Use of DFARS 217.202(2) and 234.005-1 on other than a Major System Acquisition

[ebkac]

I’m in a DoD office and interested in your opinions on the following:

DFARS 217.202(2) states, “See 234.005-1 for limitations on the use of contract options for the provision of advanced component development, prototype, or initial production of technology developed under the contract or the delivery of initial or additional items.”

234.005-1 contains the limitations.

Does the fact that 217.202(2) references 234.005-1 for limitations, and 234.005-1 is under Major Systems Acquisition, confine use of an option/line item for advanced component development, prototype, or initial production of technology developed under the contract to Major Systems Acquisition?

OR

Might one use 234.005-1 to include an option or line item for advanced component development on an R&D study/design contract, that was competitively awarded off a BAA, in order to allow the contractor to proceed with component development of the item designed on that R&D contract, without further competition, even when not a Major Systems Acquisition?   

[ji20874]

17 minutes ago, ebkac said:

Does the fact that 217.202(2) references 234.005-1 for limitations, and 234.005-1 is under Major Systems Acquisition, confine use of an option/line item for advanced component development, prototype, or initial production of technology developed under the contract to Major Systems Acquisition?

No.

18 minutes ago, ebkac said:

Might one use 234.005-1 to include an option or line item for advanced component development on an R&D study/design contract, that was competitively awarded off a BAA, in order to allow the contractor to proceed with component development of the item designed on that R&D contract, without further competition, even when not a Major Systems Acquisition?   

No.  If one were to do what you are describing, he or she would not use 234.005-1 as the authority as that authority only pertains to procurements under Part 34.

[Jamaal Valentine]

@ebkac, you aren’t acquiring major systems under FAR part 34 so the limitations at DFARS 234.005-1 wouldn’t generally apply. FAR 1.105-2 states that “[t]he FAR is divided into … parts (each of which covers a separate aspect of acquisition) ...”

However, some may argue that DFARS 217.202(2) doesn’t limit applicability to only major systems. I think this is what you are concerned with. Am I correct?

It seems you are interested in modeling something after what you read in DFARS 234.005-1. I don’t think you’d need to cite DFARS 234.005-1 as an authority. Although you might use it as an example to help sell your idea. See also FAR 1.102(d).

[ebkac]

“However, some may argue that DFARS 217.202(2) doesn’t limit applicability to only major systems. I think this is what you are concerned with. Am I correct?”

 

Precisely my concern Jamaal! 

Thank you for translating

 DFARS 217.202(2) appears, to me, to contemplate use of contract options for the provision of advanced component development, prototype, or initial production of technology developed under the contract or the delivery of initial or additional items.

217.202(2) also invokes the limitations at 234.005-1.

I suspect that 217.202(2) references the limitations at 234.005-1 not because the intent was to confine use of such an option to Major Systems Acquisition, but because the limitations were already listed at 234.005-1.  So,  someone decided it would be easier to reference the limitations at 234.005-1 instead of repeating them at 217.202(2). Admittedly, speculation.

There is an argument being made within my office that the fact that 217.202(2) references the limitations at 234.005-1, it must mean one of the inherent limitations on the option described at 217.202(2) is that it can only be used for Major Systems Acquisition, because the limitations of 234.005-1 appear under Major Systems Acquisition.

In short, I'm trying to argue that 217.202(2) would "allow" such an option, and 234.005-1 describes the limitations placed on the option.  

[Vern Edwards]

@ebkacDid you notice that DFARS 234.005-1 cites 10 USC 2302e? That statute is now at 10 USC 4004. Go read it, then come back and ask your questions.

[ebkac]

THANK YOU MR. EDWARDS! 

For anyone interested. 

10 USC 4004: Contract authority for development and demonstration of initial or additional prototype units

Text contains those laws in effect on April 5, 2022

From Title 10-ARMED FORCES

Subtitle A-General Military Law

PART V-ACQUISITION

Subpart E-Research and Engineering

CHAPTER 301-RESEARCH AND ENGINEERING GENERALLY

SUBCHAPTER I-GENERAL

§4004. Contract authority for development and demonstration of initial or additional prototype units

(a) Authority.-A contract initially awarded from the competitive selection of a proposal resulting from a general solicitation referred to in section 3012(2) of this title may contain a contract line item or contract option for-

(1) the development and demonstration or initial production of technology developed under the contract; or

(2) the delivery of initial or additional items if the item or a prototype thereof is created as the result of work performed under the contract.

 

(b) Limitations.-

(1) Minimal amount.-A contract line item or contract option described in subsection (a)(2) shall require the delivery of the minimal amount of initial or additional items to allow for the timely competitive solicitation and award of a follow-on development or production contract for those items.

(2) Term.-A contract line item or contract option described in subsection (a) shall be for a term of not more than 2 years.

(3) Dollar value of work.-The dollar value of the work to be performed pursuant to a contract line item or contract option described in subsection (a) may not exceed $100,000,000, in fiscal year 2017 constant dollars.

(4) Applicability.-The authority provided in subsection (a) applies only to the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force.

 

(c) Procedures.-The Secretary of Defense shall establish procedures to collect and analyze information on the use and benefits of the authority under this section and related impacts on performance, affordability, and capability delivery.

[ebkac]

excellent timing.

Federal Register :: Defense Federal Acquisition Regulation Supplement: Contract Authority for Development and Demonstration of Prototypes (DFARS Case 2021-D025)

PART 217—SPECIAL CONTRACTING METHODS

2. Amend section 217.202 by revising paragraph (2) to read as follows:

217.202

Use of options.

(2) For a contract that is initially awarded from the competitive selection of a proposal resulting from a broad agency announcement, see 234.005-1 for the use of contract options for the development and demonstration or initial production of technology developed under the contract or the delivery of initial or additional items.

PART 234—MAJOR SYSTEM ACQUISITION

3. Amend section 234.005-1 by revising the introductory text and paragraph (1) to read as follows:

234.005-1

Competition.

A contract that is initially awarded from the competitive selection of a proposal resulting from a broad agency announcement (see 235.016) may contain a contract line item or contract option using funds not limited to those identified in 235.016 for the development and demonstration or initial production of technology developed under the contract, or the delivery of initial or additional items if the item or a prototype thereof is created as the result of work performed under the contract, only when it adheres to the following limitations:

(1) The contract line item or contract option shall be limited to the delivery of the minimal amount of initial or additional items or prototypes that will allow for timely competitive solicitation and award of a follow-on development or production contract for those items.

* * * * *

PART 235—RESEARCH AND DEVELOPMENT CONTRACTING

4. Amend section 235.006-71 by revising paragraph (b) to read as follows:

235.006-71

Competition.

* * * * *

(b) For a contract that is initially awarded from the competitive selection of a proposal resulting from a broad agency announcement, see 234.005-1 for the use of contract line items or contract options for the development and demonstration or initial production of technology developed under the contract or the delivery of initial or additional items.