FedGovContracts.com

Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: December 6, 2001

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Multiyear Contracting

SOURCE: Federal Register, December 6, 2001, Vol. 66, No. 235, page 63336

AGENCIES: Department of Defense (DOD)

ACTION: Final Rule

SYNOPSIS: DOD is amending DFARS Subpart 217.1, Multiyear Contracting, to implement two sections of the National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398): Section 802, Multiyear Services Contracts, which clarifies that the authority to enter into multiyear contracts up to five years in length also applies to services and related supplies; and Section 806, Reporting Requirements Relating to Multiyear Contracts, which adds reporting requirements pertaining to multiyear contracts for property.

EDITOR'S NOTE: For more on the acquisition-related provisions of Public Law 106-398, see the November 2, 2000, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act of Fiscal Year 2001."

EFFECTIVE DATE: December 6, 2001.

FOR FURTHER INFORMATION CONTACT: Sandra Haberlin, Defense Acquisition Regulations Council, OUSD (AT&L) DP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; 703-602-0289; facsimile: 703-602-0350. Cite DFARS case 2000-D303/304.

SUPPLEMENTAL INFORMATION: The following changes are made by this final rule:

• Added to DFARS 217.170, General, is the requirement that DOD must receive authorization from, or provide notification to, Congress before entering into a multiyear contract for procurements that include a cancellation ceiling in excess of $100 million. Also, the authority for the secretary of defense to instruct the head of the agency proposing a multiyear contract to "include negotiated priced options for varying the quantities of end items to be procured over the life of the contract" is moved to DFARS 217.172, Multiyear Contracts for Supplies.
  
  
• Paragraph (a)(2) of DFARS 217.171, Multiyear Contracts for Services, is revised to state that the head of the agency "must be guided by the following principles when entering into a multiyear contract for services: (i) The portion of the cost of any plant or equipment amortized as a cost of contract performance should not exceed the ratio between the period of contract performance and the anticipated useful commercial life of the plant or equipment...(ii) Consider the desirability of obtaining an option to extend the term of the contract for a reasonable period not to exceed 3 years at prices that do not include charges for plant, equipment, or other nonrecurring costs already amortized. (iii) Consider the desirability of reserving the right to take title, under the appropriate circumstances, to the plant or equipment upon payment of the unamortized portion of the cost.
  
  Also added as a new paragraph (a)(4) is a requirement that "the head of the agency provide written notice to the congressional defense committees at least 30 days before award of a multiyear contract for services that includes -- (i) an unfunded contingent liability in excess of $20 million...or (ii) a cancellation ceiling in excess of $100 million."
  
  Finally, a new paragraph (a)(5) states that "the head of the agency must not initiate a multiyear contract for services exceeding $500 million unless a law specifically provides authority for the contract."
  
  
• Besides adding the statement from DFARS 217.170 about including options in multiyear contracts, DFARS 217.172, Multiyear Contracts for Supplies, is revised to include substantially the same language as new paragraphs (a)(4) and (a)(5) of DFARS 217.171.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Return to the Dispatches Library.

Return to the Main Page.