(a) This guidance establishes Defense Logistics Agency (DLA) policy for requesting review and approval of LoO change requests. Proper processing and documentation of changes to LoO requirements, cost changes, and resulting modifications is necessary to comply with recent policy on post-competition and HPO accountability and reporting; see OMB Memorandum for the President’s Management Council, April 13, 2007, subject: Validating the Results of Public-Private Competition; and, OMB Circular A-76, Attachment B, Paragraph E.4, “Monitoring Performance.”
(b) LoO change requests must be submitted using the mandatory template at DLAD PGI 90.1902(b) and shall be fully documented in writing. This documentation shall include a detailed explanation that justifies why the change is needed, if the MEO/HPO initiated the change, how the specific dollar amount requested is calculated, and an analysis of its cost impact. Each LoO change request that impacts the Agency Cost Estimate (ACE) shall be inputted by the MEO/HPO into COMPARE (or equivalent OSD-approved costing methodology or system) and have cost details on COMPARE adjustments to Lines 1 thru 6 on the Standard Competition Form across performance periods attached.
(c) LoO change requests resulting in a modification package must be coordinated with the COR prior to submittal to the appropriate approving official (see 90.1902(g)). The COR or designated representative will update the adjusted baseline cost to reflect the change, compare it to the updated LoO ACE to measure the cost impact of the change request to projected gross savings across performance periods, and provide a summary of this analysis in the request package when it is forwarded to the appropriate approving official. The Requiring Activity (RA) Commander, Director, or Senior Executive Service (SES) member (if not also the approving authority) will review any change request that exceeds $1 million (M) and provide appropriate recommendations and comments to the approving official. LoO changes will be documented in accordance with OMB Circular A-76, Attachment B, Subparagraph E.4.(4), “maintain the currency of the contract file, consistent with FAR Subpart 4.8, for contracts, MEO letters of obligation, and fee-for-service agreements.”
(d) Below are five examples that typically justify LoO change requests:
(1) Expanded requirements or increase in workload in excess of that designated in the Request for Proposal (RFP).
(2) Changes to performance requirements such as Acceptable Performance Levels, or establishing/changing the significance levels of nonconforming performance (e.g., critical, major, minor).
(3) Clarification of requirements; the need for these is often identified by the CGA during QASP implementation or while performing assessments.
(4) Policy changes initiated by statute, executive order, regulation, the Office of the Secretary of Defense, Headquarters DLA, or the RA.
(5) Conditions beyond the MEO/HPO’s control, such as RA-imposed hiring freezes and/or manpower reductions, Office of Personnel Management directed pay rate and benefits adjustments, or new collective bargaining agreements.
(e) Below are examples of situations that are not appropriate as the basis for LoO change requests. These types of changes will be documented by the initiator and reported to the ACO in order to assess actual MEO/HPO cost and performance against the Agency Tender/HPO. The documentation will become part of the LoO file.
(1) RA decision, when none of the above justifiable factors are present, to allow an MEO/HPO to adjust its current year “spending plans” in order to prevent mission failure.
(2) Conditions such as high civilian personnel turnover and/or inability to hire at the proposed grade/skill/hours available (e.g., part-time vs. full-time; temporary vs. permanent; upgrading positions for retention purposes) within the MEO/HPO.
(f) If the change would result in an increase of 30 percent or more in the MEO’s operating costs or total capital investment, a new competition will be conducted before an agency source can be used to perform the work. (See OMB Circular A-76, paragraph 5.d. and Attachment D, Definitions, regarding expansions.)
(g) Approval authority for LoO change requests is determined by calculating the value of change requests using the impact over the entire performance period, including option periods. Approval authority thresholds are as follows:
(1) The ACO will approve or disapprove change requests up to $1M in value.
(2) The Chief of Contracting Office will approve or disapprove all change requests that exceed $1M in value, but are less than or equal to $10M.
(3) The Head of Contracting Activity (HCA) will approve or disapprove change requests that exceed $10M.
(h) For requests equal to or under $10M, coordination and approval/disapproval of the change request decision will occur within four work weeks after the change request package is received by the RA CGA. For change requests that exceed $10M, the request will be submitted to the HCA for approval with a copy furnished to J-75. The ACO will report all newly-approved change requests to J-75 no later than 30 days after the end of each quarter.
(i) The LoO change request submitter may request review by the next higher approval authority when a change request up to $10M is disapproved. The request must be submitted within 10 working days from date of disapproval to be considered. The next higher approval authority has 10 working days after the request is received to resolve the matter.
(j) If the approving authority determines that urgent and compelling circumstances require that a change be implemented before a change request can be approved through the normal process, the approving authority may authorize the LoO designee to proceed with the change on an interim basis not to exceed 4 weeks. This interim approval does not eliminate the requirement to process a change request in accordance with this policy. The approval authority’s action, including supporting rationale, will be fully documented in the contract file and will be included in the change request submitted in accordance with this policy.
