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  • Question

    Are there separate regulations that govern contracting with AAFES, or can we treat them as any other business concern, i.e. set up BPA's/IDIQ's.


    Answer

    All purchases made with appropriated funds are governed by both the Federal Acquisition Regulation (FAR) and the Department of Defense Acquisition Regulation Supplement (DFARS).  The Army and Air Force Exchange Service (AAFES or Exchange) is a nonappropriated fund instrumentality (NAFI) and these procurement contracts do not obligate appropriated funds.  Neither FAR, nor DFARS or DoD component supplements apply to Nonappropriated Fund (NAF) Procurements. 

    Exchange procurement policy is established by applicable directives and instructions promulgated by the Department of Defense (DoD) (DoDI 4105.67).
      Both the Army and the Air Force have additional Instructions (ARI 210-7 and AFI 36-2702) that also provide guidance for Operational Contracting.  While AAFES is not a mandatory source required by FAR, nor DFARS, Department of Defense Instructions (DoDI) for Non-Appropriated Funding (NAF) Procurement Procedures state to support NAFIs, as appropriate, to the maximum extent practicable.


    Figure 6-1, Sample of a Memorandum of Agreement (MOA), in AR 215-8/AFI 34-211(I), Chapter 6 Exchange Operations between the State and DoD activity establishing the AAFES, reflects a determination that the operation of an exchange activity is economically feasible, and the State has determined that the establishment of the exchange facility will not create unfair competition with local commercial interests. 


    If the requirement to provide the beverage meets the appropriate definition and thresholds of
    FAR Part 18 and DFARS Part 218, criteria and procedures for use of existing or establishment of any Federal Supply Schedules (FSS), Multi-Agency Blanket Purchase Agreements (BPAs) and Multi-Agency Indefinite Delivery Contracts (IDIQs) are indicated for any of these acquisition flexibilities.  FAR Part 13 and DFARS 213 provide guidance when using Simplified Acquisition Procedures (SAP), which again must be determined by the definition and threshold of the beverage requirement.  Both FAR and DFARs provides guidance for meeting the competition requirements and procedures for identifying the appropriate sources of supply.


    Additional reference: 
    www.us.army.mil  Army Tactics, Techniques, and Procedures No. 4-10 (FM 3-100.21) OPERATIONAL CONTRACT SUPPORT TACTICS, TECHNIQUES, AND PROCEDURES, June 2011
     

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