# DLAD PART 37

- SUBPART 37.1 - Service Contracts -- General

- 37.105 Competition in Service Contracting.
- 37.110 Solicitation Provisions and Contract Clauses

- 37.110-90

- SUBPART 37.2 - ADVISORY AND ASSISTANCE SERVICES
- SUBPART 37.5 - MANAGEMENT OVERSIGHT OF SERVICE CONTRACTS

- 37.590-1 Background.
- 37.590-2 Purpose.
- 37.590-3 Policy.
- 37.590-4 Decision Authority.
- 37.590-5 Milestone Reviews.

- SUBPART 37. 6 - PERFORMANCE-BASED CONTRACTING

- 37.601 General.

- SUBPART 37.90 - SERVICES OF GRIEVANCE EXAMINERS/EQUAL EMPLOYMENT OPPORTUNITY (EEO) INVESTIGATORS

- 37.9001 General.

PART 37

SERVICE CONTRACTING

TABLE OF CONTENTS

SUBPART 37. 1 - SERVICE CONTRACTS - GENERAL

37.105 Competition in Service Contracting

37.110 Solicitation Provisions and Contract Clauses.

SUBPART 37.5 - MANAGEMENT OVERSIGHT OF SERVICE CONTRACTS

37.590 Management Oversight Structure within DLA.

37.590-1 Background.

37.590-2 Purpose.

37.590-3 Policy.

37.590-4 Decision Authority.

37.590-5 Milestone Reviews.

SUBPART 37.6: PERFORMANCE-BASED CONTRACTING

37.601 General

SUBPART 37.90 - SERVICES OF GRIEVANCE EXAMINERS/EQUAL EMPLOYMENT

OPPORTUNITY (EEO) INVESTIGATORS

37.9001 General.

SUBPART 37.1 - Service Contracts -- General

37.105 Competition in Service Contracting.

(90) See DFARS 216.505-70, Orders for services under multiple award contracts, for competition and “fair opportunity” requirements for all services exceeding $100,000 acquired under these vehicles, and 8.404-70(c)(1) and DFARS 208.404-70, Additional ordering procedures for services, regarding use of orders against GSA Federal Supply Schedules for services valued at greater than $100,000. See subpart 7.90 for additional requirements for services acquired via non-DOD contract vehicles. See DLAD 16.601 (90) for additional requirements concerning use of time and material/labor hour clins, contracts, or task orders for services.

37.110 Solicitation Provisions and Contract Clauses

37.110(a)(90)

Use 52.237-9003, Site Visit Coordinator, in solicitations when a contractor will be performing services on a DLA installation and a site visit is recommended. The buyer shall check off which contact information applies. To be used in conjunction with 52.237-1.

37.110(a)(91)

Use 52.237-9004, Evaluation – Contractor Installation or Verification of Installation, when contractor installation of equipment or contractor verification of installation at destination is required. Always use when Clause 52.246-9040 is included.

37.110-90

Use 52.237-9001, Contractor Personnel Changes and Key Personnel Requirements, in cost type contracts for both supply and service contracts, as appropriate. If the contract does not require key personnel, fill in “No Key Personnel Positions Identified” in Paragraph 2. (c).

37.110(91)

Use 52.237-9002, Key Personnel – Fixed Price Service Contracts, in solicitations and contracts for negotiated fixed-price services when the services to be provided will require professional employees and when evaluation of proposed key managerial personnel is necessary to assess the probability of successful performance.

SUBPART 37.2 - ADVISORY AND ASSISTANCE SERVICES

SUBPART 37.5 - MANAGEMENT OVERSIGHT OF SERVICE CONTRACTS

37.590 Management Oversight Structure within DLA.

37.590-1 Background.

(a) Section 801 of the FY 2002 National Defense Authorization Act (P.L. 107-107) called for a program review structure, similar to the one pertaining to procurement of weapon systems (i.e., “the DOD 5000 series”), for service acquisitions. The section also addressed standards for determining which procurements should be subject to review, key decision points, and specific matters to be considered. Similar requirements were imposed by Section 812 of the National Defense Authorization Act for FY 2006.

(b) The Under Secretary of Defense (Acquisition, Technology and Logistics) (USD(AT&L)), released policy memoranda on May 31, 2002 and October 2, 2006 that fulfilled the statutory requirements. The current requirement calls for notification of the USD(AT&L) for potential review of service acquisitions valued at $1 billion or more, or “special interest” acquisitions (e.g., A-76 cost comparisons; high Congressional interest; etc.) of any dollar value. Acquisition of information technology (IT) services shall similarly be referred to the Assistant Secretary of Defense for Networks and Information Integration/Chief Information Officer (ASD(NII)/CIO). Other service acquisitions below the $1 billion threshold are to be managed under component-level review structures established in accordance with Departmental guidelines; see 37.590-4, below.

(c) This section (with field-level supplementation, where indicated and appropriate) fulfills the mandate of the USD(AT&L) policy cited above by establishing a more strategic and integrated approach to the acquisition of services.

37.590-2 Purpose.

The purpose of this policy is to ensure:

(a) that sufficient attention is paid to fulfillment of the Departmental goal that 50% of service acquisitions shall be performance-based by FY 2005 (see Subpart 37.6);

(b) that acquisitions of services are based on clear, performance-based requirements (whether or not formally designated “performance-based”);

(c) that required outcomes are identified and measurable;

(d) that there is a consistent review and approval process for service acquisitions; and

(e) that acquisitions are properly planned and administered to achieve the intended results.

37.590-3 Policy.

(a)(i) Create a documented acquisition strategy in support of each proposed service acquisition valued above $100,000, to be updated when changes occur. This strategy should ensure that services are acquired by business arrangements that are in the best interests of the Department and DLA, that reflect a strategic approach, in terms of overall spending on services, and that are entered into or issued and managed in compliance with applicable statutes, regulations, directives, and other requirements. It should also guarantee enterprise-wide approaches to procurement and development of new ways of doing business. Approval of the appropriate decision authority (see 37.590-4, below) shall be obtained for each acquisition strategy prior to the contracting office’s initiating any action to commit the Government to the strategy. In addition to the following, see Subparts 7.1, 7.90, and 90.11 for guidance in preparing this documentation.

(ii) The acquisition strategy shall address the following (modified, as appropriate, on the basis of complexity and dollar value of the acquisition):

(1) Requirement — Include the outcomes to be satisfied; whether these outcomes are performance-based; measures of success for the service acquisition; and, for other than newly identified requirements, how it was previously satisfied.

(2) Risks — Include current and potential cost; schedule and performance risk; and a risk mitigation plan.

(3) Competition - Include either an explanation of how full and open competition will be provided, or a statutory citation for the authority permitting less than full and open competition; include a similar explanation or citation for procurements subject to DFARS 208.405-70 and 216.505-70. Address plans for competition for foreseeable follow-on acquisitions.

(4) Small business and related considerations - Include a discussion of how the acquisition will affect achievement of small business goals/targets, and how it will support any other applicable directed programs.

(5) Business arrangements — Include details on funding; type of contract; duration (including option periods); total cost estimate; and pricing arrangements. NOTE: The Advance Acquisition Planning Template provided in 90.1103, while not required to be submitted for service acquisitions, provides an excellent outline of the kind of information required here.

(6) Special considerations for multi-year contracts — If the acquisition strategy calls for a multi-year service contract under authority of 10 USC 2306c, the strategy must address DLA’s plans for budgeting for termination liability. For further guidance on multiyear contracting for services, see DFARS Section 217.171.

(iii) Further guidance on acquisition strategy for information technology acquisitions may be found in FAR Part 39 and DFARS Part 239. In addition, all IT acquisitions for services will be processed in accordance with J-6’s One Book chapters, “Information Technology Acquisition Requirements Planning” and “IT Portfolio Management Process.”

(iv) For actions described in 37.590-4(c), below, see also 7.104-90(e) for documents

required to be submitted for Integrated Acquisition Review Board review and approval.

(b) Establish metrics for each proposed service acquisition. These should generally pertain (as appropriate) to cost, schedule, and performance. The cognizant decision authority (see 37.590—4, below) will approve the metrics selected, and will conduct execution reviews to assess outcomes against requirements. These will occur at certain milestone points; see 37.590-5, Milestone Reviews, below.

(c) Accurately report required data regarding each service acquisition having a value greater than $2,500 via the DD 350 system; this requirement includes services pertaining to information technology. Applicable data to be collected via the DD 350 include the following:

(1) Services purchased.

(ii) Total dollar amount.

(iii) Form of contracting action.

(iv) Whether the purchase was performance—based and fixed price; performance—based, other than fixed price; or not performance-based.

(v) For a purchase made through an agency other than the Department of Defense, the agency through which it was made. Separately maintain (via other than DD 350 reporting) a listing of any assisted acquisition and the service charge associated with each. See 7.9003(b)(7).

(vi) Extent of competition provided, and whether there was more than one offer.

(vii) Whether the purchase was made from a small business concern; a small disadvantaged business concern; or a woman—owned small business concern.

37.590-4 Decision Authority.

The decision authority (review and approval) level associated with each dollar range for service acquisitions valued above $100,000, as depicted in the chart at 7.104-90 and described more fully, below, shall ensure that each such acquisition is reviewed and approved at a level above the contracting officer. Also, to ensure the appropriate level of interest and strategic decision-making, local procedures should require that service acquisitions greater than the simplified acquisition threshold be reviewed and coordinated at the highest levels practicable.

(a) The decision authority for all service acquisitions (other than information technology (IT)) with a total value greater than $1 billion is retained by USD(AT&L). Submit acquisition strategy documentation for all such acquisitions to J-72 for review and coordination. Following intermediate approval levels, including the Senior Procurement Executive (SPE) and/or the Integrated Acquisition Review Board (I-ARB; see (c), below), notification, including the acquisition strategy documentation, will be forwarded to the Director, Defense Procurement and Acquisition Policy and Acquisition Policy (DPAP). DPAP shall notify the SPE within ten working days of receipt whether USD(AT&L) will review the acquisition. If DPAP notification is not provided within that time-frame, the acquisition may proceed. If a review is conducted by USD(AT&L), it shall be completed within 30 working days of the determination. Similarly, ASD(NII)/CIO retains decision authority for IT service acquisitions. Documentary review in advance of intermediate approvals for IT service acquisitions shall be conducted jointly by J-7 and J-6. The same time-frames (10/30 days) apply.

(b) The decision authority for all service acquisitions with a total planned dollar value equal to or greater than $500 million, but less than $1 billion, is the Component Acquisition Executive or designee (i.e., the SPE). Forward acquisition strategy documentation for all such acquisitions through J-72 for review and coordination.

(c) The decision authority for all service acquisitions greater than $50 million, but less than $500 million, is the I-ARB, or a streamlined review board, under the chairmanship of the SPE; see 7.104-90 and 90.1503 for composition and procedures of the I-ARB. Submit acquisition strategy documentation through J-72 to the I-ARB or other board, as designated, for acquisition and business case analysis approval.

(d) All acquisitions with a total planned dollar value below $50 million shall be reviewed and coordinated in accordance with field activity/DES management structure and dollar threshold review/approval procedures, except that all activities other than DESC, DSCP, DSCC, and DSCR must submit acquisitions valued between $20 million and $50 million to J-72 for review and coordination. Minimum acquisition and business case analysis (BCA) approval levels are as follows:

(i) For acquisitions valued between $100,000 and $5 million: no lower than one level above the contracting officer. However, non-performance-based services acquired through a DoD contract or task order need to be given greater attention, in order to comply with statutory requirements. Therefore, review and approval at the next higher level (i.e., Chief of the Contracting Office, as required in (ii), below) is strongly encouraged. Additionally, any service acquisition, whether or not performance-based, acquired by contract or task order awarded by an agency other than DoD, needs to conform with the requirements of subpart 7.90, as well as with this subpart. Note that all service acquisitions, even in this range of values, are subject to the I-ARB process, as described in 7.104-90.

(ii) For acquisitions valued between $5 million and $20 million: Chief of the Contracting Office.

(iii) For acquisitions valued between $20 million and $50 million: Head of the Contracting Activity or designee for DESC, DSCP, DSCC, and DSCR; Streamlined I-ARB for all other activities.

(e) The thresholds set forth above are inclusive of both the base period and any option periods of the proposed acquisitions. They are established for routine acquisitions; they do not prevent reviews of acquisitions designated as “special interest” at higher organizational levels. For example, the SPE may choose to review an acquisition valued below $50 million if Congressional or OSD interest is anticipated.

37.590-5 Milestone Reviews.

(a) Milestone review and approval levels and criteria for service acquisitions Subject to I— ARB review (see 37.590-4 (c) and (d), above) shall be in accordance with 90. 1502 (a) (iii) (i.e., after the Business Strategy and Acquisition Planning phase (Phase II) as illustrated in the chart at 90.1502 (a); Phase I is not applicable). At each decision point, the I-ARB shall either permit the acquisition to proceed, modify the strategy, or terminate the process.

(b)(1) For acquisitions with a total value under $50 million (that is, not subject to I-ARB review), milestone reviews and approvals shall be established and conducted in accordance with local procedures. These procedures should ensure that the contract is continuously reviewed and assessed.

(2) As a general rule, business strategy and acquisition plans should be evaluated by the decision authorities identified in 37.590-4, above, prior to release of the solicitation; this is Milestone A. Some elements to be reviewed may include, but shall not be limited to, logistical benefits; statement of work/statement of objectives (SOW/SOO); contract type; contract incentives/disincentives; metrics; and method of contract performance management, such as a performance management plan or performance review board.

(3) Following the solicitation and offer evaluation process, another review should be conducted to ensure the apparently successful proposal is consistent with all the SOW/SOO requirements. The cost/price proposal should also be compared with historic support costs or other available comparative cost/price data, as applicable. Authorization to proceed to award, or determination to terminate the process, is Milestone B.

(4) Implementation review consists of continuous contractor performance monitoring by means of the methods and measurements included in the SOW/SOO or in the Government’s Quality Surveillance Plan. Monitoring should be conducted to ensure that all expected outcomes from previous phases are appropriately evaluated and addressed before moving on to the next phase of the acquisition; this is especially critical when a contract includes options. Again, the review should focus on an assessment of contractor performance against established, measurable outcomes called out in the contract. It should also include (as appropriate) a reconsideration of logistical costs and benefits, as measured against baseline documentation prepared for Milestone A. Formal exercise of this post-award review process, especially prior to option exercise, is Milestone C. A final assessment should also be made, and entered into the Contract History file, upon completion of contract performance.

SUBPART 37. 6 - PERFORMANCE-BASED CONTRACTING

37.601 General.

(90) It is Department of Defense (and Federal Government-wide) policy that a minimum of 50 percent of the components’ service acquisitions, measured in dollars, will be performance-based. In order to fulfill this directive, you should be aware of performance-basing criteria. Consult the Performance Based Services Acquisition (PBSA) home-page (http://www.dla.mil/j-3/j-336/PBSA.htm ) accessible from the DLA Regulatory home-page, for assistance and considerations. The web site may be especially helpful in your establishment of performance metrics for cost, schedule, and performance.

(91) In order to receive credit toward fulfilling the goals mentioned above, make sure you record performance—based service acquisitions correctly on the DD 350, Individual Contracting Action Report; see 37.590-3(c), above. See DFARS PGI 253.204-70(b) (1) (v) for instructions for the correct coding of line B1E, Performance Based Service Contract. Note that a contract may be considered performance—based if at least 50% of its value is for work that is performance-based.

(92) Although these will not be considered for inclusion in the reporting required above, you should make every effort to performance—base the services aspects of acquisitions that are primarily considered supply contracts, such as prime vendor arrangements.

SUBPART 37.90 - SERVICES OF GRIEVANCE EXAMINERS/EQUAL EMPLOYMENT OPPORTUNITY (EEO) INVESTIGATORS

37.9001 General.

Requirements for services of grievance examiners/EEO investigators shall be satisfied by the most appropriate FAR/DFARS prescribed contracting procedure. The contracting officer shall be responsible for selection of the contracting procedure and for administration of the resulting contract(s). Small purchase contracts for these services shall be placed only with sources identified in the qualified pool of estimators/examiners list maintained by the HQ DLA Office of Equal Employment Opportunity (CAAH), Defense Switched Network (DSN) 284-7192. Contracting officers shall contact (CAAH) to obtain a current required source list for soliciting in accordance with FAR 13.106 procedures.