Department of Defense (DOD) Enacts Regulation Requiring a "Proposal Adequacy Checklist"
Under a recently issued Department of Defense (DOD) regulation, defense contractors may now be required to complete a “proposal adequacy checklist” when submitting proposals in response to a solicitation that requires submission of certified cost or pricing data. The checklist is a compilation of 36 pre-existing requirements related to cost and pricing information that must be submitted with certain proposals. The stated purpose of the checklist is to “ensure offerors take responsibility for submitting thorough, accurate and complete proposals.” The DOD has maintained that the new checklist imposes no additional requirements or burdens on contractors; however, some commenters to the proposed rule disagreed and believe that the checklist will increase proposal preparation costs.
While use of the checklist is not mandatory, the rule states that contracting officers “should” include the checklist in solicitations where cost or pricing data is required. When included in a solicitation, the checklist comprises 36 items to which offerors must respond by confirming that the information at issue is included in the proposal (or explaining why the item was not included) and identifying the page number of the proposal where the information is included. The items on the checklist cover a broad range of topics and have been organized into several categories: i) general instructions; ii) cost elements [sub-divided into: a) materials and services; and b) subcontracts]; iii) exceptions to certified cost or pricing data [sub-divided into: a) inter-organizational transfers; and b) direct labor]; iv) indirect costs; v) other costs; vi) formats for submission of line item summaries; and vii) other.
The preamble to the proposed rule maintains that the checklist would not impose any additional burden on offerors because the checklist is created directly from requirements already imposed on offerors. Rather, the checklist is intended to be a useful tool for ensuring proposal accuracy. In other words, the checklist does not create any new requirements but merely compiles and organizes existing requirements so that offerors are better able to confirm that they have included all required information. Additionally, the checklist will streamline the DOD’s evaluation process by providing a convenient reference for agency personnel when they are appraising the offeror’s proposal.
In crafting the rule, the DOD was careful to ensure that the rule not be construed as adding new requirements. Thus, for example, during the comment period, one commenter pointed out that checklist item number 32 seemed to impose an added requirement because the Federal Acquisition Regulation (FAR) provision covered by checklist item number 32 requires a time-phased breakdown of labor hours, rates and cost by appropriate category for the labor basis of estimates (BOEs), but does not require more detailed breakdowns such as task descriptions, statement-of-work references, applicable contract line item number (CLIN) references or a rationale for the estimate. In response, the DOD modified checklist item number 32 to make clear that the more detailed breakdowns were merely included as examples and that there is no requirement beyond the FAR mandate to include labor hours, rates and cost by appropriate category for the labor BOEs.
However, despite the DOD’s assertions that the new rule would not create any additional burden for contractors, several commenters to the proposed rule argued that completion of the checklist would add another layer of review to the proposal preparation process, as offerors would now be required to cross-reference their proposal with the checklist and ensure that the completed checklist is itself accurate and matches the information contained in the proposal. Neither of these tasks is insignificant. The commenters further argued that this additional burden would add to proposal preparation costs and would be ultimately passed on to the government. The DOD responded that incomplete proposals result in rework and lost time for the government and that the checklist would reduce the incidence of incomplete proposals and thereby reduce government costs. Furthermore, the DOD argued that the checklist would help offerors streamline their own proposal preparation process.
According to the background information submitted with the proposed rule, the rule was created in support of the DOD’s Better Buying Power (BBP) initiative. The BBP initiative is the implementation of best practices to strengthen the Defense Department's buying power, improve industry productivity, and provide an affordable, value-added military capability to the Warfighter. Launched in 2010, BBP encompasses a set of fundamental acquisition principles to achieve greater efficiencies through affordability, cost control, elimination of unproductive processes and bureaucracy, and promotion of competition. BBP initiatives also incentivize productivity and innovation in industry and government, and improve tradecraft in the acquisition of services.
The new rule appears at DFARS 215.408, and the solicitation provision/contract clause appears at DFARS 252.215.7009. The rule went into effect on March 28, 2013 and contractors should expect the proposal checklist clause to start to appear in new solicitations immediately.