# DLAD PGI PART 17 – SPECIAL CONTRACTING METHODS

- DLAD PGI PART 17 – SPECIAL CONTRACTING METHODS

- PGI SUBPART 17.74 – LIMITATIONS.

- PGI 17.7400 Scope.

- PGI 17.7404-3 Definitization schedule.

- PGI SUBPART 17.75 – ACQUISITION OF REPLENISHMENT PARTS

- PGI 17.7506 – Spare parts breakout program.

- PGI SUBPART 17.93 – SURGE AND SUSTAINMENT (S&S)

- PGI 17.9303 S&S implementation procedures for contracting officers.

- PGI SUBPART 17.95 – TAILORED LOGISTICS SUPPORT CONTRACTING

- PGI 17.9502 Tailored logistics support contracting program of instruction.
- PGI 17.9503(e) Contract management plan.
- PGI 17.9504 Pricing.
- PGI 17.9505(a) Pre-award tools.
- PGI 17.9507(c)(ii) Price review tools.
- PGI 17.9507(c)(v) Management tools.

- PGI SUBPART 17.96 – NON-ECONOMY ACT INTERAGENCY ACQUISITIONS

- PGI 17.9602 Ordering procedures.
- PGI 17.9605 Follow-up procedures for non-Economy Act transactions.

DLAD PGI PART 17 – SPECIAL CONTRACTING METHODS

PGI SUBPART 17.74 – LIMITATIONS.

(Revised September 15, 2011 through PROCLTR 2011-41)

PGI 17.7400 Scope.

PROCLTR 11-41 contains the DLA Guide to Understanding Undefinitized Contract Actions and Unpriced Change Orders for training purposes and summarizes the information (in PowerPoint form for training) provided in the following section, PGI 17.7404-3.

PGI 17.7404-3 Definitization schedule.

(a)(2) To ensure timely approval, submit all proposed undefinitized contract actions (UCAs), regardless of value, or unpriced change orders with an estimated value exceeding $5 million to J72 a minimum of two weeks prior to proposed issuance date in order to permit J7 and General Counsel review and DLA Director approval. Requests for DLA HQ review and approval of a letter contract or other UCA, regardless of value, or unpriced change order with an estimated value exceeding $5 million shall be prepared in accordance with DFARS Subpart 217.74 and DLAD 17.74. The proposed action must be as complete and definite as practicable under the particular circumstances, including all supply chain and/or contracting activity review, coordination, and approval. HCAs for activities with an assigned HCA shall review requests for UCAs or unpriced change orders and may disapprove requests or forward them to J72 for further processing.

(b) At a minimum, requests for approval shall include:

(1) An acquisition plan;

(2) Any required justification and approvals or determination and findings;

(3) A written statement of urgency supporting the requirement for a UCA or unpriced change order, including:

(i) The quantities, dates and priorities of existing and projected requirements to be filled by the buy;

(ii) The date that the requirement was first known to exist;

(iii) Why the interests of national defense demand that a contractor be given a binding commitment so that work can begin immediately , including the adverse impact on agency requirements resulting from delays in beginning performance;

(iv) Why negotiation of a definitive contract or priced order did not and cannot occur in sufficient time to meet the acquisition need; and

(v) The determination required by FAR 16.603-3 (letter contracts only);

(4) The contracting officer's responsibility determination concerning the prospective contractor (FAR 9.103); and

(5) A price negotiation memorandum that includes the not-to-exceed ceiling total price and ceiling unit price(s) to be included.

(6) A funding document that includes the offeror’s proposed obligation amount by period prior to definitization, interim billing price, and the predefinitization limits of the Government's liability under the UCA or change order;

(7) A discussion of any requirement for progress payments, provisional payments, and options for increased quantity or performance period;

(8) The proposed definitization schedule including dates for

(i) Proposed obligation rate against the not-to-exceed ceiling price;

(ii) Receipt of the contractor's proposal;

(iii) Beginning of negotiations;

(iv) Completion of negotiations;

(v) Target date for definitization; and

(9) The following additional milestone dates (unless another contract management activity will definitize):

(i) Receipt of field pricing report;

(ii) Receipt of the local price or cost/price analysis; and

(iii) Submission of the proposed definitive contract/change order and supporting file for DLA HQ review and approval, pursuant to 1.690-6(c)(6).

(10) The delivery schedule.

(c) A copy of a signed letter contract shall be forwarded to DLA HQ, attention: J73 within 1 week of execution.

PGI SUBPART 17.75 – ACQUISITION OF REPLENISHMENT PARTS

(Revised December 23, 2011 through PROCLTR 2012-14)

PGI 17.7506 – Spare parts breakout program.

This DLAD section follows the DFARS in topics and structure.

Part 1 – General.

1-101 Applicability.

(a)(1) All DLA except that DLA Energy and DLA Troop Support clothing and textile (C&T) and medical and subsistence will implement only those portions of the DFARS as is feasible in the reduction of noncompetitive parts.

Part 2 – Break-out coding.

2-202 Assignment of codes.

2-202-90 Assignment of codes.

(a) A competitive AMC (1 or 2) shall be assigned to a part when a complete technical data package is available, or when there are two or more approved independent manufacturing sources, or when a non-manufacturing prime and the actual manufacturer both independently contend for contracts.

(b) When parts are received that are coded AMC 5, care shall be taken to assure that solicitation is accomplished only with the identified prime contractor despite the CAGE identification to the actual manufacturer. These parts should be considered likely candidates for breakout to direct purchase from AMC 5 to AMC 4.

(c) In the case of parts with an assigned AMSC of U or V, if another source is approved, but a complete technical data package for unrestricted competition is not available, the AMC will be changed to 2 and the AMSC will be changed to AMSC C or R, or other, as appropriate. Only valid combinations of AMC/AMSCs shall be entered into the contracting technical data file.

2-203 Improving part status.

(b) Code suspense dates.

A 1-year code suspense validation date will be assigned to parts with an ASMC or A, H, or Y regardless of the AMC.

A 3-year suspense date will be assigned to parts having an AMSC of C, U, or V.

A 5-year suspense date will be assigned to parts with an AMSC of B, P, or R and parts with an AMC/AMSC of M or 4M. Parts with an assigned AMC/AMSC of 1G, 2G, 1K, 2K, 1M, 2M, 1N, 2N, 1T, or 2T and those with an AMC/AMSC of 1G, 2G, 1K, 2K, 1M, 2M, 1N, 2N, 1T, or 2T and those with an AMSC of L need not be subject to the code suspense validation.

Exceptions may be made on a case-by-case basis as necessary.

Suspense dates should not be changed merely to update the assigned date but should be made in conjunction with a review or screen based upon an anticipated forecast or immediate buy action. Buys shall not be held up simply to review the part for application of a new suspense date, unless the contracting officer determines that the buy can be held up until the review and any breakout action is completed (see DFARS PGI 217.7506 1-105 (e)(2)).

Part 3 – Identification, selection, and screening of parts.

3-301 Identification and selection procedures.

3-301.2 Annual buy forecasts.

An annual projection of estimated buy activity prepared quarterly shall be used to initially list parts in descending buy dollar order down to $5,000 reflecting projections for the next 12 months. These projections shall be the basis for selecting items to be screened for possible breakout. Care shall be taken to assure that an item selected in this manner is not redundant with planed or ongoing breakout activity in another program or effort, such as, but not limited to, value engineering and evaluation of alternate offers.

3-302 Screening.

(a) When results of a screening action indicate there is no expectation of breakout, consideration should be given, where applicable, to any other ongoing programs that may improve price or lead time. Examples of such other programs include, but are not limited to, value engineering and the competition advocate program. A folder shall be maintained for all screened parts to include any pertinent reports, analysis, or documents that relate to the assigned AMC/AMSC (see DFARS PGI 217.7506 3-302(i)).

3-303 Full screening procedure.

3-303.2 Data evaluation phase (steps 2 -14).

(c)(4) Step 5. Prior to expenditure of funds for acquisition of technical data to effect a breakout action, a review of data requirements shall be conducted in accordance with DLA Procedures. When there is any doubt as to acceptability by the cognizant military service of data to be acquired to effect the desired AMC/AMSC change, the data shall not be procured. Instead, all breakout activity for the part shall be summarized and forwarded to the cognizant Military Service activity with a recommendation that they pursue acquisition of the necessary data (see DFARS PGI 217.7506 3-303.2(c)(4)).

Part 5 – Reporting system

5-502 Reporting procedures.

(c) ICPs shall forward reports to DLA HQ, attention: DLA spare parts breakout program manager, DLA Acquisition (J7), no later than 30 days after the end of each period designated.

PGI SUBPART 17.93 – SURGE AND SUSTAINMENT (S&S)

(Revised September 11, 2012 through PROCLTR 2012-41R)

PGI 17.9303 S&S implementation procedures for contracting officers.

(a) This section details procedures, to be adapted as necessary for individual procurements, for obtaining surge and sustainment (S&S) coverage through acquisition planning and long-term contracting. Refer to DLA Instruction 1214, Industrial Capabilities Surge and Sustainment, for more detailed process guidance on the industrial specialist’s involvement and responsibilities.

(b) These procedures will enable contracting officers to implement S&S in the acquisition process. The supporting buyer and industrial specialist shall assist the contracting officer with implementation to ensure appropriate S&S coverage is obtained. System procedures are detailed in paragraph (c) of this section. (The term ‘buyer’ is used in this section and also denotes the acquisition specialist, both pre-award and post-award, and/or post-award contract administrator, as applicable.)

(1) Presolicitation phase.

(i) The contracting officer shall conduct market research, which includes the historical surge plan and performance, and collaborate with the industrial specialist to determine the appropriate strategy to obtain S&S coverage. (See Part 10.)

(A) If market research clearly shows that surge quantities and delivery schedule can be met through the long term contract (LTC) maximum and required delivery, and can satisfy both peacetime and wartime requirements, the contracting officer shall consult the industrial specialist to determine if surge-specific provisions can be excluded, in part or as a whole, from the solicitation.

(B) The contracting officer shall only exclude surge-specific provisions after receiving concurrence from the industrial specialist through the waiver process described in paragraph (5)(xii) of this section, and will clearly document the market research result, surge coverage decision, and concurrence in the acquisition plan.

(ii) The contracting officer will ensure that the LTC population is verified and validated for surge requirements using the appropriate industrial base (IB) tool or by consulting the industrial specialist to determine surge requirements. Methods for incorporating surge requirements into the LTC include the following. (Refer also to paragraph (c)(2) of this section for detailed system procedures.)

(A) Include surge requirements using MWR or D1-D6 in the solicitation/contract under a separate contract line item (CLIN); or

(B) Include the surge quantity option (see 17.9304), either as a percent increase of the base contract delivery rate or an exact quantity above the base contract delivery amount, that will result in sustainable delivery as required in the contract or order for items that are market ready, commercial, or non-national stock number (NSN) vendor part numbered, such as cataloged commercial items under a prime vendor arrangement. The exact quantity or percent for the surge quantity option can be calculated based on historical consumption data or other appropriate demand data.

(C) If the acquisition is for a long term contract, with more than 25 percent of the NSNs in the solicitation having surge items and the contract ceiling exceeds $10 million, or the procurement will require approval by a field- or HQ-level acquisition review board in accordance with 7.104-90, the contracting officer shall request revalidation of surge requirements through collaboration between the industrial specialist and the military service(s).

(iii) The contracting officer will collaborate with the industrial specialist when developing the evaluation criteria for S&S requirements for inclusion to the solicitation.

(A) For tradeoff best value source selection, the buyer, in collaboration with the industrial specialist, selects and includes appropriate S&S evaluation criteria in the solicitation as either an evaluation factor or sub-factor, depending on its significance. (See FAR 15.304).

(B) For lowest price technically acceptable (LPTA) and automated best value system (ABVS) procurements, the buyer, in collaboration with the industrial specialist, determines an appropriate evaluation factor or sub-factor, depending on its significance, to evaluate the CAP for technical acceptability.

(iv) The contracting officer shall obtain industrial specialist concurrence with the S&S coverage strategy, which will be documented in the acquisition plan.

(2) Solicitation phase.

(i) When surge requirements apply, the contracting officer shall include the monthly wartime rate (MWR), D1-D6, or surge quantity option CLINS, and insert appropriate provisions, clauses, and evaluation criteria in the solicitation. (See 17.9304.)

(ii) The contracting officer will ensure that the solicitation includes a requirement for a CAP from the offeror; the solicitation should state that the CAP must include an exit strategy.

(iii) The contracting officer shall notify the industrial specialist immediately upon issuing the solicitation (see paragraph (c)(2) of this section for related system procedures).

(iv) The contracting officer shall collaborate with the industrial specialist prior to making changes, such as an increase, decrease, or deletion, to surge requirements and coverage in the solicitation to assess the impact of the proposed change.

(A) The industrial specialist assesses the impact of the proposed change to surge requirements and will advise the contracting officer.

(B) The contracting officer proceeds with the amendment or change if appropriate, with adjustments as based on industrial specialist feedback.

(C) The contracting officer shall notify the industrial specialist when an amendment is issued affecting surge coverage, close dates, and/or LTC population.

(v) Solicitation closing. The vendors are required to submit the following with their proposals:

(A) Prices for the surge quantity, either in dollars or as a percentage, as specified in the solicitation;

(B) When surge pricing exceeds non-surge contract pricing for the same item(s), the contracting officer shall require information other than cost or pricing, or, if applicable, certified cost or pricing data to determine price reasonableness or cost realism in accordance with clause 52.217-9009;

(C) A copy of the CAP. Refer to paragraph (c)(4) of this section for system procedures.

(3) Evaluation.

(i) The contracting officer shall ensure the offeror’s capability assessment plan (CAP) is submitted to the industrial specialist for evaluation and a recommendation:

(A) The industrial specialist reviews the CAP and determines the application of warstopper or Government investment, then advises the contracting officer;

(B) If warstopper or Government investment applies, the buyer notifies all vendors competing in the acquisition during negotiations or issues an amendment to include the investment;

(C) When evaluating the surge quantity, the contracting officer, buyer and industrial specialist will perform a pricing evaluation as detailed in paragraph (4) of this section.

(D) The contracting officer shall ensure that the CAP includes an exit strategy and that the proposed exit strategy is in the Government’s best interest. Refer also to paragraph (5) of this section for exit strategy alternatives.

(4) Pricing evaluation.

(i) The contracting officer shall evaluate surge pricing for the surge quantity in accordance with FAR 15.404-1 to determine price reasonableness (see FAR 15.403 and DFARS 215.403 for guidance on requiring certified cost or pricing data or data other than certified cost or pricing data).

(ii) If the contracting officer cannot independently justify the surge price, the contracting officer shall ensure offerors submit information other than certified cost or pricing data or, if applicable, certified cost or pricing data, as circumstances require, that sufficiently explain causes of price difference between surge and peacetime quantities, in accordance with 52.217-9009. The information may be submitted in the offeror's own format unless the contracting officer requests a specific format in the solicitation.

(iii) The contracting officer shall consider the unique factors affecting S&S pricing when evaluating prices for the surge quantity, which may cause higher pricing than peacetime quantities since S&S involves increased production and accelerated delivery time, usually 30 days or less, during contingency operations. In addition, S&S pricing is often based on vendors’ estimates of future costs or projections since contingency operations are unpredictable and there is uncertainty when or if the Government will exercise surge. Certified cost or pricing data will not always apply to S&S. Instead, information other than certified cost or pricing data as described in FAR 15.402(a)(2) may apply. The vendor may have other costs in addition to the normal peacetime costs to support S&S requirements, such as:

(A) premium pay for overtime and/or additional shifts to fulfill increased production to support surge;

(B) additional costs for expedited delivery of materials from sub-tier vendors to meet the accelerated delivery requirement of surge;

(C) the cost to order minimum purchase quantity from sub-tier suppliers, in addition to peacetime ordering, to pre-position materials required to produce or supply S&S quantities, with a factor for the risk that the Government will not issue a surge order and/or buy-back any excess or unconsumed materials before contract expiration or termination;

(D) maintaining reserve production capacity that otherwise would generate revenue; and/or

(E) maintaining extra inventory, raw materials, or components specifically to support surge requirements.

(iv) Another consideration in determining price reasonableness is the risk assumed by the contractor. The Government is not obligated to exercise the surge CLINS during the contracted performance period. The suppliers are therefore assuming all the risks of incurring additional costs and holding additional inventory to support S&S coverage, until the Government executes a surge order to support contingency operations and other emergencies.

(v) In addition to allowing for extra costs, the contracting officer should consider whether to allow for additional profit over and above any amount for the peacetime requirement. When the weighted guidelines method is applied in accordance with DFARS 215.404-71, the contracting officer should review, in addition to other relevant factors.

(vi) A review of the S&S capability plan may assist in analyzing the surge price in comparison to the peacetime price, since it may indicate costs that the offeror expects to incur if the S&S requirement is invoked.

(vii) The contracting officer shall also consider guidance in DFARS 217.7505(b)(2) and the definition of S&SPR under 17.93, if applicable, when evaluating the surge prices that are higher than the non-surge contract prices, since the Services’ go-to-war requirements directly support the national security interests of the United States.

(viii) Removing the surge requirement. If surge prices are deemed unreasonable or if surge negotiations will cause the delay of contract award, the contracting officer may submit a waiver request to the industrial specialist for concurrence with removing surge requirement, in part or as a whole, from the solicitation/contract. (Refer to paragraph (5)(xii) of this section for the waiver procedure.)

(ix) The buyer documents the industrial specialist’s recommendation and surge price objectives in the pre-negotiation briefing memorandum (PBM). The total surge price is not added in the overall comparative price evaluation due to varying factors affecting surge pricing;

(5) Negotiations/discussions phase. (See FAR 15.306.)

(i) When the vendor’s capability assessment plan (as per clause 52.217-9006 surge and sustainment requirements) does not meet the stated solicitation surge requirements, the contracting officer shall conduct discussions to obtain the required surge coverage. If unable to reach agreement through discussions, the contracting officer shall collaborate with the industrial specialist for assistance in developing an alternate surge strategy, if necessary. (Refer to paragraph (5)(xiii) of this section regarding alternate surge strategy.) Surge coverage includes the following factors and considerations:

(A) Negotiating surge prices;

(B) Using the exit strategy, for example, surge asset buy-back for high demand items, surge asset ramp down, as leverage or a negotiating tool to obtain surge coverage;

(C) Considering alternate packaging or guaranteed minimum for surge items, if appropriate and/or applicable;

(D) Engaging the industrial specialist during negotiations to determine an alternate surge strategy to obtain coverage;

(E) Collaborating with the industrial specialist to determine if Government investment can be applied to obtain surge coverage.

(F) Obtaining surge coverage and considering the vendor’s proposed alternative(s) to support the Services’ go-to-war items in accordance with 17.9302.

(ii) The contracting officer shall consult the industrial specialist for a warstopper or Government investment determination and recommendation when an industrial capability issue (ICI) is identified by the supplier and/or if the supplier is requesting Government investment. (Refer to paragraphs (5)(viii) and (5)(ix) of this section for warstopper or Government investment determinations.)

(iii) The contracting officer shall ensure that approved warstopper or Government investment is offered to all suppliers competing in the acquisition.

(iv) The contracting officer shall negotiate an exit strategy that is in the Government’s best interest.

(v) The vendor is required to include an exit strategy in accordance with clause 52.217-9006. If the vendor’s CAP doesn’t adequately address an exit strategy, the contracting officer will develop an exit strategy with the vendor during negotiations or discussion.

(vi) When warstopper or Government investment does not apply, the contracting officer, in conjunction with the industrial specialist, will consider the following exit strategies.

(A) Surge asset ramp-down before contract expiration date (e.g., ramp-down 6-12 months before contract expiration);

(B) Asset buy-back for high demand or backordered items based on historical stock position, or to have inventory on-hand until follow-on contract can be established;

(C) Asset buy-back guaranteed minimum applied in percent, dollar amount, or quantity based on historical demand patterns and/or items with long lead times;

(D) Shifting of assets to other contracts if applicable.

(vii) When warstopper investment applies, the contracting officer will consider the following exit strategies or other alternate strategy that is in the Government’s best interest:

(A) Transferring investment to the next contract;

(B) Placing investments into production to produce finished goods and offset price for Government furnished property, material, or equipment;

(C) Salvaging investment to be used for other Government projects; or

(D) Returning funds to the U.S. Treasury through the warstopper program manager at DLA HQ J74.

(viii) For Government investment application:

(A) The supplier may request Government investment in its proposal or during negotiation or discussion.

(B) The contracting officer consults the industrial specialist to determine if Government investment can be applied.

(C) The contracting officer will limit or conserve use of Government investment when obtaining S&S coverage. The contracting officer will only authorize or allow Government investment to overcome an S&S shortfall and/or to obtain coverage. Refer to 52.217-9006 for shortfall conditions.

(D) With the industrial specialist’s concurrence, the contracting officer approves the contractor’s request for Government investment only when it is in the Government’s best interest to do so.

(E) The contracting officer ensures an exit strategy is included when Government investment applies. (Refer to paragraph (b)(5)(xiii) of this section for exit strategy alternatives.).

(ix) For warstopper investment application:

(A) Warstopper application is determined and approved by the DLA HQ J7 warstopper program manager.

(B) When warstopper investment applies, the contracting officer ensures that the solicitation contains a statement to that effect. Refer to 52.217-9010 Limitation on Use of S&S Government Investment.

(C) The contracting officer negotiates and includes surge coverage with warstopper investment only when approved by the DLA HQ J7 warstopper program manager.

(D) When the DLA HQ J7 warstopper program manager approves use of warstopper investment, the contracting officer consults the industrial specialist to process the investment:

A. (1) The industrial specialist processes the request and advises the contracting officer of warstopper funding approval;

B.

C. (2) Upon receiving funding approval, the contracting officer:

(i) Includes the warstopper CLIN 9965 and not-to-exceed amount in the contract;

(ii) Incorporates an appropriate exit strategy.

D. (3) If warstopper or Government funding is approved before contract award, the contracting officer notifies all vendors competing in the acquisition of the approved investment amount by amendment of the solicitation and includes explicit written language describing use and limitation of Government investment (to be incorporated to the resulting contract).

E.

F. (4) If warstopper or Government funding approval occurred after contract award, the contracting officer notifies and advises the supplier of approval by issuing a bilateral contract modification with the approved dollar amount using CLIN 9965 and explicit written language describing use and limitation of Government investment, to which the contractor is required to agree as consideration for receipt of the funding.

(x) As a result of successful negotiation, the contracting officer will:

(A) Proceed with awarding surge coverage at a fair and reasonable price;

(B) Include appropriate surge CLINS, the monthly wartime rate (MWR) or D1-D6 prices, exit strategy, and warstopper investment, if applicable, in the contract;

(C) Document the price negotiation memorandum (PNM) with the surge negotiation /discussion results to include basis for determining surge prices fair and reasonable, delivery terms, ramp-up time if applicable, and exit strategy.

(xi) When negotiation is unsuccessful,

(A) After making every attempt to obtain surge coverage and the vendor refuses to support surge, and/or negotiation becomes extended, and/or surge prices are unreasonable, the buyer elevates the issue to the contracting officer for a waiver request decision and describes attempts made to obtain surge coverage;

(B) The contracting officer consults the industrial specialist for alternate solutions or recommends excluding surge requirement, in part or as whole, via a waiver request; and/or

(C) The industrial specialist recommends an alternate solution if any or concurs with the waiver request.

(xii) Surge waiver process.

(A) When surge coverage is unobtainable and/or negotiations or discussions are unsuccessful, or, when the contracting officer, in collaboration with the industrial specialist, determines that it is in the Government’s best interest to exclude surge in part or as a whole, the contracting officer shall submit a written waiver request to the industrial specialist for concurrence prior to excluding the surge item(s) and/or requirements from the solicitation. The contracting officer’s waiver request will include the following information:

G. (1) Description of attempts made to obtain surge coverage;

H.

I. (2) Discussion of whether the contract maximum in quantity or dollar value can sustain potential increase in demands in the event of future contingency or emergency;

J.

K. (3) Recommendation to exclude surge, in part or as a whole; and

L.

M. (4) Relevant information concerning surge coverage or item(s) being excluded from the LTC.

(B) The industrial specialist may recommend other alternatives, if any, or concurs with the waiver request in writing and forwards a copy to DLA HQ J74.

(C) The contracting officer shall only exclude surge-specific provisions, in part or as a whole, from the solicitation and contract upon receiving concurrence from industrial specialist and shall document the waiver concurrence in the contract file.

(D) Upon receiving the industrial specialist’s concurrence to remove surge-specific provisions in part or as whole, the contracting officer shall factor surge quantities into the contract maximum calculation, that is, ensures the contract maximum (quantity or dollar value) can cover potential surge in demands in the event of future contingencies to prevent untimely contract expiration, and obtains an accelerated delivery schedule that will satisfy both peacetime and wartime requirements.

(E) The industrial specialist will notify the strategic material sourcing group (SMSG) or integrated supplier team (IST) lead in writing of the surge provision exclusion for a determination of an alternate support strategy for the Services’ go-to-war items or notification that a potential unsupported item issue (UII) exists.

(F) The buyer excludes surge coverage or item(s) as a requirement after receiving concurrence from the industrial specialist and documents the price negotiation memorandum (PNM), also including the waiver in the contract file.

(G) Surge policy provides for waivers to surge clauses, however, the contracting officer will include a requirement in the solicitation and resulting contract for an informational eCAP to provide the industrial specialist an opportunity to determine the total production capacity of the mandatory source during wartime.

(xiii) Determination of an alternate surge support strategy.

(A) The industrial specialist coordinates with the strategic material sourcing group (SMSG) or industrial specialist team (IST) lead for alternate surge support strategy for the excluded surge coverage or item(s) with consideration for the following alternatives:

N. (1) Corporate exigency contracts (CECs);

O.

P. (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);

Q.

R. (3) Industrial base maintenance contracts (IBMCs);

S.

T. (4) Vendor managed inventory (VMI); and/or

U.

V. (5) Agreements common in some industries (for example, subsistence), to include a memorandum of understanding, memorandum of agreement or blanket purchase agreement.

(B) If using alternate support strategies listed above in paragraph (A), subpart 17.93 Surge and Sustainment does not apply. Terms, conditions, and provisions for these alternatives will be developed and established by the contracting officer and the industrial specialist based upon the specific contingency support needs of the customer(s).

(C) When the alternative methods to obtain S&S coverage also fail, the industrial specialist notifies DLA HQ J74 and the Services that an unsupported item issue (UII) exists. The industrial specialist relays the information to the SMSG/IST lead for future acquisition planning and strategy.

(D) The contracting officer documents the UII and unsuccessful attempts to obtain surge coverage in the contract file.

(6) Award phase.

(i) The contracting officer shall incorporate the approved CAP, exit strategy, and, if applicable, CLIN 9965 for the approved Government investment amount, and explicit written language in the contract regarding limited use of investment.

(ii) The contracting officer notifies the industrial specialist when the contract, with surge items, is awarded. (Refer to paragraph (c)(6) of this section for system procedures.)

(7) Post-award phase.

(i) The contracting officer will coordinate with the industrial specialist before making any changes to the surge coverage after contract award, shall modify the contract as appropriate, and shall document the contract file with any changes.

(ii) Exercising option periods.

(A) The contracting officer shall consult the industrial specialist for changes in industry capability. Refer to paragraph (c)(7)(v) of this section when exercising the contract’s option period with surge. (Also refer to 17.207.)

(B) The contracting officer notifies the industrial specialist before making any changes to the surge coverage i.e., add/delete items or increase/decrease) and then follows the procedures under paragraph (b)(7)(iii) of this section, when adding, deleting, increasing, or decreasing surge coverage.

(iii) Additions or deletions. Increasing or decreasing monthly wartime rate (MWR) and/or surge coverage. Refer to paragraph (c)(7) of this section for system procedures.

(A) If the contracting officer intends to decrease or increase the surge coverage, notify the industrial specialist before making any changes;

(B) The industrial specialist reviews and determines the impact to the customer, surge support, and warstopper investment (if applicable);

(C) The industrial specialist collaborates with the Services if necessary and advises the contracting officer in writing;

(D) The contracting officer proceeds with decreasing or increasing surge coverage after receiving the industrial specialist’s recommendation.

W. (i) Additions. Adding items (phased pricing).

(a) The contracting officer will conduct surge check when pricing additions to LTC items in accordance with the Add/Delete Clause, then request and obtain surge pricing for MWR or D1-D6 and an updated CAP from the vendor.

(b) The contracting officer evaluates the surge pricing and the industrial specialist reviews the CAP and advises the contracting officer. Refer to paragraphs (b)(3) and (b)(4) of this section for procedures on CAP and surge price evaluation.

(c) The contracting officer negotiates if necessary to obtain surge coverage for the added items. Refer to paragraph (b)(5) of this section for negotiation procedures. If increasing the monthly wartime rate (MWR) or D1-D6, the contracting officer will negotiate with the vendor if necessary to lower surge prices and update the CAP;

(d) The contracting officer incorporates surge coverage via a modification and documents the contract file. Follow system procedures under paragraph (c)(7) of this section when adding surge coverage or item(s).

X. (ii) Deletions. Deleting surge items such as obsolete items or item no longer needed, in accordance with the Add/Delete Clause.

(a) The contracting officer notifies the industrial specialist in writing before deleting surge coverage or item(s) from the LTC;

(b) The contracting officer follows the surge waiver process under paragraph (b)(5)(xii) of this section when excluding or deleting surge coverage or item(s) from the LTC;

(c) The industrial specialist assesses and determines impact to surge support and warstopper investment (if applicable), and advises the contracting officer;

(d) The contracting officer proceeds with deleting surge coverage or item(s) from the LTC via a modification after receiving concurrence from the industrial specialist. The modification will include disposition and instructions for warstopper or Government investment, if applicable);

(e) The contracting officer ensures the contract file is documented by including the waiver request, industrial specialist concurrence and a copy of the modification.

Y. (2) The contracting officer issues the modification reflecting the change and includes instruction for Warstopper investment adjustment (if applicable);

(D) The contracting officer ensures that the outline agreement is updated and the contract file documented when changes are made to surge coverage.

(8) Surge execution.

(i) The contracting officer shall invoke and execute a surge order when supporting project coded requisitions for the following events. (Refer to paragraph (c)(8) of this section for related system procedures.)

(A) Wartime or contingency operations;

(B) Reconstitution of contingency resources following wartime operations or a major exercise;

(C) Not mission capable-supply (NMCS), mission capability (MICAP), or unusual and compelling requirements;

(D) Senior leadership determines executing and invoking surge are appropriate to prepare the agency for anticipated increases in demand due to a national emergency via a memorandum or other written authorization;

(E) Recognizing a peacetime support issue where inventories and peacetime delivery rates alone cannot or will not support total demand. A peacetime support issue may exist prior to the establishment of a JCS project code. Under such circumstance, DLA HQ J7, in coordination with J3, provides the supply chain with authorization to execute and invoke surge to support a peacetime issue; or

(F) Testing, validating, or maintaining the operability of the S&S capability. Under these circumstances, DLA HQ J74 authorization is required prior to invoking and executing surge.

(ii) The contracting officer shall only exercise and execute surge with warstopper investment when one or more of the conditions below apply. The contracting officer shall consult the industrial specialist before executing surge when there is warstopper-funded property, equipment, or materials involved. Free issue of consumable items involving warstopper investments requires DLA HQ J74 concurrence.

(A) Deploying or deployed troops shall be in an actual or anticipated contingency (including a declared contingency with or without a project code);

(B) A buildup of troops is in process in preparation for a contingency;

(C) Call up of reserves for deployment is in process; or,

(D) Any other preparation events intended to place DoD resources in a contingency, or at a higher than normal operations tempo.

(iii) The contracting officer shall invoke and execute surge for peacetime support issue on a case-by-case basis and only when authorized by DLA HQ J7.

(iv) The contracting officer shall only invoke and execute surge when it is in the Government’s best interest (see (v)(C) below) and shall consider the following:

(A) Any premium costs associated with exercising S&S compared with other options such as expedited delivery, spot buys, diversion, redistribution orders, reclamation;

(B) Whether the supplier is contractually obligated to provide S&S coverage and consider surge ramp-up and/or recovery time after S&S activations;

(C) Availability of funds and priorities.

(v) Prior to executing surge, the contracting officer shall make a written determination that addresses the following:

(A) It is in the Government’s best interest to execute surge in lieu of other support that may be more cost effective, for example, expedited delivery, spot buys, diversion, or redistribution orders, and with consideration for delivery, customer readiness, and vendor performance record.

(B) The requirement is determined to meet one or more of the criteria in the preceding paragraphs (i) through (iii); and

(C) The buyer has validated surge coverage in the LTC ECF and verifies the monthly wartime rate (MWR), D1-D6, or the surge quantity option, and ramp-up time requirement (see paragraph (c)(8) in this section for system procedures).

(vi) The contracting officer notifies the vendor and industrial specialist immediately by emailing a copy of the order with subject title “surge order – read immediately”; the order will include the PIIN, order number, and other information deemed necessary to bring immediate attention to the order for processing.

(vii) The contracting officer will report surge execution to the industrial specialist within 30 days for tracking and reporting purposes. Refer to paragraph (c) (8) of this section for detailed system surge execution procedures.

(9) Supplier’s change in S&S capability.

(i) The contracting officer immediately notifies and consults the industrial specialist for assessment and recommended courses of action when the supplier(s) requests a change to surge capability or can no longer meet surge coverage obligation in the contract due to unexpected supply chain interruption, such as extreme market conditions, a natural disaster, or labor dispute.

(A) The industrial specialist reviews and assesses the impact to the customer and warstopper investment (if applicable), and advises the contracting officer.

(B) The contracting officer takes action based upon the industrial specialist’s recommendation, negotiates as necessary to keep the surge coverage if possible, documents the contract file, and updates the surge coverage in the outline agreement.

(C) If surge coverage includes warstopper or Government investments, the contracting officer shall make adjustments to the investment as necessary when changes are made to the CAP.

(D) If the supplier can no longer support surge coverage, for example, due to bankruptcy, and/or the contract is being terminated, the contracting officer shall exercise the exit strategy.

(E) With assistance from the industrial specialist, the contracting officer will recoup warstopper or Government investment, specifically, funds, raw material, or finished goods, to the maximum extent possible. The contracting officer will issue a modification with instructions on investment disposition, and document the surge coverage change and the results of exit strategy in the contract file.

(F) Refer to paragraph (b)(7)(iii) of this section if making changes to surge coverage, specifically, decreasing, increasing, and/or deleting.

(G) The industrial specialist works with the SMSG or IST lead to determine an alternate or follow-on surge support strategy.

(10) Contract expiration or termination.

(i) The contracting officer shall exercise the exit strategy specified in the contract prior to termination or expiration to recoup warstopper or Government investment or to ramp-down the supplier’s surge inventory, if applicable.

(A) If the contract includes warstopper investment,

Z. (1) The contracting officer consults the industrial specialist for assistance if needed when exercising the exit strategy involving warstopper investment;

AA.

BB. (2) The contracting officer ensures all investments (i.e., funds, raw materials, or finished good) are recouped and recovered to the maximum extent possible; and

CC.

DD. (3) The contracting officer exercises the S&S exit strategy as stated in the contract and recovers all Government investment. If Government investment cannot be recouped or recovered due to unforeseen circumstance such as bankruptcy, and the existing exit strategy cannot be applied, the contracting officer can exercise an alternate exit strategy that is in the best interest of the Government. The contracting officer also then consults the industrial specialist for assistance and elevates the issue to DLA HQ J74 if necessary for alternatives.

(B) If the contract does not include Government investment,

EE. (1) The contracting officer exercises the exit strategy in accordance with the contract and documents the result of the exit strategy in the contract file for future use as lessons learned.;

FF.

GG. (2) In collaboration with the industrial specialist, the contracting officer considers the Government’s stock position and the lead time for establishing a follow-on contract when exercising the exit strategy. Consideration is also given to backorder, stock-out, customer support gap, and the acquisition timeline when determining the disposition of surge coverage.

HH.

II. (3) If terminating the contract, the contracting officer notifies the industrial specialist immediately to determine an alternate surge support strategy.

(11) Program control measures. The effectiveness in obtaining surge coverage will be assessed, measured, and tracked by DLA HQ J74 in accordance with DLA Instruction 1214, Industrial Capability Program – Surge and Sustainment.

(c) System procedures for S&S throughout the acquisition process.

(1) Detailed system tasks to be performed by the contracting officer, buyer, offeror or contractor, industrial specialist, and/or supply planner, are provided in the following table. (The term buyer also refers to the acquisition specialist.)

(2) Systems and/or applications utilized for S&S procedures include:

(i) Surge and sustainment database (S&S DB) found within the industrial base management system (IBMS) at https://headquarters.dla.mil/APPS/IBMS.

(ii) Support Planning Integrated Data Enterprise Readiness System (SPIDERS) website at https://spiders.dla.mil/.

(iii) Readiness management application (RMA) available through DLA Troop Support Medical’s website at https://www.medical.dla.mil/Portal/.

Table 1. S&S Procedures from Pre-solicitation through Post Award – System and Related Tasks.

(1) Pre-solicitation. Refer to paragraphs (b)(1) and (2) of this section for administrative procedures. (i) See requirements under PGI 17.9303(b)(1) on conduct of market research and inclusion of surge contract line-items (CLINS). (ii) With assistance from the industrial specialist, the buyer conducts surge check using the industrial base management system (IBMS), readiness management application (RMA), or support planning integrated data enterprise readiness system (SPIDERS) as applicable and as described below. (A) Go to the S&S database at https://headquarters.dla.mil/APPS/IBMS. Refer to the download section in IBMS for surge check procedures and other guidance on using IBMS. (B) Enter the national stock number (NSN) or national item identification number (NIIN), and/or the LTC population in the IBMS. (C) IBMS will provide surge requirements expressed as a monthly wartime rate (MWR) to include estimated procurement lead time (PLT). (D) Export surge results from IBMS to Excel. (E) Save the Excel sheet and use the solicitation or request for proposal (RFP) number and project name to title surge requirements in IBMS. (F) Edit the Excel sheet to meet required CLIN format. Add columns for the 9900 series CLINS (9961, 9962, 9963, and 9964), unit of issue (UI), and for pricing MWR. Estimated procurement lead time (PLT) is provided to the buyer as information only and should not be included in the solicitation. Refer to IBMS for a CLIN sample and 4.7103-2(a)(90). (iii) For medical procurements, buyers will consult the DLA Troop Support medical contingency contracting office to validate surge requirements on LTC item candidates and surge coverage recommendation. DLA Troop Support medical uses the readiness management application (RMA) as the industrial base (IB) tool to identify S&S requirements. (iv) For subsistence and clothing and textiles (C&T) procurements, buyers will consult the industrial specialist to validate surge requirements on LTC item candidates and surge coverage recommendation. DLA Troop Support subsistence and C&T use SPIDERS or IBMS to identify S&S requirements. (A) For subsistence procurements, buyers include the surge quantity option in percent or exact number to identify surge requirements. The surge quantity option is calculated using historical demand data or other appropriate data. (B) Buyers identify the surge quantity option using a regular CLIN and include the 9900 series CLINS (9961, 9962, 9963, and 9964). Refer to IBMS for the surge quantity option CLIN sample and 4.7103-1(a)(90). (C) For C&T procurements, buyers include the D1-D6 schedule to identify surge requirements. Surge requirements are obtained from SPIDERS or IBMS. (D) Buyers identify the D1-D6 schedule using regular CLINS and include the 9900 series CLINS (9961, 9962, 9963, and 9964). Refer to IBMS for a D1-D6 CLIN sample and 4.7103-1(a)(90).
(2) Solicitation. (i) Refer to paragraph (b)(2) of this section for administrative procedures. (ii) When surge requirements apply, the contracting officer includes the following in the solicitation: (A) S&S clauses in accordance with 17.9304; and (B) S&S CLINS 9960, 9961, 9962, and 9963, in accordance with 4.7103-1(a)(90); and (C) Include the monthly wartime rate (MWR) or D1-D6 using regular CLINS (i.e., 0001, 0002, etc.) to identify surge requirements. Refer to IBMS for a CLIN structure sample. (iii) For prime vendor arrangements for commercial, market ready items, non-NSN, or part numbered items, the contracting officer includes the following in the solicitation: (A) S&S alternate clauses in accordance with 17.9304; (B) S&S CLINS 9960, 9961, 9962, and 9963. Refer to IBMS for a CLIN structure sample. (C) Include the surge quantity option expressed as a percent increase of the base delivery rate or an exact quantity above the base delivery rate using a regular CLIN. Refer to IBMS, Exhibit 2C, for a CLIN structure example. (iv) The buyer notifies the industrial specialist immediately via email when the solicitation is issued and/or available in the electronic contract file (ECF). (v) The industrial specialist will obtain a copy of the solicitation from the ECF to update the appropriate industrial base (IB) tool.
(3) Solicitation amendment – changes. (i) Refer to paragraph (b) (2) of this section for administrative procedures and contracting officer considerations prior to issuing an amendment. (ii) When the amendment is posted in the ECF, the buyer notifies the industrial specialist, who will obtain a copy and update the appropriate IB tool.
(4) Solicitation closing. (i) Refer to paragraph (b)(2) of this section for administrative procedures. (ii) The supplier is required to submit the capability assessment plan (CAP) using the applicable IB tool, WICAP, eCAP or SPIDERS, as specified in clause 52.217-9007 or the alternate clause.
(5) Negotiation or discussion(s). (i) Refer to paragraph (b)(5) of this section for administrative procedures. (ii) The industrial specialist takes the appropriate action to notify the Service(s) and document any UII in the appropriate IB tool (i.e., IBMS, SPIDERS, or RMA).
(6) Award. (i) Refer to paragraph (b)(6) of this section for administrative procedures. (ii) The industrial specialist obtains a copy of the awarded contract from ECF to update the appropriate IB tool, either IBMS or SPIDERS. (iii) The contracting officer ensures that the appropriate surge CLINS (i.e., MWR, D1-D6, surge quantity option, and/or the 9900 series) are loaded in the SAP outline agreement (OA) to ensure proper sourcing of surge line items or orders in the enterprise business system (EBS). Refer to the S&S procurement job aid in enterprise business system (EBS) online help for instructions when loading surge information.
(7) Post award. (i) Refer to paragraph (b)(7) of this section for administrative procedures. (ii) Removing items in accordance with the add/delete clause. (A) The contracting officer ensures that the outline agreement (OA) is updated in SAP by removing the surge coverage or item(s) from the LTC; (B) The industrial specialist obtains a copy of the modification from ECF after notification by the buyer, updates the appropriate IB tool, and advises the Services. (iii) Adding items (phased pricing) in accordance with the add/delete clause. (A) The contracting officer conducts surge check using the appropriate IB tool or by consulting the industrial specialist. Refer to paragraph (c)(1)(ii) of this section for the surge check procedure. (B) The contracting officer notifies the industrial specialist when the modification with the awarded surge items is available in the ECF. (C) The industrial specialist obtains a copy of the modification from the ECF and updates the appropriate IB tool. (iv) Decreasing or increasing the monthly wartime rate (MWR) and/or surge coverage. (A) The contracting officer documents the contract file by incorporating related correspondence in the ECF and ensures that surge coverage is updated in the SAP outline agreement when changes are made. (B) When the modification is available in ECF, the buyer notifies the industrial specialist, who updates the appropriate IB tool. (v) Exercising option periods. When the option modification is available in the ECF, the contracting officer notifies the industrial specialist who will update the appropriate IB tool.
(8) S&S execution. (i) Refer to paragraph (b)(8) of this section for administrative procedures. (ii) Prior to executing surge, the buyer validates surge coverage in the LTC ECF and verifies the monthly wartime rate (MWR), D1-D6, or the surge quantity option, and ramp-up time requirement; (iii) Surge trigger or input to invoke or execute may come from the following sources: (A) Internal input. (1) Manual – The contracting officer, the buyer, supply planner, customer account specialist, industrial specialist, seniors leaders, DLA HQ J74; (2) Automated – Industrial base management system (IBMS) or SAP. Refer also to the job aid in EBS on-line help. (B) External input – customers or services. (iv) Executing surge for DLA direct items: (A) The supply planner performs the following actions. (1) Validates the backorder, due-in, stock-out situation, and criteria under paragraph (b)(8) of this section prior to generating a surge purchase request (PR) for manual sourcing. (2) Identifies the PR as a “surge PR” and notifies the contracting officer of the surge PR for immediate processing. Refer to the job aid “creating a surge purchase requisition” in EBS online help for instructions. (B) The contracting officer ensures the following actions are performed. (1) Retrieves the surge PR sent by the supply planner and validates the surge PR against the email sent by the supply planner. (2) Sources the surge PR against the appropriate surge CLIN(s) in the outline agreement and includes a remark stating “This is a surge order”. (3) The contracting officer notifies the contractor and the industrial specialist immediately by emailing a copy of the order with subject title “surge order – read immediately” and also including the procurement instrument identification number (PIIN), order number, and other information necessary to bring immediate attention to the order for processing. (C) The industrial specialist tracks and reports surge execution. (v) Invoking or executing surge for customer direct items. The contracting officer coordinates surge execution with the customer account specialist and industrial specialist. (A) Customer account specialist. (1) Uses surge CLIN(S) to source customer direct requisitions that meet the criteria under paragraph (b)(8) of this section. (2) Project coded requisition can be sourced automatically in SAP by loading the appropriate surge CLIN(S) in the outline agreement and inclusions and/or exclusions. (3) The customer account specialist consults the contracting officer to validate surge coverage in LTC and to load the surge CLINS in the SAP outline agreement (if not already loaded). (B) The contracting officer will ensure surge CLIN(s) are entered into the SAP outline agreement.
(9) Supplier change in S&S capability. (i) Refer to paragraph (b)(9) of this section for administrative procedures. (ii) The contracting officer instructs the supplier to update the CAP using the appropriate IB tool. (iii) When the modification becomes available in the ECF, the contracting officer notifies the industrial specialist who retrieves a copy and updates the appropriate IB tool.

PGI SUBPART 17.95 – TAILORED LOGISTICS SUPPORT CONTRACTING

PGI 17.9502 Tailored logistics support contracting program of instruction.

The following courses are suggested as part of a core curriculum. Supply chains should tailor the suggested curriculum with training pertinent to the acquisition at hand, such as units of instruction reflective of the commodities or industries involved, standard operating procedures to be followed within a program, and specific examples of fraud schemes encountered within the supply chain.

Core curriculum suggestions: - Price reasonableness and negotiation skills practicum - Commercial item determination –on-line course (CLC 020) - Commercial item pricing (CLC 131) - Procurement fraud indicators (CLM 049) - Contract pricing refresher - Pricing catalogs for prime vendor programs - Contract administration (including closeout, CORs and COTRs) - Domestic content update and refresher (see also the DAU Course “Berry Amendment” (CLC 125) - Wide area work flow - CQMPs and the acquisition review board process - Contract documentation requirements

PGI 17.9503(e) Contract management plan.

Examples of contract management plans can be found on the DLA Troop Support procurement process support, compliance division website.

PGI 17.9504 Pricing.

(a) A prime vendor (PV) contract must be able to comply fully with one of the following established PV pricing models:

Pricing Model | Initial Price Reasonableness Determination | Post-Award Price Reasonableness Determination | Audits
Fixed price utilizing distribution and pricing agreement (DAPA) and Federal Supply Schedule (FSS) pricing* *e.g. medical/surgical and pharmaceutical Variation: Medical/surgical items not covered by DAPA e.g. ACPOP | Competitively awarded using best value. All prices are determined fair and reasonable by contracting officer before time of award. Contracts are awarded, but items are unpriced until becoming a part of the 1,000 item Core List. | The contracting officer makes 100% fair and reasonable determinations for new items and price changes. The contracting officer identifies the historical items constituting 75% of the total dollar value, determines them fair and reasonable, and creates a 1,000 item Core List. Items in the 1,000 Core List change monthly based on usage frequency from prior months. All items in the 1,000 item Core List must be determined fair and reasonable before being ordered. For items not in the 1,000 Core List, with an extended value less than “ the micropurchase threshold “, a representative statistical sampling of lines sufficient to provide a 90% confidence level shall be reviewed for fair and reasonable pricing on a post-award basis no later than 60 days after award. | Monthly pricing reviews, quarterly contract audits, annually audit Monthly pricing reviews, quarterly contract audits, annually audit
Fixed price utilizing market basket* * e.g. garrison feeding | Competitively awarded using best value. Market basket items must represent at least 75% of the anticipated dollar value of the planned acquisition. The prices of all market basket items are determined fair and reasonable by contracting officer before time of award. NAPA and Central Contract pricing may apply. | The contracting officer makes 100% fair and reasonable determinations for new items and price changes. | Monthly pricing reviews, quarterly contract audits, annually audit

(b) A modified PV contract or other tailored logistics support contract must be able to comply fully with one of the following pricing models:

Pricing Model | Initial Price Reasonableness Determination | Post-Award Price Reasonableness Determination | Audits
Fixed price utilizing market basket* * e.g. MRO supplies Variation: fixed price utilizing market basket, >“ the micropurchase threshold “ e.g. Metals | Competitively awarded using best value. Market basket items must represent at least 75% of the anticipated dollar value of the planned acquisition. The prices of all market basket items are determined fair and reasonable by contracting officer before time of award. Competitively awarded using best value. Market basket items must represent at least 75% of the anticipated dollar value of the planned acquisition. The extended value of all market basket items over “ the micropurchase threshold “ are determined fair and reasonable by contracting officer before time of award. | If the tailored logistics support purchasing review clause is applicable, and the contractor complies with the clause, the contracting officer makes fair and reasonable determinations as follows for new items, price changes, and those items not included in the market basket: - For line items with an extended value of less than “ $2,500 “, a representative statistical sampling of lines sufficient to provide a 90% confidence level shall be reviewed on post-award basis no later than 60 days after award. - For line items with an extended value of “ $2,500 “ to $24,999, 100% of the items with a percentage of determinations performed pre-order and the remainder post-order. The minimum percentage for pre-order is 30%, with the remainder done no later than 60 days after award. - For line items with an extended value greater than $25,000, 100% of the items shall be determined fair and reasonable prior to any order being processed. If the tailored logistics support purchasing review clause is not applicable, the contracting officer makes 100% fair and reasonable determinations for new items and price changes. The contracting officer reviews 100% of incidental services and negotiates proper scope, pricing, and rates of labor categories prior to commencement of services. If the Tailored Logistics Support Purchasing Review clause is applicable, and the contractor complies with the clause, the contracting officer makes fair and reasonable determinations as follows for new items, price changes, and those items not included in the market basket: -For line items with an extended value of less than “ the micropurchase threshold “, a representative statistical sampling of lines sufficient to provide a 90% confidence level shall be reviewed on post-award basis no later than 60 days after award. -For line items with an extended value of “ the micropurchase threshold “ or greater, the contracting officer makes 100% fair and reasonable determinations of items. If the tailored logistics support purchasing review clause is not applicable, the contracting officer makes 100% fair and reasonable determinations for new items and price changes. The contracting officer reviews 100% of incidental services and negotiates proper scope, pricing, and rates of labor categories prior to commencement of services. | Monthly pricing reviews, quarterly contract audits, annually audit Monthly pricing reviews, quarterly contract audits, annually audit
Fixed price utilizing market basket and competition of each order* * e.g. special ops, MRO CENTCOM, Fire Fighting and Emergency Services, Lumber | Competitively awarded using best value. Market basket items must represent at least 75% of the anticipated dollar value of the planned acquisition. The prices of all market basket items are determined fair and reasonable by contracting officer before time of award. | The contracting officer competes each order among prime vendors. [For special operations, fair opportunity is provided to all contractors for all orders “ the micropurchase threshold “ or greater.] The contracting officer makes 100% fair and reasonable determinations for new items, price changes, and those items not included in the market basket. The contracting officer reviews 100% of incidental services and negotiates proper scope, pricing, and rates of labor categories prior to commencement of services. | Monthly pricing reviews, quarterly contract audits, annually audit
Fixed price utilizing pre-priced core list e.g. integrated prime vendor (IPV) | Competitively awarded core list using best value. Core list is a percentage of the total item requirements. Initial Core List items are determined fair and reasonable by contracting officer before time of award. Only items on the Core List may then be ordered. Unpriced items representing the balance of total requirements are placed on a Schedule of Unpriced items, which are not available until priced. | The contracting officer makes 100% fair and reasonable determinations for price changes or adding an item to the core list from the schedule of unpriced items. Over time, eventually all requirements identified are expected to be included in the Core List. Only items on the Core List may be ordered. The contracting officer also reviews 100% of incidental services and negotiates proper scope, pricing, and rates of labor categories prior to commencement of services. | Monthly pricing reviews, quarterly contract audits, annually audit
Tailored logistics support service contract with competition of each order* * e.g. MRO Services | Competitively awarded using best value. Vendors evaluated on price using sample tasks. | The contracting officer competes each order among vendors. | Monthly pricing reviews, quarterly contract audits, annually audit

PGI 17.9505(a) Pre-award tools.

Pre-award tools include, but are not limited to, those found at PV tools.

PGI 17.9507(c)(ii) Price review tools.

Price review tools include, but are not limited to, those summarized below.

Tailored logistics support contracting: DLA Troop Support may provide a sample of a contract management plan from their subsistence CONUS PV program upon request. Pre-award tools include, but are not limited to the catalog generator, the pre-award competitive pricing tool, the catalog access data base, and the contracting officer portal. Description of tools: 1. Catalog generator. This tool is used to audit prices and sales. It pulls the entire history of transactions and produces a catalog of all items purchased through the program including the most recently paid price. It is utilized for checking that the scope of the contract is not exceeded and for updating GSA schedule prices. 2. Pre-award competitive pricing tool. This tool is used to ensure only appropriate items are requested from vendors and that all items are competitively priced. The tool forwards the request for offers to multiple vendors, receives the offers, flags low prices and shortest lead times, allows the contracting officer to email successful offerors their award information and maintains a history of all offers. 3. Catalog access data base. This tool is used to review weekly catalog updates for both price and non-price data. Cross checks for inflations of price in any time period. 4. Contracting officer portal. See J71 systems. Price review tools include but are not limited: 1. The quantity variance report. 2. The price exception report. 3. The price audit assistant 4. The vendor markup analysis report. 5. The item price history report. 6. The daily/monthly outlier report. 7. The pricing management application. 8. Contracting officer pricing tool Description of tools: 1. Quantity variance report. This tool is used to police quantity overage incidents per vendor for each contract. While vendors can increase or decrease order quantities in order to ship in a bundle or truckload, the practice can lead to abuses. The report classifies all transactions into one of 3 categories: A. Ship Quantity < 95% Order Quantity B. Ship Quantity >= 95% Order Quantity and Ship Quantity <= 105% Order Quantity C. Ship Quantity > 105% Order Quantity 2. Price exception report. This tool is used to identify transactions at the contract level where the data is incorrect or the vendor has charged more than a fair and reasonable price. It ranks the common items by their change in price over two distinct time periods (in descending order). It also shows the change in price for a particular item from order to order. 3. Price audit assistant. This tool is used to perform monthly price reviews of items purchased recently by customers. The reports show the cost savings/loss at the item level and month level, and help identify instances of paying more than fair and reasonable prices. 4. Vendor markup analysis report. This tool measures the rate of markup from unburdened price to burdened price. Unburdened price reflects the vendor’s costs to acquire and manage the items while under its control. Burdened price adds to the unburdened price the profit/overhead and distribution fees of the vendor and the DLA surcharge. Since vendors are required to pass along savings to the customer, the tool is used to ensure customers not pay excessive markup on items. As order price increases, the percent of markup should decrease. 5. Item price history report. This tool is used to review historical item pricing. It identifies items purchased more than once within the specified date range and shows the transactions for each item. A weighted average price is calculated which is used to compare to each transaction’s price. 6. Daily/monthly outlier reports. These tools review awarded NSNs and compare unit prices to previously awarded unit prices. A 3% inflation rate is applied to unit prices in the previous year. A NSN is flagged as an outlier if the current unit price exceeds a previous unit price by 5% or more. 7. Pricing management application. This tool is used to evaluate prices charged against burdened catalog prices for those items. Burdened catalog prices include the DLA cost recovery rate as well as the vendor’s distribution fee added to the catalog price. 8. Contracting officer pricing tool. The tool is automated. See the local price analyst and/or J71 systems.

PGI 17.9507(c)(v) Management tools.

Management tools for oversight include, but are not limited to the item catalog data base, pricing reviews, pricing audits, refunds, compliance audits, and fill rates.

PGI SUBPART 17.96 – NON-ECONOMY ACT INTERAGENCY ACQUISITIONS

PGI 17.9602 Ordering procedures.

(a) Non-Economy Act assisted acquisition orders for work and services outside the Department of Defense should ordinarily be executed by issuance to the non-DOD agency of a DD Form 448, “Military Interdepartmental Purchase Request (MIPR).” In those instances where an alternative document such as a DD 1348-1 or -6 is used, it must provide information consistent with the MIPR, to include the purchase request number and the Activity Address Code (DoDAAC). A non-Economy Act order placed by DLA for its own use or in support of a military customer shall comply with the documentation standards in Volume 11A, Chapter 1 of the DOD Financial Management Regulations (FMR).

(b) Non-Economy Act orders using either assisted or direct acquisition methods must be supported with the following, which are the responsibility of the requesting official in a DLA or other Defense activity, with assistance from the DLA contracting activity:

(1) Conduct market research;

(2) Perform acquisition planning;

(3) Prepare the independent Government cost estimate (IGCE);

(4) Prepare the statement of work (SOW);

(5) Establish the basis for award, including evaluation criteria;

(6) Ensure the receipt and compliance of MIPR (or other execution document) acceptance by the supporting non-DOD activity;

(7) Assist in the technical evaluation;

(8) Establish the quality assurance plan, which addresses the following:

(A) COR/COTR responsibilities for receiving reports/invoices and inspection and acceptance duties;

(B) Contract data requirements list (CDRL) procedures, required reports, deliverables, and contract performance reports;

(C) Property/equipment management;

(D) Contract oversight. (The requesting official will not only include this in the QAP, but will also retain some share of responsibility for oversight of contract performance. See DLA PGI 17.9605(a), below.)

(9) Perform funds management/record-keeping duties, to include:

(A) Draw-down of funds;

(B) Contract reconciliation;

(C) Initiation of action to deobligate unused funds;

(D) Oversight of billing/reporting.

(10) Update all POCs as necessary throughout the acquisition.

(c) Assisted- or direct-acquisition non-Economy Act orders from a customer to DLA must include the following, as must assisted acquisition orders from DLA to a non-DOD agency:

(1) A firm, clear, specific, and complete description of the goods or services ordered. The use of generic descriptions is not acceptable. If the description is contained in more than one document, such as an item listing on one page and a price list on another, the documents should refer to one another, and the obligation document (e.g., MIPR or manual requisition) should be signed by a responsible official from the requesting activity.

(2) Specific delivery or performance requirements.

(3) A proper fund citation.

(4) Payment terms and conditions (e.g., direct cite or reimbursement; provisions of advanced payments).

(5) Department of Defense Activity Address Code (DoDAAC).

(6) In the case of assisted acquisition orders, the DLA order to the non-DOD agency must also include specific non-Economy Act statutory authority, such as the Acquisition Services Fund, through which purchases are authorized to be made from the General Services Administration (GSA) (see 41 U.S.C. 251 et seq. and 40 U.S.C. 501); or Franchise Fund authority (first established by P.L. 103-356, Title IV, section 403; see 31 U.S.C. 501 note), by which other Federal agencies may enlist the support of the Departments of the Treasury or Interior, among others.

(d) For non-Economy Act orders valued greater than the simplified acquisition threshold, the requesting official must provide, for both assisted and direct acquisitions:

(1) Market research and acquisition planning. The DLA contracting officer or other contracting official must either receive the market research and acquisition planning from the requiring activity, or accomplish them him- or herself, and prepare or provide documentation thereof for inclusion in the contract file.

(2) A statement of work that is specific, definite, and certain in terms of both the work encompassed by the order and the terms of the order itself.

(3) Terms, conditions, and requirements to comply with applicable DOD-unique statutes, regulations, directives and other requirements.

PGI 17.9605 Follow-up procedures for non-Economy Act transactions.

(a) Oversight. The DLA contracting officer shall ensure, in both assisted and direct acquisitions that the requesting official has established a satisfactory quality surveillance plan for non-Economy Act orders in excess of $100,000 to facilitate the oversight of the goods provided or services performed by the performing agency. If DLA is making a direct or assisted acquisition on behalf of a customer activity, the DLA contracting officer must ensure that the requestor produces this plan. The plan should include:

(1) Contract administration oversight in accordance with the surveillance plan;

(2) A process for receipt and review of receiving reports and invoices from the performing agency/contractor;

(3) Reconciliation of receiving reports and invoices; and

(4) Requirements for documenting acceptance of the goods received or services performed.

(b) Fund status monitoring. The requesting official (i.e. the customer or program manager, with the assistance of the DLA contracting officer or post-award contracting official, as appropriate) must monitor fund status to:

(1) Monitor balances with the performing agency;

(2) Conduct tri-annual reviews of non-Economy Act orders in accordance with the Financial Management Regulation, Volume 3, Chapter 8, Section 0804, “Tri-Annual Review of Commitments and Obligations,” in conjunction with the Financial Management/J8 organization;

(3) Confirm open balances with the performing agency;

(4) Coordinate the return of funds from the non-DOD performing agency in accordance with 17.9604(e); and

(5) Coordinate with the accounting office to ensure timely deobligation of funds.

(c) Payment. In assisted acquisitions, payment shall be made promptly upon the written request or billing of the performing agency/contractor. In assisted acquisitions and under specific conditions, payment to the performing agency may be made in advance or upon delivery of the supplies or services ordered, and shall be for any part of the estimated or actual cost, as determined by the performing agency.

(1) The requesting official and supporting DLA contracting or program office must be cognizant of the performing agency’s payment method. Should the performing agency elect to receive advances or conduct advance billing prior to providing goods or services, the requesting official and/or DLA contracting or program office, as appropriate, must comply with the requirements pertaining to advances of public money outlined in Volume 4, Chapter 5 of the “DOD Financial Management Regulation,” which implements the general prohibition against advance payments contained in 31 U.S.C. 3324 and 10 U.S.C. 2307. When the conditions under which the advance was made are satisfied, the specific appropriation or law authorizing the advance must be cited on the order, and any unused amounts of the advance shall be collected from the performing agency immediately and returned to the fund from which originally made.

(2) Payments made for services rendered or supplies furnished may be credited to the appropriation or fund of the agency performing the reimbursable work.

(d) Order close-out. All non-Economy Act orders shall be reviewed by the requesting official to determine if they are complete. Completed orders shall be fiscally closed out. The requesting official (or DLA contracting or program office, as appropriate) shall reconcile funds and coordinate the return of excess or expired funds held by the performing agency. This review shall include:

(1) Determination and identification, if applicable, of any outstanding invoices;

(2) Determination and identification of existence of excess or expired funds;

(3) Coordination of return of funds from the non-DOD performing agency, in accordance with 17.9604(e); and

(4) Coordination with the accounting office to ensure the deobligation of funds.