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DoD Limits Authority for Certain Line Items and Options

A Department of Defense interim rule amends the Defense Federal Acquisition Regulation Supplement to implement Section 819 of the National Defense Authorization Act for Fiscal Year 2010 (PL 111-84), which places limitations on certain types of line items and contract options that may be included in contracts initially awarded pursuant to competitive solicitations. Section 819 is intended to prevent a contract for new technology that is initially awarded competitively from becoming a noncompetitive effort for the development of advanced components or the procurement of prototype units. To do so, Section 819 places limitations on the dollar value, period of performance, and time for exercise of contract line items or contract options for advanced component development or procurement of prototype items. Specifically, the contract line item or contract option must be limited to the minimal amount of initial or additional prototype items that will allow for timely competitive solicitation and award of a follow-on development or production contract for those items. The term of the contract line item or contract option cannot be longer than 12 months, and the dollar value of the work to be performed pursuant to the contract line item or contract option may not exceed the lesser of the amount that is three times the dollar value of the work previously performed under the contract or $20 million. Because the coverage is most likely to apply to major systems acquisitions, the rule adds a new DFARS 234.005-1, entitled "Competition." However, the language applies to the exercise and content of certain contract options so the rule adds a reference to DFARS 234.005-1 at DFARS 217.202, Use of options. Comments on the interim rule, identified by DFARS Case 2009-D034, are due by August 9, 2010. For the text of the rule, which is effective June 8, 2010, see 70,016.568.




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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