PGI 207.171-4 Procedures.
(i) Agencies are responsible for ensuring that—
(A) Breakout reviews are performed on components meeting the criteria in DFARS 207.171-3(a) and (b);
(B) Components susceptible to breakout are earmarked for consideration in future acquisitions;
(C) Components earmarked for breakout are considered during requirements determination and appropriate decisions are made; and
(D) Components are broken out when required.
(ii) The program manager or other official responsible for the material program concerned is responsible for breakout selection, review, and decision.
(iii) The contracting officer or buyer and other specialists (e.g., small business specialist, engineering, production, logistics, and maintenance) support the program manager in implementing the breakout program.
(2) Breakout review and decision.
(i) A breakout review and decision includes—
(A) An assessment of the potential risks to the end item from possibilities such as delayed delivery and reduced reliability of the component;
(B) A calculation of estimated net cost savings (i.e., estimated acquisition savings less any offsetting costs); and
(C) An analysis of the technical, operational, logistics, and administrative factors involved.
(ii) The decision must be supported by adequate explanatory information, including an assessment by the end item contractor when feasible.
(iii) The following questions should be used in the decision process:
(A) Is the end item contractor likely to do further design or engineering effort on the component?
(B) Is a suitable data package available with rights to use it for Government acquisition? (Note that breakout may be warranted even though competitive acquisition is not possible.)
(C) Can any quality control and reliability problems of the component be resolved without requiring effort by the end item contractor?
(D) Will the component require further technical support (e.g., development of specifications, testing requirements, or quality assurance requirements)? If so, does the Government have the resources (manpower, technical competence, facilities, etc.) to provide such support? Or, can the support be obtained from the end item contractor (even though the component is broken out) or other source?
(E) Will breakout impair logistics support (e.g., by jeopardizing standardization of components)?
(F) Will breakout unduly fragment administration, management, or performance of the end item contract (e.g., by complicating production scheduling or preventing identification of responsibility for end item failure caused by a defective component)?
(G) Can breakout be accomplished without jeopardizing delivery requirements of the end item?
(H) If a decision is made to break out a component, can advance acquisition funds be made available to provide the new source any necessary additional lead time?
(I) Is there a source other than the present manufacturer capable of supplying the component?
(J) Has the component been (or is it going to be) acquired directly by the Government as a support item in the supply system or as Government-furnished equipment in other end items?
(K) Will the financial risks and other responsibilities assumed by the Government after breakout be acceptable?
(L) Will breakout result in substantial net cost savings? Develop estimates of probable savings in cost considering all offsetting costs such as increases in the cost of requirements determination and control, contracting, contract administration, data package purchase, material inspection, qualification or preproduction testing, ground support and test equipment, transportation, security, storage, distribution, and technical support.
(iv) If answers to the questions reveal conditions unfavorable to breakout, the program manager should explore whether the unfavorable conditions can be eliminated. For example, where adequate technical support is not available from Government resources, consider contracting for the necessary services from the end item contractor or other qualified source.
(i) The contracting activity shall maintain records on components reviewed for breakout. Records should evidence whether the components—
(A) Have no potential for breakout;
(B) Have been earmarked as potential breakout candidates; or
(C) Have been, or will be, broken out.
(ii) The program manager or other designated official must sign the records.
(iii) Records must reflect the facts and conditions of the case, including any assessment by the contractor, and the basis for the decision. The records must contain the assessments, calculations, and analyses discussed in paragraph 2 of this section, including the trade-off analysis between savings and increased risk to the Government because of responsibility for Government-furnished equipment.