[Federal Register Volume 75, Number 99 (Monday, May 24, 2010)]
[Notices]
[Pages 28788-28789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12349]
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DEPARTMENT OF DEFENSE
Department of the Navy
Preferred Supplier Program (PSP)
AGENCY: Department of the Navy, DoD.
ACTION: Notice of proposed policy letter.
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SUMMARY: The Deputy Assistant Secretary of the Navy, Acquisition and
Logistics Management (DASN (A&LM)), is soliciting comments that the
Department of the Navy (DON) may use in drafting a policy that will
establish a Preferred Supplier Program (PSP). Under the PSP,
contractors that have demonstrated exemplary performance, at the
corporate level; in the areas of cost, schedule, performance, quality,
and business relations would be granted Preferred Supplier Status
(PSS). Contractors that achieved PSS would receive more favorable
contract terms and conditions in DON contracts. Upon approval of the
policy by the Assistant Secretary of the Navy for Research, Development
and Acquisition, DON will initiate the pilot phase of the PSP.
DATES: DON invites interested parties from both the public and private
sectors to provide comments to be considered in the formulation of the
final policy letter. In particular, DON encourages respondents to offer
their views as discussed below, in Section D, ``Solicitation of Public
Comment.''
Interested parties should submit comments, in writing, to the
address below, on or before July 23, 2010.
ADDRESSES: Comments may be submitted by any of the following methods:
E-mail: [email protected].
Facsimile: 703-614-9394.
Mail: DASN (A&LM), Attn: Clarence Belton, 1000 Navy Pentagon, Room
BF992, Washington, DC 20350-1000.
Instructions: Please submit comments only and cite ``Proposed DON
PSP Policy Letter'' in all correspondence. All comments received will
be posted, without change or redaction, to https://acquisition.navy.mil/rda/home/acquisition_one_source/business_opportunities/preferred_supplier, so commenters should not include
information that they do not wish to be posted (for example, personal
or business-confidential).
FOR FURTHER INFORMATION CONTACT: Clarence Belton, 703-693-4006 or
[email protected].
SUPPLEMENTARY INFORMATION:
A. Background
Companies in the private sector that have implemented PSPs have
significantly improved performance. Cash flow, profit, and contract
terms and conditions that reduce contractor costs and risk are powerful
incentives that can be used to motivate contractors to perform at a
high level. DON and its contractors negotiate these key components of
the business arrangement contract by contract. As a result of this
decentralized and individual approach, DON loses an extremely important
opportunity. This policy would establish the PSP to recover that
opportunity through the use of favorable contract terms and conditions
that would be available to Preferred Suppliers (i.e., suppliers that
have demonstrated exemplary performance, at the corporate level, in the
areas of cost, schedule, performance, quality, and business relations).
The proposed policy is now in the conceptual stage. After
consideration of the comments, DON may publish a draft proposed policy
letter for additional public comments.
B. Proposed Policy Letter Concepts
The general outline of the pilot phase of the PSP, to be
established under the proposed policy letter, is set forth below.
DASN (A&LM) shall be responsible for the assessment of contractors
under the PSP. DASN (A&LM) will confer PSS at the corporate level, and
will not rate individual affiliates or subdivisions of corporations.
DASN (A&LM) shall use the Contractor Performance Assessment
Reporting System (CPARS) as the baseline data during the pilot phase of
the PSP. In the course of the pilot phase, DON also will identify other
sources of data, including information available to Navy program
offices and government contract administration organizations that the
Department may use to supplement CPARS data in implementing the PSP.
The factors that DASN (A&LM) will use to assess contractors during the
pilot phase include, at a minimum, the following CPARS areas:
Technical (Quality of Product);
Schedule;
Cost Control;
Management Responsiveness;
Management of Key Personnel;
Utilization of Small Business;
Other CPARS Factors As Appropriate.
DASN (A&LM) shall assess Energy Efficiency for all contractors as
an ``excellence factor,'' in addition to the areas above.
During the pilot phase of the PSP, DON will use a 5-star system
based upon the 5-color ratings used in CPARS, as follows:
[[Page 28789]]
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CPARS PSP
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Red........................................................... 0
Yellow........................................................ 1
Green......................................................... 2
Purple........................................................ 3
Dark Blue..................................................... 4
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DON will use the CPARS conversion table above, based upon CPARS
data, and, as appropriate, other sources of information and weighting
factors. Contractors must achieve at least a 3-Star rating to be
designated as a Preferred Supplier.
If a contractor provides documentation sufficient to establish that
it has an Energy Efficiency Program, it will receive an additional
star, up to a maximum rating of 5 Stars. A 5-Star rating can only be
achieved if the contractor maintains an active Energy Efficiency
Program, and otherwise has received a 4-Star rating. Failure to
demonstrate an active Energy Efficiency Program will not diminish the
contractor's PSP rating.
During each fiscal year, DASN (A&LM) shall reassess and rate the
top 25 DON contractors. The top 25 DON contractors will be determined
by the value of contract awards for the most recent fiscal year. Other
contractors may apply to join the PSP. DASN (A&LM) shall evaluate all
applicants currently eligible for assessment in CPARS using the same
process as it does to evaluate the top 25 contractors. DASN (A&LM) will
establish a 30-day application period that will begin no later than
January 1, annually.
In negotiating contracts with Preferred Suppliers, DON contracting
officers will be authorized to offer some or all of the following more
favorable contract terms and conditions:
[cir] More favorable progress payments.
[cir] Recognition of PSS in the development of profit or fee based
upon weighted guidelines.
[cir] Tailored contract reporting requirements.
[cir] Special award fee pools.
PSS shall not be used as a factor or sub-factor in any source
selection. However, where the contracting officer has a reasonable
belief that a Preferred Supplier may submit a bid or proposal, the
solicitation shall contain terms and conditions that will be
applicable, after award, only if the successful offeror is a Preferred
Supplier.
These special terms and conditions, applicable to contracts with
Preferred Suppliers, shall be consistent with the limitations specified
in regulations promulgated pursuant to the Federal Acquisition
Regulatory System.
C. Solicitation of Public Comment
DON invites interested parties from both the public and private
sectors to provide comments for consideration in the formulation of a
policy letter establishing the PSP. In particular, DON seeks to better
understand how to incentivize contractors, at the corporate level, to
achieve sustained superior performance in the areas of cost, schedule,
performance, quality, and business relations. Accordingly, DON welcomes
feedback regarding the following questions.
1. What clauses are currently being used in government
subcontracts, and commercial contracts and subcontracts, to incentivize
superior performance, at the corporate level, in the areas of cost,
schedule, performance, quality, and business relations?
2. What solicitation provisions, contract clauses, and performance
incentives will provide contractors with the greatest motivation to
achieve PSS?
3. Energy Efficiency is a critical DON requirement significantly
impacting the successful achievement of DON's missions. How should a
contractor's use of energy, as it relates to the entire life-cycle of a
product--design, manufacture, use, maintenance, and disposal--be
considered in the designation of Preferred Suppliers?
4. Is there any other aspect of the proposed PSP on which you wish
to comment?
Dated: May 14, 2010.
A. M. Vallandingham,
Lieutenant Commander, Office of the Judge Advocate General, U.S. Navy,
Federal Register Liaison Officer.
[FR Doc. 2010-12349 Filed 5-21-10; 8:45 am]
BILLING CODE 3810-FF-P