a. CO shall evaluate surge pricing for MWR or D1-D6 in accordance with FAR 15.404-1 to determine price reasonableness and cost realism (see FAR 2.101 and 15.403 for when to obtain cost or pricing data).
b. If the CO cannot independently justify the surge price, the CO shall ensure offerors submit information other than cost or pricing data or, if applicable, certified cost or pricing data, as circumstances require, that sufficiently explain causes of price difference between surge and peacetime quantities, in accordance with 52.217-9009. The information may be submitted in the offeror's own format unless the contracting officer requests a specific format in the solicitation.
c. CO shall consider the unique factors affecting S&S pricing when evaluating prices for MWR or D1-D6, which may cause higher pricing than peacetime quantities since S&S involves increased production and accelerated delivery time (usually 30-days or less) during contingency operations. In addition, S&S pricing is often based on vendors’ estimates of future costs or projections since contingency operations are unpredictable and there is uncertainty when or if the Government will exercise surge. Certified cost or pricing data will not always apply to S&S. Instead, information other than cost or pricing data as described in FAR 15.402(a)(2) may apply. The vendor may have other costs in addition to the normal peacetime costs to support S&S requirements, such as:
(A) premium pay for overtime and/or additional shifts to fulfill increased production to support surge;
(B) additional costs for expedited delivery of materials from sub-tier vendors to meet the accelerated delivery requirement of surge;
from sub-tier suppliers, in addition to peacetime ordering, to pre-position materials required to produce or supply S&S quantities, with a factor for the risk that the Government will not issue a surge order and/or buy-back any excess or unconsumed materials before contract expiration or termination;
that otherwise would generate revenue; and/or
materials, or components specifically to support surge requirements.
(2) The Government is not obligated to exercise the surge CLINS during the contracted performance period. The suppliers are assuming all the risks of incurring additional costs and holding additional inventory to support S&S coverage, until the Government executes a surge order to support contingency operations and other emergencies.
(3) In addition to allowing for extra costs, the Contracting Officer should consider whether to allow for additional profit over and above any amount for the peacetime requirement. When the Weighted Guidelines method is applied in 215.404-71, the Contracting Officer should review DFARS 215.404-71-2(e)(1)(ii), as well as (e)(2)(i)(B), (e)(2)(ii)(C), and 215.404-71-3(d)(ii) and (3)(i) to see if they are applicable. These references respectively address management involvement, degree of integration and coordination, critically important milestones, adequacy of cost data, and cost history.
(4) A review of the S&S Capability Plan may assist in analyzing the Surge Price in comparison to the Peacetime price, since it may indicate costs that the offeror expects to incur if the S&S requirement is invoked.
d. CO shall also consider guidance in DFARS 217.7505(b)(2) and the definition of S&SPR under 17.9301, when evaluating the surge prices that are higher than the peacetime prices. The Services’ go-to-war requirements directly support the national security interests of the United States.
e. If surge prices are deemed unreasonable or if surge negotiations will cause the delay of contract award, CO shall submit a waiver request to the IB Chief for approval prior to removing surge requirement, in part or as a whole, from the solicitation/contract. Refer to PGI 17.9301 Section 5(m) for the waiver procedure.
