Part 217 - SPECIAL CONTRACTING METHODS
Subpart 217.1 - MULTIYEAR CONTRACTING
As used in this subpart—
“Advance procurement” means an exception to the full funding policy that allows acquisition of long lead time items (advance long lead acquisition) or economic order quantities (EOQ) of items (advance EOQ acquisition) in a fiscal year in advance of that in which the related end item is to be acquired. Advance procurements may include materials, parts, components, and effort that must be funded in advance to maintain a planned production schedule.
“Congressional defense committees,” means—
(1) The Committee on Armed Services of the Senate;
(2) The Committee on Appropriations of the Senate;
(3) The Subcommittee on Defense of the Committee on Appropriations of the Senate;
(4) The Committee on Armed Services of the House of Representatives;
(5) The Committee on Appropriations of the House of Representatives; and
(6) The Subcommittee on Defense of the Committee on Appropriations of the House of Representatives.
“Military installation” means a base, camp, post, station, yard, center, or other activity under the jurisdiction of the Secretary of a military department or, in the case of an activity in a foreign country, under the operational control of the Secretary of a military department or the Secretary of Defense (10 U.S.C. 2801(c)(4)).
(a) Before awarding a multiyear contract, the head of the agency must compare the cost of that contract to the cost of an annual procurement approach, using a present value analysis. Do not award the multiyear contract unless the analysis shows that the multiyear contract will result in the lower cost (10 U.S.C. 2306b(l)(7); section 8008(a) of Pub. L. 105-56, and similar sections in subsequent DoD appropriations acts).
(b) The head of the agency must provide written notice to the congressional defense committees at least 30 days before termination of any multiyear contract (section 8010of Division C, Title VIII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235), and similar sections in subsequent DoD appropriations acts).
(c) Every multiyear contract must comply with FAR 17.104(c), unless an exception is approved through the budget process in coordination with the cognizant comptroller.
(d)(1) DoD must provide notification to the congressional defense committees at least 30 days before entering into a multiyear contract for certain procurements, including those expected to—
(i) Employ an unfunded contingent liability in excess of $20 million (see 10 U.S.C. 2306b(l)(1)(B)(i)(II), 10 U.S.C. 2306c(d)(1), and section 8008(a) of Pub. L. 105-56 and similar sections in subsequent DoD appropriations acts);
(ii) Employ economic order quantity procurement in excess of $20 million in any one year of the contract (see 10 U.S.C. 2306b(l)(1)(B)(i)(I)) and section 8008(a) of Pub. L. 105-56 and similar sections in subsequent DoD appropriations acts);
(iii) Involve a contract for advance procurement leading to a multiyear contract that employs economic order quantity procurement in excess of $20 million in any one year (see 10 U.S.C. 2306b(l)(1)(B)(ii)and section 8008(a) of Pub. L. 105-56 and similar sections in subsequent DoD appropriations acts); or
(iv) Include a cancellation ceiling in excess of $150 million (see 10 U.S.C. 2306c(d)(4) and 10 U.S.C. 2306b(g)(1).
(2) A DoD component must submit a request for authority to enter into multiyear contracts described in paragraphs (d)(1)(i) through (iv) of this section as part of the component’s budget submission for the fiscal year in which the multiyear contract will be initiated. DoD will include the request, for each candidate it supports, as part of the President’s Budget for that year and in the Appendix to that budget as part of proposed legislative language for the appropriations bill for that year (section 8008(b) of Pub. L. 105-56).
(3) If the advisability of using a multiyear contract becomes apparent too late to satisfy the requirements in paragraph (d)(2) of this section, the request for authority to enter into a multiyear contract must be—
(i) Formally submitted by the President as a budget amendment; or
(ii) Made by the Secretary of Defense, in writing, to the congressional defense committees (section 8008(b) of Pub. L. 105-56).
(4) Agencies must establish reporting procedures to meet the congressional notification requirements of paragraph (d)(1) of this section. The head of the agency must submit a copy of each notice to the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (OUSD(AT&L)DPAP), and to the Deputy Under Secretary of Defense (Comptroller) (Program/Budget) (OUSD(C)(P/B)).
(5) If the budget for a contract that contains a cancellation ceiling in excess of $150 million does not include proposed funding for the costs of contract cancellation up to the cancellation ceiling established in the contract—
(i) The notification required by paragraph (d)(1) of this section shall include—
(A) The cancellation ceiling amounts planned for each program year in the proposed multiyear contract, together with the reasons for the amounts planned;
(B) The extent to which costs of contract cancellation are not included in the budget for the contract; and
(C) A financial risk assessment of not including budgeting for costs of contract cancellation (10 U.S.C. 2306b(g) and 10 U.S.C. 2306c(d)); and
(ii) The head of the agency shall provide copies of the notification to the Office of Management and Budget at least 14 days before contract award.
217.171 Multiyear contracts for services.
(a) The head of the agency may enter into a multiyear contract for a period of not more than 5 years for the following types of services (and items of supply relating to such services), even though funds are limited by statute to obligation only during the fiscal year for which they were appropriated (10 U.S.C. 2306c(a)). Covered services are—
(1) Operation, maintenance, and support of facilities and installations;
(2) Maintenance or modification of aircraft, ships, vehicles, and other highly complex military equipment;
(3) Specialized training requiring high quality instructor skills (e.g., training for pilots and aircrew members or foreign language training);
(4) Base services (e.g., ground maintenance, in-plane refueling, bus transportation, and refuse collection and disposal); and
(5) Environmental remediation services for—
(i) An active military installation;
(ii) A military installation being closed or realigned under a base closure law as defined in 10 U.S.C. 2667(h)(2); or
(iii) A site formerly used by DoD (10 U.S.C. 2306c(b)).
(b) The head of the agency must be guided by the following principles when entering into a multiyear contract for services:
(1) The portion of the cost of any plant or equipment amortized as a cost of contract performance should not exceed the ratio between the period of contract performance and the anticipated useful commercial life of the plant or equipment. As used in this section, "useful commercial life" means the commercial utility of the facilities rather than the physical life, with due consideration given to such factors as the location, specialized nature, and obsolescence of the facilities.
(2) Consider the desirability of obtaining an option to extend the term of the contract for a reasonable period not to exceed 3 years at prices that do not include charges for plant, equipment, or other nonrecurring costs already amortized.
(3) Consider the desirability of reserving the right to take title, under the appropriate circumstances, to the plant or equipment upon payment of the unamortized portion of the cost (10 U.S.C. 2306c(c)).
(c) Before entering into a multiyear contract for services, the head of the agency must make a written determination that—
(1) There will be a continuing requirement for the services consistent with current plans for the proposed contract period;
(2) Furnishing the services will require—
(i) A substantial initial investment in plant or equipment; or
(ii) The incurrence of substantial contingent liabilities for the assembly, training, or transportation of a specialized work force; and
(3) Using a multiyear contract will promote the best interests of the United States by encouraging effective competition and promoting economies in operations (10 U.S.C. 2306c(a)).
(d) The head of an agency may not initiate a multiyear contract for services if the value of the multiyear contract exceeds $750 million unless a law specifically provides authority for the contract (10 U.S.C. 2306c(d)(2)).
217.172 Multiyear contracts for supplies.
(a) This section applies to all multiyear contracts for supplies, including weapon systems and other multiyear acquisitions specifically authorized by law (10 U.S.C. 2306b).
(b) The head of the agency may enter into a multiyear contract for supplies if, in addition to the conditions listed in FAR 17.105-1(b), the use of such a contract will promote the national security of the United States (10 U.S.C. 2306b(a)(6)).
(c) Multiyear contracts in amounts exceeding $750 million must be specifically authorized by law in an act other than an appropriations act (10 U.S.C. 2306b(i)(1)).
(d) The head of the agency may not initiate a multiyear procurement contract for any system (or component thereof) if the value of the multiyear contract would exceed $750 million unless authority for the contract is specifically provided in an appropriations act (10 U.S.C. 2306b(l)(3)).(e) The head of the agency shall not enter into a multiyear contract unless—
(1) The Secretary of Defense has submitted to Congress a budget request for full funding of units to be procured through the contract;
(2) In the case of a contract for procurement of aircraft, the budget request includes full funding of procurement funds for production beyond advance procurement activities of aircraft units to be produced in the fiscal year covered by the budget;
(3) Cancellation provisions in the contract do not include consideration of recurring manufacturing costs of the contractor associated with the production of unfunded units to be delivered under the contract;
(4) The contract provides that payments to the contractor under the contract shall not be made in advance of incurred costs on funded units; and
(5) The contract does not provide for a price adjustment based on a failure to award a follow-on contract (section 8010 of Division C, Title VIII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and similar sections in subsequent DoD appropriations acts).
(f)(1) The head of the agency must not enter into or extend a multiyear contract that exceeds $750 million (when entered into or extended) until the Secretary of Defense identifies the contract and any extension in a report submitted to the congressional defense committees (10 U.S.C. 2306b(l)(5)).
(2) In addition, for contracts equal to or greater than $750 million, the head of the contracting activity must determine that the conditions required by paragraphs (h)(2)(i) through (vii) of this section will be met by such contract, in accordance with the Secretary’s certification and determination required by paragraph (h)(2) of this section.
(g) The head of the agency may enter into a multiyear contract for—
(1) A weapon system and associated items, services, and logistics support for a weapon system (10 U.S.C. 2306b(h)(1)); and
(2) Advance procurement of components, parts, and materials necessary to manufacture a weapon system, including advance procurement to achieve economic lot purchases or more efficient production rates (see 217.172 (h)(3) and (4) of this section regarding economic order quantity procurements) (10 U.S.C. 2306b(h)(2)). Before initiating an advance procurement, the contracting officer must verify that it is consistent with DoD policy (e.g., the full funding policy in Volume 2A, chapter 1, of DoD 7000.14-R, Financial Management Regulation).
(h) The head of the agency shall ensure that the following conditions are satisfied before awarding a multiyear contract for a defense acquisition program that has been specifically authorized by law to be carried out using multiyear contract authority:
(1) The multiyear exhibits required by DoD 7000.14-R, Financial Management Regulation, are included in the agency’s budget estimate submission and the President’s budget request.
(2) The Secretary of Defense certifies to Congress in writing, by no later than30 days before entry into such contracts, that each of the conditions in paragraphs (h)(2)(i) through (vii) of this section is satisfied (10 U.S.C. 2306b(i)(3).
(i) The Secretary has determined that each of the requirements inFAR 17.105-1, paragraphs (b)(1) through (b)(5), will be met by such contract and has provided the basis for such determination to the congressional defense committees (10 U.S.C. 2306b(i)(3)(A)).
(ii) The Secretary’s determination under paragraph (h)(2)(i) of this section was made after the completion of a cost analysis performed by the Defense Cost and Resource Center of the Department of Defense and such analysis supports the findings (10 U.S.C. 2306b(i)(3)(B)).
(iii) The system being acquired pursuant to such contract has not been determined to have experienced cost growth in excess of the critical cost growth threshold pursuant to 10 USC 2433(d) within 5 years prior to the date the Secretary anticipates such contract (or a contract for advance procurement entered into consistent with the authorization for such contract) will be awarded (10 U.S.C. 2306b(i)(3)(C)).
(iv) A sufficient number of end items of the system being acquired under such contract have been delivered at or within the most current estimates of the program acquisition unit cost or procurement unit cost for such system to determine that current estimates of such unit costs are realistic (10 U.S.C.2306b(i)(3)(D)).
(v) Sufficient funds will be available in the fiscal year in which the contract is to be awarded to perform the contract, and the future-years defense program for such fiscal year will include the funding required to execute the program without cancellation (10 U.S.C. 2306b(i)(3)(E)).
(vi) The contract is a fixed price type contract (10 U.S.C. 2306b(i)(3)(F)).
(vii) The proposed multiyear contract provides for production at not less than minimum economic rates, given the existing tooling and facilities (10 U.S.C. 2306b(i)(3)(G)). The head of the agency shall submit to OUSD(C)(P/B) information supporting the agency’s determination that this requirement has been met.
(viii) The head of the agency shall submit information supporting this certification to OUSD(C)(P/B) for transmission to Congress through the Secretary of Defense.
(A) The head of the agency shall, as part of this certification, give written notification to the congressional defense committees of—
(1) The cancellation ceiling amounts planned for each program year in the proposed multiyear contract, together with the reasons for the amounts planned;
(2) The extent to which costs of contract cancellation are not included in the budget for the contract; and
(3) A financial risk assessment of not including the budgeting for costs of contract cancellation (10 U.S.C. 2306b(g)); and
(B) The head of the agency shall provide copies of the notification to the Office of Management and Budget at least 14 days before contract award.
(3) The contract is for the procurement of a complete and usable end item (10 U.S.C. 2306b(i)(5)(A)).
(4) Funds appropriated for any fiscal year for advance procurement are obligated only for the procurement of those long-lead items that are necessary in order to meet a planned delivery schedule for complete major end items that are programmed under the contract to be acquired with funds appropriated for a subsequent fiscal year (including an economic order quantity of such long-lead items when authorized by law (10 U.S.C. 2306b(i)(5)(B)).
(5) The Secretary may make the certification under paragraph (h)(2) of this section notwithstanding the fact that one or more of the conditions of such certification are not met if the Secretary determines that, due to exceptional circumstances, proceeding with a multiyear contract under this section is in the best interest of the Department of Defense and the Secretary provides the basis for such determination with the certification (10 U.S.C. 2306b(i)(6)).
(6) The Secretary of Defense may not delegate this authority to make the certification under paragraph (h)(2) of this section or the determination under paragraph (h)(5) of this section to an official below the level of the Under Secretary of Defense for Acquisition, Technology, and Logistics (10 U.S.C. 2306b(i)(7)).
(7) All other requirements of law are met and there are no other statutory restrictions on using a multiyear contract for the specific system or component. One such restriction may be the achievement of specified cost savings. If the agency finds, after negotiations with the contractor(s), that the specified savings cannot be achieved, the head of the agency shall assess the savings that, nevertheless, could be achieved by using a multiyear contract. If the savings are substantial, the head of the agency may request relief from the law’s specific savings requirement (10 U.S.C. 2306b(i)(4)). The request shall—
(i) Quantify the savings that can be achieved;
(ii) Explain any other benefits to the Government of using the multiyear contract;
(iii) Include details regarding the negotiated contract terms and conditions; and
(iv) Be submitted to OUSD(AT&L)DPAP for transmission to Congress via the Secretary of Defense and the President.
(i) The Secretary of Defense may instruct the head of the agency proposing a multiyear contract to include in that contract negotiated priced options for varying the quantities of end items to be procured over the life of the contract (10 U.S.C. 2306b(j)).
(j) Any requests for increased funding or reprogramming for procurement of a major system under a multiyear contract shall be accompanied by an explanation of how the request for increased funding affects the determinations made by the Secretary of Defense under 217.172 (h)(2) (10 U.S.C. 2306b(m)).
217.173 Multiyear contracts for military family housing.
The head of the agency may enter into multiyear contracts for periods up to 4 years for supplies and services required for management, maintenance, and operation of military family housing and may pay the costs of such contracts for each year from annual appropriations for that year (10 U.S.C. 2829).
217.174 Multiyear contracts for electricity from renewable energy sources.
(a) The head of the contracting activity may enter into a contract for a period not to exceed 10 years for the purchase of electricity from sources of renewable energy, as that term is defined in section 203(b)(2) of the Energy Policy Act of 2005 (42 U.S.C. 15852(b)(2)).
(b) Limitations. The head of the contracting activity may exercise the authority in paragraph (a) of this section to enter into a contract for a period in excess of five years only if the head of the contracting activity determines, on the basis of a business case analysis (see PGI 217.1 , Supplemental Information TAB, for a business case analysis template and guidance) prepared by the requiring activity, that—
(1) The proposed purchase of electricity under such contract is cost effective; and
(2) It would not be possible to purchase electricity from the source in an economical manner without the use of a contract for a period in excess of five years.
(c) Nothing in this section shall be construed to preclude the DoD from using other multiyear contracting authority of DoD to purchase renewable energy.
Subpart 217.2 - OPTIONS
217.202 Use of options.
(1) See PGI 217.202 for guidance on the use of options.
(i) See PGI 217.202 (1) for guidance on the use of options with foreign military sales (FMS).
(ii) See PGI 217.202 (2) for the use of options with sole source major systems for U.S. and U.S./FMS combined procurements.
(2) For a contract that is initially awarded from the competitive selection of a proposal resulting from a broad agency announcement, see 234.005-1 for the use of contract options for the development and demonstration or initial production of technology developed under the contract or the delivery of initial or additional items.
(e)(i) Notwithstanding FAR 17.204(e), the ordering period of a task order or delivery order contract (including a contract for information technology) awarded by DoD pursuant to 10 U.S.C. 2304a—
(A) May be for any period up to 5 years;
(B) May be subsequently extended for one or more successive periods in accordance with an option provided in the contract or a modification of the contract; and
(C) Shall not exceed 10 years unless the head of the agency determines in writing that exceptional circumstances require a longer ordering period.
(ii) Paragraph (e)(i) of this section does not apply to the following:
(A) Contracts, including task or delivery order contracts, awarded under other statutory authority.
(B) Advisory and assistance service task order contracts (authorized by 10 U.S.C. 2304b that are limited by statute to 5 years, with the authority to extend an additional 6 months (see FAR 16.505(c)).
(C) Definite-quantity contracts.
(D) GSA schedule contracts.
(E) Multi-agency contracts awarded by agencies other than NASA, DoD, or the Coast Guard.
(iii) Obtain approval from the senior procurement executive before issuing an order against a task or delivery order contract subject to paragraph (e)(i) of this section, if performance under the order is expected to extend more than 1 year beyond the 10-year limit or extended limit described in paragraph (e)(i)(C) of this section (see FAR 37.106 for funding and term of service contracts).
217.207 Exercise of options.
(c) In addition to the requirements at FAR 17.207(c), exercise an option only after:
(1) Determining that the contractor’s record in the System for Award Management database is active and the contractor’s Data Universal Numbering System (DUNS) number, Commercial and Government Entity (CAGE) code, name, and physical address are accurately reflected in the contract document. See PGI 217.207 for the requirement to perform cost or price analysis of spare parts prior to exercising any option for firm-fixed-price contracts containing spare parts.
(2) Verifying in the Supplier Performance Risk System (SPRS) ( https://www.sprs.csd.disa.mil/) that—
(i) The summary level score of a current NIST SP 800-171 DoD Assessment (i.e., not more than 3 years old, unless a lesser time is specified in the solicitation) for each covered contractor information system that is relevant to an offer, contract, task order, or delivery order are posted (see 204.7303).
(ii) The contractor has a CMMC certificate at the level required by the contract, and that it is current (i.e., not more than 3 years old) (see 204.7502).
217.208 Solicitation provisions and contract clauses.
Sealed bid solicitations shall not include provisions for evaluations of options unless the contracting officer determines that there is a reasonable likelihood that the options will be exercised (10 U.S.C. 2305(a)(5)). This limitation also applies to sealed bid solicitations for the contracts excluded by FAR 17.200.
217.208-70 Additional clauses.
(a) Use the basic or the alternate of the clause at 252.217-7000 , Exercise of Option to Fulfill Foreign Military Sales Commitments, in solicitations and contracts when an option may be used for foreign military sales requirements. Do not use the basic or the alternate of this clause in contracts for establishment or replenishment of DoD inventories or stocks, or acquisitions made under DoD cooperative logistics support arrangements.
(1) Use the basic clause when the foreign military sales country is known at the time of solicitation or award.
(2) Use the alternate I clause when the foreign military sale country is not known at the time of solicitation or award.
(b) When a surge option is needed in support of industrial capability production planning, use the clause at 252.217-7001 , Surge Option, in solicitations and contracts.
(1) Insert the percentage or quantity of increase the option represents in paragraph (a) of the clause to ensure adequate quantities are available to meet item requirements.
(2) Change 30 days in paragraphs (b)(2) and (d)(1) to longer periods, if appropriate.
(3) Change the 24-month period in paragraph (c)(3), if appropriate.
Subpart 217.4 - Reserved
Subpart 217.5 - INTERAGENCY ACQUISITIONS
217.500 Scope of subpart.
(a) Unless more specific statutory authority exists, the procedures in FAR subpart 17.5 and this subpart apply to all purchases, except micro-purchases, made for DoD by another agency. This includes orders under a task or delivery order contract entered into by the other agency. (Pub. L. 105-261, section 814.)
(b) A contracting activity from one DoD Component may provide acquisition assistance to deployed DoD units or personnel from another DoD Component. See PGI 217.502-1 for guidance and procedures.
(a) Written agreement on responsibility for management and administration—
(1) Assisted acquisitions. Follow the procedures at PGI 217.502-1 (a)(1), when a contracting activity from a DoD Component provides acquisition assistance to deployed DoD units or personnel from another DoD Component.
217.503 Ordering procedures.
(d) When the requesting agency is within DoD, a copy of the executed determination and findings required by FAR 17.502-2 shall be furnished to the servicing agency as an attachment to the order. When a DoD contracting office is acting as the servicing agency, a copy of the executed determination and findings shall be obtained from the requesting agency and placed in the contract file for the Economy Act order.
Subpart 217.6 - MANAGEMENT AND OPERATING CONTRACTS
217.600 Scope of subpart.
FAR Subpart 17.6 does not apply to DoD.
Subpart 217.7 - INTERAGENCY ACQUISITIONS: ACQUISITIONS BY NONDEFENSE AGENCIES ON BEHALF OF THE DEPARTMENT OF DEFENSE
217.700 Scope of subpart.
(a) Implements section 854 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375), section 801 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), and section 806 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84); and
(b) Prescribes policy for the acquisition of supplies and services through the use of contracts or orders issued by non-DoD agencies.
As used in this subpart—
“Assisted acquisition” means the type of interagency contracting through which acquisition officials of a non-DoD agency award a contract or a task or delivery order for the acquisition of supplies or services on behalf of DoD.
“Direct acquisition” means the type of interagency contracting through which DoD orders a supply or service from a Governmentwide acquisition contract maintained by a non-DoD agency.
“Governmentwide acquisition contract” means a task or delivery order contract that–
(i) Is entered into by a non-defense agency; and
(ii) May be used as the contract under which property or services are procured for one or more other departments or agencies of the Federal Government.
Departments and agencies shall establish and maintain procedures for reviewing and approving orders placed for supplies and services under non-DoD contracts, whether through direct acquisition or assisted acquisition, when the amount of the order exceeds the simplified acquisition threshold. These procedures shall include—
(a) Evaluating whether using a non-DoD contract for the acquisition is in the best interest of DoD. Factors to be considered include—
(1) Satisfying customer requirements;
(3) Cost effectiveness (taking into account discounts and fees). In order to ensure awareness of the total cost of fees associated with use of a non-DoD contract, follow the procedures at PGI 217.770 (a)(3); and
(4) Contract administration (including oversight);
(b) Determining that the tasks to be accomplished or supplies to be provided are within the scope of the contract to be used;
(c) Reviewing funding to ensure that it is used in accordance with appropriation limitations; and
(d) Collecting and reporting data on the use of assisted acquisition for analysis. Follow the reporting requirements in subpart 204.6.
Subpart 217.70 - EXCHANGE OF PERSONAL PROPERTY
217.7000 Scope of subpart.
This subpart prescribes policy and procedures for exchange of nonexcess personal property concurrent with an acquisition. 40 U.S.C. 503 permits exchange of personal property and application of the exchange allowance to the acquisition of similar property. This subpart does not authorize the sale of nonexcess personal property.
As used in this subpart—
(a) “Exchange (trade-in) property” means property which—
(1) Is not excess but is eligible for replacement (because of obsolescence, unserviceability, or other reason); and
(2) Is applied as whole or partial payment toward the acquisition of similar items (i.e., items designed and constructed for the same purpose).
(b) “Property” means items that fall within one of the generic categories listed in DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management Procedures: Materiel Programs.
DoD policy is to exchange, rather than replace, eligible nonexcess property whenever exchange promotes economical and efficient program accomplishment. Exchange policy, authority, and applicability are governed by—
(a) The Federal Property Management Regulations issued by the Administrator of the General Services Administration; and
(b) DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management Procedures: Materiel Programs.
217.7003 Purchase request.
Ensure that the requiring activity provides all of the following in support of the purchase request—
(a) A certification that the property is eligible for exchange and complies with all conditions and limitations of DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management Procedures: Materiel Programs.
(b) A written determination of economic advantage indicating—
(1) The anticipated economic advantage to the Government from use of the exchange authority;
(2) That exchange allowances shall be applied toward, or in partial payment of, the items to be acquired; and
(3) That, if required, the exchange property has been rendered safe or innocuous or has been demilitarized;
(c) All applicable approvals for the exchange; and
(d) A description of the property available for exchange (e.g., nomenclature, location, serial number, estimated travel value).
217.7004 Solicitation and award.
(a) Solicitations shall include a request for offerors to state prices—
(1) For the new items being acquired without any exchange; and
(2) For the new items with the exchange (trade-in allowance) for the exchange property listed.
(b) The contracting officer is not obligated to award on an exchange basis. If the lowest evaluated offer is an offer for the new items without any exchange, the contracting officer may award on that basis and forgo the exchange.
(c) Exchanges may be made only with the successful offeror. When the successful offer includes an exchange, award one contract for both the acquisition of the new property and the trade-in of the exchange property. The only exception is when the items must be acquired against a mandatory Federal supply schedule contract, in which case, award a separate contract for the exchange.
217.7005 Solicitation provision.
Use the provision at 252.217-7002 , Offering Property for Exchange, when offering nonexcess personal property for exchange. Allow a minimum of 14 calendar days for the inspection period in paragraph (b) of the clause if the exchange property is in the contiguous United States. Allow at least 21 calendar days outside the contiguous United States.
Subpart 217.71 - MASTER AGREEMENT FOR REPAIR AND ALTERATION OF VESSELS
217.7100 Scope of subpart.
This subpart contains acquisition policies and procedures for master agreements for repair and alteration of vessels.
(a) “Master agreement for repair and alteration of vessels”—
(1) Is a written instrument of understanding, negotiated between a contracting activity and a contractor that—
(A) Contains contract clauses, terms, and conditions applying to future contracts for repairs, alterations, and/or additions to vessels; and
(B) Contemplates separate future contracts that will incorporate by reference or attachment the required and applicable clauses agreed upon in the master agreement.
(2) Is not a contract.
(b) “Job order”—
(1) Is a fixed price contract incorporating, by reference or attachment, a master agreement for repair and alteration of vessels;
(2) May include clauses pertaining to subjects not covered by the master agreement; but applicable to the job order being awarded; and
(3) Applies to a specific acquisition and sets forth the scope of work, price, delivery date, and other appropriate terms that apply to the particular job order.
(a) Activities shall enter into master agreements for repair and alteration of vessels with all prospective contractors located within the United States or its outlying areas, which—
(1) Request ship repair work; and
(2) Possess the organization and facilities to perform the work satisfactorily. (Issuance of a master agreement does not indicate approval of the contractor's facility for any particular acquisition and is not an affirmative determination of responsibility under FAR Subpart 9.1 for any particular acquisition.)
(b) Activities may use master agreements in work with prospective contractors located outside the United States and its outlying areas.
(c) Activities may issue job orders under master agreements to effect repairs, alterations, and/or additions to vessels belonging to foreign governments.
(1) Contractors shall treat vessels of a foreign government as if they were vessels of the U.S. Government whenever requested to do so by the contracting officer.
(2) Identify the vessel and the foreign government in the solicitation and job order.
217.7103 Master agreements and job orders.
217.7103-1 Content and format of master agreements.
Follow the procedures at PGI 217.7103-1 for preparation of master agreements.
217.7103-2 Period of agreement.
(a) Master agreements remain in effect until cancelled by either the contractor or the contracting officer.
(b) Master agreements can be cancelled by either the contractor or the contracting officer by giving 30 days written notice to the other.
(c) Cancellation of a master agreement does not affect the rights and liabilities under any job order existing at the time of cancellation. The contractor must continue to perform all work covered by any job order issued before the effective date of cancellation of the master agreement.
217.7103-3 Solicitations for job orders.
(a) When a requirement arises within the United States or its outlying areas for the type of work covered by the master agreement, solicit offers from prospective contractors that—
(1) Previously executed a master agreement; or
(2) Have not previously executed a master agreement, but possess the necessary qualifications to perform the work and agree to execute a master agreement before award of a job order.
(b) Follow the procedures at PGI 217.7103-3 when preparing solicitations for job orders.
217.7103-4 Emergency work.
(a) The contracting officer, without soliciting offers, may issue a written job order to a contractor that has previously executed a master agreement when—
(i) Delay in the performance of necessary repair work would endanger a vessel, its cargo or stores; or
(ii) Military necessity requires immediate work on a vessel.
(b) Follow the procedures at PGI 217.7103-4 when processing this type of undefinitized contract action.
217.7103-5 Repair costs not readily ascertainable.
Follow the procedures at PGI 217.7103-5 if the nature of any repairs is such that their extent and probable cost cannot be ascertained readily.
217.7103-6 Modification of master agreements.
(a) Review each master agreement at least annually before the anniversary of its effective date and revise it as necessary to conform to the requirements of the FAR and DFARS. Statutory or other mandatory changes may require review and revision earlier than one year.
(b) A master agreement shall be changed only by modifying the master agreement itself. It shall not be changed through a job order.
(c) A modification to a master agreement shall not affect job orders issued before the effective date of the modification.
217.7104 Contract clauses.
(a) Use the following clauses in solicitations for, and in, master agreements for repair and alteration of vessels:
(1) 252.217-7003 , Changes.
(2) 252.217-7004 , Job Orders and Compensation.
(3) 252.217-7005 , Inspection and Manner of Doing Work.
(4) 252.217-7006 , Title.
(5) 252.217-7007 , Payments.
(6) 252.217-7008 , Bonds.
(7) 252.217-7009 , Default.
(8) 252.217-7010 , Performance.
(9) 252.217-7011 , Access to Vessel.
(10) 252.217-7012 , Liability and Insurance.
(11) 252.217-7013 , Guarantees.
(12) 252.217-7014 , Discharge of Liens.
(13) 252.217-7015 , Safety and Health.
(14) 252.217-7016 , Plant Protection, as applicable.
(b)(1) Incorporate in solicitations for, and in, job orders, the clauses in the master agreement, and any other clauses on subjects not covered by the master agreement, but applicable to the job order to be awarded.
(2) Use the clause at 252.217-7016 , Plant Protection, in job orders where performance is to occur at the contractor's facility.
Subpart 217.72 - Reserved
Subpart 217.73 - IDENTIFICATION OF SOURCES OF SUPPLY
This subpart implements 10 U.S.C. 2384. It contains policy and procedures for requiring contractors to identify the actual manufacturer of supplies furnished to DoD.
Contractors shall identify their sources of supply in contracts for supplies. Contractor identification of sources of supply enables solicitation, in subsequent acquisitions, of actual manufacturers or other suppliers of items. This enhances competition and potentially avoids payment of additional costs for no significant added value.
(a) Whenever practicable, include a requirement for contractor identification of sources of supply in all contracts for the delivery of supplies. The identification shall include—
(1) The item's actual manufacturer or producer, or all the contractor's sources for the item;
(2) The item's national stock number (if there is one);
(3) The item identification number used by—
(i) The actual manufacturer or producer of the item; or
(ii) Each of the contractor's sources for the item; and
(4) The source of any technical data delivered under the contract.
(b) The requirement in paragraph (a) of this section does not apply to contracts that are—
(1) For commercial items; or
(2) Valued at or below the simplified acquisition threshold.
217.7303 Solicitation provision.
(a) Use the provision at 252.217-7026, Identification of Sources of Supply, or one substantially the same, in all solicitations for supplies when the acquisition is being conducted under other than full and open competition, except when -
(1) Using FAR 6.302-5;
(2) The contracting officer already has the information required by the provision (e.g., the information was obtained under other acquisitions);
(3) The contract is for subsistence, clothing or textiles, fuels, or supplies purchased and used outside the United States;
(4) The contracting officer determines that it would not be practicable to require offerors/contractors to provide the information, e.g., nonrepetitive local purchases; or
(5) The contracting officer determines that the exception at 217.7302(b) applies to all items under the solicitation.
(b) If appropriate, use the provision at 252.217-7026, Identification of Sources of Supply, or one substantially the same, in service contracts requiring the delivery of supplies.
Subpart 217.74 - UNDEFINITIZED CONTRACT ACTIONS
This subpart prescribes policies and procedures implementing 10 U.S.C. 2326.
As used in this subpart—
“Contract action” means an action which results in a contract.
(1) It includes contract modifications for additional supplies or services.
(2) It includes task orders and delivery orders.
(3) It does not include change orders, administrative changes, funding modifications, or any other contract modifications that are within the scope and under the terms of the contract, e.g., engineering change proposals, value engineering change proposals, and over and above work requests as described in subpart 217.77. For policy relating to definitization of change orders, see 243.204-70 .
“Definitization” means the agreement on, or determination of, contract terms, specifications, and price, which converts the undefinitized contract action to a definitive contract.
“Qualifying proposal” means a proposal that contains sufficient information to enable DoD to conduct meaningful analyses and audits of the information contained in the proposal.
“Undefinitized contract action” means any contract action for which the contract terms, specifications, or price are not agreed upon before performance is begun under the action. Examples are letter contracts, orders under basic ordering agreements, and provisioned item orders, for which the price has not been agreed upon before performance has begun. For policy relating to definitization of change orders, see 243.204-70 .
(a) The following undefinitized contract actions (UCAs) are not subject to this subpart. However, the contracting officer shall apply the policy and procedures to them to the maximum extent practicable (also see paragraph (b) of this section):
(1) Purchases at or below the simplified acquisition threshold.
(2) Special access programs.
(3) Congressionally mandated long-lead procurement contracts.
(b) If the contracting officer determines that it is impracticable to adhere to the procedures of this subpart for a particular contract action that falls within one of the categories in paragraph (a) of this section, the contracting officer shall provide prior notice, through agency channels, electronically via email to the Principal Director, Defense Pricing and Contracting (Contract Policy), at firstname.lastname@example.org.
DoD policy is that undefinitized contract actions shall—
(a) Be used only when—
(1) The negotiation of a definitive contract action is not possible in sufficient time to meet the Government's requirements; and
(2) The Government's interest demands that the contractor be given a binding commitment so that contract performance can begin immediately.
(b) Be as complete and definite as practicable under the particular circumstances.
See PGI 217.7404 for additional guidance on obtaining approval to authorize use of an undefinitized contact action, documentation requirements, and other limitations on their use.
(a) Foreign military sales contracts.
(1) A contracting officer may not enter into a UCA for a foreign military sale unless—
(i) The UCA provides for agreement upon contractual terms, specifications, and price by the end of the 180-day period beginning on the date on which the contractor submits a qualifying proposal; and
(ii) The contracting officer obtains approval from the head of the contracting activity to enter into a UCA in accordance with 217.7404-1 .
(2) The head of the contracting activity may waive the requirements of paragraph (a)(1) of this section, if a waiver is necessary in order to support any of the following operations:
(i) A contingency operation.
(ii) A humanitarian or peacekeeping operation.
(b) Unilateral definitization by a contracting officer. Any UCA with a value greater than $50 million may not be unilaterally definitized until—
(1) The earlier of—
(i) The end of the 180-day period, beginning on the date on which the contractor submits a qualifying proposal to definitize the contractual terms, specifications, and price; or
(ii) The date on which the amount of funds expended under the contractual action is equal to more than 50 percent of the negotiated overall not-to-exceed price for the contractual action;
(2) The head of the contracting activity, without power of redelegation, approves the definitization in writing;
(3) The contracting officer provides a copy of the written approval to the contractor; and
(4) A period of 30 calendar days has elapsed after the written approval is provided to the contractor.
The contracting officer shall obtain approval from the head of the contracting activity before—
(a) Entering into a UCA. The request for approval must fully explain the need to begin performance before definitization, including the adverse impact on agency requirements resulting from delays in beginning performance.
(b) Including requirements for non-urgent spare parts and support equipment in a UCA. The request should show that inclusion of the non-urgent items is consistent with good business practices and in the best interest of the United States.
(c) Modifying the scope of a UCA when performance has already begun. The request should show that the modification is consistent with good business practices and in the best interests of the United States.
217.7404-2 Price ceiling.
UCAs shall include a not-to-exceed price.
217.7404-3 Definitization schedule.
(a) UCAs shall contain definitization schedules that provide for definitization by the earlier of—
(1) The date that is 180 days after the contractor submits a qualifying proposal. This date may not be extended beyond an additional 90 days without a written determination by the head of the contracting activity without power of redelegation, the commander of the combatant command concerned, or the Under Secretary of Defense for Acquisition and Sustainment that it is in the best interests of the military department or the defense agency, the combatant command, or the Department of Defense, respectively, to continue the action; or
(2) The date on which the amount of funds obligated under the contract action is equal to more than 50 percent of the not-to-exceed price.
(b) Submission of a qualifying proposal in accordance with the definitization schedule is a material element of the contract. If the contractor does not submit a timely qualifying proposal, the contracting officer may suspend or reduce progress payments under FAR 32.503-6, or take other appropriate action.
217.7404-4 Limitations on obligations.
(a) The Government shall not obligate more than 50 percent of the not-to-exceed price before definitization. However, if a contractor submits a qualifying proposal before 50 percent of the not-to-exceed price has been obligated by the Government, then the limitation on obligations before definitization may be increased to no more than 75 percent (see 232.102-70 for coverage on provisional delivery payments).
(b) In determining the appropriate amount to obligate, the contracting officer shall assess the contractor’s proposal for the undefinitized period and shall obligate funds only in an amount consistent with the contractor’s requirements for the undefinitized period.
(1) A contingency operation; or
(2) A humanitarian or peacekeeping operation.
217.7404-6 Allowable profit.
When the final price of a UCA is negotiated after a substantial portion of the required performance has been completed, the head of the contracting activity shall ensure the profit allowed reflects—
(a) Any reduced cost risk to the contractor for costs incurred during contract performance before negotiation of the final price. However, if a contractor submits a qualifying proposal to definitize a UCA, and the contracting officer for such action definitizes the contract after the end of the 180-day period beginning on the date on which the contractor submitted the qualifying proposal, the profit allowed on the contract shall accurately reflect the cost risk of the contractor as such risk existed on the date the contractor submitted the qualifying proposal;
(b) Any reduced cost risk to the contractor for costs expected to be incurred during performance of the remainder of the contract after negotiation of the final price; and
(c) The requirements at 215.404-71 -3(d)(2). The risk assessment shall be documented in the price negotiation memorandum.
217.7405 Plans and reports.
(a) To provide for enhanced management and oversight of UCAs, departments and agencies shall—
(1) Prepare and maintain a Consolidated UCA Management Plan; and
(2) Prepare semi-annual Consolidated UCA Management Reports addressing each UCA with an estimated value exceeding $5 million.
(b) Consolidated UCA Management Reports and Consolidated UCA Management Plan updates shall be submitted to the Office of the Director, Defense Procurement and Acquisition Policy, by October 31 and April 30 of each year in accordance with the procedures at PGI 217.7405 .
(c) Consolidated UCA Management Reports shall include information about all change orders that are not forward priced (i.e., unpriced) and have an estimated value exceeding $5 million.
217.7406 Contract clauses.
(a) Use the clause at FAR 52.216-24, Limitation of Government Liability, in—
(1) All UCAs;
(2) Solicitations associated with UCAs;
(3) Basic ordering agreements;
(4) Indefinite delivery contracts;
(5) Any other type of contract providing for the use of UCAs; and
(6) Unpriced change orders with an estimated value exceeding $5 million.
(b)(1) Use the clause at 252.217-7027 , Contract Definitization, in—
(i) All UCAs;
(ii) Solicitations associated with UCAs;
(iii) Basic ordering agreements;
(iv) Indefinite delivery contracts;
(v) Any other type of contract providing for the use of UCAs; and
(vi) Unpriced change orders with an estimated value exceeding $5 million.
(2) Insert the applicable information in paragraphs (a), (b), and (d) of the clause.
(3) If, at the time of entering into the UCA or unpriced change order, the contracting officer knows that the definitive contract action will meet the criteria of FAR 15.403-1, 15.403-2, or 15.403-3 for not requiring submission of certified cost or pricing data, the words “and certified cost or pricing data” may be deleted from paragraph (a) of the clause.
Subpart 217.75 - ACQUISITION OF REPLENISHMENT PARTS
217.7500 Scope of subpart.
This subpart provides guidance on additional requirements related to acquisition of replenishment parts.
“Replenishment parts,” as used in this subpart, means repairable or consumable parts acquired after the initial provisioning process.
Departments and agencies—
(a) May acquire replenishment parts concurrently with production of the end item.
(b) Shall provide for full and open competition when fully adequate drawings and any other needed data are available with the right to use for acquisition purposes (see Part 227). However—
(1) When data is not available for a competitive acquisition, use one of the procedures in PGI 217.7504 .
(2) Replenishment parts must be acquired so as to ensure the safe, dependable, and effective operation of the equipment. Where this assurance is not possible with new sources, competition may be limited to the original manufacturer of the equipment or other sources that have previously manufactured or furnished the parts as long as the action is justified. See 209.270 for requirements applicable to replenishment parts for aviation or ship critical safety items.
(c) Shall follow the limitations on price increases in 217.7505 .
217.7503 Spares acquisition integrated with production.
Follow the procedures at PGI 217.7503 for acquiring spare parts concurrently with the end item.
217.7504 Acquisition of parts when data is not available.
Follow the procedures at PGI 217.7504 when acquiring parts for which the Government does not have the necessary data.
217.7505 Limitations on price increases.
This section provides implementing guidance for Section 1215 of Pub. L. 98-94 (10 U.S.C. 2452 note).
(a) The contracting officer shall not award, on a sole source basis, a contract for any centrally managed replenishment part when the price of the part has increased by 25 percent or more over the most recent 12-month period.
(1) Before computing the percentage difference between the current price and the prior price, adjust for quantity, escalation, and other factors necessary to achieve comparability.
(2) Departments and agencies may specify an alternate percentage or percentages for contracts at or below the simplified acquisition threshold.
(b) The contracting officer may award a contract for a part, the price of which exceeds the limitation in paragraph (a) of this section, if the contracting officer certifies in writing to the head of the contracting activity before award that—
(1) The contracting officer has evaluated the price of the part and concluded that the price increase is fair and reasonable; or
(2) The national security interests of the United States require purchase of the part despite the price increase.
(c) The fact that a particular price has not exceeded the limitation in paragraph (a) of this section does not relieve the contracting officer of the responsibility for obtaining a fair and reasonable price.
(d) Contracting officers may include a provision in sole source solicitations requiring that the offeror supply with its proposal, price and quantity data on any government orders for the replenishment part issued within the most recent 12 months.
217.7506 Spare parts breakout program.
See PGI 217.7506 and DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management Procedures: Materiel Programs, for spare parts breakout requirements.
Subpart 217.76 - CONTRACTS WITH PROVISIONING REQUIREMENTS
(a) Follow the procedures at PGI 217.7601 for contracts with provisioning requirements.
(b) For technical requirements of provisioning, see DoD Manual 4140.01, Volume 2, DoD Supply Chain Materiel Management Procedures: Demand and Supply Planning.
Subpart 217.77 - OVER AND ABOVE WORK
Follow the procedures at PGI 217.7701 when acquiring over and above work.
217.7702 Contract clause.
Use the clause at 252.217-7028 , Over and Above Work, in solicitations and contracts containing requirements for over and above work, except as provided for in Subpart 217.71.
Subpart 217.78 - REVERSE AUCTIONS
In accordance with section 814 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328) as amended by section 882 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91) (see 10 U.S.C. 2302 note), contracting officers shall not use reverse auctions when procuring items designated by the requiring activity as personal protective equipment or an aviation critical safety item, when the requiring activity advises the contracting officer that the level of quality or failure of the equipment or item could result in combat casualties. See 252.209-7010 for the definition and identification of critical safety items.
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