Steps

Tasks

Sources

NEGOTIATION/DISCUSSION

5

(a) CO negotiates if necessary to obtain surge coverage. Delivery for S&S items will be 30 days or less.

(b) CO makes every attempt to obtain surge coverage to include the following:

(i) Negotiate surge prices if necessary;

(ii) Use the exit strategy (e.g., surge asset buy-back for high demand items, surge asset ramp down) as leverage or negotiating tool to obtain surge coverage;

(iii) Consider alternate packaging or guaranteed minimum for surge items if appropriate and/or applicable;

(iv) Engage the IS and/or IB Chief during negotiations to determine alternate surge strategy to obtain coverage;

(v) Collaborate with IB Chief to determine if Government investment can be applied to obtain surge coverage.

NOTE: When negotiating/discussing surge, make every attempt to obtain surge coverage and consider vendor's proposed alternatives to support the Services' go-to-war items IAW DLAD 17.9303(a).

(c) If vendor's CAP excludes the exit strategy, obtain one during negotiation/discussion. Vendor is required to include an exit strategy IAW Clause 52.217-9006. CO ensures that the proposed exit strategy is in the Government's best interest.

(d) Consider the following exit strategies when WS or Government investment does not apply:

(i) Surge asset ramp-down before contract expiration date (i.e., 6-12 months);

(ii) Asset buy-back for highly demanded or backordered items based on historical stock position, or to have inventory on- hand until follow-on contract can be established;

(iii) Apply asset buy-back guaranteed minimum in percent, dollar amount, or quantity based on historical demand patterns and/or items with long lead times;

(iv) Shift assets to other contracts if applicable.

(e) Consider the following exit strategies or other alternate strategy that is in the Government's best interest when Warstopper investment applies:

(i) Transfer investment to the next contract;

(ii) Put investments into production to produce finished goods and offset price for Government furnished property, material, or equipment;

(iii) Salvage investment to be used for other government projects; or

(iv) Return funds to US Treasury through the WS Program Manager at HQ DLA J-74.

(f) For other Government investment application:

(i) Supplier may request for Government investment during negotiation/discussion;

(ii) CO consults the IS to determine if Government investment can be applied and IS advises the CO;

(iii) CO exercises prudence and limit or conserve use of Government investment when obtaining S&S coverage. Only authorize or allow Government investment to overcome S&S shortfall and/or to obtain coverage. Refer to 52.217-9006(c)(3) to (7) for shortfall conditions;

(iv) CO and IS approve request for Government investment only when it is absolutely in the Government's best interest to do so;

(v) CO ensures an exit strategy is included when Government investment applies. Refer to exit strategy alternatives under (e) above.

(g) For Warstopper (WS) investment application:

(i) WS application is determined and approved by the DLA HQ J-7 WS Program Manager(PM).

(ii) When WS investment applies, CO notifies the vendor(s) of Government investment during negotiations or discussions. Refer to 52.217-9010 for Limitation on Use of S&S Government Investment.

(iii) CO exercises great prudence when negotiating surge coverage with WS investment and only include when approved by DLA HQ J-7 WS PM.

(h) When DLA HQ J-7 WS PM approves use of WS investment, the CO consults the IS to process the investment:

(i) IS processes the request and advises the CO of WS funding approval;

(ii) Upon receiving funding approval, the CO:

(A) Includes the WS CLIN 9965 and not-to-exceed amount in the contract;

(B) Incorporate appropriate exit strategy as listed under (e) above;

(i) If WS or Government funding is approved before contract award, CO notifies all vendors competing in the acquisition of the approved investment amount and includes explicit written language describing use and limitation of Government investment.

(j) If WS or Government funding approval occurred after contract award, CO notifies and advises the supplier of approval by issuing a contract modification with the approved dollar amount using CLIN 9965 and includes explicit written language describing use and limitation of Government investment.

(k) For a successful negotiation,

(i) Proceed with awarding surge coverage;

(ii) Include appropriate surge CLINS, MWR/D1-D6 prices, exit strategy, WS investment (if applicable) in the contract;

(iii) Include explicit language in the contract on use and limitation of WS or Government investment;

(iv) Document the PNM of surge negotiation results.

(l) When negotiation is unsuccessful,

(i) After making every attempt to obtain surge coverage, and vendor refuses to support surge, and/or negotiation becomes extended, and/or surge prices are unreasonable, Buyer elevates to the CO for a waiver request decision and describe attempts made to obtain surge coverage;

(ii) CO consults IB Chief for alternate solutions or recommends to exclude surge requirement, in part or as whole, via a waiver request;

(iii) IB Chief recommends alternate solution if any or approve waiver request;

(m) Surge Waiver Process

(i) CO sends a waiver request to the IB Chief via email that includes the following information:

(A) Describe every attempts made to obtain surge coverage;

(B) Inform IB Chief whether the contract maximum (quantity or dollar value) can sustain potential increase in demands in the event of future contingency or emergency;

(C) Incorporate CO's decision/concurrence to exclude surge, in part or as a whole, in the email;

(D) Attach surge coverage or item(s) being excluded from LTC;

(ii) IB Chief may recommend other alternatives if any or approves the waiver request via email and forwards a copy to HQ DLA J-74;

(iii) Buyer excludes surge coverage or item(s) as a requirement after receiving approval from the IB Chief;

(iv) CO ensures the contract maximum (quantity or dollar value) can cover potential surge in demands in the event of future contingencies to prevent untimely contract expiration;

(v) Buyer documents the PNM and includes the waiver approval in the contract file;

(vi) IS coordinates with SMSG or IST Lead for alternate surge support strategy for the excluded surge coverage or item(s).

(n) IS in collaboration with the SMSG or IST Lead considers the following alternatives:

(i) Corporate Exigency Contracts (CEC);

(ii) Minimum Sustaining Rate (MSR) contracts (this type of contract may generate protected inventory that can be used to meet contingency demands as free issue);

(iii) Industrial Base Maintenance Contracts (IBMC);

(iv) Vendor Managed Inventory; and/or

(v) Agreements common in some industries (e.g. subsistence), such as memorandum of understanding/agreement or blanket purchase agreement.

(o) If using alternate support strategies listed under (n) above, DLAD 17.93 does not apply. Terms, conditions, and provisions for these alternatives will be developed and established by the Contracting Officer and IS based upon specific contingency support needs of the customer(s).

(p) When the alternative methods to obtain S&S coverage also fail, the IS notifies the IB Chief and HQ DLA J-74 that Unsupported Item Issue (UII) exists. IS takes the appropriate action to notify the Service(s) and document UII in the appropriate IB tool (i.e., IBMS, SPIDERS, RMA). IS relays the information to the SMSG/IST Lead for future acquisition planning and strategy.

(q) CO documents the contract file of the UII for future use.

17.9303(c)(4)