# DLAD PGI

- SUBPART 17.93 Surge and Sustainment ( S&S)

- PGI 17.9300.
- PGI 17.9301. S&S Implementation Procedures, Guidance, and Instructions for Contracting Officers.

SUBPART 17.93 Surge and Sustainment ( S&S)

PGI 17.9300.

This DLAD PGI subpart prescribes the mandatory procedures, guidance, and instructions for obtaining Surge and Sustainment (S&S) coverage through acquisition planning and long-term contracting. Refer to the Industrial Capabilities Surge and Sustainment One Book (to be completed June 2008) to view a more detailed process, if necessary.

PGI 17.9301. S&S Implementation Procedures, Guidance, and Instructions for Contracting Officers.

The procedures, guidance, and instructions help Contracting Officers implement S&S in the acquisition process. The supporting Industrial Specialist (IS) shall assist the contracting officer with implementation to ensure appropriate S&S coverage is obtained.

Step | Task | Reference (DLAD unless otherwise specified)
I. PRESOLICITATION
1 | Contracting officer (CO) validates S&S items being considered for inclusion in a long-term contract by conducting a Surge Check using IBMS portal at https://today.dla.mil/J-3/IBMS_V3/Default.aspx. Refer to Exhibit 1 for IBMS Surge Check procedures. | 17.9303(b) Exhibit 1
2 | CO performs market research and determines if the S&S Monthly War Time Rate (MWR) can be met through the peacetime quantity and delivery schedule. Refer to 17.9303(b)(2) for methods to achieve S&S coverage. If the S&S quantity and delivery can be met via peacetime schedule, the S&S items do not need to be included in the solicitation. However, consider adjusting the contract maximum quantity to accommodate future demand increase to support S&S, if Surge CLIN is not included as a separate CLIN. Document the acquisition plan indicating that the MWR and delivery can be satisfied through peacetime schedule and a separate S&S CLIN will not be included in the solicitation/contract. If S&S quantity and delivery cannot be satisfied through peacetime quantity and delivery schedule, the CO shall include the S&S CLINS in the solicitation. Document the planned method for S&S coverage in the acquisition plan. | 17.9303(b)(2) 17.9303(b)(2)(A) 17.9303(c) 17.9303(c)
II. SOLICITATION
4 | If S&S coverage applies IAW Step 2 above, include the following in the solicitation: (a) S&S clauses IAW DLAD 17.9306; and (b) Appropriate S&S CLINS IAW 4.7103-2(a)(90); and (c) S&S MWR CLINS for each item with corresponding delivery schedule from IBMS (Note: Delivery for S&S items will be 30 days or less). Refer to Exhibit 2 for CLIN structure. | 17.9303(b)(2)(C) 17.9306 4.7103-2(a)(90) Exhibit 2
5 | The Contracting Officer notifies the supporting IS of solicitation release. | 17.9303(e)
III. EVALUATION/NEGOTIATION
6 | Submit a hard copy of the supplier’s CAP for review and validation to the supporting IS. The IS reviews the CAP and makes a recommendation to the CO. - IS will assess the plan and identify the strengths and weaknesses of the CAP, and advise the CO. - If supplier requests government investment to support S&S coverage, IS reviews the request for consideration and advises the CO if government investment can be applied. - CO shall negotiate when necessary to limit or minimize use of government investment when obtaining S&S coverage. If it is in the government’s best interest to provide funding, then use government investment to overcome the S&S shortfall and or to obtain coverage. Refer to 52.217-9006(c)(3) to (7) for shortfall conditions. - CO shall negotiate the offeror’s proposed S&S exit strategy to ensure that it is in the government’s best interest. (a) For supplier-owned S&S asset, consult the IS for assistance to determine the appropriate exit strategy alternatives. Consider the following exit strategies to ramp-down supplier-owned S&S assets: (1) Asset buy-back if government has a need; (2) Apply asset buy-back guaranteed minimum (percent or dollar amount); (3) Apply assets to other contracts. (b) If Warstopper investment applies, see Step 8 below for exit strategy alternatives. Document the S&S negotiation position in the Pre-Negotiation Briefing Memorandum (PBM). | 52.217-9008 Industrial Capabilities Program (ICP) - Surge and Sustainment One Book (To be completed Jun 2008) 52.217-9010 52.217-9006 (c)(3)to(7) 17.9303(g) 17.9303(c)
7 | The CO uses the IS recommendation to develop the negotiation position and negotiate the S&S coverage, if necessary. (a) If negotiations for S&S coverage become extended, the CO may proceed with contract award with some or none of the S&S requirements (CLINS) providing the supplier agrees to continue S&S negotiations in good faith. (b) If the CO attempts to obtain S&S coverage is unsuccessful or is unable to negotiate best value S&S quantity, schedule and/or price for any or all of the S&S items. Refer to 17.9303(b)(3) if S&S is unobtainable. (1) CO shall proceed with contract award without the S&S CLINS. CO notifies the IS, SMSG or IST Lead that the S&S CLINS will be excluded from the solicitation/contract due to unsuccessful attempt to obtain S&S coverage; and (2) Submits a waiver letter to exclude the S&S items to the IB Chief for approval, specifying attempts made to obtain S&S coverage and rationale for exclusion (i.e. unable to negotiate fair and reasonable price). (3) CO shall consider increasing the contract maximum quantity to cover UII or to provide support for increased demand in the future resulting from a contingency, when excluding S&S CLINS due to unsuccessful attempts to obtain S&S coverage. (c) IS in collaboration with the SMSG or IST lead develop an alternate strategy for obtaining S&S coverage. Alternatives may include, but are not limited to the following: (1) Corporate Exigency Contracts (CEC) (2) Minimum Sustaining Rate (MSR) contracts (this type of contract may generate protected inventory that can be used to meet contingency demands as free issue) (3) Industrial Base Maintenance Contracts (IBMC); (4) Vendor Managed Inventory; and/or (5) agreements common in some industries (e.g. subsistence), such as memorandum of understanding/agreement (MOU/MOA). (d) When alternative methods to obtain S&S coverage also fail, the IS notifies the IB Chief and HQ DLA J-74 that Unsupported Item Issue (UII) exists. The IS takes appropriate action to notify the Service(s) and document UII in IBMS, and relay information to the SMSG or IST lead. | 17.9303(b)(3)& IB One Book (To be completed Jun 2008) 17.9303(b)(4) 17.9303(b)(5)
8 | After negotiations, if CO determines it is in the Government’s best interest to use the investment and approves the supplier’s request for government funding, the CO notifies the IS immediately. The IS reviews the S&S investment request and advises the CO for available investment options. (a) For Warstopper investments, the IS processes the funding request and advises the CO of the funding approval. (b) Upon receipt of funding approval, the CO does the following: (1) include the appropriate Warstopper CLINS in the contract (See DLAD 4.7103-2(a)(90)); and (2) ensure an investment exit strategy is included in the contract. Consider the exit strategies listed below in order of preference or CO may consider other strategies: (i) transfer investment to the next contract; (ii) put investments into production to produce finished goods and offset price for GFM; or (iii) salvage investment to be used for other government projects; or (iv) return funds to US Treasury through the Warstopper Program Manager at HQ DLA J-74. If supplier requests government investment after contract award, CO follows process above and notifies the supplier(s) of the government investment approval by issuing a letter with explicit language describing use and limitation of government investment. Modify the contract to add the appropriate Surge CLIN and add CLIN in the SAP Outline Agreement (OA). Provide a copy of the mod to IS. Document the contract file. | 52.217-9006(d) Warstopper One Book 4.7103-2(a)(90) 52.217-9010 4.7103(2)(a)(90) 17.9303(e) 17.9303(c)
IV. AWARD
9 | CO makes determination and decision on CAP responsiveness and acceptability based on best value to the government. CO documents the results of negotiation on S&S coverage or UII in the Price Negotiation Memorandum (PNM). | 17.9303(c)
10 | CO incorporates all appropriate clauses and Surge CLINS in the contract (if not initially included in the solicitation). CO provides a copy of the contract to the IS or notifies when contract is available electronically in the Electronic Contract File (ECF). | 17.9303(c) 17.9303(e)
11 | CO ensures that the Surge CLINS are properly transcribed or incorporated in the SAP OA. Refer S&S Procurement Job Aid for instructions. | 17.9303(d)
V. POST AWARD-EXERCISE TERM OPTION, ADD/DELETE ITEMS
12 | Prior to exercising the option, CO reviews and validates S&S requirements using Surge Check in IBMS portal at https://today.dla.mil/J-3/IBMS_V3/Default.aspx. Consult IS and SMSG/IST Lead for any changes to the MWR and/or CAP. | 17.9303(f)
13 | CO adjusts and or obtains new S&S coverage for any changes in the MWR or for item addition/deletion. Specifically, (a) When no Warstopper investments are made and the MWR decreased or the requirement needs to be deleted, issue unilateral modification to the contract to remove the related Surge CLIN(S). Prior to deleting the item(s) or CLIN(s) from the contract, CO consults the supporting IS to verify with the Service(s). IS advises the CO to proceed with deleting the item after validating with the Services. (b) When Warstopper investments are made and the MWR decreased or the requirement needs to be deleted, CO evaluates the change to determine if removal of the Surge CLIN will reduce future Warstopper costs, or if the raw materials can be transferred to another surge item. Consult the IS for assistance. (c) When MWR increases or adding new S&S requirement, CO requires the supplier to update the CAP and negotiates any changes. If investments are requested follow Step 8 above and: -Add appropriate surge CLINS IAW 4.7103(2)(a)(90), if government investment applies; -Add S&S item CLIN when necessary; -Update SAP OA (refer to S&S Procurement Job Aid) CO issues a bilateral modification to add the item(s) into the contract. Provide a copy of modification to the IS. | 17.9303(f) 52.217-9006(h) 17.9303(e)
14 | CO notifies the supporting IS of any contract modification affecting supplier surge capability by providing the IS a copy of the modification or notification to obtain a copy from ECF. | 17.9303(e)
15 | CO documents the contract file with any changes to the S&S coverage and/or plan. | 17.9303(c)
VI. S&S EXECUTION
16 | The CO shall invoke and execute surge when conditions in 17.9305(a) exist. The CO invokes and executes S&S by issuing a delivery order against the Surge CLIN(S). (a) Surge event may be triggered through manual or automated sources. For example, information received through customer collaboration and/or in-house sources may indicate an impending MICAP/NMCS or spike in demand to support unscheduled repair activity on a weapon system that would create significant backorders; or IBMS triggers an e-mail notice to the buyer, supply planner, and IS of anticipated stock outs due to increased demands that cannot be met with existing inventory and due-ins. (b) If IBMS triggers an automated notice, supply planner shall generate a manual PR (refer to DLA DD Process Flow under Exhibit 3 or S&S Supply Planning Job Aid for instructions) in EBS to support S&S requirement. The PR shall be identified as a “Surge PR”. (c) CO shall review the conditions that triggered the surge PR recommendation with the supply planner, buyer, and IS; shall consider other options to resolve the situation that may be more cost effective prior to invoking/executing surge (e.g., expedited delivery, spot buys, redistribution orders, etc.); and determine the appropriate action. (1) Upon determination and decision to invoke/execute surge, the CO sources the PR against the S&S CLIN(S) in SAP OA and issues the surge order; and (2) Sends an email notice to the vendor and IS alerting stakeholders of the surge order. CO includes the PIIN, DO number, and other information deemed necessary for the vendor to process the order immediately. (d) Customer direct PRs may be sourced automatically, if desired. For automatic sourcing of S&S customer direct PRs, refer to the S&S CD Process Flow under Exhibit 3. | 17.9303(d) 17.9305 See S&S Procurement and Supply Planning Job Aids (To be completed Jun 2008) Exhibit 3 or S&S Supply Planning Job Aid (To be completed Jun 2008) Exhibit 3
VII. SUPPLIER’S CHANGE IN S&S CAPABILITY
17 | In the event a supplier notifies the CO of any changes to the S&S capability due to an unexpected supply chain interruption (extreme market conditions, natural disaster, labor dispute, etc.), CO instructs the supplier to update CAP in IBMS portal. CO notifies the IS. IS validates the updated CAP and makes recommendation to the CO. | 52.217-9006(g) 52.217-9007(a) S&S One Book (for more details if needed)- To be completed Jun 2008
18 | CO uses IS recommendation to negotiate changes, if necessary. CO follows Steps 6, 7, and 8 if applicable. CO issues contract modification to reflect the change in coverage. CO documents the contract file of any changes to the S&S coverage and update SAP OA. | 52.217-9006(g)& (h) 17.9303(c)
19 | CO provides a copy of modification or notification to IS that modification is available in ECF. | 17.9303(e)
VIII. CONTRACT CLOSEOUT/TERMINATION
20 | If contract included S&S government investments, CO ensures all investments are recovered to the maximum extent possible. CO exercises S&S exit strategy in the contract and recoups the government investment. If government investment cannot be recouped due to unforeseen circumstance (e.g., supplier bankruptcy) and the existing exit strategy cannot be applied, CO can exercise alternate exit strategy deemed appropriate that is in the best interest of the government. CO contacts the IS to assist with processing or exercising the exit strategy. For supplier-owned S&S assets ramp-down, CO reviews the contract to determine the exit strategy. If exit strategy is not included in the contract, consult the IS for ramp-down alternatives. Consider the following when ramping down supplier-owned S&S assets through negotiations: -Asset buy-back if government has a need; -Apply assets to other contracts; -Monetary consideration (CO determines a percentage amount) Document the resultant exit strategy in the contract file. | Warstopper One Book 17.9303(g) 17.9303(c)