Government Contracts Rule Would Change Criteria for Follow-On Production Contracts
Wednesday, October 23, 2019

Rule Would Change Criteria for Follow-On Production Contracts

By Government Contracts Editorial Staff

A proposed rule issued by the Department of Defense would amend the Defense Federal Acquisition Regulation Supplement to modify the criteria required to exempt certain follow-on production contracts from competition. The rule implements section 815 of the National Defense Authorization Act for Fiscal Year 2016 (PL 114-92), which repealed and replaced section 845 of the FY 1994 NDAA (PL 103-160; 10 USC 2371 note) with 10 USC 2371b. The statute modified DoD’s authority to carry out certain prototype project transactions as well as the criteria required to award an associated follow-on production contract to a participant in the transaction without the use of competitive procedures. DFARS 206.001(S-70) currently states that the award of a follow-on production contract for products developed under 10 USC 2371 is exempt from the use of competitive procedures if the prototype project transaction agreement includes a provision for a follow-on production contract; specific criteria in 10 USC 2371 note are met; and the quantities and prices for the follow-on contract do not exceed the quantities and target prices established in the transaction agreement. Section 815 no longer limits a follow-on production contract to quantities and target prices that were established in the transaction agreement.

Limitation Removed. The rule would amend DFARS 206.001 to remove this limitation to exempt a follow-on contract from competitive procedures. The rule would add the following to the list of criteria necessary to award a follow-on production contract without competition:

  • a written determination was executed by certain acquisition officials for transactions in excess of specified dollar values;
  • the follow-on contract is awarded to participants in the transaction for the prototype project;
  • competitive procedures were used to select the parties in the transaction; and
  • the participants in the transaction successfully completed the prototype project provided for in the transaction.

These additions do not implement new requirements. The changes will help ensure contracting officers are aware of and comply with DoD’s other transactional authority when awarding a follow-on production contract. Comments on the proposed rule, referencing DFARS Case 2019-D031, are due November 25, 2019. See ¶70,020.442 for the text of the rule.

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