The Rewrite has taken over two years to implement, which included an initial proposal in January 1996 followed by two revised proposals resulting from comments. The final version was issued September 30, 1997. The stated goals of the rewrite are to (1) provide better techniques for selecting awardees (2) simplify the process (3) obtain better value and (4) eliminate unnecessary requirements.

The changes affected how dialogue would be used in source selection decisions, use of past performance information and some less dramatic changes to contract pricing matters.

The most dramatic changes to FAR Part 15 encourages more robust dialogue between offers and the government. The changes address appropriate dialogue during discrete steps of the source selection process: before solicitations are drafted, after an offer is received but before the competitive range is determined, establishing a competitive range and after the competitive range is determined.

The new FAR 15 encourages industry-government dialogue before receipt of proposals. It cites industry or small business conferences, public hearing, market research, draft RFPs, presolicitation proposal conferences and one-on-one meetings as suggested techniques to facilitate early exchange of information. The rewrite places few restrictions on the types of information to be exchanged, cautioning any such exchange be consistent with procurement integrity requirements. The authors worry that particularly in one-on-one meetings, the rewrite will allow COs to discuss the agency’s requirement with a particular offeror without providing the same accommodation to other offerors. Citing a policy rewrite to FAR Part 1 that requires contractors be "treated fairly and impartially but need not be treated the same", they express a concern for unequal treatment that must be carefully monitored.

Under the old FAR Part 15, when award was made without discussions the only permissible dialogue was "minor" clarification" defined as communications with the offeror for the sole purpose of eliminating minor irregularities or apparent clerical mistakes in the proposal. Such limited communications were to be conducted without giving the offeror an opportunity to revise or modify its proposal except to correct clerical mistakes. This definition has been eliminated, substituting several different types of exchanges after receipt of proposals. Clarifications are now "limited exchanges" when it is intended to award a contract without discussions and in them "offerors may be given the opportunity to clarify certain aspects of proposals (e.g. the relevance of an offeror’s past performance information and adverse past performance information to which the offeror has not previously had an opportunity to respond) or to resolve minor or clerical errors".

This provision is significantly broader, giving offerors the opportunity to address (1) the relevance of past performance information and (2) adverse past performance information to which the offeror had not previously been able to respond, even if there are no clerical mistakes. Even so, these exchanges do not permit the offeror to change its proposal other than to correct mistakes. These exchanges about past performance, which would have been considered "discussions" under the old FAR can tilt an award decision by increasing past performance scores or, generally, provide a more positive impression.

Previously, the government typically evaluated proposals and established a competitive range without conducting any exchanges with offerors (except for solicitation amendments provided to all offerors). The rewrite now specifically permits "communications" before a competitive range is set. These communications are limited to (a) offerors whose past information is the determining factor preventing them from being place in the range and (b) offerors whose exclusion or inclusion in the competitive range is uncertain. They may be conducted to enhance the Government’s understanding of proposals, to allow reasonable interpretations of proposals or to facilitate the evaluation process. They may not be made to cure proposal deficiencies or material ommissions, to alter technical or cost elements of a proposal nor revise a proposal.

An agency is not required to conduct these precompetitive-range communication with all offerors. Though they may not lead to revising proposals, the communications may address ambiguities in the proposal or their concerns such as perceived deficiencies, weaknesses, errors, omissions, mistakes or information related to past performance. The authors express the same concern that these provisions open the door to unequal treatment of offerors.

Under the prior version, in order to conduct discussions, COs had to determine a competitive range of proposals that had a "reasonable chance" to win and if there was doubt, they were directed to include the proposal in the range. In the rewrite, COs are to take two steps: (1) compile a competitive range after evaluating all proposals against factors specified in the solicitation and (2) after determining this range, allowing the CO to further limit the number of proposals to "permit an efficient competition" among the most highly rated proposals.

After the competitive range is established, the rewrite provides for significantly more exhanges – called "negotiations" – between offerors in the competitive range and the Government. Negotiations are defined as exchanges "undertaken with the intent of allowing offerors to revise their proposal" either in a competitive or sole-source environment. Negotiations may include "bargaining" which encompasses "persuasion, alteration of assumptions and positions, give-and-take, and may apply to price, schedule, technical requirements, type of contract and other terms of a proposed contract". For a competitive acquisition, negotiations taking place after the competitive range is determined are called "discussions".

The rewrite continues the old requirement for the CO to conduct discussion with each offeror in the competitive range. Under the new rule, the primary objective of these discussions is to "maximize the Government’s ability to obtain best value". The CO is instructed to discuss significant weaknesses, deficiencies, and other aspects such as cost, price, technical approach, past performance, and terms and conditions that could, in the CO’s opinion, be altered or explained to materially enhance the proposal’s chance for award.

In addition, where the solicitation states evaluation credit will be given for technical solutions exceeding mandatory minimums, the revised rule permits the Government to negotiate for increased performance beyond mandatory minimums. The FAR also now permits the Government to suggest to offerors that have exceeded mandatory minimums that their proposal would be more competitive if the excesses were removed and the price decreased.

Also, where the prior rules permitted a CO to eliminate a proposal from the competitive range without conducting discussions only if the offeror had no reasonable chance to win, proposals may now be eliminated if the proposal is no longer considered to be among the most highly rated proposals being considered for award. The offer may be eliminated whether or not (a) all material aspects have been discussed or (b) the offeror has been afforded a chance to submit a proposed revision.

Though the change expands the government’s ability to conduct exchanges after receipt of proposals, it contains certain limits. The government personnel may not engage in conduct that (1) favors one offer over another (2) reveals an offeror’s "technical solution, including unique technology, innovative and unique uses of commercial items or any information that would compromise an offeror’s intellectual property" (3) reveals an offeror’s price without their permission (4) reveals the names of individuals providing reference information about an offeror’s past performance or (5) knowingly furnishes source selection information in violation of procurement integrity regulations.

In addition, while the FAR previoulsly allowed the Government to inform an offeror that its cost or price is considered "too high or unrealistic" it now permits the CO to inform an offeror its price is "too high or too low" and "reveal the results of the analysis supporting that conclusion". At its discretion, the government may also indicate to all offerors the cost or price the Government’s price analysis, market research and other reviews has identified as reasonable. While not revealing another offeror’s price without their permission, more aspects of price can be revealed.

After conducting discussions, the rewrite requires the CO to give all remaining competitive range offerors the opportunity to submit a "final proposal revision", a step that replaces the "best and final offer" procedure under the old FAR. The CO must set a common cut-off date for receipt of final proposal revisions. Like before, the Government must inform offerors final proposed revisions must be in writing and the Government intends to make award without obtaining further revisions.

Though less dramatic than exchanges, the FAR Part 15 rewrite addressing the requirements for evaluating an offeror’s past performance is intended to help ensure past performance information is more fairly evaluated.

FAR Part 15 has been revised in response to numerous GAO protest cases. FAR 15 now contains mandatory requirements regarding past performance evaluations, many of which were already followed. Solicitations must now (a) describe the approach for evaluating past performance (including offerors with no relevant performance history) (b) provide offerors the opportunity to identify past or current contracts (public and private) for efforts similar to Government requirements and (c) authorize offerors to provide information on problems encountered and corrective actions taken.

When evaluating an offeror’s past performance, the source selection authority must consider this information as well as other information obtained from other sources and determine its relevance. Evaluations must now take into account "relevant" information regarding an offeror’s predecessor companies, key personnel and subcontractors that will have major roles in performing the contract.

Agencies cannot treat all past performance information the same. The FAR now states the CO "shall" consider "the currency and relevance of the information, source of the information, context of the data and general trends of contractor’s performance".

Past performance need not be included as an evaluation factor in lowest price technically acceptable selection. If the CO decides to include past performance in these procurements, past performance is treated as a "pass/fail" evaluation factor.

A frequent area of dispute under prior FAR 15 versions was the extent to which agencies were required to conduct discussions regarding adverse past performance information. The rewrite reinforces the requirement for agencies to conduct exchanges regarding adverse or otherwise material past performance information in a number of sections. Where an agency intends to award a contract without discussions, an offeror may be given the opportunity to clarify adverse past performance information to which they had not previously had the opportunity to respond. Moreover, adverse past performance information on which the offeror has not had a prior opportunity to comment must be disclosed in communications before the competitive range is established. With respect to offerors within the competitive range, past performance is included as one of the aspects of a proposal that must be addressed in discussions with an offeror if the CO believes they could be altered or explained to enhance materially the chances of winning.

In order to address the lingering issue of how to treat offerors that have no relevant past performance, many tried to get the drafters of the rewrite to provide guidance. The drafters left the issue to be resolved on an ad hoc basis. In the desire to comply with original statutory requirement to make absence of past performance information neither favorable nor unfavorable, prior FAR Part 15 stated "firms lacking relevant past performance history shall receive a neutral evaluation for past performance". Numerous attempts to provide practical guidance on the meaning of "neutral evaluation" failed and the final rewrite simply restates the original statute: "In the case of an offeror without a record of relevant past performance or for whom information on past performance is not available, the offeror may not be evaluated favorably or unfavorably on past performance". For better or worse, the acquisition agency will determine for themselves what rating scheme to use to satisfy this requirement, leaving it to the GAO and courts to fill in the gaps.

Though not dramatic, FAR 15 changes affect cost and pricing issues, clarifies "best value" and addresses cost realism analyses.

The rewrite clarifies that the CO will be prohibited form obtaining cost or pricing data for acquisitions at or below the simplified acquisition threshold (currently $100,000). The rewrite also seeks to clarify exceptions to the cost or pricing requirements by eliminating confusing language from the old FAR Part 15. For modifications to a contract falling under the commercial item exemption, the rewrite states any modification of a contract for an item meeting the definition of "commercial item" in FAR 2.101 that does not change the item from a commercial to noncommercial item is exempt from the requirement for cost or pricing data.

The rewrite also eliminates two mandatory cover sheets for submission of cost or pricing data (Standard Form 1411) and information other than cost or pricing data (SF 1449). However, the rewrite still requires submission of the information contained on the SF 1411 in narrative form, making the benefit of eliminating the form of questionable value. .

For unbalanced pricing the rewrite eliminates the requirement for COs to analyze offers to determine whether they are "mathematicially" and "materially" unbalanced. Unbalanced pricing is now defined as existing when in spite of an acceptable total evaluated price the price of one or more contract line items is significantly over or understated. If cost or price analysis indicates unbalanced pricing exists, the CO must perform a risk analysis and consider whether the award of the contract will result in paying unreasonably high prices for contract performance. If lack of balance poses unacceptable risk, the CO may reject the offer.

The rewrite changes the old requirement to obtain field pricing assistance (DCAA audit and "technical" evaluation) whenever cost or pricing data was obtained and the acquisition was expected to exceed $500,000. The rewrite gives the CO discretion to request field pricing support when information at the buying activity is inadequate to determine a fair and reasonable price.

The rewrite has replaced the absence of a definition of "best value" with a new one as "the expected outcome of an acquisition that, in the Government’s estimation, provides the greatest overall benefit in response to the requirement". What were once called "best value source selections" are now called "tradeoff processes" and require documentation of perceived benefits to the Government in awarding a contract to a higher priced proposal. This is a result of GAO decisions requiring written support for price premiums paid for higher technically rated proposals.

As under prior regulations, "cost realism" means that the proposed price reflects costs that are realistic for the work to be performed, reflect a clear understanding of the requirements and are consistent with the various elements of the technical proposal. The FAR 15 rewrite seeks to provide expanded guidance, by requiring cost realism analysis be performed on cost-type contracts to determine probable cost of performance for each offeror. The probable cost – the Government’s best estimate of the contract cost most likely to result from an offeror’s proposal – is determined by adjusting the offeror’s proposed cost and fee to reflect any additions or reductions in cost elements to realistic levels based upon the results of the cost realism analysis.

In addition, the rewrite endorses the use of cost realism analysis on fixed-price incentive contracts or in "exceptional" cases on other competitive fixed-price contracts when (1) new requirements may not be fully understood by offerors (2) quality concerns exist (3) past experience indicates contractor’s proposed costs have resulted in quality or service shortfalls. The results of the cost realism may be used to assess performance risk and responsibility determinations but the offered prices will not be adjusted as a result of the cost realism analysis.

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