Defense Federal Acquisition Regulation Supplement: Use of Supplier Performance Risk System (SPRS) Assessments (DFARS Case 2019-D009)

Citation85 FR 53748
Record Number2020-18645
Published date31 August 2020
CourtDefense Acquisition Regulations System
Federal Register, Volume 85 Issue 169 (Monday, August 31, 2020)
[Federal Register Volume 85, Number 169 (Monday, August 31, 2020)]
                [Proposed Rules]
                [Pages 53748-53751]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-18645]
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                DEPARTMENT OF DEFENSE
                Defense Acquisition Regulations System
                48 CFR Parts 204, 209, 212, 213, and 252
                [Docket 2020-0027]
                RIN 0750-AK44
                Defense Federal Acquisition Regulation Supplement: Use of
                Supplier Performance Risk System (SPRS) Assessments (DFARS Case 2019-
                D009)
                AGENCY: Defense Acquisition Regulations System, Department of Defense
                (DoD).
                ACTION: Proposed rule.
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                SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
                Regulation Supplement (DFARS) to update the policy and procedures for
                use of the Supplier Performance Risk System.
                DATES: Comments on the proposed rule should be submitted in writing to
                the address shown below on or before October 30, 2020, to be considered
                in the formation of a final rule.
                ADDRESSES: Submit comments identified by DFARS Case 2019-D009, using
                any of the following methods:
                 [cir] Regulations.gov: http://www.regulations.gov. Search for
                ``DFARS Case 2019-D009.'' Select ``Comment Now'' and follow the
                instructions provided to submit a comment. Please include ``DFARS Case
                2019-D009'' on any attached document.
                 [cir] Email: [email protected]. Include DFARS Case 2019-D009 in
                the subject line of the message.
                 [cir] Fax: 571-372-6094.
                 [cir] Mail: Defense Acquisition Regulations System, Attn: Heather
                Kitchens, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon,
                Washington, DC 20301-3060.
                 Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To
                confirm receipt of your comment(s), please check www.regulations.gov,
                approximately two to three days after submission to verify posting
                (except allow 30 days for posting of comments submitted by mail).
                FOR FURTHER INFORMATION CONTACT: Ms. Heather Kitchens, telephone 571-
                372-6095.
                SUPPLEMENTARY INFORMATION:
                I. Background
                 The Supplier Performance Risk System (SPRS) is a DoD enterprise
                application that retrieves quality and delivery data from Government
                systems to calculate ``on time'' delivery scores and quality
                classifications. Contracting officers will use the overall risk
                assessment generated by the SPRS module to evaluate quotes and offers
                received under all solicitations for supplies and services, including
                solicitations using part 12 procedures for the acquisition of
                commercial items. The system generates three risk assessments using the
                SPRS Evaluation Criteria and calculations at https://www.sprs.csd.disa.mil/pdf/SPRS_DataEvaluationCriteria.pdf. These risk
                assessments are described as follows:
                 Item Risk. SPRS collects data to generate the probability
                that a product or service, based on intended use, will introduce
                counterfeit or nonconforming material entering the DoD supply chain,
                which can result in significant personnel safety issues, mission
                degradation, or monetary loss. SPRS ``flags'' items identified by
                Government sources as ``high risk'' and provides suggested mitigations,
                or as ``not high risk''.
                 Price Risk. SPRS collects historical pricing data from
                Government sources and applies a common statistical method to calculate
                the average price paid for a product or services, generating a price
                range that contracting officers can use in the evaluation of fair and
                reasonable pricing. Price Risk determines whether ``a proposed price is
                consistent with historical prices paid for that item and is depicted by
                high, low, or within range''.
                 Supplier Risk. SPRS calculates a supplier risk score, for
                contracting officers to compare competing suppliers. This score
                includes three years of relevant supplier performance information from
                existing Government data sources.
                II. Discussion and Analysis
                 The proposed rule amends the DFARS to: (1) Move coverage of the
                Supplier Performance Risk System (SPRS) from part 213, Simplified
                Acquisition Procedures, to a new subpart 204.7X, Supplier Performance
                Risk System; and (2) replace DFARS clause 252.213-7000, Notice to
                Prospective Suppliers on Use of Supplier Performance Risk System in
                Past Performance Evaluations, with DFARS provision 252.204-70XX, Notice
                to Prospective Suppliers on Use of Supplier Performance Risk System in
                Performance Evaluations, to enhance the use of SPRS in the evaluation
                of a supplier's performance through the introduction of SPRS system-
                generated item, price, and supplier risk assessments.
                 In the new subpart, at 204.7X01, definitions are added for item,
                price, and supplier risk. Section 204.7X02, Applicability, provides
                that the use of SPRS is required to be used to evaluate quotes and
                offers in response to all solicitations for supplies and services,
                including solicitations using FAR part 12 procedures for the
                acquisition of commercial items. Language is added at 204.7X03,
                Procedures, to provide guidance to the contracting officer on how SPRS
                risk assessments shall be considered during award decisions, how to
                respond to risk assessment ratings, and what mitigating strategies
                shall be considered for risk assessments prior to award. A prescription
                for use of the new solicitation provision at 252.204-70XX is added at
                204.7X04.
                 The proposed rule amends the DFARS by requiring contracting
                officers to use the supplier risk assessments available in SPRS as a
                factor in determining
                [[Page 53749]]
                responsibility at DFARS 209.105-1, as required by 204.7X03(c)(1). The
                supplier risk assessment reduces supply chain risk as it highlights for
                the contracting officer the probability that an award made to a
                supplier may subject the procurement to the risk of unsuccessful
                performance or to supply chain risk.
                 At DFARS 212.301(f), the newly proposed provision, 252.204-70XX,
                Notice to Prospective Suppliers on Use of the Supplier Performance Risk
                System in Performance Evaluations, is added to the list of clauses and
                provisions applicable to FAR part 12 acquisitions. DFARS provision
                252.213-7000, which is superseded by 252.204-70XX, is removed from the
                list.
                 DFARS 213.106-2, Evaluation of quotations or offers, is amended to
                provide a cross-reference to subpart 204.7X, and expanded to require
                that SPRS data is used for evaluation of a supplier quote or offer for
                all solicitations for supplies and services, including solicitations
                using FAR part 12 procedures for the acquisition of commercial items.
                Previously, use of SPRS was limited to competitive acquisitions using
                simplified acquisition procedures that were valued at less than or
                equal to $1 million under the authority at FAR subpart 13.5. The
                language is amended to require the contracting officer to evaluate
                suppliers using all SPRS data, not just past performance data. The text
                is also amended to require that the basis for award will be based on an
                overall risk assessment, if applicable. A cross-reference is added to
                see 204.7X04 for use of the 252.204-70XX provision, while DFARS
                213.106-2-70 is removed, since DFARS provision 252.213-7000 is being
                removed.
                 The new solicitation provision at DFARS 252.204-70XX, Notice to
                Prospective Suppliers on Use of Supplier Performance Risk System in
                Performance Evaluations, provides the definitions of the SPRS risk
                assessments for item, price, and supplier risk; provides a notice that
                SPRS will be used in the evaluation of suppliers' performance and adds
                a link to the SPRS web page; addresses how the SPRS risk assessments
                will be used by the contracting officer to evaluate quotes or offers
                received in response to the solicitation; and provides links to the
                SPRS User's Guide and SPRS evaluation criteria.
                III. Applicability to Contracts at or Below the Simplified Acquisition
                Threshold and for Commercial Items, Including Commercially Available
                Off-the-Shelf Items
                 This rule is applicable to all solicitations for supplies and
                services, including solicitations using FAR part 12 procedures for the
                acquisition of commercial items. The rule proposes to add DFARS
                provision 252.204-70XX, Notice to Prospective Suppliers on Use of
                Supplier Performance Risk System in Performance Evaluations, to replace
                DFARS provision 252.213-7000, Notice to Prospective Suppliers on Use of
                Supplier Performance Risk System in Past Performance Evaluations. The
                new provision provides notice to potential offerors that the overall
                risk assessment generated by the SPRS module will be used to evaluate
                quotes or offers received in response to the solicitation.
                IV. Executive Orders 12866 and 13563
                 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
                all costs and benefits of available regulatory alternatives and, if
                regulation is necessary, to select regulatory approaches that maximize
                net benefits (including potential economic, environmental, public
                health and safety effects, distributive impacts, and equity). E.O.
                13563 emphasizes the importance of quantifying both costs and benefits,
                of reducing costs, of harmonizing rules, and of promoting flexibility.
                This is not a significant regulatory action and, therefore, was not
                subject to review under section 6(b) of E.O. 12866, Regulatory Planning
                and Review, dated September 30, 1993. This rule is not a major rule
                under 5 U.S.C. 804.
                V. Executive Order 13771
                 This rule is not subject to E.O. 13771, because this rule is not a
                significant regulatory action under E.O. 12866.
                VI. Regulatory Flexibility Act
                 The DoD does not expect this rule to have an 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
                proposed changes made to existing DFARS text and provision merely
                reflect existing DoD practice, procedures, and systems used by DoD,
                i.e., the Supplier Performance Risk System in Performance Evaluations
                (SPRS). However, an initial regulatory flexibility analysis has been
                performed and is summarized as follows:
                 DoD is proposing to revise the Defense Federal Acquisition
                Regulation Supplement to incorporate the expanded capabilities of SPRS,
                made possible by recent technical enhancements. SPRS is a DoD
                enterprise application that retrieves quality and delivery information
                performance data obtained from Government reporting systems. The system
                provides three risk assessments for contracting officer use in
                evaluations: Item, price, and supplier risk assessments.
                 The objective of the proposed rule is to notify offerors that SPRS
                collects performance data from a variety of Government sources on
                awarded contracts, to develop item, price, and supplier risk
                assessments for contracting officer use during evaluation of quotations
                or offers. The proposed rule also requires contracting officers to use
                the supplier risk assessment as a factor in the evaluation of
                contractor responsibility. The legal basis for the rule is covered
                under 41 U.S.C 1707, Office of Federal Procurement Policy statute.
                 The Federal Procurement Data System indicates that in FY17-FY19,
                DoD awarded 198,038 contracts (both products and services), of which
                123,217 were awarded to small businesses (approximately 62%). DoD does
                not expect small entities will be materially affected by this rule.
                 The rule does not impose any additional reporting, recordkeeping,
                and other compliance requirements.
                 This rule does not duplicate, overlap, or conflict with any other
                Federal rules.
                 There are no known significant alternatives to the rule.
                 DoD invites comments from small business concerns and other
                interested parties on the expected impact of this rule on small
                entities. DoD will also consider comments from small entities
                concerning the existing regulations in subparts affected by this rule
                in accordance with 5 U.S.C. 610. Interested parties must submit such
                comments separately and should cite 5 U.S.C 610 (DFARS Case 2019-D009),
                in correspondence.
                IV. Paperwork Reduction Act
                 The rule does not contain any information collection requirements
                that require the approval of the Office of Management and Budget under
                the Paperwork Reduction Act (44 U.S.C. chapter 35).
                [[Page 53750]]
                List of Subjects in 48 CFR Parts 204, 209, 212, 213, and 252
                 Government procurement.
                Jennifer Lee Hawes,
                Regulatory Control Officer, Defense Acquisition Regulations System.
                 Therefore, 48 CFR parts 204, 209, 212, 213, and 252 are proposed to
                be amended as follows:
                0
                1. The authority citation for 48 CFR parts 204, 209, 212, 213, and 252
                continues to read as follows:
                 Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
                PART 204--ADMINISTRATIVE AND INFORMATION MATTERS
                0
                2. Add subpart 204.7X to read as follows:
                SUBPART 204.7X--Supplier Performance Risk System
                Sec.
                204.7X00 Scope of subpart.
                204.7X01 Definitions.
                204.7X02 Applicability.
                204.7X03 Procedures.
                204.7X04 Solicitation provision.
                SUBPART 204.7X--Supplier Performance Risk System
                204.7X00 Scope of subpart.
                 This subpart provides policies and procedures for use of the
                Supplier Performance Risk System (SPRS) risk assessments in the
                evaluation of a supplier's quotation or offer.
                204.7X01 Definitions.
                 As used in this subpart--
                 Item risk means the probability that a product or service, based on
                intended use, will introduce performance risk resulting in safety
                issues, mission degradation, or monetary loss.
                 Price risk means the measure of whether a proposed price for a
                product or service is consistent with historical prices paid for that
                item or service.
                 Supplier risk means the probability that an award made to a
                supplier may subject the procurement to the risk of unsuccessful
                performance or to supply chain risk (see 239.7301).
                204.7X02 Applicability.
                 Use of SPRS assessments is required for acquisitions using FAR part
                13 simplified acquisition procedures, including solicitations for
                supplies and services using FAR part 12 procedures for the acquisition
                of commercial items. SPRS retrieves item, price, quality, delivery, and
                supplier information on contracts from Government reporting systems in
                order to develop overall risk assessments of suppliers. SPRS is
                available at https://www.sprs.csd.disa.mil, and the SPRS user's guides
                are available at https://www.sprs.csd.disa.mil/reference.htmf.
                204.7X03 Procedures.
                 The contracting officer shall ensure the basis for award includes
                an evaluation of each supplier's overall risk assessment in SPRS, if
                applicable. Suppliers without an overall risk assessment in SPRS shall
                not be evaluated favorably or unfavorably under the risk assessment
                factor. Contracting officers shall use information available in SPRS on
                item risk, price risk, and supplier risk as follows:
                 (a) Item risk. (1) Item risk shall be considered to determine
                whether the procurement of products or services represents a high
                performance risk to the Government. Item risk is displayed in SPRS with
                the reason(s) an item is identified as high risk.
                 (2) Before issuing a solicitation and when evaluating quotations or
                offers, the contracting officer shall access the SPRS item risk report
                and review any warnings provided. If there are item risk warnings, the
                contracting officer shall consider strategies to mitigate risk, such as
                the following:
                 (i) Consulting with the program office.
                 (ii) Including mitigating requirements in the statement of work, as
                provided by the requiring activity.
                 (iii) Applying risk mitigation strategies, including FAR and DFARS
                clauses identified in the SPRS application, as appropriate.
                 (b) Price risk. (1) Price ratings shall be considered as part of
                determining if a proposed price is consistent with historical prices
                paid for an item or otherwise creates a risk to the Government.
                 (2) The contracting officer shall consider strategies to mitigate
                price risk, such as the following--
                 (i) Not awarding to suppliers with high price ratings unless there
                is a way to justify the price through price analysis;
                 (ii) Utilizing appropriate price negotiation techniques and
                procedures; and
                 (iii) Using price reasonableness or price realism techniques at FAR
                13.106 or FAR 15.4 when making award decisions.
                 (c) Supplier risk. (1) The contracting officers shall consider
                supplier risk during the evaluation of a supplier's performance
                history, to assess the risk of unsuccessful performance, in award
                decisions. Supplier risk assessments in SPRS include quality, delivery,
                and other supplier performance information.
                 (2) See risk mitigation strategies in paragraphs (a)(2) and (b)(2)
                of this section.
                204.7X04 Solicitation provision.
                 Use the provision at 252.204-70XX, Notice to Prospective Suppliers
                on the Use of the Supplier Performance Risk System in Performance
                Evaluations, in solicitations for supplies and services, including
                solicitations using FAR part 12 procedures for the acquisition of
                commercial items.
                PART 209--CONTRACTOR QUALIFICATIONS
                0
                3. Amend section 209.105-1 by adding paragraph (3) to read as follows:
                209.105-1 Obtaining information.
                * * * * *
                 (3) Contracting officers shall use the supplier risk assessment
                available in the Supplier Performance Risk System (SPRS) at https://www.sprs.csd.disa.mil as a factor in determining responsibility. See
                204.7X03(c)(1).
                PART 212--ACQUISITION OF COMMERCIAL ITEMS
                0
                4. Amend section 212.301 by--
                0
                a. Adding paragraph (f)(ii)(K);
                0
                b. Removing paragraph (f)(v); and
                0
                c. Redesignating paragraphs (f)(vi) through (xix) as paragraphs (f)(v)
                through (xviii).
                 The addition reads as follows:
                212.301 Solicitation provisions and contract clauses for the
                acquisition of commercial items.
                * * * * *
                 (f) * * *
                 (ii) * * *
                 (K) Use the provision at 252.204-70XX, Notice to Prospective
                Suppliers on Use of the Supplier Performance Risk System in Performance
                Evaluations, as prescribed in 204.7X04.
                * * * * *
                PART 213--SIMPLIFIED ACQUISITION PROCEDURES
                0
                5. Revise section 213.106-2 to read as follows:
                213.106-2 Evaluation of quotations or offers.
                 (b)(i) For solicitations for supplies and services using FAR part
                13 simplified acquisition procedures, including solicitations using FAR
                part 12 procedures for the acquisition of commercial items, the
                contracting officer shall ensure--
                 (A) Supplier Performance Risk System (SPRS) assessments are used
                for evaluation of a supplier's quotation or
                [[Page 53751]]
                offer. See subpart 204.7X. SPRS is available at https://www.sprs.csd.disa.mil, and the SPRS user's guides are available at
                https://www.sprs.csd.disa.mil/reference.htm;
                 (B) The basis for award shall include an evaluation of each
                supplier's overall risk assessment in SPRS, if applicable; and
                 (C) Suppliers without a risk assessment in SPRS are not evaluated
                favorably or unfavorably under the risk assessment factor.
                 (D) See 204.7X04 for use of the provision at 252.204-70XX, Notice
                to Prospective Suppliers on the Use of the Supplier Performance Risk
                System in Performance Evaluations.
                213.106-2-70 [Removed]
                0
                6. Remove section 213.106-2-70.
                PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
                0
                7. Add section 252.204-70XX to read as follows:
                252.204-70XX Notice to Prospective Suppliers on Use of the Supplier
                Performance Risk System in Performance Evaluations.
                 As prescribed in 204.7X04, use the following provision: NOTICE TO
                PROSPECTIVE SUPPLIERS ON USE OF THE SUPPLIER PERFORMANCE RISK SYSTEM IN
                PERFORMANCE EVALUATIONS (DATE)
                 (a) Definitions. As used in this provision--
                 Item risk means the probability that a product or service, based
                on intended use, will introduce performance risk resulting in safety
                issues, mission degradation, or monetary loss.
                 Price risk means a measure of whether a proposed price for a
                product or service is consistent with historical prices paid for
                that item or service.
                 Supplier risk means the probability that an award made to a
                supplier may subject the procurement to the risk of unsuccessful
                performance or to supply chain risk (see Defense Federal Acquisition
                Regulation Supplement 239.7301).
                 (b) The Supplier Performance Risk System (SPRS), available at
                https://www.sprs.csd.disa.mil, will be used in the evaluation of
                suppliers' performance for acquisitions using Federal Acquisition
                Regulation (FAR) part 13 simplified acquisition procedures,
                including solicitations using FAR part 12 procedures for the
                acquisition of commercial items. SPRS retrieves item, price,
                quality, delivery, and supplier information on contracts from
                Government reporting systems in order to develop overall risk
                assessments.
                 (c) SPRS risk assessments will be used by the Contracting
                Officer during the evaluation of quotations or offers received in
                response to this solicitation as follows:
                 (1) Item risk shall be considered to determine whether the
                procurement represents a high performance risk to the Government.
                 (2) Price risk shall be considered as part of determining if a
                proposed price is consistent with historical prices paid for an item
                or otherwise creates a risk to the Government.
                 (3) Supplier risk, including but not limited to quality and
                delivery, shall be considered during the evaluation of a supplier's
                performance history to assess the risk of unsuccessful performance
                and supply chain risk.
                 (d) SPRS risk assessments are generated daily for each supplier.
                Suppliers are able to access their risk assessment by following the
                access instructions in the SPRS user's guide available at https://www.sprs.csd.disa.mil/reference.htm. Suppliers are granted access to
                SPRS for their own risk assessment classifications only. SPRS
                reporting procedures and risk assessment methodology are detailed in
                the SPRS user's guide. The method to challenge a rating generated by
                SPRS is also provided in the user's guide. SPRS evaluation criteria
                are available from the reference at https://www.sprs.csd.disa.mil/pdf/SPRS_DataEvaluationCriteria.pdf.
                 (e) The Contracting Officer may consider any other available and
                relevant information when evaluating a quotation or an offer.
                 (End of provision)
                252.213-7000 [Removed]
                0
                8. Remove section 252.213-7000.
                [FR Doc. 2020-18645 Filed 8-28-20; 8:45 am]
                BILLING CODE 5001-06-P
                

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