Defense Logistics Agency Instruction

Defense Logistics Agency Instruction

DLAI 3210 Effective August 20, 2003

Modified March 3, 2010 Logistics Operations and Readiness

Organic Manufacturing

References: Refer to Enclosure 1.

1. PURPOSE. This Instruction prescribes the process DLA uses for the soliciting from and placing project orders with public manufacturers. This chapter does not address procedures for conducting public private competition (i.e. Office of Management and Budget Circular A-76). Authority for this chapter is 41 United States Code (U.S.C.) 23. This chapter provides additional guidance to that found in DOD Financial Management Regulation (FMR) 7000.14-R, Volume 11A. The contracting officer should review and be knowledgeable of this FMR to ensure all provisions of public manufacturing are met.

We do this process because using DOD organic manufacturing sources are "last resort" suppliers for items that are not obtainable from the private sector. Solicitations to public manufacturers are based on conditions stated herein.

2. APPLICABIILTY. This Instruction applies to Headquarters, DLA and DLA Defense Supply Centers (DSC).

3. POLICY. It is DLA policy to rely on the private sector as the primary source of supply for required material and services. However, public manufacturers will be solicited when the private sector cannot meet Agency requirements, or where using the public sector meets the intent of laws providing direct access (e.g., Army Arsenal Act (10 U.S.C. ? 4532).

4. RESPONSIBILITIES. Refer to Enclosure 2.

5. PROCEDURES. Refer to Enclosure 2. Refer to Enclosure 3 for definitions.

6. EFFECTIVE DATE. October 22, 2004.

Richard J. Connelly Director, DLA Support Services

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Enclosure 1

References

1. This Instruction constitutes a reformatting of DLA One Book Process Chapter, Organic Manufacturing. 2. 10 U.S.C. ? 4532, Army Arsenal Act. 3. Federal Acquisition Regulation (FAR) Part 27, Patents, Data, and Copyrights. 4. FAR 4.7., Contractor Records Retention. 5. Defense Federal Acquisition Regulation Supplement (DFARS) 204.7003, Procurement Instrument Identification Numbers (PIIN). 6. DLA FOXP Memorandum, Subject: Issuing Inter-service and Intra-governmental Orders, dated August 25, 1998. 7. Procurement Process ? Contract Clearance and Oversight. 8. DLA Technical Quality Policy and Procedures Desk Book, Appendix A28. 9. Quality Assurance (QA) Program. 10. DOD 7000.14R FMR, VOL 11A, Chapter 2, Subject: Project Orders.

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Enclosure 2 Procedures

NOTE: Only Contracting Officers shall award "stand-alone PO's. However, if an order is placed against an existing PO, the order may be placed by an authorized Ordering Officer. PO's shall define authorized Ordering Officers (if any). Contracting offices shall use similar business systems and practices for public and private sectors. Contracting personnel are responsible for issuing the Rough Order of Magnitude (ROM) request, RFQ, SF 18 or similar form, and award document; entering the project order into the DLA Contract Action Reporting System (DCARS); and performing/delegating post award functions. Request for Price and Delivery Estimate (RPDE) may be assigned for processing to the OM Program Personnel (See DLA TechnicalQuality Policy and Procedures Desk Book, Appendix A28. Supply, Technical, and Quality functional activities will be the same as used for private sector acquisitions to the maximum extent possible.

1. A SLA is an agreement between the DLA and the Military Services that establishes a standard DSC format for the obligation of funds and the specific working arrangements for manufacture or refurbishment of parts. When these agreements are established, subsequent project orders shall reference these SLA's by the DSC.

1.1. Contracting officers shall ensure that quality assurance provisions consistent with private sector vendor requirements are contained in the award document. For example, if a certificate of conformance is required from a private sector manufacturer for an item (or for an equivalent item in the case of a first time Agency acquisition), the same will be required from the public manufacturer. If Defense Contract Management Agency, (DCMA) would be tasked to perform source inspection at a private manufacturer's plant, DCMA should be tasked to provide these inspections using the provisions below. These provisions will be clearly specified in any issued project order. Configuration Control measures will be consistent with private sector procurements.

1.2. Government Source Inspection (GSI) on OM Project Orders:

1.2.1. Critical Safety Items: QA requirements including GSI mandated by the Military Services will not be waived by DLA. If an OM site refuses to bid items with these requirements, refer the solicitation to Tech/Quality for review with the Engineering Support Activity for possible relief. If OM site refuses to bid these items, then they must be considered nonprocurable.

1.2.2. Critical Application Items: These items may be procured using Destination Inspection and Acceptance with a Certificate of Quality Conformance in accordance with QA Program procedures.

1.2.3. Foreign Military Sales (FMS) Items: GSI requirements will not be waived by DLA for FMS items. If OM site refuses to bid these items, then they must be considered nonprocurable.

1.2.4. All Other Items: Procure using Destination Inspection and Acceptance.

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1.3. Conditions for Use of Public Manufacturers.

1.3.1. Public manufacturer(s) should be solicited when:

1.3.1.1. No responsive/technically acceptable offer from a responsible private sector source is received in response to a solicitation. The determination that the offer is unacceptable requires contracting officer consideration of several factors, including the urgency of need, the potential that an acceptable agreement could be obtained through negotiations, and the possibility of breaking out non-urgent quantities for a private sector award. A private sector response may also be considered unacceptable if any of the following un-resolvable conditions exist:

1.3.1.1.1. The offeror can not meet the required delivery date.

1.3.1.1.2. The proposed price is considered unreasonable (or not fair and reasonable under the circumstances in accordance with Procurement Process ? Contract Clearance and Oversight. Caution must be exercised to ensure that a project order is not subsequently issued at a price exceeding the price found unreasonable in the private sector. However, the contracting officer may determine that it is in the government's best interest to issue a project order under these circumstances if: (a) the public manufacturer's price includes one time startup costs, (b) there is a recurring demand for the item, and (c) subsequent prices for the item are anticipated to be lower than the unreasonable private sector price. Such determination must be in writing and approved by the head of the contracting activity. This approval authority may be delegated to the Chief of the Contracting Office. Note that these same considerations should be applied to private sector quotes as part of the price reasonability determination.

1.3.1.2. If an item has never been acquired from the private sector as a result of being designated for public manufacture under the authority of the Army Arsenal Act (10 U.S.C. ? 4532) or similar Military Department authorities, the contracting officer may continue to rely exclusively on a public manufacturer as the source of supply (this situation may exist for a large number of items to be acquired as Numerical Stock Objective or "insurance" items).

1.3.2. Limitations on Use of Public Manufacturers. PO may be issued only to DOD owned and operated establishments that have been given the authority to operate a reimbursable program in an amount equal to or exceeding the project order amount(s). Additionally, project orders shall be issued only to those DOD owned and operated establishments that are capable of substantially performing the work ordered (i.e., the project order recipient should incur costs of not less than 51% of the total costs attributable to rendering the work or services ordered). The contracting officer should ensure that applicable restrictions of DOD FMR 7000.14R, Volume 11A are met. Additionally, acquiring activities shall obtain a letter signed by the public manufacturers Commander/Director or authorized designee specifying who is authorized to accept a project order on behalf of the public manufacturer.

1.4. Solicitation Procedures.

1.4.1. When an applicable condition of section number "1.3." is satisfied, the following procedures shall be used in soliciting public manufacturers:

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