(a) This section applies to all multiyear contracts for supplies, including weapon systems and other multiyear acquisitions specifically authorized by law. For additional policies that apply only to multiyear contracts for weapon systems, see 217.173.
(b) The head of the agency may enter into a multiyear contract for supplies if, in addition to the conditions listed in FAR 17.105-1(b), the use of such a contract will promote the national security of the United States (10 U.S.C. 2306b(a)(6)).
(c) The head of the agency shall not enter into a multiyear contract unless-
(1) The Secretary of Defense has submitted to Congress a budget request for full funding of units to be procured through the contract; and
(2) In the case of a contract for procurement of aircraft, the budget request
includes full funding of procurement funds for production beyond advance procurement activities of aircraft units to be produced in the fiscal year covered by the budget.
that exceeds $500 million (when entered into or extended until the Secretary of
Defense identifies the contract and any extension in a report submitted to the
congressional defense committees (10 U.S.C. 2306b(1)(5)).
(2) In addition, for contracts equal to or greater than $500 million, the head of the contracting activity must determine that the conditions required by paragraphs (f)(2)(i) through (vii) of this section will be met by such contract, in accordance with the
Secretary’s certification and determination required by paragraph (f)(2) of this section
(10 U.S.C. 2306b(a)(1)(7)).
(e) The head of the agency must provide written notice to the congressional defense committees at least 30 days before award of a multiyear contract that includes-
contracts, that each of the conditions in paragraphs (f)(2)(i) through(vii) of this section is
satisfied (10 U.S.C. 2306b(i)(1)(A)-(G).
FAR 17.105, paragraphs (b)(1) through (b)(6) will be met by such contract and has
provided the basis for such determination to the congressional defense committees
(10 U.S.C. 2306b(i)(1)(A)).
(ii) The Secretary’s determination under paragraph (f)(2)(i) of this
section was made after the completion of a cost analysis performed by the Cost
Analysis Improvement Group of the Department of Defense and such analysis
supports the findings (10 U.S.C. 2306b(i)(1)(B)).
(iii) The system being acquired pursuant to such contract has not been
determined to have experienced cost growth in excess of the critical cost growth
threshold pursuant to section 10 USC 2433(d) within 5 years prior to the date the
Secretary anticipates such contract (or a contract for advance procurement entered
into consistent with the authorization for such contract) will be awarded (10 U.S.C.
2306b(i)(1)(C)).
(iv) A sufficient number of end items of the system being acquired
under such contract have been delivered at or within the most current estimates of
the program acquisition unit cost or procurement unit cost for such system to
determine that current estimates of such unit costs are realistic (10 U.S.C.
2306b(i)(1)(D)).
(v) During the fiscal year in which such contract is to be awarded,
sufficient funds will be available to perform the contract in such fiscal year, and the
future-years defense program for such fiscal year will include the funding required
to execute the program without cancellation (10 U.S.C. 2306b(i)(1)(E)).
(vi) The contract is a fixed price type contract (10 U.S.C. 2306b(i)(1)(F)).
(vii) The proposed multiyear contract provides for production at not less
than minimum economic rates, given the existing tooling and facilities. The head of
the agency shall submit to USD(C)(P/B) information supporting the agency’s
determination that this requirement has been met (10 U.S.C. 2306b(i)(1)(G)).]
(viii) The head of the agency shall submit information supporting this certification to USD(C)(P/B) for transmission to Congress through the Secretary of Defense.
(ix) In the case of a contract with a cancellation ceiling in excess of $100 million, if the budget for the contract does not include proposed funding for the costs of contract cancellation up to the cancellation ceiling established in the contract-
(B) The head of the agency shall provide copies of the notification to the Office of Management and Budget at least 14 days before contract award in accordance with the procedures at PGI 217.1.
(3) If the value of a multiyear contract for a particular system or component exceeds $500 million, use of a multiyear contract is specifically authorized by
(i) An appropriations act (10 U.S.C. 2306b(l)(3)); and
(ii) A law other than an appropriations act (10 U.S.C. 2306b(i)(3)).
(4) The contract is for the procurement of a complete and usable end item (10 U.S.C. 2306b(i)(4)(A)).
(5) Funds appropriated for any fiscal year for advance procurement are obligated only for the procurement of those long-lead items that are necessary in order to meet a planned delivery schedule for complete major end items that are programmed under the contract to be acquired with funds appropriated for a subsequent fiscal year (including an economic order quantity of such long-lead items when authorized by law (10 U.S.C. 2306b(i)(4)(b)).
(6) The Secretary may make the certification under paragraph (f)(2) of this
section notwithstanding the fact that one or more of the conditions of such
certification are not met if the Secretary determines that, due to exceptional
circumstances, proceeding with a multiyear contract under this section is in the
best interest of the Department of Defense and the Secretary provides the basis for
such determination with the certification (10 U.S.C. 2306b(i)(5)).
certification under 217.172(f)(2) or the determination under 217.172(f)(6) to an
official below the level of the Under Secretary of Defense for Acquisition,
Technology, and Logistics. (10 U.S.C. 2306b(i)(6)).
(8) The Secretary of Defense shall send a notification containing the
findings of the agency head under FAR 17.105(b), and the basis for such findings,
30 days prior to the award of a multiyear contract or a defense acquisition program
that has been specifically authorized by law. ((10 U.S.C. 2306b(i)(7)).
restrictions on using a multiyear contract for the specific system or component
(10 U.S.C. 2306b(i)(2)). One such restriction may be the achievement of
specified cost savings. If the agency finds, after negotiations with the contractor(s), that the specified savings cannot be achieved, the head of the agency shall assess the savings that, nevertheless, could be achieved by using a multiyear contract. If the savings are substantial, the head of the agency may request relief from the law’s specific savings requirement. The request shall
(i) Quantify the savings that can be achieved;
(ii) Explain any other benefits to the Government of using the multiyear contract;
(iii) Include details regarding the negotiated contract terms and conditions; and
(iv) Be submitted to OUSD(AT&L)DPAP for transmission to Congress via the Secretary of Defense and the President.
(g) The Secretary of Defense may instruct the head of the agency proposing a multiyear contract to include in that contract negotiated priced options for varying the quantities of end items to be procured over the life of the contract (10 U.S.C. 2306b(j)).
(h) The head of an agency shall not award a multiyear contract using fiscal year 2005 appropriated funds unless-
(1) The Secretary of Defense has submitted to Congress a budget request for full funding of units to be procured through the contract;
(2) Cancellation provisions in the contract do not include consideration of recurring manufacturing costs of the contractor associated with the production of unfunded units to be delivered under the contract; and
(3) The contract provides that payments to the contractor under the contract shall not be made in advance of incurred costs on funded units (Section 8008 of Pub. L. 108-287).
(i) Do not award a multiyear contract using fiscal year 2005 appropriated funds that provides for a price adjustment based on a failure to award a follow-on contract (Section 8008 of Pub. L. 108-287).
