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NMCARS PART 5201 FEDERAL ACQUISITION REGULATIONS SYSTEM



PART 5201 FEDERAL ACQUISITION REGULATIONS SYSTEM

SUBPART 5201.1—PURPOSE, AUTHORITY, ISSUANCE

5201.101 (FAR 1.101) Purpose.

The Navy Marine Corps Acquisition Regulation Supplement (NMCARS) establishes uniform Department of the Navy (DoN) policies and procedures implementing and supplementing the Federal Acquisition Regulation (FAR) and the Defense FAR Supplement (DFARS).

5201.102 (FAR 1.102) Statement of guiding principles for the Federal Acquisition System.

(d)(S-90) By October 15th of each even numbered year, and to support the biennial certification required by the Senior Procurement Executive (SPE), the Heads of the Contracting Activity (HCAs) shall submit written certifications that the contracting activity is in compliance with Department of Defense (DoD) Instruction (DoDI) 5000.66 and Deputy Secretary of Defense memorandum, Reinforcing the Evaluation Requirements Of Contracting Officers Under DoDI 5000.66, dated August 27, 2008. Activities shall submit certifications to Deputy Assistant Secretary of the Navy (Acquisition and Procurement) (DASN(AP)) by email at RDAJ&As.fct@navy.mil with the subject “FAR 1.102 - Biennial Certification of Evaluation Requirements of Contracting Officers.”

5201.103 (FAR 1.103) Authority.

(b) The NMCARS is prepared, issued, and maintained pursuant to the authority of Secretary of the Navy (SECNAV) Instruction (SECNAVINST) 5400.15.

(S-90) All DoN activity acquisition regulation supplements and changes thereto are required to be approved by DASN(AP). Requests for review and DASN(AP) approval shall be submitted

annually via email to Policy@navy.mil with the subject “[Activity Name] acquisition regulation

supplement – Request for Approval.”

5201.104 (DFARS 201.104) Applicability.

The NMCARS applies to all DoN activities in the same manner and to the same extent as specified in FAR 1.104 and DFARS 201.104.

5201.105 (FAR 1.105) Issuance.

5201.105-2 (FAR 1.105-2) Arrangement of regulations.

(c) References and citations.

(1) References to this supplement within this supplement will be without a name or acronym prefix. References to FAR citations in this supplement should be read to include any corresponding paragraphs of the DFARS and this supplement and any additional authorizations, restrictions, policies and procedures they may contain. For example, the words "...when authorized under FAR Part 25..." include authorities granted under FAR Part 25, DFARS Part 225 and Part 5225 of this supplement. A FAR cite in parentheses immediately after the NMCARS cite means related coverage is contained in the FAR (e.g. 5201.104 (FAR 1.104)). A DFARS cite in parentheses immediately after the NMCARS cite means related coverage is contained in the DFARS (e.g. 5201.104 (DFARS 201.104)). A Procedures, Guidance and Information (PGI) cite in parenthesis immediately after the NMCARS cite means related coverage is contained in PGI (e.g. 5201.104 (PGI 201.104)). The cite denoted in parentheses represents the lowest level of guidance contained in FAR, DFARS and the PGI. Additional relevant guidance associated with the NMCARS content may also be contained in the higher level documents.

5201.107 (DFARS 201.107) Certifications.

In accordance with 41 United States Code (U.S.C.) 1304, a new requirement for a certification by a contractor or offeror may not be included in any activity supplement, clause book, contract clause, solicitation provision, policy letter, policy memorandum or any other similar document unless-

(1) The certification requirement is specifically imposed by statute; or

(2) Written justification for such certification is provided to the Secretary of Defense (SECDEF) by Assistant Secretary of the Navy (Research Development & Acquisition) (ASN(RDA)), and the SECDEF approves in writing the inclusion of such certification requirement.

5201.108 (FAR 1.108) FAR conventions.

(b) Delegation of authority. Within this supplement, any authorities assigned or delegated to a specific level may be delegated or redelegated, unless otherwise restricted.

5201.170 (DFARS 201.170) Peer reviews.

(a)(1) DoN peer reviews shall be performed on solicitations and contracts with estimated values at $50,000,000 or more (including options). If using multiple award procedures, one Peer Review shall apply for all resulting contracts. Annex 8 contains additional Peer Review guidance. Submit the peer review package to DASN(AP) by email at RDAJ&As.fct@navy.mil with the subject “DFARS 201.170 – DASN(AP) Peer Review.”

(S-90) Performance Based Logistics (PBL) acquisitions with a value greater than the approval authority defined in FAR 6.304(a)(4), whether sole source or competitive, shall have a DASN(AP) Peer Review. Submit the peer review package to DASN(AP) by email at RDAJ&As.fct@navy.mil with the subject “DFARS 201.170 – DASN(AP) Peer Review.”

(2) Peer Review Rolling Forecast Report. By the 25th day of each month, HCAs shall submit a rolling forecast of acquisitions valued at $250,000,000 or more requiring peer reviews by DASN(AP) or Director of Defense Procurement and Acquisition Policy (DPAP), in the format prescribed by Annex 8, Peer Review Program. Submit the required information to DASN(AP) by email at RDAJ&As.fct@navy.mil with the subject “DFARS 201.170 - Peer Review Rolling Forecast.”

5201.170-4 (PGI 201.170-4) Administration of peer reviews.

(f) Contracting Officers shall submit copies of required memoranda documenting the disposition of peer review results and recommendations to DASN(AP)/ Director, Program Analysis and Business Transformation (PA&BT) by email at RDAJ&As.fct@navy.mil with the subject “PGI 201.170-4 - Disposition Of Peer Review Recommendations” followed by the applicable solicitation/contract number and peer review date.

5201.190 Reports.

Annex 14 contains a consolidated listing of reporting requirements for DoN components and field contracting activities. Where there is a difference between the annex and a specific reporting requirement not found in the annex, the specific requirement shall take precedence.

SUBPART 5201.2—ADMINISTRATION

5201.201 (DFARS 201.201) Maintenance of the FAR.

5201.201-1 (DFARS 201.201-1) The two councils.

(d)(i) Submit proposed revisions to the FAR, DFARS or NMCARS to DASN(AP) via the

Deputy/Assistant Commander for Contracts of the cognizant HCA by email at Policy@navy.mil

with the subject “DFARS 201.201-1 – Proposed [FAR/DFARS/NMCARS] Revision.” Each proposed revision should include a legal review and identify the name, code, and telephone number of the activity point of contact.

SUBPART 5201.3—AGENCY ACQUISITION REGULATIONS

5201.303 (DFARS 201.303) Publication and codification.

(a)(ii) To the extent possible, all text in this Supplement (whether implementing or supplemental) is numbered as if it were implementing the FAR or DFARS.

(A) Implementing numbering is the same as its FAR or DFARS counterpart, preceded by the prefix "52".

(B) Supplemental numbering is the same as its FAR or DFARS counterpart, preceded by the prefix “52” with the addition of a number 90 and up for parts, subparts, sections, or subsections or S-90 and up for lower divisions.

5201.304 (DFARS 201.304) Agency control and compliance procedures.

(4) “Component” is defined as a DoN HCA exercising assigned or delegated contracting authority. Component clauses or changes to existing component clauses that meet the conditions at DFARS 201.301 shall be published for public comment in the Federal Register.

(A) Component clauses, except as provided DFARS PGI 201.301(b)(iii)(A), require Under Secretary of Defense (Acquisition, Technology and Logistics (USD(AT&L))/DPAP approval.

(B) Clause numbering. Clause numbers will be assigned by DASN(AP).

(5) Proposed clause packages shall be submitted via DASN(AP) to DPAP by email at

Policy@navy.mil with the subject “NMCARS 5201.304- Proposed Component Clause/Clause

Update Package.”

SUBPART 5201.4—DEVIATIONS FROM THE FAR

5201.402 (DFARS 201.402) Policy.

(2) Submit those requests for individual or class deviation that require approval at a level higher

than the HCA to DASN(AP) by email at Policy@navy.mil with the subject “DFARS 201.402 –

Deviation Request.”

5201.403 (DFARS 201.403) Individual deviations.

(1) DASN(AP) is the approval authority for:

(i) individual deviations from the FAR or DFARS other than those specified in DFARS 201.402(1) and DFARS 201.403(2) and 5201.403(2).

(ii) individual or class deviations from NMCARS.

(iii) deviations from certain component clauses (see 5201.304(4)).

(2) In the case of a purchase or contract by an offshore contracting activity with a foreign contractor made outside the United States, its possessions, or Puerto Rico, deviations from contract clauses may be granted by the HCA provided that no change in intent, principle, or substance is made. The HCA may delegate this authority no lower than one level above the contracting officer.

5201.404 (DFARS 201.404) Class deviations.

Deviations involving basic agreements, basic ordering agreements, or master agreements are considered class deviations.

(b)(ii) DASN(AP) is the approval authority for class deviations described at DFARS 201.404(b)(ii).

SUBPART 5201.6—CAREER DEVELOPMENT, CONTRACTING AUTHORITY, AND RESPONSIBILITIES

5201.601 (FAR 1.601) General.

5201.601-90 Department of the Navy authorities and responsibilities.

(a) General. HCAs are responsible for establishing adequate and effective internal controls to carefully manage and closely oversee the execution of delegated contracting authority for assigned contracting mission functions. This includes proactively working with requirements and program personnel during acquisition planning to facilitate the timely submission of requirements to the appropriate contracting activity for contract action in a manner which promotes and permits maximum competition. In conjunction with executing assigned contracting missions, there are certain types of procurements for which authority resides solely with the HCA as described in paragraph (c) below, unless authority is delegated in writing to another HCA and accepted by the receiving HCA to execute those procurements. Delegation of DoN contracting authority applies only within DOD. If the contracting activity is outside DoD, contracting officers shall follow interagency acquisitions procedures in FAR 17.5, DFARS 217.5, and NMCARS 5217.5. Contracting authority delegations shall not be used to circumvent interagency acquisition requirements. At a minimum, HCAs shall address the following requirements in the contracting activity’s procedures for delegation of contracting authority:

(1) Identify all HCAs to which contracting authority has been delegated and specify any limitations on their contracting authority.

(2) Track delegations received from HCAs.

(3) Ensure DASN(AP) notification and approval of delegation, as required. Delegation of DoN contracting authority within DoN does not require prior DASN(AP) approval except as noted in 5201.601-90(b)(4). Obtain DASN(AP) approval when the request for delegation of contracting

authority is intended ultimately to lead to a procurement by a DoD activity outside DoN. Activities

shall notify DASN(AP), no less than 30 days prior to an anticipated delegation or as early as

practicable, by email at Policy@navy.mil with the subject “NMCARS 5201.601-90 – Contracting

Authority Delegation Approval” to allow time for approval before granting a delegation

of contracting authority leading to a procurement contracted by a DoD activity outside DoN.

Activities shall use the template in Annex 11, Delegation of Contracting Authority, as applicable.

(4) Ensure contracting authority delegations are made, in writing from HCA to HCA. This authority may not be redelegated. Any delegation must also consider the anticipated workload and available resources to ensure effective execution and management of the delegated authority. Upon signature, submit a copy of all contracting authority delegations to DASN(AP) by email at

Policy@navy.mil with the subject “NMCARS 5201.601-90 – Copy of Contracting Authority

Delegation.

(5) Manage and oversee contracting authority delegations to ensure the delegated contracting authority is being executed and administered in accordance with the delegation of authority and contracting regulations, rules, and procedures.

(b) HCA responsibilities and limitations. Each HCA is solely responsible for executing its delegated contracting authority for assigned acquisition programs and cognizant areas of responsibilities subject to any established limitation. An HCA has authority to procure supplies and services to support all organic requirements, such as those set forth in SECNAVINST 5400.15, unless such procurements fall within the scope of unique contracting responsibilities assigned to another HCA.

(1) The request to delegate contracting authority shall document the rationale supporting the delegation and address why the delegation is necessary for the efficient and proper administration of the receiving HCA’s contracting operations.

(2) The DoN HCA receiving the delegated authority shall affirmatively acknowledge and accept

the conditions of the delegation in writing prior to exercising the delegated authority.

(3) HCA delegated authority may not be redelegated to contracting offices not under the cognizance of the receiving HCA unless specifically defined in the delegation of contracting authority request.

(4) DoN HCAs receiving DoN delegated contracting authority shall obtain both delegating HCA

and DASN(AP) approval prior to using the delegated contracting authority to execute a procurement through a non-DoN cognizant contracting activity (e.g., NAVFAC delegates authority to contract for construction to NAVSUP, and NAVSUP uses the Army Corps of Engineers to procure the construction). The procurement, proposed contracting activity, and limitations should be included in the initial request for delegation authority. In all cases, the specific written delegation by the HCA holding the unique contracting authority shall occur prior to the receiving HCA requesting that another DoD activity conduct a procurement on its behalf.

(c) HCA unique contracting authorities. The assigned responsibilities of the DoN contracting activities are as follows:

(1) Deputy Assistant Secretary of the Navy (Acquisition and Procurement)(DASN(AP)) has the following overarching responsibilities:

(A) Serves as the principal advisor and executive agent to ASN(RDA), who serves as the Navy Acquisition Executive and Senior Procurement Executive.

(B) Exercises plenary contracting authority on behalf of the Department, including approving, revising or denying DoN Activity contracting responsibilities.

(C) Reviews and processes Justification and Approvals (J&As) requiring ASN(RDA) approval.

(D) Reviews and processes acquisition documents (e.g. acquisition plans, acquisition strategies for services, Determination and Findings (D&Fs)) requiring DASN(AP) or higher level approval.

(E) Approves individual and class deviations and waivers from the FAR and DFARS.

(F) Serves as the DoN’s representative on the Defense Acquisition Regulations (DAR) Council and provides DoN policy, guidance, oversight and coordination for DAR Council committees and FAR teams.

(G) Serves as the DoN focal point for coordination, interpretation and implementation of DoD acquisition policy, including all DoD 5000-series instructions, manuals and directives.

(H) Implements and maintains the NMCARS.

(I) Oversees, provides guidance, and conducts Procurement Performance Management Assessment Program (PPMAP) reviews and DoN Peer Reviews.

(J) Executes the ASN(RDA) duties as the senior official responsible for the management of acquisition of contract services.

(K) Serves as the DoN focal point for the compilation and review of the Inventory of Contracted Services.

(L) Serves as the DoN lead for proposed mergers and acquisitions as well as the Committee on Foreign Investment in the United States reviews.

(M) Serves as the Competition Advocate General (CAG) of the Navy and as principal advisor to the Secretary of the Navy and to ASN(RDA) for competition policy issues. The CAG is responsible for challenging barriers to competition and promoting full and open competition in the acquisition process pursuant to the Competition in Contracting Act (CICA); developing and assigning annual competition goals for the Activities; preparing an annual report addressing DoN competition results; sponsoring DoN acquisition achievement awards programs; and publishing long-range acquisition estimates.

(N) Serves as the DoN Acquisition Ombudsman.

(O) Chairs the Navy Contract Adjustment Board in accordance with Public Law 85-804.

(P) Represents ASN(RDA) on committees and workgroups relating to acquisition, program management, contractual services and audits conducted by the Government Accountability Office, DoD Inspector General (DODIG), Naval Inspector General, and Naval Audit Service.

(Q) Advises ASN(RDA) on matters related to contractor labor relations. Develops, implements, and oversees the execution of policies and procedures on contractor labor relations.

(R) Serves as the DoN focal point for industrial base policy, to include the exercise of responsibilities related to the Defense Production Act, the Defense Priorities and Allocation System, requests for special priorities assistance, and assessments of the industrial base.

(2) Installations and Logistics, Headquarters, U.S. Marine Corps (HQMC, I&L) is responsible for the award and administration of contracts for supplies and services to support installation and logistics requirements of the Marine Corps Operating Forces and supporting establishments.

(3) Marine Corps Systems Command (MARCORSYSCOM) is responsible for awarding and administering contracts for assigned Marine Corps programs, assigned IT systems programs or components, and relevant professional, research and engineering services, except for naval aviation programs.

(4) Military Sealift Command (MSC) is responsible for awarding and administering contracts for services of ocean-going ships, craft, floating dry docks, and other repair facilities, for purposes such as oceanographic research and survey, underwater research, cable laying, and range instrumentation; and contracts for the maintenance, conversion, and modernization of assigned vessels. MSC’s unique contracting responsibilities include contracts for services of ferries and tugs, but exclude contracts for (i) pilot services and (ii) ferries and tugs used for husbanding services, including water taxi contracts awarded outside the continental United States under husbanding services contracts. MSC transportation responsibilities are identified in the Defense Transportation Regulation.

(5) Naval Air Systems Command (NAVAIRSYSCOM) is responsible for awarding and administering contracts for naval aviation programs and efforts supported by the Naval Air Warfare Centers, to include relevant logistics, training and professional, research and engineering services. In addition, NAVAIRSYSCOM unique contracting responsibilities include designing, developing, procuring, and supporting naval aviation systems used by the Navy and Marine Corps.

(6) Naval Facilities Engineering Command (NAVFACENGCOM) is responsible for awarding and administering contracts for all architect-engineer, construction, utilities, energy, facilities support, and assigned weapon and IT system programs or components associated with Navy expeditionary forces.

(i) NAVFACENGCOM’s unique contracting responsibilities include:

(A) Facility engineering and construction, including capital improvements;

(B) Utilities, including sales and privatization;

(C) Shore Energy, including renewable, conservation, Energy Savings Performance Contracts (ESPCs) and Utility Energy Service Contracts (UESCs), and sales;

(D) Environmental remediation, cultural resources (on DoD installations only), historical research, natural resources conservation studies (on and off DoD installations), execution of the Defense Environmental Restoration Program (DERP), delegated caretaker functions at military installations to be closed under the Defense Base Closure and Realignment Act of 1990, and any amendments thereto;

(E) Public works, including maintenance of buildings, grounds, roads and other infrastructure;

(F) Guard services related to the protection and security of U.S. military installations and facilities;

(G) Anti-Terrorism Force Protection (ATFP) infrastructure (ashore);

(H) Contingency engineering, expeditionary and construction training systems and equipment;

(I) Logistics-over-the-shore, near shore, and ocean facilities infrastructure systems;

(J) Navy expeditionary equipment, infrastructure, and Information Technology (IT) related systems;

(K) Procurement and lease (over 120 days) of Navy (excludes United States Marine Corps (USMC)) civil engineer support equipment, including railway, construction and weight-handling equipment;

(L) Procurement and maintenance of automotive vehicles used by DoN; and

(M) Lease (over 120 days) of automotive vehicles used by DoN.

(N) Construction, lease, purchase and/or installation of relocatable buildings, including trailers.

(O) DoN acquisition of public utility services including, but not limited to, electricity, gas, water, sewerage, drainage, fire and police protection, street lighting and cleaning, and trash and garbage disposal.

In addition, NAVFACENGCOM is responsible for contract administration functions associated with construction work under contracts awarded by other DoN contracting activities that contain any construction work.

(ii) Procedures.

(A) If an HCA other than NAVFACENGCOM intends to award a contract, and the contract scope contains any element of construction work, contracting officers shall consult with NAVFACENGCOM, as early as practicable in the acquisition planning process, to ensure HCA solicitations and contracts containing any element of construction work are properly structured, and the construction work under the contract is administered, in accordance with DoN policy.

(B) NAVFACENGCOM will, upon request, assist contracting officers in determining whether the extent of construction activities to be performed under an HCA contract for supplies, equipment, services, or research and development, etc. requires a delegation of construction contracting authority from the Commander, NAVFACENGCOM (COMNAVFACENGCOM) and/or triggers the application of FAR Subpart 22.4, Labor Standards for Contracts Involving Construction. The delegation of authority is contingent on the HCA demonstrating, in a written request for authority, that contracting and technical/program personnel properly trained in construction contract administration and the labor standards applicable to construction work are available in the activity/organization.

(7) Naval Sea Systems Command (NAVSEASYSCOM) is responsible for awarding and administering contracts for ships and submarines, assigned weapon systems and platforms, and relevant professional, research and engineering services. NAVSEASYSCOM unique contracting responsibilities include awarding and administering contracts for construction, maintenance and modernization of ships and submarines, nuclear propulsion, water craft, submersibles, equipage for towing, diving and salvage, and University Affiliated Research Centers.

(8) Naval Supply Systems Command (NAVSUPSYSCOM) is responsible for awarding and administering contracts in support of assigned logistics support functions. NAVSUPSYSCOM’s unique contracting responsibilities include procuring supplies and services for all non-contracting Navy activities, offices or commands for which no other HCA is delegated authority. NAVSUPSYSCOM is the DoN Executive Agent for the policy areas identified in paragraphs (i)

through (iv) below. NAVSUPSYSCOM shall obtain DASN(AP) approval by e-mail at

Policy@navy.mil with the subject “Request for Approval [Document Name]” before issuing

overarching policy in any of these areas:

(i) AbilityOne acquisitions as defined in FAR Part 8.

(ii) Contract Reporting.

(iii) Government purchase card program.

(iv) Simplified acquisition procedures as defined in FAR Part 13, except that NAVFACENGCOM may promulgate other procedures for construction, architect-engineer services, and facilities support service contracts.

(9) Office of Naval Research (ONR) is responsible for awarding and administering contracts and other instruments for assigned DoN Science and Technology (S&T) research. ONR unique contracting responsibilities include the award and administration of contracts to the Navy’s Federally Funded Research Development Center (FFRDC).

(10) Space and Naval Warfare Systems Command (SPAWARSYSCOM) is responsible for awarding and administering contracts in the information dominance domain, including assigned programs in the areas of research and development, systems engineering and development, and other relevant professional services associated with production, installation and sustainment for Command, Control, Communications, Computers, Intelligence Surveillance, and Reconnaissance Systems (C4ISR); Joint Tactical Radios Systems (JTRS), Space Systems; Enterprise Information Systems (EIS); and Navy Chief Information Officer (CIO) supported information technology initiatives.

(11) Strategic Systems Programs (SSP) is responsible for awarding and administering contracts in support of the development, production, and life-cycle support of the TRIDENT Strategic Weapon System, and other assigned programs under the cognizance of the Director, SSP (DIRSSP).

5201.602 (FAR 1.602) Contracting officers.

5201.602-1 (FAR 1.602-1) Authority.

(b) Contract documents shall be forwarded to the appropriate attorney or attorneys in the Office of General Counsel for review as to form and legality and any additional pertinent comment or advice.

5201.602-3 (FAR 1.602-3) Ratification of unauthorized commitments.

(b)(1) Within 10 calendar days of determining the need for a ratification of an unauthorized commitment (UAC), the activity where the ratifiable action occurred shall report the UAC to its respective HCA in accordance with the Activity’s procedures.

(b)(3)(i) The HCA (or designee) may delegate ratification authority as follows:

(ii) The authority to ratify, at any level, reverts to the HCA without power of delegation if--

(iii) For counting purposes, use the date that the ratifiable action occurred not the date of reporting.

(iv) The ability to delegate in accordance with (i) resets at the beginning of each FY.

(v) The HCA shall maintain records of all ratifications regardless of dollar value and review as part of its Procurement Performance Management Assessment Program (PPMAP) (see NMCARS 5201.691).

(S-90) DoN Policy.

(a) HCAs shall establish procedures for ratification of UACs.

(b) When an activity receives a UAC that falls within another activity’s unique contracting authority (as defined in 5201.601-90), one of two actions is required to address the UAC:

(1) Authority may be requested from the HCA with the unique contracting authority to address the UAC and complete the ratification (if necessary); or,

(2) The HCA with unique contracting authority ratifies the UAC or determines it is not a ratifiable action. If ratification is necessary, a Military Interdepartmental Purchase Request (MIPR) shall be executed and funded by the activity to which the employee who committed the UAC belongs. This MIPR shall be provided to the activity with the unique contracting authority to complete the ratification.

(c) The ratifying official and the contracting officer on the ratified action shall not be the same individual.

(d) DASN(AP) reserves the right to request copies of any documentation at any point in the process.

(e) Reporting.

(1) The activity executing the ratification is responsible for reporting.

(2) Submit a quarterly report of all UACs/ratifications exceeding $3500, approved at a level no lower than the Deputy/Assistant Commander for Contracts, in the format prescribed in Annex 15

to DASN(AP) by e-mail at Policy@navy.mil with the subject “NMCARS 5201.602-3(S-90)(e)(2) –

Quarterly Ratification Reporting” by January 31, April 30, July 31 and October 31. Negative reports are required.

(3) Submit a copy of HCA ratification procedures, approved at a level no lower than the

Deputy/Assistant Commander for Contracts, to DASN(AP) by e-mail at Policy@navy.mil with the

subject “NMCARS 5201.602-3(S-90)(e)(3) – Ratification Procedures” annually by March 31.

5201.603 (FAR 1.603) Selection, appointment, and termination of appointment for contracting officers.

5201.603-1 (FAR 1.603-1) General.

HCAs are the agency head’s designees for the selection and appointment of contracting officers, and for the termination of their appointments. HCAs will maintain records specifying who (by position/title/office) in the contracting chain of command may select, appoint and terminate appointment of qualified individuals within the contracting activity’s cognizance and specify authority limits.

5201.603-2-90 Contracting officer warrants.

Notification requirements. Submit copies of documentation supporting any warrants authorized pursuant to DFARS 201.603-2(3) and warrants issued pursuant to the exception at DFARS 201.603-

2(2)(ii) to DASN(AP) at Policy@navy.mil with the subject “DFARS 201.603-2(2)(ii) – Waiver of

Contracting Officer Qualification” within five days of issuance.

5201.603-2-91 Contracting officer warrant issuance to non-DoD employee.

Except where a DoN activity is designated HCA for a joint-contracting operation, if there is a need to issue a warrant to a non-DoN employee, an HCA must submit a waiver request to

DASN(AP) by email at Policy@navy.mil with the subject “DFARS 201.603-2 – Contracting

Officer Warrant Issuance to a non-DoN Employee” for approval, using the template in Annex 12, provided the individual is a civilian or military member of the DoD and meets applicable requirements commensurate to the proposed warrant level per 10 U.S.C.§1724.

5201.603-4 (FAR 1.603-4) Termination.

A Contracting Officer appointment shall be terminated in writing when the individual is transferred from the position due to reassignment or permanent change of station/duty; the need for a contracting officer function no longer exists; the individual retires, resigns or the Agency terminates his/her employment; or the individual fails to comply with laws and regulations governing the procurement process, including the delegated warrant authority and responsibilities. Warrants issued specifically for a contingency operation are only valid for the period during which the individual is assigned to support the contingency office and shall be terminated in writing upon

detachment from that office. HCAs shall keep a copy of each terminated warrant for 10 years beyond the date of termination.

5201.690 Requirements to be met before entering into contracts.

(a) Contract actions must be subject to review prior to award. The formal review process is conducted and documented through the use of the business clearance. The purpose of the business clearance is to demonstrate that the proposed decision on a contract action conforms to law, regulation, good business practices and DoD/DoN acquisition policy.

(b) HCAs shall establish written procedures defining the types of contract actions that will require a business clearance, the applicable dollar thresholds, and the review and approval process. At a minimum, HCA procedures shall address business clearance requirements for the actions listed below. HCAs should expand this list, as appropriate.

(1) Contracts (including task and delivery orders against indefinite-delivery contracts, basic ordering agreements, blanket purchase agreements, and other contract tools).

(2) Contract modifications not within the scope or under the terms of an existing contract.

(3) Undefinitized contract actions (see DFARS Subpart 217.74.)

(4) Modifications and changes issued pursuant to the Changes, Disputes, Economic Price Adjustment, Fair Labor Standards Act and Service Contract Act—Price Adjustment, Government Delay of Work, Government Property, Incentive Price Revision, Over and Above Work, Stop-Work Order, Termination, and Value Engineering contract clauses.

(5) Settlement of claims or requests for equitable adjustment not addressed under paragraph (4) above.

(6) Retroactive pricing after completion, including final price determination.

(7) Definitization of any undefinitized or unpriced contract action, including change orders, Engineering Change Proposals, Value Engineering Change proposals, and Over and Above Work.

(8) Advance agreements on special or unusual cost items (see 5231.109.)

(9) Actions that result in the establishment, modification or rescission of a guarantee of performance on a government contract by a third party.

(c) The following contract actions do not require a business clearance, but the file must include the rationale for award sufficiently documented in a format prescribed by HCA procedures:

(1) Contract actions awarded using simplified acquisition procedures.

(2) Task orders or delivery orders issued under FAR Subpart 8.4, Federal Supply Schedules.

(3) Task orders or delivery orders issued on a firm-fixed price basis against indefinite-delivery type contracts for:

(i) supplies for which unit prices are established in the contract; or

(ii) services for which unit prices are established in the contract for specific tasks to be performed and where a statement of work/statement of objectives is not required.

(d) HCAs must establish business clearance approval levels at least one level above the individual responsible for conducting the negotiations; or, if negotiations are not required, for handling the proposed contract action. The degree and complexity of documentation required, and approval levels/thresholds, for various actions should be governed by the magnitude and complexity of the action being reviewed.

(e) Annex 2, Business Clearance Memorandum, contains the required content and recommended format to document decisions on contract actions that are subject to business clearance requirements. If an activity plans to use a format other than Annex 2, the activity shall notify DASN(AP) by submitting its HCA approved alternate format by email at RDAJ&As.fct@navy.mil with the subject “NMCARS 5201.690 – Alternate Business Clearance Memorandum Format.”

(f) Contracting Officers shall address Theater Business Clearance (TBC) requirements when soliciting or awarding contracts or performing contract administration. Solicitations and contracts subject to TBC are those valued at >$150K and with performance > 30 days that require performance or delivery, including construction contracts, with the place of performance in Afghanistan.

5201.691 Procurement management oversight.

5201.691-1 Purpose.

(a) The primary objective of procurement management oversight is to validate sound contracting practices throughout the DoN. This oversight encourages and assists HCAs in making continuous improvements in their acquisition and procurement processes. It also provides a mechanism for sharing "best practices" throughout the DoN. Procurement management oversight in the DoN is conducted through the Procurement Performance Management Assessment Program (PPMAP). The PPMAP is a flexible, performance-based, process-oriented program that requires contracting activities to perform periodic self-assessments of:

(1) critical procurement processes used to manage and execute procurement operations within the HCA, including their associated outcomes;

(2) performance-based metrics; and,

(3) the results of employee and customer surveys.

(b) The HCA will use the results of these self-assessments to:

(1) evaluate the quality of its procurement processes and management systems;

(2) validate execution of delegated authority is occurring according to law and regulation;

(3) mitigate risk of vulnerabilities for fraud, waste or abuse to occur; and,

(4) take appropriate corrective actions, as needed, to improve or maintain the quality of procurement operations within the contracting activity.

5201.691-2 Responsibilities.

(a) DASN(AP) is responsible for managing and overseeing the performance of the DoN contracting/procurement system by reviewing HCAs and other designated DoN contracting organizations using the PPMAP as one of its primary methods to execute this responsibility. DASN(AP) is also responsible for providing PPMAP guidance, as appropriate.

(b) Each HCA is responsible for performing management and oversight reviews of all procurement operations performed within the HCA, i.e. within Headquarters and at any subordinate contracting organization or field activity with delegated procurement authority, for procurement operations associated with any delegated authority, and at any other activities as directed by DASN(AP) or higher level authority. HCAs shall:

(1) establish written procedures implementing the DoN PPMAP review process for the contracting activity;

(2) perform and document periodic self-assessments (and other internal reviews) to evaluate and improve the quality of the procurement organization’s operations and processes within the contracting activity; and,

(3) conduct and document timely reviews of all subordinate organizations and field activities with delegated contracting/procurement authority to ensure execution of authority is performed according to law and regulation.

(c) HCAs will, upon request, provide qualified senior contracting personnel to serve on DASN(AP) PPMAP teams.

(d) Reporting requirements. HCAs shall provide DASN(AP) the following information:

(1) By October 1st of each year, submit a PPMAP assessment plan for the new fiscal year identifying the self-assessments and activity reviews scheduled for the contracting activity, including the specific resources (by activity) that will be assigned to conduct that oversight.

(2) By January 30th of each year, submit a report summarizing for the contracting activity the outcome of the previous fiscal year’s periodic self-assessments/internal compliance reviews performed on the contracting/procurement function at Headquarters and of on-site reviews/assessments conducted on subordinate contracting organizations and field activities with delegated procurement authority. The annual report should clearly convey the actions the HCA has taken to improve the quality of contracting/procurement operations within the contracting activity. At a minimum, the HCA’s report must:

(i) include a summary of the findings noted for the contracting activity;

(ii) describe any statutory and/or regulatory deficiencies identified;

(iii) explain associated corrective actions taken either at the contracting activity-level or specific subordinate field activity-level;

(iv) identify best practices which could be useful to other DoN contracting activities;

(v) include other relevant information, i.e. the results of the HCA’s annual warrant file audits, acquisition staffing and workload analysis, external audits or reviews to include the status of relevant recommendations; and, if applicable,

(vi) address the actions taken in response to a DASN(AP) PPMAP performed during the reporting period.

(3) Submit the required information in paragraphs (d)(1) and (2) above to DASN(AP) by e-mail at RDAJ&As.fct@navy.mil with the subject “NMCARS 5201.691-2 – PPMAP Reporting.” Reports must be signed by the HCA’s senior contracting official.

(e) DASN(AP) shall be advised in writing, within five calendar days, any time an HCA revokes, suspends or reduces contracting or purchase card authority delegated to a cognizant field contracting activity or subordinate organization. Submit notifications to DASN(AP) by e-mail at RDAJ&As.fct@navy.mil with the subject “NMCARS 5201.691-2 –Revocation of [Contracting or Purchase Card] Authority.”

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