Enclosure 9 -- Acquisition of Services

1. Overview
2. Applicability
3. Responsibilities
4. Acquisition of Services Planning
5. Review and Approval
   Table 9. Acquisition of Services Categories
6. Independent Management Reviews
7. Data Collection
8. Compliance with Title 40/CCA
9. Definitions

1. OVERVIEW. Acquisitions of services shall support and enhance the warfighting capabilities of the Department of Defense.

1. All acquisitions of services shall be based on clear, performance-based requirements; include identifiable and measurable cost, schedule, and performance outcomes consistent with customer needs; and receive adequate planning and management to achieve those outcomes.
2. Managers shall use a strategic, enterprise-wide approach for both planning and execution of the acquisition, and shall use business arrangements that are in the best interests of the Department of Defense.
3. All acquisitions of services shall comply with applicable statutes, regulations, policies, and other requirements, whether the services are acquired by or on behalf of the Department of Defense.

2. APPLICABILITY

1. The policies in this enclosure apply to:
   1. All services acquired from private sector entities, by or for the Department of Defense;
   2. Advisory and assistance services even if those services support research and development or construction activities; and
   3. Acquisitions of services occurring after a program achieves full operational capability, if those services were not subject to previous milestone reviews.
2. Except as in 2.c. of this enclosure, the policies in this enclosure do not apply to research and development activities, construction activities, or services that are reviewed and approved as an acquisition program or part of an acquisition program managed in accordance with this Instruction.
3. Senior officials and decision authorities may apply these policies to research and development activities at their discretion.
4. These policies shall not impede the ability of Senior Officials and Decision Authorities to rapidly respond to emergency situations.

3. RESPONSIBILITIES

1. The SAE of each Military Department shall be the Senior Official for acquisitions of services for their Military Department.
2. The USD(AT&L) shall be the Senior Official for acquisitions of services for the DoD Components outside the Military Departments. The USD(AT&L) may delegate decision authority to Commanders and Directors of the DoD Components.
3. Senior Officials shall be responsible for the acquisitions of services within their respective organizations. They shall establish life-cycle management structures to ensure effective implementation of the policies in this enclosure
4. Senior Officials may designate Decision Authorities to review and approve acquisitions of services.
5. Consistent with the Department's strategic sourcing objective, Senior Officials shall collaborate with other Senior Officials, determine key categories of services for the Department, and dedicate full-time commodity managers to coordinate procurement of these services. Senior Officials shall conduct periodic spend analyses.
6. The USD(AT&L) shall conduct an annual review of the Department's policy for the acquisition of services, and assess the Department's progress in achieving its purpose. Senior Officials, and DoD Component Decision Authorities reporting to the USD(AT&L), shall conduct similar reviews of acquisitions within their authority.

4. ACQUISITION OF SERVICES PLANNING. Consistent with the size and complexity of the program, Senior Officials or their designees shall consider the following (section 2330 of Reference (k)):

1. Requirements Development and Management:
   1. The source of the requirement, the outcomes to be achieved and, if performance-based (see Federal Acquisition Regulation (FAR) Subpart 37.6 (Reference (bg))), what metrics will be used to measure the outcomes.
   2. How the requirement was previously satisfied.
   3. The nature and extent of market research conducted.
   4. Whether it complies, if a consolidated requirement, with Defense Federal Acquisition Regulation Supplement (DFARS) 207.170 (Reference (bh)).
   5. For bundled requirements, determine if a benefit analysis was done as prescribed in the DoD Benefit Analysis Guidebook (Reference (bi)).
2. Acquisition Planning:
   1. The adequacy of the acquisition approach including appropriate milestones.
   2. The cost/price estimate for the total planned acquisition.
   3. How the acquisition will be funded and the availability of funding.
   4. The technical, business, management, and other significant considerations, including the requirement for competition. For task and delivery order contracts, the enhanced competition requirements stated in sections 2304a and 2304c of Reference (k).
   5. Opportunities for strategic sourcing.
   6. The period of performance for the base year and all option years.
   7. Demonstrated implementation of performance-based acquisition methods or rationale for not using those methods.
   8. Opportunities to implement socio-economic business concerns.
   9. Source selection process planning.
   10. Any required waivers or deviations.
   11. If other than full and open competition, why full and open competition procedures will not apply, citing the appropriate statutory authority. Actions taken to improve the competitive environment for the current requirement, and plans to improve competition for foreseeable follow-on acquisitions, shall be addressed.
   12. If the acquisition strategy calls for a multi-year service contract (as distinguished from contracts that span multiple years–see FAR Subpart 17.1 (Reference (bj)) and DFARS Subpart 217.171 (Reference (bk))), the strategy shall address compliance with section 2306c of Reference (k) and Reference (c). OMB Circular A-11 requires that multi-year 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.
   13. Before acquisition planning for contractor services, the head of the agency acting through manpower officials shall conduct an analysis using the criteria in Reference (r) to ensure contractors do not perform inherently governmental functions or services that are exempt from contract performance.
   14. A lease-purchase analysis if required by OMB Circular A-94, Section 13 (Reference (bl)).
3. Solicitation and Contract Award:
   1. The type of business arrangements anticipated (e.g., single contract, multiple award task order contract, task order under existing multiple award contract, and interdepartmental transfers, or interdepartmental purchase requests).
   2. The duration of each business arrangement (base period and all option periods).
   3. Pricing arrangements (e.g., fixed price, cost reimbursement, time and materials, labor hour, or variations, based on guidance in FAR Part 16 (Reference (bm)) and, for commercial services, in FAR Part 12 (Reference (bn))).
   4. Proposed evaluation criteria and the employment of award and incentive fees to recognize and promote contract performance.
4. Risk Management: An assessment of current and potential technical, cost, schedule, and performance risks and the plan for mitigating or retiring those risks.
5. Contract Tracking and Oversight: The existing or planned management approach following contract award, quality assurance surveillance or written oversight plans and responsibilities, and tracking procedures or processes used to monitor contract performance.
6. Performance Evaluation: The plan for evaluating whether the metrics and any other measures identified to guide the acquisition have been achieved. These measures shall include the thresholds for cost, schedule, and performance for the acquisition of a service.

5. REVIEW AND APPROVAL

1. Senior Officials shall designate Decision Authorities to review Acquisitions of Services for each of the categories in Table 9 in this enclosure.
2. The following procedures shall apply to IT services estimated to cost more than $500 million, all services estimated to cost more than $1 billion, and special interest programs designated by the USD(AT&L), the ASD(NII), or their designees:
   1. Senior Officials of the Military Departments and decision authorities in DoD Components outside the Military Departments shall, before the final solicitation is issued (or, for other than full and open competition, before negotiations commence) notify the USD(AT&L) of any proposed acquisition of non-IT services with a total estimated value over $1 billion (base year(s) and options), or the ASD(NII)/DoD CIO of any proposed acquisition of IT services with a total estimated value over $500 million (base year(s) and options).

Table 9. Acquisition of Services Categories.

1.  
   2. Notification shall consist of a briefing or written notification to the Director, Defense Procurement, Acquisition Policy, and Strategic Sourcing (DPAP), in the Office of the USD(AT&L), or the Director, Acquisition, in the Office of the ASD(NII), indicating the expected value of the acquisition of services for the projected life (base year and options) of the contract, and providing copies of the Acquisition Strategy and, if competitive, sections L and M of the solicitation. A Justification and Approval and an acquisition plan will be submitted if the acquisition strategy uses a sole source approach or if directed by the Decision Authority.
   3. The ASD(NII)/DoD CIO shall notify the USD(AT&L) of any proposed acquisitions of IT services with a total estimated value greater than $1 billion (base year(s) and options).
   4. Within 10 working days after receipt of the notification, the USD(AT&L) or ASD(NII)/DoD CIO or designee shall initiate a review of the proposed acquisition strategy. The review shall be accomplished within 30 days. Issues arising from the review shall be resolved in accordance with procedures specified by the USD(AT&L) or ASD(NII)/DoD CIO or designee, in direct coordination with the originating Senior Official or decision authority. After completion of the review, the Director, DPAP (for all acquisitions greater than $1 billion), or the ASD(NII) (for acquisitions of IT services greater than $500 million), shall document the result in a decision memorandum. The acquisition may only proceed, and final RFPs may only be released, after the Acquisition Strategy has been approved.
 

3. The Director, DPAP, shall maintain a list of the acquisitions of services expected to exceed $1 billion (base year(s) and options) based upon the notifications provided by the DoD Components.

6. INDEPENDENT MANAGEMENT REVIEWS (HEREAFTER REFERRED TO AS "PEER REVIEWS"). The Director, DPAP, shall organize review teams and facilitate pre-award and post-award Peer Reviews for all service contracts with an estimated value of $1 billion or more (including options). The teams shall be comprised of senior contracting leaders from across the Department of Defense, as well as members of the Office of General Counsel who are civilian employees or military personnel from outside of the military department or other defense agency whose procurement is the subject of the Peer Review. Senior Officials and DoD Component Decision Authorities under the cognizance of USD(AT&L) shall establish their own procedures to conduct pre and post-award Peer Reviews for contracts valued at less than $1 billion.

1. Pre-Award Peer Reviews shall be conducted in three phases for competitive procurements: 1) prior to issuance of the solicitation; 2) prior to request for final proposal revisions; and 3) prior to contract award. For non-competitive procurements, pre-award Peer Reviews shall be conducted at the pre- and post-business clearance phases. For continuity, review teams shall be comprised of the same members for each phase, whenever possible. Pre-Award Peer Reviews shall assess the following elements:
   1. The process was well understood by both Government and Industry;
   2. Source selection was carried out in accordance with the Source Selection Plan and RFP;
   3. The Source Selection Evaluation Board evaluation was clearly documented;
   4. The Source Selection Advisory Council advisory panel recommendation was clearly documented;
   5. The Source Selection Authority decision was clearly derived from the conduct of the source selection process;
   6. All source selection documentation is consistent with the Section M evaluation criteria; and
   7. The business arrangement.
2. Post-Award Peer Reviews shall assess the following elements:
   1. Contract performance in terms of cost, schedule, and requirements;
   2. Use of contracting mechanisms, including the use of competition, the contract structure and type, the definition of contract requirements, cost or pricing methods, the award and negotiation of task orders, and management and oversight mechanisms;
   3. The contractor's use, management, and oversight of subcontractors;
   4. The staffing of contract management and oversight functions;
   5. The extent of any pass-through charges and excessive pass-through charges (as defined in DFARS 252.215-7004 (Reference (bq)) and section 852 of P.L. 109-364 (Reference (br))); and
   6. For contracts under which one contractor provides oversight for services performed by other contractors:
      1. Evaluation of the extent of the agency's reliance on the contractor to perform acquisition functions closely associated with inherently governmental functions as defined in paragraph (b)(3) of section 2383 of Reference (k); and
      2. Evaluation of the financial interest of any prime contractor performing acquisition functions described in paragraph 6.b.(6)(a) of this enclosure in any contract or subcontract with regard to which the contractor provided advice or recommendations to the agency.

7. DATA COLLECTION. Senior Officials and DoD Component Decision Authorities under the cognizance of USD(AT&L) shall establish procedures to collect acquisition of services data. The collection of the following data shall be automated, and the data may be requested by the USD(AT&L), ASD(NII)/DoD CIO, or Senior Official at any time:

1. The services purchased.
2. The total estimated value (base year(s) and options) of the contract/task order/interdepartmental purchase request
3. The total estimated value of the instant acquisition and the total dollar amount obligated to date on the contract.
4. The type of contract action used to make the purchase (i.e., fixed price type, cost type, or time and materials task order/contract).
5. Whether the purchase was made through:
   1. A performance-based contract, performance-based task order, or other performance-based arrangement that contains firm fixed prices for the specific tasks to be performed;
   2. Any other performance-based contract, performance-based task order, or performance-based arrangement; or
   3. Any contract, task order, or other arrangement that is not performance-based.
6. If the purchase was made on behalf of the Department of Defense, the identity of the agency that made the purchase.
7. The extent of competition in making the purchase and the number of offerors.
8. Whether the purchase was made from:
   1. A small business concern;
   2. A small business concern owned and controlled by socially and economically disadvantaged individuals; or
   3. A small business concern owned and controlled by women.
   4. A small business concern owned and controlled by a veteran;
   5. A small business concern owned and controlled by a service-disabled veteran; or
   6. A small business concern certified by the Small Business Administration as an Historically Underutilized Business Zone concern.
9. The functions and missions performed by the contractor.
10. The contracting organization, the component of the DoD administering the contract, and the organization whose requirements are being met through contractor performance of this function.
11. The funding source, by appropriation and operating agency.
12. The fiscal year for which the activity first appeared on an inventory required by paragraph (c) of section 2330a of Reference (k).
13. The number of full time contractor employees (or its equivalent) paid for the performance of the activity.
14. A determination whether the contract is a personal services contract.

8. COMPLIANCE WITH TITLE 40/CCA. All acquisitions of IT services, regardless of acquisition of services category, are subject to sections 11101 et seq. of Title 40/CCA (Reference (v). For acquisitions of IT services with a total estimated value greater than $500 million, DoD Component Senior Officials, Decision Authorities, and CIOs shall ensure:

1. Acquisition planning addresses the elements of Table 8 in Enclosure 5; and
2. The acquisition strategy and related planning address the relevant aspects of sections 11101 et seq. of subtitle III of Reference (v) before the final solicitation is issued or, for other than full and open competition, before negotiations commence.

9. DEFINITIONS

1. Service. Engagement of the time and effort of a contractor whose primary purpose is to perform an identifiable task, or tasks, rather than to furnish an end item of supply.
2. Procurement Action. With respect to the acquisition of services, a procurement action includes the following:
   1. Entry into a contract or any other form of agreement including, but not limited to, basic ordering agreements, blanket purchase agreements, indefinite quantity/indefinite delivery contracts, and similar ordering agreements.
   2. Issuance of a task order or any transfer of funds to acquire a service on behalf of the Department of Defense.
3. Acquisition of Services. The execution of one or multiple contracts or other instruments committing or obligating funds (e.g., funds transfer, placing orders under existing contracts) for a specified requirement. Acquisition begins at the point when agency needs are established and includes all functions directly related to the process of fulfilling those needs by contract, agreements, or funds transfer.
4. IT Services. The performance of any work related to IT and the operation of IT, including NSS. This includes outsourced IT-based business processes, outsourced IT, and outsourced information functions.