Contracting Cone

Procurement for Experimental Purposes – 10 USC 2373

Procurement for Experimental Purposes (commonly referred to as “2373”) authorizes the government to acquire quantities necessary for experimentation, technical evaluation, assessment of operational utility, or to maintain a residual operational capability. This authority currently allows for acquisitions in the following nine areas:

 

Ordnance Signal Chemical Activity
Transportation Energy Medical
Space-Flight Aeronautical Supplies Telecommunications

 

2373 can be competitive or non-competitive and awarded using a contract or agreement. FAR and DFARS are not applicable; therefore, formal competitive procedures do not apply and any resultant contract is not required to include standard provisions and clauses required by procurement laws. Instead, a contract could be written using commercial terms.  Another option is to use an Other Transaction-like agreement, similar to the agreements written under the authority of 10 U.S.C. §2371 or 10 U.S.C. §2371b.

 

A Determination & Finding (D&F) identifying the following information is required to execute a 2373 award:

  • A description of the item(s) to be purchased and dollar amount of purchase
  • A description of the method of test/experimentation
  • The quantity to be tested
  • A definitive statement that use of the authority at 10 U.S.C. §2373 is determined to be appropriate for the acquisition

 

 

Common Applications

  • Purchase ordnance, signal, chemical activity, transportation, energy, medical, space-flight, aeronautical supplies, and telecommunications including parts and accessories and designs thereof, necessary for experimental or test purposes to develop best supplies for national defense
  • Testing new capabilities for fielding (i.e., weapons, combat vehicle modifications, test aircraft)

 

Pros

Cons

Ability to use in conjunction with science and technology OTs (10 U.S.C. §2371) or incentive prize competitions (10 U.S.C. §2374a) enable rapid transition of emerging technologies into fielded systems for testing and evaluation Pursuit and execution of this provision, especially when used in combination with an OT, requires highly experienced and empowered staff; lack of guidance, structure, and processes can challenge and intimidate inexperienced staff
Potential to use this authority to procure higher quantities of supplies; definitions in statutory language can be broadly interpreted Government may be in a sole-source or limited-source negotiation with vendor; may lose negotiation leverage on pricing and favorable terms and conditions
Provides a flexible and fast vehicle to use to acquire products outside the US Use of this authority is still relatively unknown; lack of guidance and established precedent increases risk to the government
Can be executed quickly and non-competitively; does not require a sole source J&A but only a D&F signed by the Contracting Officer or Head of Contracting Activity, depending on dollar value Although a J&A is not required, some Competition Advocates are unfamiliar with this authority and prefer to have input/coordination on the D&F or insist on a J&A

Can be “stacked” with other statutory authorities if long-term, critical thinking is applied to acquisition strategy across acquisition phases

 

An agreement under this authority is NOT an other transaction agreement and this authority is not synonymous with Other Transaction authority; interchangeable use of terms and definitions confuse potential contractors and make it harder to determine compliance with the correct statute
May be used in Rapid Prototyping; may transition to an Other Transaction for Prototype for additional Rapid Prototyping or a FAR-based Production contract for Rapid Fielding May not be used as a predecessor to an Other Transactions for Production; currently only a successfully completed Other Transaction for Prototype may transition to an Other Transaction for Production.  

 

 

Restrictions

  • FAR/DFARS N/A
  • SECDEF delegation required (currently delegated to DARPA, Navy, and selectively within Air Force and Army)
  • Contracting Officer must have Agreement Officer authority to execute
  • Purchases limited to quantities necessary for experimentation, technical evaluation, assessment of operational utility, or safety or to provide a residual operational capability
  • Appropriate for use in select situations to prevent inappropriate use/abuse and potential revocation of authority

Protests

This authority allows for a procurement via “contract or otherwise.”  Under the Competition in Contracting Act of 1984 (CICA), 31 U.S.C. § 3552, the General Accounting Office has jurisdiction to consider protests concerning an alleged violation of a procurement statute or regulation.

 

GAO Air Tractor Case

Air Tractor, Inc, Feb 2020

  • Basis:  Improper use, did not comply with applicable statutory and regulatory requirements
  • Decision:
      • Dismissed as untimely
      • Denied  — “agency did not abuse its discretion in deciding that the award met applicable statutory requirements”

Examples of Use

The following examples of how this authority has been successfully used are based on actual procurements, told from the Contracting Officer or Program Manager’s point of view.

 

#1 Multiple Sole Source, Fast Turn

What Happened

My cell phone rang as I walked into my office. No coffee, not even time to put my armload of papers on my desk.

“We have a situation,” one of my Program Managers told me. “Come to Room 1–now. We need your contracting expertise.”

All the seats at the conference room table were already taken when I walked in, all by people who far outranked me. The big screen TV on the wall repeated the news coverage I’d seen over breakfast. Someone wheeled in a spare chair for me and I scooted close to the head of the table, within eyesight and earshot of the highest ranking person in the room. He was polling his audience for ideas.

“What do we have out there that we can test today to see if it’s the answer, how much will it cost, and when can the contractor deliver?”

Not “When can you get on contract?” or “When can you get a proposal?”  

No.

“When can the contractor deliver?

 Why this Course of Action

We needed something new, something we could test and put at least a few in the field within a few days. Something deliverable within hours after finding the best solution we could.   In the on-the-spot market research, we had nothing but a few possibilities that might work for this particular scenario but none had been tested in this situation. Nothing in inventory and nothing already on contract. Nothing commercially available. Whatever the solution, it would be a fast turn because if the first one failed, we needed to get to the next possibility immediately.

We looked at several options, or courses of action (COAs), over the next half-hour.

Among the COAs were:

1.Direct our prime contractor to go to the 3 possible vendors to acquire units to test. Biggest problems: The scope was questionable, the time required of middlemen to get involved, and—though it wasn’t our primary concern—some steep pass-through fees. The prime contractor also wasn’t known for being extraordinarily responsive.

 

2. Issue Undefinitized Contractual Actions (UCAs) to the 3 possible vendors. While this was a relatively fast way to move forward if we had money and a requirement, the UCA approval authority wasn’t in the program office chain of command and he was known for being risk averse. The last UCA he had approved had taken over a month to get his approval when the problem came with an Urgent Operational Need (UON) attached and both funding and requirements paperwork in order. Even if by some miracle, he approved the UCA issuance, the vendors might fail and then we would have to shut down the effort to keep from wasting resources, and all that after a significant delay. We would also have to deal with the aftermath of a UCA definitization. All this assumed the vendors would accept a UCA, which is not always true. If we had an existing contract with any of them that was close enough in scope, we might have considered a change order, but this COA was iffy for too many reasons.

 

3. Using a CRADA was briefly considered but none of the vendors were willing to give up a unit for nothing in return and due to the particular scenario, there was nothing they would have wanted that we could have given them in turn for essentially destroying their property in the testing of it. Money needed to change hands. A small business still has bills to pay.

 

4.Use 10 USC 2373 for the purpose of testing each vendor’s unit, which fit under the signal technology area.

 

These and several other COAs were considered. All but 10 USC 2373 would take too long or create issues with either money or scope, and 10 USC 2373 could be enhanced by adding other innovative techniques.

How It Was Used

The 3 vendors were not in competition with one another at this point.   We were essentially still in market research mode, and we hoped to buy from all.

We called the 3 vendors to see if they could provide the unit to be tested the next day, which we could buy under this statutory authority that day with funds available within the program office. One was a no-go; they weren’t as far along as they’d been advertising. The other two said yes, either to driving it to the program office or to someone from the program office picking it up and bringing it back for testing the next day. The estimated cost for one was well below any thresholds for coordination or review, including legal review, but over SAT. Easy.

We followed up via email with the two vendors to ask each for a quote and a brief technical description to be emailed back and followed up by an oral presentation over the phone that lasted maybe 10 minutes and answered any questions we had. We wrote the contracts that day, as well as the minimal documentation required. We used the 10 USC 2373 authority the same as we would for FAR 6.3 authorities on the cover page of the agreements.

Behind the scenes, we dropped everything else we needed to work on that day, and the other functionals, particularly FM, sped in lock step with us so we had the final funding docs by the time the contracts were signed.

Results

The vendors delivered the units the next day and the units were tested by that afternoon. One was not optimal in certain weather/climate, which didn’t provide a solution but did provide valuable information.

The other solution was deemed acceptable and the vendor was able to provide a temporary solution through 10 USC 2373 while strategies for the longer term were considered. The next step might’ve been an Other Transaction for Prototype or a Production contract or FAR Part 12 contract, but real world events dictated a different direction and the situation resolved itself after additional units under the contract were tested downrange.

#2 Multiple Sole Source, Moderate Turn

What Happened

The Program Office was testing a new aircraft. They needed to know how the aircraft would react to carrying 5 specific bombs/missiles, 2 each.

Why this Course of Action

One course of action that was considered was to pull the bombs/missiles off their current production lines. For one weapon, that was possible.   For the other four, the production contracts were limited by Justification and Approval documents to a maximum number of units, which were already accounted for, and the Contracting Officers for those contracts were unwilling to go through the unwieldy process to add 2 units to each contract.

The quickest way to acquire the other 8 units (four pair) was to use 10 USC 2373, under the ordnance technology, though they might possibly have use aeronautical supplies since technically the aircraft was being tested, not the ordnance.

How It Was Used

The Contracting Officer wrote multiple contracts to the contractors who produced the bombs/missiles, including one contract that represented more than one of the needed pairs. These were written as FAR-based contracts under 10 USC 2373, supported by a single D&F, and less any reportable or review-triggering threshold, not by intent but by virtue of what was needed.

The contracts were simple, with quick delivery because the contractors were able to pull units off existing production lines and make up the quantities for their production contracts. Prices were easy to negotiate based on existing production contracts and price bands.

Because analysis cannot be contracted via 10 USC 2373 and the Program Office needed an assessment of the testing, a separate contract was written to a single contractor for that purpose as an in-scope modification to an existing contract.

Results

The four pair of units were provided seamlessly and in time for flight tests that were able to determine any impact of each pair of units on the aircraft as well as the fifth pair. Analysis was successfully performed under a different, independent contract.

#3 Sole Source, Moderate Turn

 

What Happened:

In a war time situation, my Program Office had had a lot of success with one particular manufacturing method related to ordnance. Only one contractor could perform this kind of work at that time, and it was more expensive than a different manufacturing method that had not been tested.

The contractor had suggested the new method might be an equally good solution but cheaper. We were able to acquire the more expensive version without any problem, so it wasn’t an emergency but we couldn’t take forever either. We wanted to have a better solution before the current inventory using the older manufacturing method ran out.

Why this Course of Action

Our market research determined that only one contractor could produce even small quantities using both manufacturing methods so that the DoD could test six of each method to see if the new method was as strong as the old method. The total estimate was over the simplified acquisition threshold at the time.

Our Contracting Director refused to sign Justification and Approval (J&A) documentation under any circumstances because he felt a sole source acquisition, even at that size and justifiable, would attract negative attention. Source selection procedures at that time required us to hold a competition that would’ve lasted months and ultimately would have been competition for competition’s sake with an award going to the only company who could perform.

We decided to try 10 USC 2373 because it allowed us to test manufacturing methods in small quantities and in a sole source situation under the ordnance technology area.

How It Was Used

We used 10 USC 2373 as the authority on the cover page of the contract and purchased six units using one manufacturing method and six using the other method. The agreement was in the form of a short FAR-based R&D supply contract. It took less than 2 weeks from the day the requirement was identified to the request and review the proposal and then to award the contract, with no rush. Maybe another couple of days before the units were received for testing.

The Contracting Officer and Program Manager signed a one-page Determination and Finding (D&F) as the sole source justification.

Results

The twelve units were tested, and the Program Office was able to make a decision on whether to acquire more units using the older, more expensive manufacturing method or the newer, cheaper method. Very little manpower was tied up in the contract award, and resources weren’t spent disproportionately on a source selection. It was even faster than FAR Part 6 source selection procedures at that time and location.

#4 Restricted Source Competition, Moderate-to-Fast Turn

What Happened:

The Program Office was considering a restricted-source competition of 3 large defense contractors with bombs that might meet the requirement and go to production. The bombs had been developed on the contractors’ dime in two cases and under a Government contract in the third.   The original expectation to get to a “fly-off” was a year or longer. That did not include requesting and obtaining proposals on the next phase if the fly-off was successful. The cost estimate was under $5M, but the Program Manager’s chain of command initially insisted on using small-dollar source selections “as practice” for larger future source selections instead of waiving or streamlining where possible.

Why this Course of Action

After lengthy discussions with the Program Office’s legal counsel, the strategy that cost the least resources and moved the program closer to production was to use 10 USC 2373 as a restricted competition under the ordnance technology area.

A source selection would take far too long.   A J&A would be required for anything faster, and the Competition Advocate was known for lengthy approvals, if any.

How It Was Used

The acquisition strategy agreed upon by the Program Office, Contracting Officer, and legal counsel was to use 10 USC 2373 as the authority for a limited competition among the three contractors for a fly-off. The competition was customized and didn’t look like a normal Part 15 source selection, with none of the same wording.   In addition, the fly-off results and data were to be delivered to the Government as a proposal for a follow-on production contract, which would make the next phase much faster.

We did not consider an Other Transaction for Prototype as a next step or an Other Transaction for Production because the Contracting leadership at that time was opposed to Other Transactions for Prototype and an OT for Production had not yet been written into statute.

The acquisition strategy contemplated contract delivery within three months, including the lead time to get on contract.

Results

Unfortunately, the Program Office reorganized before the acquisition strategy could be approved. As a result, this and other upcoming contracts were shifted to a different Contracting Officer in a different buying office who preferred a standard source selection which took significantly longer.

Frequently Asked Questions (FAQs)

 

Q: Does the word PROCUREMENT in the title mean I have to use procurement funds?

A: No. It is highly unlikely that you will use procurement funds for this authority.  The word procurement in the title may be confusing because it can be interpreted as synonymous with production.

The prior name for this statute was Acquisition for Experimental or Test Purposes. In this case, procurement  is synonymous with acquisition.

Q: What color of money must I use?

A: Normally, this authority uses either Research, Development, Test and Evaluation (RDT&E) funds or Operations and Maintenance (O&M) funds. The statute does not dictate particular funding but rather this is determined by fiscal law. 

If you use RDT&E funds, then the intent of the purchase and the wording of your documentation must match RDT&E.

If what you are buying meets the intention of O&M funding, then the documentation must Operations and Maintenance, not Research and Development.

Q: Can I use this statute for a sole-source production lot buy?

A: No, that is not the intent of this statute. It’s intended for experimentation, technical evaluation, assessment of operational utility, or maintenance of a residual operational capability. It’s not meant as an authority to buy production units for inventory.

Q: Is there a limit on how many units I can buy for testing under this authority?

A: No, there is not a specified number of units you can buy, other than that the number shouldn’t exceed what’s needed for testing or experimentation. You may need to test 5 or you may need to test 500; however, if you buy 500 with the intention of testing 5 and put the remaining 495 into inventory, then you will have used this authority improperly.

Q: Can I use this authority for experiments on virtual reality headsets?

A: Yes, under the most recent addition to technology areas, telecommunications.  Prior to that addition, it might have fit under the signal area or possibly aeronautical supplies, space,  or medical, depending on why the experiments were to be conducted.  Telecommunications encompasses a wide variety of possibilities, including cyber, artificial intelligence, big data, machine learning, robotics, virtual reality, and augmented reality.

Q: Can I go from a 2373 directly to an Other Transaction for Production?

A: Currently, no. The only way to enter an Other Transaction for Production is through a successfully completed Other Transaction for Prototype. The Section 809 Panel’s Recommendation #81 opens the aperture for pathways other than Other Transaction for Prototype to get to Other Transaction for Production. To expand the use of 2373’s, Congress would need to amend 10 U.S.C. §2371b, which governs Other Transaction for Production criteria.

Q: Is a 2373 an OT?

A: No.  Although it may be used in conjunction with Other Transaction Authority, Procurement for Experimental Purposes is a different, separate statute.

Q: Is the agreement for a 2373 written as an OT?

A:  The authority allows for a procurement via a “contract or otherwise.” This could be a FAR-based contract using the statute as the authority on the cover page of the contract, an Other Transaction-like agreement with articles, a commercial contract, or anything in between.

Over the last few years, there has been more of a blending between the procurement authority of Procurement for Experimental Purposes and the agreement framework of an Other Transaction for Prototype. This has been primarily because few people know what anything other than a FAR-based contract looks like and think that non-FAR agreements are synonymous with other transaction  agreements.

Be careful not to mix the authorities even when using them together, called “stacking” by Richard Dunn of The Strategic Institute (see references section of this page). Mixing authorities can lead to misunderstanding or misinterpretation as demonstrated in the  Air Tractor, Inc GAO protest.

Q: Is 2373 exempt from the Competition in Contracting Act (CICA)?

A:  Yes. 10 U.S.C. §2373 states that Chapter 137 applies only if you buy more than the needed quantities for experimentation, technical evaluation, assessment of operational utility, or safety or to provide operational utility.  A complete list of exemptions can be found at https://www.law.cornell.edu/uscode/text/10/subtitle-A/part-IV/chapter-137, Procurement Generally, which includes competitive procedures and Competition Advocates.  A Justification and Approval (J&A) is not required under this statute, whether the agreement is by “contract or otherwise.”

Q: Can a procurement be awarded competitively?

A:  Yes.  It can be awarded as a result of full and open competition or restricted competition.  You can also award it  as a sole source purchase instead of competitively.  If you do choose to compete, you do not have to use FAR Part 15 procedures but can instead craft your own competitive procedures.  If you do use the FAR as a model, you may wish to modify the terminology so that it is not misinterpreted as a FAR Part 15 procurement instead of a procurement under this statute.

Q: Could this statute be used to procure mental health tech solutions?

A:  Depending on the solution and provided it otherwise complies with the requirements of the statute, mental health tech solutions would most likely fit under the medical technology area.

Q: Can I use this authority for a non-DoD procurement?

A:  No.  Currently, it is for DoD only.

Q: How were the list of technology areas determined?

A:  They were added through National Defense Authorization Acts (NDAAs) over time, usually reflecting emerging technologies and the need for experimentation.  The most recent change, the addition of telecommunications as a tech area, was added as part of the John S. McCain National Defense Authorization Act of 2019.  Prior to that, NDAA 2016 added transportation, energy, medical, and space-flight, the first change since 1996.

For a war story of how the law was changed, watch the 10-minute video, 2373 — Rapid Acquisition for Experimental & Test Purposes, from Richard Dunn and the Strategic Institute.

Q: Can performance under 2373 be considered past performance for FAR-based awards?

A:  Yes.  They can be considered past performance under the same conditions that any contract can be considered past performance.  Any recency or relevancy criteria would apply.

Q: How should an organization request authority to use 2373?

A:  Unfortunately, there isn’t a one-size-fits-all answer at this time.   You should discuss with your Policy and/or Legal offices as they likely have procedures in place for requesting other authorities.

Q: Do you have to have an agreements warrant to award a 2373?

A:  That depends.  If you are awarding a FAR-based contract  as the resulting agreement, you need a Contracting Officer’s warrant.  If you are awarding an other transaction agreement as the resulting agreement, you need an Agreements Officer’s warrant.

Not enough consistent information exists at this time for any other type of agreement, so consult your Policy and/or Legal offices if the agreement doesn’t fit one of these two categories.

Q: Can 2373 be used for Middle Tier of Authority (MTA)? How does it transition?

A: Yes. It can be used for the Rapid Prototyping pathway.  It may stand alone or may transition to an Other Transaction for Prototype or to a FAR-based production contract.  It does not have to transition: you might discover through testing or experimentation that the solution answers the questions necessary and is no longer needed, whether because it failed or exceeded expectations.

If you transition directly to a FAR-based production contract, you may need to add documentation that would be required to begin your FAR-based contract but that was not required for your 2373 contract/agreement. The same applies to Other Transactions for Prototype that transition to a FAR-based production contract. If you may need FAR-based documentation to transition, plan ahead so you can work that documentation concurrently.

Q: What review levels are required for 2373?

A: No statutory or regulatory ceiling exists for 2373’s. Some organizations require a senior contracting official’s approval to use a 2373 above a certain threshold. Because the statute itself exempts Chapter 137‘s general procurement requirements and FAR-based requirements do not apply, typical contract reviews are not required; however, your local buying activity may wish to use the same reviews as required by a FAR-based procurement, even though they are not  required by the statute for 2373.

If you transition directly to a FAR-based production contract, you may need to add documentation that would be required to begin your FAR-based contract but that was not required for your 2373 contract/agreement. The same applies to Other Transactions for Prototype that transition to a FAR-based production contract. If you may need FAR-based documentation to transition, plan ahead so you can work that documentation concurrently.

Q: I want a sole-source contractor to design and develop a widget and I don't have time to compete or write a J&A. Can I use 2373 as a short cut?

A: No.  This statute is not a short cut, though it usually is significantly faster than FAR-based procedures.  This statute has a specific purpose that should not be convoluted just to get around writing a J&A. It would be more appropriate for you to use a Broad Agency Announcement, write a J&A based on (possibly) unusual and compelling urgency,  issue a letter contract, or write an Other Transaction for Prototype, to name a few.

If you transition directly to a FAR-based production contract, you may need to add documentation that would be required to begin your FAR-based contract but that was not required for your 2373 contract/agreement.  The same applies to Other Transactions for Prototype that transition to a FAR-based production contract.  If you may need FAR-based documentation to transition, plan ahead so you can work that documentation concurrently.

Q: Do I have to write a Justification and Approval document (J&A) if I go sole source?

A: No. A J&A is not required, and 2373 is exempt from competitive procedures and Competition Advocates, as stated in the statute. Documentation normally consists of a 1-2 page Determination and Findings (D&F) signed by the Contracting Officer/Agreements Officer and Program Manager, and occasionally Legal Counsel and a senior Contracting official in the local buying activity.

References