Major Capability Acquisition (MCA)

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Study Contracts

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Each page in this pathway presents a wealth of curated knowledge from acquisition policies, guides, templates, training, reports, websites, case studies, and other resources. It also provides a framework for functional experts and practitioners across DoD to contribute to the collective knowledge base. This site aggregates official DoD policies, guides, references, and more.

DoD and Service policy is indicated by a BLUE vertical line.

Directly quoted material is preceeded with a link to the Reference Source.

Reference Source: FAR 34.005-3

Whenever practicable, contracts to be performed during the concept exploration phase shall be for relatively short periods, at planned dollar levels. These contracts are to refine the proposed concept and to reduce the concept’s technical uncertainties. The scope of work for this phase of the program shall be consistent with the Government’s planned budget for the phase. Follow-on contracts for such tasks in the exploration phase shall be awarded as long as the concept approach remains promising, the contractor’s progress is acceptable, and it is economically practicable to do so

Contracting Strategies

Reference Source: Contracting Cone

The Contracting Cone presents the full spectrum of FAR and non-FAR based contracting solutions available for consideration.

Contracting Cone showing a spectrum of contracting strategies, which are categorized by FAR and Non-FAR/Statutory authorities.

 

The contracting strategies highlighted below may be particularly well-suited for study efforts to explore technological and innovative solutions, improve existing products, or develop new products.

IDIQ/MAC/GWAC Contracts (FAR Part 16.5)

Reference Source: Contracting Cone – IDIQ (FAR Part 16.5)

IDIQ contracts provide a method to order from existing agency indefinite-delivery contracts as well as contracts awarded by another agency (i.e. Government-wide Acquisition Contracts (GWAC) and Multi-Agency Contracts (MAC)).

Restrictions
  • Scope determination required (work, period of performance, and ceiling)
  • Fair opportunity required for a delivery-order or task-order exceeding micro-purchase threshold unless one of the following statutory exceptions applies:
    • The agency need for the supplies or services is so urgent that providing a fair opportunity would result in unacceptable delays
    • Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized
    • The order must be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the contract, provided that all awardees were given a fair opportunity to be considered for the original order
    • It is necessary to place an order to satisfy a minimum guarantee
    • For orders exceeding the simplified acquisition threshold, a statute expressly authorizes or requires that the purchase be made from a specified source
    • In accordance with section 1331 of Public Law 111-240 (15 U.S.C. §644(r)), contracting officers may, at their discretion, set aside orders for any of the small business concerns identified in FAR Part 19.000(a)(3). When setting aside orders for small business concerns, the specific small business program eligibility requirements identified in FAR Part 19 apply.

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

Broad Agency Announcement (FAR Part 35.016)

Reference Source: Contracting Cone – BAA FAR Part 35.016

BAAs are used to obtain proposals for basic and applied research and development to advance or evaluate cutting edge technologies, not related to a specific system or hardware requirement. BAAs should be used when meaningful solutions can be expected. BAAs are typically “open” and proposals accepted for a specified period of time. Proposals submitted in response to BAAs may or may not lead to contracts.

 

Restrictions
  • Limited to basic and applied research
  • Must be funded using RDT&E funds
  • Cannot be used for specific system or hardware solution
  • Cannot be used for systems engineering and advisory services
  • Cannot be used for production

See additional references and resources for this strategy in the Contracting Cone – BAA FAR Part 35.016

Small Business Innovation Research (SBIR)

Reference Source: Contracting Cone – SBIR/STTR

Small Business Innovation Research (SBIR) is a competitive program that encourages small businesses to engage in Federal Research and Development (R&D) with the potential for commercialization to stimulate innovation.

Small Business Technology Transfer (STTR) is another program to facilitate cooperative R&D between small business concerns and non-profit U.S. research institutions with the potential for commercialization of innovative technological solutions.

Federal agencies with R&D budgets exceeding $100 million are required to allocate a percentage of their R&D budget to these programs. Participating agencies determine relevant R&D topics for their programs.

SBIR/STTR is a gated process with three (3) phases executed through BAA contracts, grants, or agreements:

  • Phase I Concept Development: Explore technical merit and feasibility of an idea or technology and determine the quality of performance of the small business prior to providing further Federal support in Phase II. Contracts are no more than 6 months in duration and are funded by the SBIR/STTR program. Typically, Phase I awards are typically less than $150,000.
  • Phase II Prototype Development: Continue R&D efforts initiated in Phase I and evaluate commercialization potential. Contracts are no more than 24 months, are funded by the SBIR/STTR program, and typically are less than $1 million. Award amounts are based on Phase I results and scientific and technical merit for commercialization.
  • Phase III Commercialization: Work that derives from, extends, or completes R&D efforts under prior SBIR/STTR Phase I/II and enables a small business to pursue commercialization. Phase III work may be for products (including test and evaluation), production contracts, and/or R&D activities. There is no limit on the number, duration, type, or dollar value of Phase III award. Phase III awards cannot be funded by the SBIR program. Agencies may enter into a Phase III SBIR contracts, grants, or agreements at any time (competitively or non-competitively) with a Phase I or Phase II awardee.
Restrictions
  • SBIR/STTR data rights protection: Apply to all phases and restricts the Government from disclosing SBIR data outside the Government. Government cannot compete technologies containing SBIR data.
  • Sole source Phase III awards may not be appropriate in all cases if multiple sources exist in the open market for similar product.

See additional references and resources for this strategy in the Contracting Cone – SBIR/STTR.

Commercial Solutions Opening (CSO)

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

The Defense Commercial Solutions Opening (CSO) Pilot is a competitive program authorized by Section 879 of the FY17 NDAA 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.

Research Other Transactions (OTs)

Reference Source: Contracting Cone – Research OTs

Research OTs (10 U.S.C. §2371)

Research OTs are appropriate for basic, applied, and advanced research projects related to weapons systems or other military needs. Research OTs may be used to pursue research and development of technology with dual-use application (commercial and government). Unlike Prototype OTs, Research OTs do not include authority for transition to follow-on production contracts or transactions.

Research OTs should include a cost sharing arrangement that, to the maximum extent practicable, do not require funds provided by the government to exceed funds provided by other parties. There is latitude for the final share ratio to be other than 50/50 based on considerations such as the party’s resources, prior investments in the technology, commercial vs. military relevant, unusual performance risk, and nature of the project.

Although CICA is not applicable, competition should be pursued to the maximum extent practicable to incentivize high quality and competitive pricing.

Research OTs are also used to execute Technology Investment Agreements (TIAs) when the government seeks to retain intellectual property rights that deviate from the Bayh-Dole Act (35 U.S.C. §18  and 37 CFR Part 401) which permits a university, small business, or non-profit institution to pursue ownership of an invention made using government provided funds.

 

Restrictions
  • FAR/DFARS are not applicable
  • 50/50 cost share arrangement to maximum extent practicable
  • Agencies must be explicitly authorized by Congress to use OTs
  • Contracting Officer must have Agreement Officer authority to execute

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

Contract Types

Reference Source: FAR 16.101

A wide selection of contract types is available to the Government and contractors in order to provide needed flexibility in acquiring the large variety and volume of supplies and services required by agencies. Contract types vary according to:

  • The degree and timing of the responsibility assumed by the contractor for the costs of performance; and
  • The amount and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or goals.

The contract types are grouped into two broad categories: fixed-price contracts (see subpart 16.2) and cost-reimbursement contracts (see subpart 16.3). The specific contract types range from firm-fixed-price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss), to cost-plus-fixed-fee, in which the contractor has minimal responsibility for the performance costs and the negotiated fee (profit) is fixed. In between are the various incentive contracts (see subpart 16.4), in which the contractor’s responsibility for the performance costs and the profit or fee incentives offered are tailored to the uncertainties involved in contract performance.

Reference Source: FAR 16.601

A time-and-materials contract provides for acquiring supplies or services on the basis of direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit; and actual cost for materials (except as provided for in 31.205-26 (e) and (f)).

Reference Source: Contracting Cone

The Contracting Cone provides a Contract Type Matrix that maps the contract types that are allowed for each of the contract strategies outlined in the Contracting Cone. Note that non-FAR based, or Statutory Authority, contract strategies are executed via agreements vice contracts.

Contract Type Selection - MSA Phase

Reference Source: DAG CH 1–4.2.11.4 Contract Types

In the Materiel Solution Analysis phase, programs contract for analytical studies, often using Firm-Fixed-Price (FFP) contracts.

Reference Source: FAR 16.207-2

A firm-fixed-price, level-of-effort term contract is suitable for investigation or study in a specific research and development area. The product of the contract is usually a report showing the results achieved through application of the required level of effort. However, payment is based on the effort expended rather than on the results achieved.

Reference Source: FAR 16.306

A cost-plus-fixed-fee contract is suitable for use when the conditions of 16.301-2 are present and, for example-

  • The contract is for the performance of research or preliminary exploration or study, and the level of effort required is unknown; or
  • The contract is for development and test, and using a cost-plus-incentive-fee contract is not practical.

 A cost-plus-fixed-fee contract normally should not be used in development of major systems (see part 34) once preliminary exploration, studies, and risk reduction have indicated a high degree of probability that the development is achievable and the Government has established reasonably firm performance objectives and schedules.

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.)