EXECUTIVE SUMMARY

(a) Multi-year Contracting (MYC) is a special contracting method that permits acquisition of known requirements for more than one year (but not more than five years) even though the total funds ultimately required to be obligated for subsequent years are not available at the time of contract award. MYC allows the contractor to conduct production and capitalization planning in a more efficient environment than that which characterizes the annual appropriations and acquisition cycle.

(b) Contractors are usually willing to become involved with MYC because the Government, in the event of contract cancellation, indemnifies them against the loss of costs, which would have been otherwise recouped over the full term of the contract. These unrecovered costs, which are reimbursed by the Government, are called cancellation charges and are limited to preaward negotiated (not-to-exceed) levels.

(c) This guide has three main purposes. First, it explains the benefits of MYC. Second, the guide enables an Integrated Product Team (IPT) to evaluate the potential use of MYC for its program. Lastly, if the use of MYC is selected by the IPT, the guide assists the IPT in structuring the correct MYC solicitation elements, in correctly verifying cost savings, and in properly awarding and administering a multi-year contract.