-based selection procedure or under the Small Business Innovation Research Program.

What is a “nontraditional” defense contractor? The proposed rule would add a definition at DFARS 215.401 to state that it is an entity that has not performed any contractor or subcontract work, specific to DoD, under Cost Accounting Standards for at least a year preceding the solicitation of sources for the procurement.

Many small businesses fall under this “nontraditional” defense contractor definition. If appropriately implemented in the DFARS, the lack of a requirement for cost or pricing data for certain procurements would indeed expedite several procurements and ease administrative burden not only for small businesses, but also the Federal government (i.e., our tax payer dollars hard at work).

Formal comments should be submitted in writing by October 31, 2016.

We will watch for any changes or developments in the proposed rule. If you have any questions or concerns on how the proposed rule may impact your business, please do not hesitate to contact one of our experienced GovCon professionals for assistance.

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