IV. Regulatory Flexibility Act

DoD does not expect 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 final rule does not add to or delete existing regulations on discussions for DoD procurements under $100 million, the majority of DoD procurements. For procurements of at least $100 million, any increase in discussions is anticipated to benefit all offerors, including small businesses, by providing them an opportunity to explain details of the offer and address their particular capabilities.

A final regulatory flexibility analysis was performed and is summarized as follows. This rule was initiated at the request of the Director, Defense Procurement and Acquisition Policy, to implement a recommendation of the Department of Defense (DoD) Source Selection Joint Analysis Team (JAT). The JAT, which was tasked to revise the DoD Source Selection Procedures, determined that there is a significant positive correlation between high-dollar source selections conducted without discussions and the number of protests sustained. In order to improve the quality of high-dollar, complex source selections, and reduce turbulence and inefficiency resulting from sustained protests, the policy is changed to strongly encourage discussions prior to the award of source selections estimated at $100 million or more.

DoD research has indicated that meaningful discussions with industry prior to contract award on high-dollar, complex requirements improves both industry's understanding of solicitation requirements and the Government's understanding of industry issues. By identifying and discussing these issues prior to submission of final proposals, the Government is often able to issue clarifying language. The modified requirements documentation allows industry to tailor proposals and better describe the offeror's intended approach, increases the probability that the offeror's proposal satisfies the Government requirements, and often results in better contract performance. Asking contracting officers to conduct discussions with industry provides a reasonable approach to recognizing and addressing valid industry concerns and a constructive alternative to protests resulting from industry frustration over misunderstood requirements. The legal basis is 41 U.S.C. 1303 and 48 CFR chapter 1.

Data were reviewed for the most recent year available, Fiscal Year 2009. While there is no data source available that tabulates the number of offers received from small businesses, DoD determined that 620 new contracts and 252 new task orders or delivery orders of $100 million or more were awarded to small businesses during Fiscal Year 2009. Therefore, DoD estimates that at least 872 small businesses could benefit from this policy change.

There is no reporting, recordkeeping, or other compliance requirement associated with the proposed rule. Therefore, there is no impact, positive or negative, on small businesses in this area. Thus, there are no additional professional skills necessary on the part of small businesses in this area. There are no direct costs to small business firms to comply with this rule. Conversely, small businesses that might have previously filed a protest against an award when discussions were not held may now be able to avoid the costs associated with protesting.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

There are no practical alternatives that will accomplish the objectives of the proposed rule. When a solicitation includes the provision at FAR 52.215-1, Instructions to Offerors--Competitive Acquisitions, paragraph (f)(4) of the clause states that the "Government intends to evaluate proposals and award a contract without discussions." If, however, the solicitation includes FAR 52.215-1 with its Alternate I, then the revised paragraph (f)(4) states that the "Government intends to evaluate proposals and award a contract after conducting discussions with offerors whose proposals have been determined to be within the competitive range." Use of the clause without Alternate I will not accomplish the stated objectives; only the clause with its Alternate I will accomplish the purpose of this case. No comments were received from small entities on this rule.