[Code of Federal Regulations]
[Title 32, Volume 1]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR3.9]

[Page 20-21]
 
                       TITLE 32--NATIONAL DEFENSE
 
              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE
 
PART 3_TRANSACTIONS OTHER THAN CONTRACTS, GRANTS, OR COOPERATIVE AGREEMENTS FOR PROTOTYPE PROJECTS--Table of Contents
 
Sec.  3.9  Follow-on production contracts.

    (a) Authority. A competitively awarded OT agreement for a prototype 
project that satisfies the condition set forth in law that requires non-
Federal parties to the OT agreement to provide at least one-third of the 
costs of the prototype project may provide for the award of a follow-on 
production contract to the awardee of the OT prototype agreement for a 
specific number of units at specific target prices, without further 
competition.
    (b) Conditions. The Agreements Officer must do the following in the 
award of the prototype project:
    (1) Ensure non-Federal parties to the OT prototype agreement offer 
at least one-third of the costs of the prototype project pursuant to 
subsection (d)(1)(B)(i), 10 U.S.C. 2371 note.
    (2) Use competition to select parties for participation in the OT 
prototype agreement and evaluate the proposed quantity and target prices 
for the follow-on production units as part of that competition.
    (3) Determine the production quantity that may be procured without 
further competition, by balancing of the level of the investment made in 
the project by the non-Federal parties with the interest of the Federal 
Government in having competition among sources in the acquisition of the 
product or products prototyped under the project.
    (4) Specify the production quantity and target prices in the OT 
prototype agreement and stipualte in the agreement that the Contracting 
Officer for the follow-on contract may award a production contract 
without further competition if the awardee successfully completes the 
prototype project and agrees to production quantities and prices that do 
not exceed those specified in the OT prototype agreement (see part 
206.001 of the Defense Federal Acquisition Regulation Supplement).
    (c) Limitation. As a matter of policy, establishing target prices 
for production units should only be considered when the risk of the 
prototype project permits realistic production pricing

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without placing undue risks on the awardee.
    (d) Documentation. (1) The Agreements Officer will need to provide 
information to the Contracting Officer from the agreement and award file 
that the conditions set forth in paragraph (b) of this section have been 
satisfied.
    (2) The information shall contain, at a minimum:
    (i) The competitive procedures used;
    (ii) How the production quantities and target prices were evaluated 
in the competition;
    (iii) The percentage of cost-share; and
    (iv) The production quantities and target prices set forth in the OT 
agreement.
    (3) The Project Manager will provide evidence of successful 
completion of the prototype project to the Contracting Officer.

[69 FR 16482, Mar. 30, 2004]

                          PARTS 4	8 [RESERVED]

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