2.8.7.5. Major Contract(s) Planned
For each contract with an estimated total value greater than $40 million dollars for an MDAP or greater than $17 million dollars for a MAIS, including all options.
2.8.7.5.1. Major Contract Table
Provide a table (see example Table 3) that identifies the purpose, type, value, performance period, and deliverables of the contract.
Table 3. Notional Table of Major Contracts
MAJOR CONTRACTS
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Contract
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Purpose
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Type
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Value
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Performance Period
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Major Deliverables
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Specify what the basic contract buys; how major deliverable items are defined; options, if any, and prerequisites for exercising them; and the events established in the contract to support appropriate exit criteria for the phase or intermediate development activity.
Identify the contract type(s) and period(s) of performance. The acquisition strategy shall provide the information necessary to support the decision on contract type. (See FAR Part 16 and Section 818, Public Law (P.L.) 109-364 for additional direction.)
NOTES
- Each major contract (greater than $40 million (then-year dollars) for a Major Defense Acquisition Program and greater than $17 million for Major Automated Information System) planned to execute the Acquisition Strategy must be addressed.
- Per Section 818 NDAA FY 2007, for MS B approval, the Milestone Decision Authority (MDA) shall select a contract type that is consistent with the level of program risk. The MDA may select from a fixed-price, including fixed price incentive, or cost type contracts.
- The law states that the "MDA may authorize the use of a cost type contract" upon determination that:
- a. the program is complex and technically challenging that it would not be practicable to reduce program risk to a level that would permit the use of a fixed-price contract
- b. the complexity and technical challenge of the program is not the result of a failure to meet the requirements established in section 2366a of title 10, United States Code.
- These two (preceding) bullets must be included verbatim in the AS to meet the intent of Section 818, and for MS B approval, and combined with supporting documentation, if a cost type contract is to be used.
- The MDA shall document the contract type selected, to include an explanation of the program risk level and the steps, if necessary, to reduce high program risk in order to proceed to MS B.
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CONSIDERATION
Consider including an explanation of the level of program risk for the program and, if the Milestone Decision Authority determines that the level of program risk is high, the steps that have been taken to reduce program risk and reasons for proceeding with MS B approval despite the high level of program risk. (See also section 2.8.6.)
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Address the alignment of the contract (s) with the overarching acquisition strategy and the competition strategy.
Indicate whether a competitive award, sole source award, or multiple source development with down select to one production contract is planned.
If expecting to use other than full and open competition, cite the authority and indicate the basis for applying that authority, identify source(s), and explain why full and open competition cannot be obtained.
Indicate how subcontract competition will be sought, promoted, and sustained throughout the course of the acquisition. Identify any known barriers to increasing subcontract competition and address how to overcome them.
Specify breakout plans for each major component or sub-system as well as spares and repair parts.
Assess the comparative benefits of awarding a new contract vice placing a requirement under an existing contract. (10 USC 2306, 10 USC 2304)
If planning to award a new indefinite delivery contract, indicate how many contracts are planned to be awarded. If a single award is planned, explain why multiple awards are not feasible. Indicate the ordering period.
Undefinitized Contracts. Indicate if an undefinitized contract will be awarded and provide the rationale. Identify steps to avoid using an undefinitized contract, and list the planned incentives to motivate the contractor to achieve timely definitization.
2.8.7.5.2. Contract Incentives
Provide the planned contract incentives:
- Provide the specific incentive structure. Indicate how the incentive structure will motivate contractor behavior resulting in the cost, schedule, and performance outcomes required by the government for the contract and the program as a whole.
- If more than one incentive is planned for a contract, the strategy should explain how the incentives complement each other and do not conflict with one another.
2.8.7.5.3. Earned Value Management (EVM)
Summarize the financial reporting that will be required by the contractor on each contract, including requirements for EVM.
2.8.7.5.4. Source Selection Approach
Identify the source selection evaluation approach (e.g., Trade-off or Lowest Price Technically Acceptable) and briefly summarize planned procedures (10 USC 2305).
Highlight the considerations influencing the proposed source selection procedures. Indicate how these may change from phase to phase.
State the timing for submission and evaluation of proposals. Identify the criteria that will be used to select the winning bidder. Indicate how those criteria reflect the key government goals for the program.
2.8.7.5.5. Sources
List the known prospective sources of supplies or services that can meet the need. Consider required sources of supplies or services (see FAR Part 8), and sources identifiable through databases including the government-wide database of contracts and other procurement instruments intended for use by multiple agencies available at https://www.contractdirectory.gov/contractdirectory/.
Based on results of market research, identify the specific opportunities for:
- small business,
- veteran-owned small business,
- service-disabled veteran-owned small business,
- HUBZone small business,
- small disadvantaged business, and
- women-owned small business concerns, and
- specify how small business participation has been maximized at both the direct award and subcontracting levels (see FAR Part 19).
2.8.7.5.6. Contract Bundling or Consolidation
If the contract is a bundled acquisition (consolidating two or more requirements for supplies or services, previously performed under smaller contracts, into a single contract that is likely to be unsuitable for award to a small business), indicate the specific benefits anticipated to be derived from bundling. Reference FAR section 7.107, Acquisition Planning. (15 USC 644)
If applicable, identify the incumbent contractors and the contracts affected by the bundling.
Per DFARS section 207.170, if the acquisition strategy proposes consolidation of contract requirements with an estimated total value exceeding $6 million, provide: (1) the results of market research; (2) identification of any alternative contracting approaches that would involve a lesser degree of consolidation; and (3) a determination by the senior procurement executive that the consolidation is necessary and justified.
NOTES
- Section 644, title 15, United States Code requires a Benefit Analysis & Determination when contract bundling is planned.
- FAR 7.103(s) requires that acquisition planners, to the maximum extent practicable, avoid unnecessary and unjustified bundling that precludes small business participation as contractors. As a result of this direction, DoD Instruction 5000.02 requires a Benefit Analysis and Determination. The purpose of the benefit analysis is to determine the relative benefit to the government among two or more alternative procurement strategies. (See definitions at FAR 2.201 and DFARS 207.170-2)
- DFARS 207.170 directs agencies not to consolidate contract requirements with an estimated total value exceeding $5.5million unless the acquisition strategy includes: (1) the results of market research: (2) Identification of any alternative contracting approaches that would involve a lesser degree of consolidation; and (3) a determination by the senior procurement executive that the consolidation is necessary and justified.
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2.8.7.5.7. Subcontracting Plan / Small Business Participation
When FAR Subpart 19.7 applies, the acquisition strategy should establish maximum practicable individual socio-economic subcontracting goals, meaningful small business work, and incentives for small business participation.
Outline planned award evaluation criteria concerning small business utilization in accordance with FAR Subpart 15.3, and DFARS Subpart 215.3 regarding source selection; and
Summarize the rationale for the selection of the planned subcontract tier or tiers.
Indicate how prime contractors will be required to give full and fair consideration to qualified sources other than the prime contractor for the development or construction of major subsystems and components.
CONSIDERATION
The Program Manager should consider consulting the local small business representative or Office of Small Business Programs website for additional information concerning this information requirement or any other small business-related related acquisition planning.
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2.8.7.5.8. Special Contracting Considerations
Identify any special contracting considerations: list any unique clauses or special provisions (e.g., any contingent liabilities (i.e., economic price adjustment or business base clauses, termination liability, etc.)) or special contracting methods (see FAR Part 17) included in the contract; list any special solicitation provisions or FAR deviations required (see FAR Subpart 1.4).
2.8.7.5.9. Special Test Equipment
Identify any planned use of government-furnished special test equipment, unique tooling, or other similar contractual requirements.
2.8.7.5.10. Testing & Systems Engineering Requirements
Specify how testing and systems engineering requirements, including life-cycle management and sustainability requirements, have been incorporated into contract requirements.
Identify the engineering activities to be stated in the RFP and required of the contractor to demonstrate the achievement of the reliability and maintainability design requirements.
Provide a table (see example Table 4) to specify how the sustainment key performance parameter thresholds have been translated into reliability and maintainability design and contract specifications. Table 4, as presented here, is a sample. The actual format of this table may be varied to suit the nature of the procurement or to add additional requirements. The reliability threshold is often expressed as Mean Time Between Failure (MTBF). Use the appropriate life units (e.g., hours, cycles, etc.). "MTTR" is "mean time to repair;" "N/A" may be entered if an item is not applicable.
Table 4. Reliability and Maintainability Requirements
Reliability and Maintainability Requirements
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Parameter
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Threshold
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Contract Specification Requirement
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Reliability (e.g., MTBF)
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Maintainability (e.g., MTTR)
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2.8.7.5.11. Warranty
Indicate whether a warranty is planned, and if so, specify the type and duration; summarize the results of the supporting Cost Benefit Analysis. (See FAR Subpart 46.7 and DFARS Subpart 246.7.)
NOTES
- The Program Manager (PM) should examine the value of warranties on major systems and pursue them when appropriate and cost-effective. If appropriate, the PM should incorporate warranty requirements into major systems contracts in accordance with FAR Subpart 46.7.
- Warranty program data should be included in the Life-cycle Sustainment Plan (see Guidebook Chapter 5).
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2.8.7.5.12. Multiyear Contracting
If this strategy is for Milestone C or later, indicate whether the production program is suited to the use of multiyear contracting (10 USC 2306b). Indicate any plans for multiyear contracting and address compliance with 10 USC 2306c and Office of Management and Budget (OMB) Circular A-11.
NOTES
- In accordance with 10 USC 2306b, the Acquisition Strategy should address the PM's consideration of multiyear contracting for full rate production, and address the PM’s assessment of whether the production program is suited to the use of multiyear contracting based on the requirements in FAR Subpart 17.1. Similarly, the Acquisition Strategy should address the PM’s consideration of the criteria of 10 USC 2306c when considering a multiyear contract for "covered" services.
- If the acquisition strategy calls for a multi-year service contract (as distinguished from contracts that span multiple years, (see FAR Subpart 17.1 and DFARS Subpart 217.171), the strategy shall address compliance with 10 USC 2306c and OMB Circular A-11. OMB Circular A-11 requires that multiyear service contracts be scored as operating leases. Therefore, the Acquisition Strategy shall address the budget scorekeeping that will result from use of the proposed contracting strategy.
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2.8.7.5.13. Leasing
Indicate whether leasing was considered (applies to use of leasing in the acquisition of commercial vehicles and equipment) and, if part of the strategy, economically justify that leasing of such vehicles is practicable and efficient and identify the planned length of the lease.
NOTES
- The Program Manager (PM) should consider the use of leasing in the acquisition of commercial vehicles and equipment whenever the PM determines that leasing of such vehicles is practicable and efficient. Leases are limited to an annual contract with no more than a 5-month lease option.
- The PM may not enter into any lease with a term of 18 months or more, or extend or renew any lease for a term of 18 months or more, for any vessel, aircraft, or vehicle, unless the PM has considered all costs of such a lease (including estimated termination liability) and has determined, in writing, that the lease is in the best interest of the Government (10 USC 2401a and DFARS 207.4). It should be noted that a lease of more than 12 months does not permit the extension of one year funding authority.
- Leases of equipment to meet a valid need under the provisions of CJCS Instruction 3170.01 will be categorized in accordance with the criteria in DoD Instruction 5000.02<GB 5000.02>.
- For further guidance on leasing, see Office of Management and Budget (OMB) Circular A-11, Appendix B, Budgetary Treatment of Lease-Purchases and Leases of Capital Assets; and OMB Circular A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs.
- Additionally 10 USC 2401 must be met for long-term services contracts where the contractor will use a vessel, aircraft or combat vehicle to perform the services. This statute (Section 2401) also applies to long-term leases and charters of vessels, aircraft and combat vehicles. This statute bars entry into such a contract unless the Secretary of a military department has been specifically authorized by law to enter the contract. Section 2401 requires the Secretary of the military department must notify Congressional committees before issuing a solicitation for such a contract. Section 2401 also requires the Secretary must notify the committees of detailed information regarding the proposed contract and must certify that certain criteria and laws have been satisfied (as set out in Section 2401).
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2.8.7.5.14. Modular Contracting (Major Information Technology programs only)
Quantify the extent to which the program is implementing modular contracting (41 USC 2308).
CONSIDERATION
- The Program Manager should consider use of modular contracting, as described in FAR Section 39.103, for major IT acquisitions, to the extent practicable.
- Similarly, before an agency can consolidate contract requirements with an estimated value exceeding $5.5M, DFARS 207.170-3 requires the Acquisition Strategy must contain the results of market research, alternative contracting approaches, and a determination by the senior procurement executive that the consolidation is necessary and justified.
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2.8.7.5.15. Payment
Identify financing method(s) planned and whether these provision(s) will be flowed down to subcontractors. Indicate if early progress payments will be traded off for lower prices in negotiations.
2.8.7.5.16. Other Relevant Information
Provide any other pertinent information that may enhance understanding of the contracting strategy.