(e) HOW TO PREPARE A SAVINGS VALIDATION PACKAGE.

Present the contents as described below:

(1) I. Purpose. The purpose of this document is to establish validated multi-year savings attributable to the use of MYC in acquiring [quantity] [name of end item] FY__ through FY__ requirements.

(2) II. Background. Provide relevant background information. In most cases, it will consist of:

(i) When, how and why MYC was considered. For example:

"During FY__, the Air Force was formulating a plan for satisfying its FY __ through FY __ requirements. A multi-year feasibility study was conducted. It indicated that significant savings could be achieved through the use of a multi-year contract. In [month and year] a MJP was prepared based on budgetary estimates. It was submitted through appropriate channels to support the Air Force's recommendation to use MYC."

"In [month and year], the Department of Defense submitted a MJP to Congress (Appendix A). This set of multi-year exhibits, based on budget estimates, projected that the Government could realize multi-year savings of $__ million (then year) or __ percent by acquiring the [name of end item] under a multi-year contract rather than a series of annual-buy contracts."

(ii) When and how Congress authorized use of the multi-year contract. For example:

"Based on data in the [month and year] justification package, the Congress authorized the use of a multi-year contract in Section __ of the FY__ Appropriations Act and appropriated funds for that purpose."

(iii) When the Air Force initiated procurement action.

(iv) When the Air Force and the contractor reached agreement on the price of the multi-year contract.

(v) The extent to which the negotiated contract differs from the contract contemplated when the MJP was prepared. For example:

"There were limited, but significant, differences between the contract baseline contemplated in [month and year when the justification package was prepared] and the baseline actually existing when negotiations were completed. These differences are summarized in Appendix C. They must be understood in order to relate the validated multi-year savings (based on actual contract details) to the projected multi-year savings based on budgetary estimates developed prior to [previously cited month and year].

(3) III. Statement of Validated Multi-year Savings. Show in summary form the derivation of the validated multi-year savings. Use the data that fit your circumstances. You should include:

(4) IV. Method of Determining Amount of Validated Multi-year Savings. Describe how you arrived at the validated multi-year savings. In this description you should identify the source documents you used, the analysis you performed, and any other analyses or calculations you performed to determine the amount of validated multi-year savings.

(5) V. Appendices. Include Appendices that provide necessary support documentation. At a minimum, include:

(i) Appendix A, Multi-year Justification Package.

(ii) Appendix B, Chronology of Events. Some of the events you should include are:

(A) Date RFP was issued.

(B) Date proposals were received.

(C) Beginning and ending dates of factfinding.

(D) Date any revised proposals were received.

(E) Date of Appropriations Act that provided authority to use a multi-year contract.

(F) Beginning and ending dates of Should Cost, if done.

(G) Beginning and ending dates of negotiations.

(iii) Appendix C, Baseline Differences. (Summarize the differences between the set of assumptions underlying the estimates in the MJP and the set of facts and assumptions underlying the data in the savings validation exhibits. Examples include:

(A) The MJP estimates were based on [month and year] inflation projections. The negotiated price is based on [month and year] inflation projections.

(B) The MJP estimates were based on a configuration baseline of [dates]. The negotiated baseline includes Engineering Change Proposals identified in the Price Negotiation Memorandum.

The MJP estimates were based on the assumption that the contract would include a duration and description warranty. The negotiated contract includes a duration and description warranty.

(iv) Appendix D, Savings Validation Exhibits. Additional appendices may be necessary. If, for example, your analysis cannot be adequately explained by a paragraph in the body of the package, you should put the full explanation in an appendix. Or, if the multi-year contract includes a few line items priced on a conventional annual-buy basis, you may need an appendix to list those line items. This is significant because it causes the contract price to be higher than the Total Multi-year Cost on Exhibit MYP-3, Contract Funding Plan (Normally, those two numbers are identical).

(A) Prior to award, the negotiated multi-year price should be compared to a notional annual buy price that is based upon the annual buy proposal or position (if annual buy proposal has been waived) used in the initial savings validation as updated for comparable proposal and negotiation changes made during the multi-year negotiation process. A full audit trail of the construction of the annual buy position should be maintained in the official contract file. Competitively derived validation findings should reflect a comparison of the contracts actual multi-year proposed price to its comparable annual buy proposed price.

(1) The validation finding format should be similar to that of the initial findings supported by an updated set of exhibits. However, the format can be adapted to fit the needs of your program.

(2) Validation findings will be made prior to initiation of the multi-year contract if its price is definitized prior to the initiation.

(3) If the multi-year effort was initiated with an undefinitized contract vehicle (letter contract, EOQ advance buy contract, etc.) a preliminary validation findings should be prepared based upon dual proposal data as analyzed by the contracting officer to ensure proposal validity. If changes are made to the proposal data in preparing the validation exhibits, the contracting officer should maintain a good audit trail of those adjustments. Following the conclusion of negotiation, a final validation findings must be made before definitization.

(B) Validation Categories and Approval Levels

(1) Validation efforts will result in one of the three situations described in the categories below:

(2) The findings used in the verification are referred to as validation findings. After verification by the contracting officer, the approval of Category I findings must be done by the same organizational level required to approve the initial findings. For validation Category II findings, SAF/AQ approves major MYCs, and the HCA approves all others. For validation Category III findings, SAF/AQ approval is necessary for major MYCs and SAF/AQC approval is necessary for all others.

(3) After approval of the validation findings, additional reviews or Congressional notifications may be required prior to award depending on unfunded contingent liability amounts, EOQ amounts, and others. (See notification requirements in AFFARS 5317.191.)