[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR17.106-3]

[Page 322]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 17_SPECIAL CONTRACTING METHODS--Table of Contents
 
                   Subpart 17.1_Multiyear Contracting
 
Sec.  17.106-3  Special procedures applicable to DoD, NASA, and the Coast Guard.

    (a) Participation by subcontractors, suppliers, and vendors. In 
order to broaden the defense industrial base, to the maximum extent 
practicable--
    (1) Multiyear contracting shall be used in such a manner as to seek, 
retain, and promote the use under such contracts of companies that are 
subcontractors, suppliers, and vendors; and
    (2) Upon accrual of any payment or other benefit under such a 
multiyear contract to any subcontractor, supplier, or vendor company 
participating in such contract, such payment or benefit shall be 
delivered to such company in the most expeditious manner practicable.
    (b) Protection of existing authority. To the extent practicable, 
multiyear contracting shall not be carried out in a manner to preclude 
or curtail the existing ability of the Department or agency to provide 
for termination of a prime contract, the performance of which is 
deficient with respect to cost, quality, or schedule.
    (c) Cancellation or termination for insufficient funding. In the 
event funds are not made available for the continuation of a multiyear 
contract awarded using the procedures in this section, the contract 
shall be canceled or terminated.
    (d) Contracts awarded under the multiyear procedure shall be firm-
fixed-price, fixed-price with economic price adjustment, or fixed-price 
incentive.
    (e) Recurring costs in cancellation ceiling. The inclusion of 
recurring costs in cancellation ceilings is an exception to normal 
contract financing arrangements and requires approval by the agency 
head.
    (f) Annual and multiyear proposals. Obtaining both annual and 
multiyear offers provides reduced lead time for making an annual award 
in the event that the multiyear award is not in the Government's 
interest. Obtaining both also provides a basis for the computation of 
savings and other benefits. However, the preparation and evaluation of 
dual offers may increase administrative costs and workload for both 
offerors and the Government, especially for large or complex 
acquisitions. The head of a contracting activity may authorize the use 
of a solicitation requesting only multiyear prices, provided it is found 
that such a solicitation is in the Government's interest, and that dual 
proposals are not necessary to meet the objectives in 17.105-2.
    (g) Level unit prices. Multiyear contract procedures provide for the 
amortization of certain costs over the entire contract quantity 
resulting in identical (level) unit prices (except when the economic 
price adjustment terms apply) for all items or services under the 
multiyear contract. If level unit pricing is not in the Government's 
interest, the head of a contracting activity may approve the use of 
variable unit prices, provided that for competitive proposals there is a 
valid method of evaluation.