D-100 Scope.
D-101 Definition.
D-102 Policy.
D-103 Responsibility.
D-104 Procedures.
D-105 Records.
D-100 Scope.
(a) This appendix provides policy and procedures
for breaking out components of end items for future acquisitions so that the
Government can purchase the components directly from the manufacturer or
supplier and furnish them to the end item manufacturer as Government-furnished
material.
(b) This appendix does not apply to—
(1)
The initial decisions on Government-furnished
equipment/contractor-furnished equipment that are made at the inception of an
acquisition program; or
(2)
Breakout of parts for replenishment (see Appendix E).
D-101 Definition.
“Component,” as used in this
appendix, includes subsystems, assemblies, subassemblies, and other major
elements of an end item; it does not include elements of relatively small
annual acquisition value.
D-102 Policy.
DoD policy is to breakout
components of weapons systems or other major end items under certain
circumstances.
(a) When it is anticipated that a prime contract
will be awarded without adequate price competition, and the prime contractor is
expected to acquire any component without adequate price competition, breakout
that component if—
(1)
Substantial net cost savings probably will be achieved; and
(2)
Breakout action will not jeopardize the quality, reliability,
performance, or timely delivery of the end item.
(b) Even when either or both the prime contract
and the component will be acquired with adequate price competition, consider
breakout of the component if substantial net cost savings will result from—
(1)
Greater quantity acquisitions; or
(2)
Such factors as improved logistics support (through reduction in
varieties of spare parts) and economies in operations and training (through
standardization of design).
(c) Breakout normally is not justified for a
component that is not expected to exceed $1 million for the current year's
requirement.
D-103 Responsibility.
(a) Agencies are responsible for ensuring that—
(1) Breakout reviews are performed on components meeting the criteria in
D-102(a) and (b);
(2)
Components susceptible to breakout are earmarked for consideration in
future acquisitions;
(3)
Components earmarked for breakout are considered during requirements
determination and appropriate decisions are made; and
(4)
Components are broken out when required.
(b) The program manager or other official
responsible for the material program concerned is responsible for breakout
selection, review, and decision.
(c) The contracting officer or buyer and other
specialists (e.g., small business specialist, engineering, production,
logistics, and maintenance) support the program manager in implementing the
breakout program.
D-104 Procedures.
(a) A breakout review and decision includes—
(1)
An assessment of the potential risks to the end item from possibilities
such as delayed delivery and reduced reliability of the component;
(2)
A calculation of estimated net cost savings (i.e., estimated acquisition
savings less any offsetting costs); and
(3)
An analysis of the technical, operational, logistics, and administrative
factors involved.
(b) The decision must be supported by adequate
explanatory information, including an assessment by the end item contractor
when feasible.
(c) The following questions should be used in
the decision process—
(1)
Is the end item contractor likely to do further design or engineering
effort on the component?
(2)
Is a suitable data package available with rights to use it for
Government acquisition? (Note that
breakout may be warranted even though competitive acquisition is not possible.)
(3)
Can any quality control and reliability problems of the component be
resolved without requiring effort by the end item contractor?
(4)
Will the component require further technical support (e.g., development
of specifications, testing requirements, or quality assurance
requirements)? If so, does the
Government have the resources (manpower, technical competence, facilities,
etc.) to provide such support? Or, can
the support be obtained from the end item contractor (even though the component
is broken out) or other source?
(5)
Will breakout impair logistics support (e.g., by jeopardizing
standardization of components)?
(6)
Will breakout unduly fragment administration, management, or performance
of the end item contract (e.g., by complicating production scheduling or
preventing identification of responsibility for end item failure caused by a
defective component)?
(7)
Can breakout be accomplished without jeopardizing delivery requirements
of the end item?
(8)
If a decision is made to breakout a component, can advance acquisition
funds be made available to provide the new source any necessary additional lead
time?
(9)
Is there a source other than the present manufacturer capable of
supplying the component?
(10)
Has the component been (or is it going to be) acquired directly by the
Government as a support item in the supply system or as Government-furnished
equipment in other end items?
(11)
Will the financial risks and other responsibilities assumed by the
Government after breakout be acceptable?
(12)
Will breakout result in substantial net cost savings? Develop estimates of probable savings in
cost considering all offsetting costs such as increases in the cost of
requirements determination and control, contracting, contract administration,
data package purchase, material inspection, qualification or preproduction
testing, ground support and test equipment, transportation, security, storage,
distribution, and technical support.
(d) If answers to the questions reveal
conditions unfavorable to breakout, the program manager should explore whether
the unfavorable conditions can be eliminated.
For example, where adequate technical support is not available from
Government resources, consider contracting for the necessary services from the
end item contractor or other qualified source.
D-105 Records.
(a) The contracting activity shall maintain
records on components reviewed for breakout.
Records should evidence whether the components—
(1)
Have no potential for breakout;
(2) Have been earmarked as potential breakout candidates;
(3)
Have been, or will be, broken out.
(b) The program manager or other designated
official must sign the records.
(c) Records must reflect the facts and
conditions of the case, including any assessment by the contractor, and the
basis for the decision. The records
must contain the assessments, calculations, and analyses discussed in D-104,
including the trade-off analysis between savings and increased risk to the
Government because of responsibility for Government-furnished equipment.