Competition is a key consideration for fostering innovation and affordability for defense applications. The Program Strategy document for all programs should describe the competition planned for the subject phase of the program’s life cycle, or explain why competition is not practicable or not in the best interests of the Government.
Specify measures planned to be used to ensure competition, or the option of competition at both the prime contract level and the subcontract level (at such tier or tiers as are appropriate) of such program throughout the life-cycle of such program as a means to improve contractor performance; and adequate documentation of the rationale for the selection of the subcontract tier or tiers. Specify which of the following measure are planned to ensure competition:

Competitive prototyping.
Dual-sourcing.
Unbundling of contracts.
Funding of next-generation prototype systems or subsystems.
Use of modular, open architectures to enable competition for upgrades.
Use of build-to-print approaches to enable production through multiple sources.
Acquisition of complete technical data packages.
Periodic competitions for subsystem upgrades.
Licensing of additional suppliers.
Periodic system or program reviews to address long-term competitive effects of program decisions.
Other

In situations where head-to-head competition is not possible, explain how dissimilar competition or other competitive approaches will be used.

Indicate how the results of the previous acquisition phase impact the competition strategy for the approaching phase.

CONSIDERATIONS

If this is a Technology Demonstration Strategy specify the following with respect to Competitive Prototyping plans:

Will the complete system be prototyped? If not, provide a supporting rationale.
List the critical subsystems of the system that are to be competitively prototyped. If neither the complete system nor the critical subsystems are planned to be competitively prototyped, refer to the waiver section below.
Specify the number of candidates anticipated to be in the competition for each complete system and/or critical subsystem. Indicate whether the candidates are expected to be commercial, government or academic sources.
Specify the planned competitive criteria to be used to down-select for each complete system and/or critical subsystem (e.g. technical data rights, performance criteria).

NOTES

Competitive Prototyping Waivers: the Milestone Decision Authority may waive the requirement only on the basis that—

A. the cost of producing competitive prototypes exceeds the expected life-cycle benefits (in constant dollars) of producing such prototypes, including the benefits of improved performance and increased technological and design maturity that may be achieved through competitive prototyping; or
B. but for such waiver, the Department would be unable to meet critical national security objectives.

P.L. 111-23, Weapon Systems Acquisition Reform of 2009 stipulates that whenever a Milestone Decision Authority authorizes a waiver the Milestone Decision Authority shall require that the program produce a prototype before Milestone B approval if the expected life-cycle benefits (in constant dollars) of producing such prototype exceed its cost and its production is consistent with achieving critical national security objectives; and, shall notify the congressional defense committees in writing not later than 30 days after the waiver is authorized and include in such notification the rationale for the waiver and the plan, if any, for producing a prototype.

[The prototyping requirement may NOT be waived—only the competitive aspect of prototyping may be waived in the limited circumstances noted.]

2.8.7.2. Market Research

Summarize the research conducted and the results of market research. Indicate the specific impact of those results on the various elements of the program. Summarize plans for continuing market research to support the program throughout development and production.

Market research information provided in the strategy should be sufficient to satisfy the requirements of 10 United States Code (USC) 2366a and 10 USC 2366b. For more information, see Federal Acquisition Regulation (FAR) Part 10, Market Research, and Defense Federal Acquisition Regulation Supplement (DFARS) section 210.001).

CONSIDERATIONS

Market research is a primary means of determining the availability and suitability of commercial items and the extent to which the interfaces for these items have broad market acceptance, standards-organization support, and stability. In addition, market research is important in seeking small business capabilities.
Thorough market research needs to be performed to determine whether or not small businesses are capable of satisfying the requirements. Market research supports the acquisition planning and decision process, supplying technical and business information about commercial technology and industrial capabilities to arrive at the most suitable approach to acquiring, distributing and supporting supplies and services. Market research, tailored to program needs, should continue throughout the acquisition process and during post-production support.
Market research should yield an understanding of potential material solutions, their technology maturity, and potential sources, and should suggest strategies for acquiring them.
Market Research is required to support the 10 USC 2366b Milestone B certification. Compliance with 10 USC 2377, 15 USC 644, P.L.111-23, other statute & DFARs determine the outcome of the market strategy certification element.

2.8.7.3. Advance Procurement

Indicate whether advance procurement of long lead items is planned. List highest dollar value items. The Acquisition Strategy must clearly indicate the intention to employ advance procurement. [NOTE: The MDA must separately and specifically approve advance procurement if authorization is sought prior to the applicable milestone decision.]

NOTES

DoD Financial Management Regulation 7000.14-R (Volume 2A, Chapter 1) requires that the procurement of end items be fully funded, i.e., the cost of the end items to be bought in any fiscal year should be completely included in that year's budget request. However, there are times when it is appropriate to procure some components, parts, materiel, or effort in advance of the end item buy. These items are referred to as advance procurements. Statutory authority for these advance procurements should be provided in the relevant authorization and appropriations acts.
Advance procurement funds are used in major acquisition programs for advance procurement of components whose long-lead times require purchase early in order to reduce the overall procurement lead-time of the major end item. Advance procurement of long lead components is an exception to the DoD "full funding" policy and must be part of the President's budget request. These expenditures are subject to the following limitations:
- a. the cost of components, material, parts, and effort budgeted for advance procurement should be low compared to the total cost of the end item
- b. the PM judges the benefits of the advance procurement to outweigh the inherent loss of or limitation to future MDA flexibility
- c. the MDA approves the advance procurement
- d. the procurement received statutory authority, as discussed above
As part of the milestone review, the MDA should approve specific exit criteria for advance procurement. These specific exit criteria should be satisfied before the PM releases any advance procurement funding for either the initial long lead-time items contract(s) or the contract(s) for individual, follow-on, long lead-time lots. The contracts office should initiate a separate contract action for advance procurement of long lead materiel.
The MDA must approve advance procurement in advance of Milestone C, and the intention should be clearly noted in the Acquisition Strategy. A template should be completed and provided for MDA approval prior to executing long lead advance procurement if the approved AS and current/appropriate year budget exhibits do not contain all of the equivalent content. The template can be included in the AS, or by separate memo for the MDA to approve.

2.8.7.4. Sustainment Strategy

The details of program sustainment planning are included in the Life Cycle Sustainment Plan, which will be prepared and approved as a separate document. This portion of the Program Strategy document should:

Specify the contracting strategy to provide product support throughout the system life cycle. The sustainment strategy should reflect the Maintenance or Support CONOPS and consider: impacts to system capability requirements; responsiveness of the integrated supply chains across government and industry; maintaining long-term competitive pressures on government and industry providers; and providing effective integration of weapon system support that is transparent to the warfighter and provides total combat logistics capability.

CONSIDERATIONS

Provide an overview of the sustainment related contract(s) including how the integrated product support package will be acquired. The discussion must include the:

Type contract and length along with major terms and conditions
Performance measures being used (including the extent to which it is traditional transaction based/process focused and performance-based/outcome focused)
Sustainment related functions, hardware or data covered in each contract
Portion of system covered by performance based product support strategy

State the assumptions used in determining whether contractor or agency support will be employed, both initially and over the life of the acquisition, including consideration of contractor or agency maintenance and servicing (see FAR Subpart 7.3), support for contracts to be performed in a designated operational area or supporting a diplomatic or consular mission (see FAR section 25.301); and distribution of commercial items.*

* Note: Items marked with an asterisk (*) in this section are not required for the Technology Development Phase or Technology Development Strategy.

Provide an overview of the sustainment-related contract(s) including how the integrated product support package will be acquired. The discussion should provide:

The performance measures being used (including the extent to which it is traditional transaction based/process focused and performance-based/outcome focused);

The portion of the system covered with the associated sustainment-related functions;

How the support concept ensures integration with other logistics support and combat support functions to optimize total system availability while minimizing cost and the logistics footprint;

How the product support strategy will ensure the selection of best value support providers, maximize partnering, and advocate integrated logistics chains in accordance with DoD product support objectives;

How manpower and spares will be optimized;*

Efforts to ensure secure and integrated information systems across industry and government that enable comprehensive supply chain integration and full asset visibility;*

Dedicated investments needed to achieve continuous improvement of weapon system supportability and reduction in operating costs;

How performance expectations (as defined in performance agreements) will be compared to actual performance results (post Milestone C);*

If Interim Contract Support (ICS) is planned, the ICS requirements, approach, and a plan to transition to normal sustainment support.*

If the strategy includes contractor logistics support (CLS), indicate how CLS contract flexibility will support the sustainment concept;* and

How the program will ensure product support integration throughout the system life cycle.

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

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.

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.)

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.

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.

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
Parameter	Threshold	Contract Specification Requirement
Reliability (e.g., MTBF)
Maintainability (e.g., MTTR)

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).

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.

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).

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.

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.

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MAJOR CONTRACTS

Contract

Purpose

Performance Period

Major Deliverables