Major Capability Acquisition (MCA)

Reference Source: DoD Prototyping Handbook, Oct 2022

An IDIQ vehicle provides contracting officers with the flexibility needed when the exact quantity of a product or service is not known at the award of the contract. With “multiple award” IDIQs, multiple vendors are awarded the opportunity to compete for work that is added to the contract through task orders. Contracting officers can award task orders to a single awardee under specific exceptions covered in the FAR. IDIQs are popular contracting vehicles for defense S&T laboratories due to their flexibility and agility. If an innovator’s prototyping project fits within the scope of an existing IDIQ contract of which the innovator is an awardee, the contracting officer can rapidly add a task order to the contract and award the new task order quickly.

Reference Source: Contracting Cone – Commercial Solutions Opening (CSO)

Section 803 of the FY22NDAA provided the DoD with permanent CSO authority, codified in 10 U.S.C. §3458, to obtain solutions or new capabilities that fulfill requirements, close capability gaps, or provide potential technological advances. CSO procedures are similar to those for Broad Agency Announcements (BAAs), with the exception that a CSO can be used to acquire innovative commercial items, technologies, or services that directly meet program requirements, whereas BAAs are restricted to basic and applied research. The CSO program may also be used to acquire R&D solutions from component development through operational systems development.

For CSO purposes, innovation is defined as any technology, process, or method, including research and development that is new as of the date of proposal submission or any application of a technology, process, or method that is new as of proposal submission.

See additional references and resources for this strategy in the Contracting Cone – Commercial Solutions Opening (CSO)

Reference Source: Contracting Cone – Prototype OTs

Prototype OTs (10 USC §4022) are appropriate for research and development and prototyping activities to enhance mission effectiveness of military personnel and supporting platforms, systems, components, or materials. Prototype OTs may be used to acquire a reasonable number of prototypes to test in the field before making a decision to purchase in quantity. Prototype OTs provide a streamlined path to award a non-competitive follow-on Production OT or FAR contract.

For OTs, a “prototype project” is defined as a prototype project addressing a proof of concept, model, reverse engineering to address obsolescence, pilot, novel application of commercial technologies for defense purposes, agile development activity, creation,  design, development, demonstration of technical or operational utility, or combinations of the foregoing. A process, including a business process,may be the subject of a prototype project.

Prototype OT Award Criteria

One of the following must be met to award a Prototype OT:

• At least one non-traditional defense contractor* participates to significant extent or
• All significant participants are small or non-traditional defense contractors or
• One third of total cost provided by sources other than gov (if no non-traditional defense contractor participation) or
• Agency Senior Procurement Executive determines circumstances justify use of a transaction that provides for
  • Innovative business arrangements not feasible or appropriate under a contract
  • Opportunity to expand defense supply base not practical or feasible under a contract

*As defined in 10 U.S.C. § 3014, a non-traditional defense contractor is an entity that is not currently performing and has not performed, for at least one-year period preceding the solicitation of sources for the other transaction, any contract or subcontract for the DoD that is subject to full coverage under the cost accounting standards (CAS).

Competition

Although the Competition in Contracting Act (CICA) is not applicable to OTs, competition should be pursued to the maximum extent practicable to incentivize high quality and competitive pricing. Additionally, competitive procedures are required in order to leverage the authority for transition to follow-on production contracts or transactions without subsequent competition.

Follow-on Production Criteria

The following conditions must be met in order to award a non-competitive follow-on Production OT or FAR contract:

• Competitive procedures were used to award the Prototype OT, and
• The prototype project in the transaction was “successfully completed”

“Successful completion” of a prototype project requires written determination of the responsible approving official stating the efforts under a Prototype OT:

(1) Met the key technical goals of a project;
(2) Satisfied success metrics incorporated into the Prototype OT; or
(3) Accomplished a particularly favorable or unexpected result that justifies the transition to production

Successful completion can occur prior to the conclusion of a prototype project to allow the government to transition any aspect of the prototype project determined to provide utility into production, while other aspects of the prototype project have yet to be completed. Prototype OTs shall contain a provision that sets forth the conditions for the prototype agreement to be successfully completed.

Additionally, the government shall include notice of the possibility of a follow-on production award in both the Prototype OT solicitation and the Prototype OT agreement.

Prototype OT and Follow-on Production OT Approval Authorities

The following approval authorities and dollar thresholds (per individual OT award) are applicable to Prototype and Production OTs. The approval authorities above $100 million are non-delegable. The value of each individual OT is considered separately for purposes of determining approval authority, rather than the total value of all OTs included in a prototype project or follow-on production effort. Any contractor cost sharing should be included in the OT value. Separate approvals are required for Prototype OTs and follow-on Production OTs.

Restrictions

• FAR/DFARS are not applicable
• Contracting Officer must have Agreement Officer authority to execute OTs
• Cost sharing requirements apply if no significant participation by non-traditional defense contractors
• Limited to requirements that have a prototyping element
• OTs can only deliver limited quantities of prototypes
• Prototype project must address anticipated follow-on activities, competitive procedures must be used to award prototype project, and successful completion of prototype project required to transition to follow-production vehicle
• May not exceed $500M without USD R&E or USD A&S approval

See additional references and resources for this strategy in the Contracting Cone – Prototype OTs.

Reference Source: Contracting Cone – Procurement for Experimental Purposes

Procurement for Experimental Purposes (10 U.S.C. §4023) 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:

The Procurement for Experimental Purposes authority 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 leverage the authority of 10 U.S.C. §4021 or 10 U.S.C. §4022 and execute a research or prototype OT for the items allowed under this statute.

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. §4023 is determined to be appropriate for the acquisition

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

See additional references and resources for this strategy in the Contracting Cone – Procurement for Experimental Purposes.

Reference Source: DoD Prototyping Handbook, Oct 2022

CRADAs are written agreements between one or more federal laboratories and one or more nonfederal parties under which the government, through its laboratories, provides personnel, facilities, equipment or other resources with or without reimbursement (but not funds) to nonfederal parties. The non-federal parties provide personnel, funds, services, facilities, equipment or other resources to conduct specific research or development efforts that are consistent with the mission of the laboratory.

Reference Source: Contracting Cone – CRADA

CRADAs authorize federal labs to enter into agreements with other federal agencies, state/local gov’t, industry, non-profits, and universities for licensing agreements for lab developed inventions or intellectual property to commercialize products or processes originating in federal labs.

• Labs may seek an industry partner with resources to successfully market invention or commercialize
• Labs may seek an industry partner to stimulate a market for new technology
• Non-federal/industry partner may seek government lab to further develop unique resources

Restrictions

• Limited to government owned or government owned, contractor operated labs
• Government may contribute wide variety of resources, but no funds
• Collaborating partner may contribute funds to the effort, as well as personnel, services and property
• May not provide for research that duplicates research being conducted under existing programs carried out by DoD

See additional references and resources for this strategy in the Contracting Cone – CRADA.

Reference Source: DoD Prototyping Handbook, Oct 2022

Partnership Intermediary Agreements are agreements between the Federal Government and State or local government agencies or nonprofit entities (i.e., intermediaries) that provide intermediary services between a Federal Government organization and small businesses, educational institutions, and laboratories. These public-facing intermediaries help government organizations find, collaborate with, and contract with industry, labs, and academic partners to discover and develop innovative solutions to solve problems that the organization is trying to solve. A good example of a partnership intermediary is SOFWERX, established through a partnership intermediary agreement between the U.S. Special Operations Command and the non-profit Doolittle Institute. Other partnership intermediaries include the Virginia Tech Applied Research Corporation; Defensewerx; the Center for Technology, Research, and Commercialization; Innovation and Modernization Patuxent River; and the Wright Brothers Institute.

Reference Source: Contracting Cone – Partnership Intermediary Agreement

A Partnership Intermediary Agreement (PIA) is a contract, agreement, or memorandum of understanding with non-profit partnership intermediary to engage academia and industry on behalf of government to accelerate tech transfer and licensing.

Partnership intermediary means an agency of a state or local gov, or a nonprofit entity owned in whole or in part by, chartered by, funded in whole or in part by, or operated in whole or in part by or on behalf of a State or local Government, that assists, counsels, advises, evaluates, or otherwise cooperates with small business firms and institutions of higher education.

See additional references and resources for this strategy in the Contracting Cone – Partnership Intermediary Agreement.

Reference Source: DoD Prototyping Handbook, Oct 2022

Challenges and prize competitions authorized by the 2010 America COMPETES Reauthorization Act and the FY00 NDAA, are tools that can be used for securing innovation and prototypes. Examples of challenge/prize competitions include the following:

• The “incentive prize” tool uses the authorities provided by the America COMPETES Reauthorization Act of 2010 to enable an agency to run a competition where the winner receives a prize for developing a viable solution to solve a government need.

• The “milestone-based competition” process allows agencies to enter into contractual relationships with a qualified pool of contractors and to issue task orders for a series of clear, technically feasible milestones, each with an assigned deadline and monetary value.

• The “rapid technology prototyping” model involves issuance of several contracts for small, inexpensive prototypes to be built within a short period of time (i.e., several months) and then tested in a relevant demonstration scenario to assess the viability of each prior to making a substantial investment.

• The “challenge-based acquisition” model is designed to explore the market and pay only for a successful solution, but is geared towards projects where solutions are likely to already exist as opposed to having to be developed. The key differentiator between challenge-based acquisition and a traditional performance based acquisition is the firm requirement to demonstrate product performance in real-world conditions prior to a major commitment of resources for full production.

• The “staged contract” method utilizes short concept papers to enable agencies to identify vendors who are most likely to receive an award and to help those who are less likely to receive an award avoid the cost of developing a detailed proposal.

Reference Source: DAG CH 1–4.2.11.4 Contract Types

In Technology Maturation and Risk Reduction, programs may contract with multiple contractors for competitive prototyping of critical program technologies. This creates a competitive situation that provides built-in incentives for contractors to perform well, so incentives are generally unnecessary. Cost-plus-fixed-fee (CPFF) contracts are common in this situation, but fixed price type contracts may be used (see limitations in DFARS 235.006).

Reference Source: FAR 35.006

Although the Government ordinarily prefers fixed-price arrangements in contracting, this preference applies in R&D contracting only to the extent that goals, objectives, specifications, and cost estimates are sufficient to permit such a preference. The precision with which the goals, performance objectives, and specifications for the work can be defined will largely determine the type of contract employed. The contract type must be selected to fit the work required.

Because the absence of precise specifications and difficulties in estimating costs with accuracy (resulting in a lack of confidence in cost estimates) normally precludes using fixed-price contracting for R&D, the use of cost-reimbursement contracts is usually appropriate (see subpart 16.3). The nature of development work often requires a cost-reimbursement completion arrangement (see 16.306(d)). When the use of cost and performance incentives is desirable and practicable, fixed-price incentive and cost-plus-incentive-fee contracts should be considered in that order of preference.

When levels of effort can be specified in advance, a short-duration fixed-price contract may be useful for developing system design concepts, resolving potential problems, and reducing Government risks. Fixed-price contracting may also be used in minor projects when the objectives of the research are well defined and there is sufficient confidence in the cost estimate for price negotiations. (See 16.207.)

Reference Source: DFARS 235.006

Consistent with section 829 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), the Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)) has determined that the use of cost-reimbursement contracts for research and development in excess of $25 million is approved, if the contracting officer executes a written determination and findings that—

(A) The level of program risk does not permit realistic pricing; and

(B) It is not possible to provide an equitable and sensible allocation of program risk between the Government and the contractor.

Reference Source: DFARS 234.004

The contracting officer shall include in solicitations for contracts for the technical maturation and risk reduction phase, engineering and manufacturing development phase or production phase of a weapon system, including embedded software:

• Clearly defined measurable criteria for engineering activities and design specifications for reliability and maintainability provided by the program manager, or the comparable requiring activity official performing program management responsibilities; or
• Ensure a copy of the justification, executed by the program manager or the comparable requiring activity official performing program management responsibilities for the decision that engineering activities and design specifications for reliability and maintainability should not be a requirement, is included in the contract file (10 U.S.C. 2443).

Reference Source: DoD Prototyping Handbook, Oct 2022

Defense Innovation Unit (DIU)

DIU is a Joint DoD organization in OUSD(R&E) that connects commercial innovators with defense organizations to rapidly meet Joint warfighter needs. DIU uses a model they created, called Commercial Solutions Opening (CSO), to solicit solutions from nontraditional vendors. DIU works with its DoD partners to develop short (from a few sentences to a paragraph), broad Areas of Interest (AoI) in laymen’s terms that it posts to its website. Interested companies respond directly to DIU with solution briefs in the form of papers (five pages or less) or slide decks (fifteen slides or less). The CSO model is available for use by other DoD components as well. Ultimately, however, the key to DIU’s success is the networks they have cultivated that help them identify and encourage nontraditional vendors to respond to DoD AoIs.

Defense Consortia

Defense Consortia are collaborative partnerships between the U.S. Government and a consortium of industry (large and small, traditional and nontraditional companies), non-profit organizations, research institutes, and academic institutions. Consortia are open to any U.S. entity and, depending on the consortium, may include as many as 500 organizations. A consortium is typically focused on a specific technology area or problem set and is managed by a consortium management firm that acts as the primary interface between the government and consortium members. The consortium management firm will work with a government partner to collaboratively develop a needs statement that it will communicate to its members and will assist in the proposal development and contracting actions of its members.

Partnership Intermediary Agreements

Partnership Intermediary Agreements are agreements between the Federal Government and State or local government agencies or nonprofit entities (i.e., intermediaries) that provide intermediary services between a Federal Government organization and small businesses, educational institutions, and laboratories. These public-facing intermediaries help government organizations find, collaborate with, and contract with industry, labs, and academic partners to discover and develop innovative solutions to solve problems that the organization is trying to solve. A good example of a partnership intermediary is SOFWERX, established through a partnership intermediary agreement between the U.S. Special Operations Command and the non-profit Doolittle Institute. Other partnership intermediaries include the Virginia Tech Applied Research Corporation; Defensewerx; the Center for Technology, Research, and Commercialization; Innovation and Modernization Patuxent River; and the Wright Brothers Institute.

Tradeshows, Conventions, and Industry Associations

Tradeshows, conventions, and industry associations offer great opportunities to discuss problems and mission needs and to announce new requirements, interest in new technologies, and rapid acquisition plans for the procurement of commercial-off-the-shelf technology, prototypes, or services.

Social Media and On-Line Resources

Several SMEs recommended the use of social media and on-line resources as solicitation venues. Social media outlet user groups (e.g., LinkedIn, Facebook, etc.) offer great access to targeted technology networks where nontraditional innovators may have a presence. Posting solicitations to these groups may generate solutions from innovators who otherwise would not have responded to traditional DoD solicitation approaches. Another option is to use crowd-sourcing sites (e.g., InnoCentive) to generate innovative ideas. These approaches may produce some very viable innovative solutions, but they may also spawn unrealistic or unfeasible solutions.

Reference Source: DoD Prototyping Handbook, Oct 2022

Several SMEs offered the following best practices for soliciting solutions for warfighter gaps:

• When developing solicitations, it is important to remember their intended audiences— especially when pursuing non-traditional defense contractors and academia. PMs should make an effort to translate the warfighter gaps from typical military terminology to technical needs that can be understood by all potential recipients. Any metrics included in the solicitation should also be drafted with the same vocabulary considerations.

• Before publishing solicitations, operations security analyses and public release reviews should be conducted to protect For Official Use Only or other sensitive information from being released to the public.

• Solicitations should include a request that respondents provide whatever data sets they have that support their solution or approach. These data sets will assist in determining the feasibility of the proposed solution.

• If applicable, solicitations should include a statement addressing the possibility of follow-on production.

• PMs should consider binning the needs into functional areas and having technical SMEs in those functional areas put together outlines of things they need to see from vendors for each functional area. These outlines can then be provided as part of the solicitation.

• The targeted commercial marketplace should be researched to identify venues and techniques typically used by that marketplace for soliciting specific needs. Potential venues and techniques include catalogs, product directories, trade journals, seminars, professional organizations, contractor briefings, meetings and conversations with companies, in-house experts, on-line resources, social media, and vendor surveys.

Reference Source: DoD Prototyping Handbook, Oct 2022

The following are examples of selection criteria that defense organizations have used to select prototyping projects.

• The Joint Special Operations Command (JSOC) Capability and Technology Evaluation (JCTE) team annually invites industry to submit solutions that address JSOC’s Technology Interest Areas and compete for Cooperative Research and Development Agreements (CRADA). The JCTE Team uses the following major criteria areas to assess submissions. Each of these major criteria areas has six possible responses, weighted 0-5.

• • Operational Relevance: Does the submission address a known gap?
  • Technical Merit: What level of supporting data accompanies the submission?
  • Deliverable: Will this be a paper product or a product for operational use?
  • Internal IRAD-to-Date: What level of funding has been invested in this proposed project to date?
  • Planned Future IRAD: What level of IRAD funding is planned to complete the project?
  • Schedule: Will this project be completed in less than 6 months or will it take longer than 24 months?

• The Rapid Prototyping Program (RPP) established criteria according to three guidelines—strategic, implied, and other guidelines. Their specific criteria are found in Table 4.

Reference Source: DAG CH 8-3.12 Incorporating T&E into DoD Acquisition Contracts

In the early phases of development, the contractor plans and executes the majority of design testing that transitions technology from science and technology efforts into functional capabilities desired by the military, as well as qualification testing of sub-component parts and products from vendors that makes up the system delivered to the military. The Lead DT&E Organization and Participating Test Organizations need to understand the contractor testing capabilities, processes, data collection, and analysis methods to assess the appropriate amount of visibility into those test activities as well as determine data collection and transfer benefiting government test organizations to avoid redundant or unnecessary testing. Government test organizations determine cost/benefit ratios with visibility into proprietary activity and data transfer to the government. In addition, consideration is given to near- and end-state evaluations during operational testing (OT).

The PM, combat developer, and appropriate T&E personnel collaboratively develop the acquisition and T&E strategies so that users’ capability-based operational requirements (i.e., CDD, Concept of Operations/Operational Mode Summary/Mission Profile (CONOPS/OMS/MP) are correctly translated into accurate contractual terms; and actions that give the highest probability of successful outcome for the government-contracted events provide for sufficient time to execute all regulatory and statutory T&E activities and reporting.

Incorporating T&E into DoD acquisition contracts is the test focus for the pre-RFP Review. It is essential that a good draft TEMP be available for the review and that the RFP adequately addresses the TEMP.

One key issue to remember: if the contract does not include a T&E item or requirement, do not expect it!