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Procurement Lead Time

ACON 060

DAU GLOSSARY DEFINITION

The interval in time between the initiation of procurement action and receipt of the products or services purchased as the result of such actions.

Alternate Definition
The DoD Dictionary of Military Terms defines Procurement Lead Time as the “interval in time between the initiation of procurement action and receipt of the products or services purchased as the result of such actions.” For major systems contracts, it is the time between initiation of the procurement action and receipt into the supply system of the production model (excluding prototypes). Procurement Lead Time is composed of both PALT and Production Lead Time. Systems with long Procurement Lead Times often qualify for advance procurement funding (an exception to the “full funding” requirement) when the Procurement Lead Time is greater than the life of the appropriated funds required to purchase the system.
General Information

The DoD Dictionary of Military Terms defines Procurement Lead Time as the “interval in time between the initiation of procurement action and receipt of the products or services purchased as the result of such actions.” For major systems contracts, it is the time between initiation of the procurement action and receipt into the supply system of the production model (excluding prototypes). Procurement Lead Time is composed of both PALT and Production Lead Time. Systems with long Procurement Lead Times often qualify for advance procurement funding (an exception to the “full funding” requirement) when the Procurement Lead Time is greater than the life of the appropriated funds required to purchase the system.

Procurement Lead Time is a term sometimes used interchangeably with the terms Procurement Action Lead Time, Contract Action Lead Time, and Administrative Lead Time. Precise terminology varies among contracting officers and across agencies, but organizations use one or more measures of lead time for internal management and efficiency purposes.

Procurement Action Lead Time (PALT)

This is the amount of time required to complete the actions leading to contract award. It begins when the approved requisitioning document is received in the contracting activity and lasts until a contract or order is awarded. PALT includes the time required to process/assemble the purchase request (including the independent government estimate), statement of work/performance work statement, technical exhibits/attachments, service contract approvals (ref. DFARS 237.170-2), quality assurance surveillance plan for services, and any applicable sole source justification & approval. It also includes the time required to solicit the Government requirement, evaluate the offers received, and obtain necessary approvals before making the final contract award. PALT does not include Production Lead Time (see the section on Production Lead Time below).

PALT is used by management to forecast contract awards and plan workload. It may also be used to evaluate the efficiency of contracting personnel. An example of PALT standards (taken from one contracting office’s website):

The following standard PALTs are indicated and are based upon the time when a “proper” purchase request (PR) is received by the Directorate of Contracting until contract award:

 

  • Requirements < $25K = 20 days
  • Requirements $25K to $100K = 30 days
  • Requirements $100K to $10M = Up to 208 days

 

Contracting actions are subject to many variables and inputs from others. The specific acquisition strategy being employed, program dollar value, complexity, risk, and authority level for approving acquisition documents all affect PALT times. As such, care must be taken when using it as a strict metric for evaluation purposes. Because of this, there are no mandated PALT standards at the Federal, DoD, or Component levels. They are normally instituted at local contracting office level.

 

Production Lead Time

 

This is the time between contract award and the receipt into the Government supply system of the purchased system or items. Another variation defines it as the amount of time required to produce the first item after contract award. Production Lead Time may be further broken out into initial production lead time and reorder production lead time. Initial production lead time is the time interval if the item is not under production as of the date of contract award. Reorder production lead time is the time interval if the item is under production as of the date of contract placement. Once a contract has been awarded, program managers use Production Lead Time to fine tune their estimates of the initial operating capability for a system.

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