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  • Question

    Do you have any information you can share on continued contracts (other than what's already in the DFARS), or know if any historical examples of a program that used a continued contract with success.


    Answer

    1. The DFARS and DFARS PGI references quoted below in pertinent part below are applicable to this response.

    DFARS 204.7001 – Policy
      (c)(1) If continued performance under a contract number is not possible or is not in the Government’s best interest solely for administrative reasons (e.g., … for lengthy major systems contracts with multiple options), the contracting officer may assign an additional PII number by issuing a separate continued contract to permit continued contract performance.
      (c)(3) When issuing a continued contract, the contracting officer shall—(ii) Follow the procedures at PGI 204.7001(c).

    PGI 204.7001 -- Policy
      (c)(i) Continued contracts are issued solely for administrative reasons and do not constitute a new procurement. When issuing a continued contract, the contracting officer shall— (C) Find a clear breaking point (for example, between issuance of orders, exercise of options, or establishment of a new line of accounting) to issue the continued contract

    2. The following references are also applicable to this response.

    A. Federal Register / Vol. 71, No. 92 / Friday, May 12, 2006 / Rules and Regulations
    Defense Federal Acquisition Regulation Supplement; Authorization for Continued Contracts [DFARS Case 2003–D052]
    http://www.gpo.gov/fdsys/pkg/FR-2006-05-12/pdf/06-4465.pdf

    B. Defense Acquisition Guidebook (DAG), Chapter 2 - Program Strategies
    Section 2.2. Program Strategy Document Requirements
    https://acc.dau.mil/CommunityBrowser.aspx?id=510066#2.6

    Section 2.7. Acquisition Strategy versus Acquisition Plan
    https://acc.dau.mil/CommunityBrowser.aspx?id=510067

    C. AR 70-1, Army Acquisition Policy (22 July 2011)
    Chapter 4, Acquisition Strategy
    4–1. General considerations for the acquisition strategy

    3. In direct response to this inquiry, except as noted in paragraph 4 below, our research did not yield any additional regulatory or DoD policy guidance specifically regarding the use of continued contracts. Furthermore, our research of readily available DAU library resources did not yield any historical examples of programs that used continued contracts, and so more extensive research would be needed that is outside the scope of the AAP Program (i.e., conducting formal surveys of Services and other DoD agency acquisition officials regarding each agency's actual use of continued contracts).

    4. When new rules are implemented in the DFARS, they are published in The Federal Register (FR). In addition to specifying the actual changes to the DFARS, the FR notice also provides a “Background” statement not included in the DFARS that generally describes DoD’s intent for issuing the rule. As indicated in reference 2A, the final rule pertaining to the use of continued contracts was published in the FR on May 12, 2006. The “Background” section of this FR notice states that this rule resulted from the DFARS Transformation initiative in order to permit contracting activities to issue a separate continued contract, when continued performance under the existing contract number is not practical for administrative reasons. This section also states that: “Use of this procedure is expected to be limited1, but will help to simplify administration, payment, and closeout of lengthy, complex contracts1[ 1emphasis added]. Furthermore, Section B of this FR notice includes a certification required by the Regulatory Flexibility Act that “this final rule will not have a significant economic impact on a substantial number of small entities because the rule addresses an administrative procedure that is performed by the Government.”

    5. Paragraph 4-1c of reference 2C states the following in pertinent part: “The Defense Acquisition Guidebook contains details about the contents of the AS” [Acquisition Strategy]. Therefore, based on our findings as discussed above concerning the proper use of continued contracts as intended by DoD, we believe that an analysis of what the DAG regards as appropriate content of the Acquisition Strategy document, versus the appropriate content of other acquisition-related documents, is highly relevant to our response to this inquiry. As indicated in DAG section 2.7, there normally would be two distinct documents generated for an ACAT 1D program: an Acquisition Strategy document required by DoD Instruction 5000.02 that is approved by the Milestone Decision Authority (MDA) and a separate Acquisition Plan required by FAR subpart 7.1 and DFARS subpart 207.1 prepared by the Contracting Officer.

    6. The Acquisition Strategy document is a top-level description, in sufficient detail to allow senior leadership and the MDA to assess whether the strategy makes good business sense, effectively implements laws and policies, and reflects management’s priorities. As explained in DAG section 2.2, the Acquisition Strategy must satisfy the statutory and regulatory information requirements as specified in DoD 5000.02. Contracting strategy in particular should explain and, to the extent necessary, provide the analysis and rationale for the strategy. For example, it should (1) justify the use of fixed-price or cost-plus vehicles, and (2) explain why the incentives provided were chosen and why there is confidence that they will successfully motivate the contractor to provide the performance desired by the Government. As such, based on the guidance provided in the DAG, we believe that the Acquisition Strategy document would not address any contracting procedures that DoD policy expressly considers as only administrative in nature.

    7. As explained in DAG section 2.7, DoD Components often prefer to provide a more general Acquisition Strategy to the MDA for approval and choose to prepare a separate, more detailed Acquisition Plan for subsequent approval. While the Acquisition Strategy describes the Program Manager’s plan to achieve programmatic goals and summarizes the program planning and resulting program structure, the detailed Acquisition Plan prepared by the Contracting Officer formally documents the specific contractual actions necessary to execute the approved Acquisition Strategy pursuant to FAR and DFARS requirements.

    8. Based on the above, while the contemplated use of an option (a commonly used and easily understood contracting approach) to authorize the acquisition of support services would certainly be addressed in the Acquisition Strategy, we believe that the potential use of a continued contract as a specific execution approach to exercise such option as permitted by DFARS PGI 204.7001(c)(i)(C) would more appropriately be addressed in the detailed Acquisition Plan. If the Acquisition Plan were to state that a continued contract will be used to exercise the services option, then this approach should also be justified by a detailed analysis supporting why the use of this administrative procedure is in the Government’s best interest and compliant with DoD policy (e.g., for purposes of contract closeout as mentioned by DoD in the May 12, 2006 FR notice). In the alternative, the Acquisition Plan could note the potential use of a continued contract as the most practical method to exercise the services option, but in that case should explain the specific process that the Contracting Officer will use in the future to make such a determination.



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