Navigating the Department of Defense Acquisition Process

¶ … secondary literature and a survey of practitioners concerning the fact that Defense Logistics Agency (DLA) acquisition costs are often excessive because first article testing (FAT) requirements are often misapplied to DLA contracts. This study was guided by three objectives: (a) to determine the frequency of misapplication of First Article Testing requirements to Defense Logistic Agency contracts; (b) to determine Engineering Support Agency and Defense Logistics Agency employee interpretations of First Article Testing requirements; and, (c) to provide Engineering Support and Defense Logistics Agency employees with First Article test requirement discriminators that will assist with appropriate First Article Test requirement application to Defense Logistics Agency contracts. This study was also guided by the following research questions: (a) what major factors do Engineers and Defense Logistics Agency employees consider prior to applying First Article Test requirements to contracts?, and (b) what specific discriminators can be applied to First Article Test requirement decision making process? A summary of the research and important findings, answers to the guiding research questions and future directions for research are presented in the study's concluding chapter.

First Article Testing Costs for Defense Logistics Agency Contracts

Course

October 17, 2014

Table of Contents

Chapter 1: Definition of the Problem

Problem Statement

Research Objectives

Research Hypothesis/Research Questions

Assumptions

Definitions of Terms

Limitations and Delimitations

Chapter 2: Literature Review

Chapter 3: Methodology

Chapter 4: Data Analysis

Chapter 5: Summary, Conclusions and Recommendations

Chapter 1: Definition of the Problem

Problem Statement

The Defense Logistics Agency Acquisition (J7) Directorate is tasked with the management of the establishment and operations of overall procurement policy and oversight for DLA's 5.2 million managed items (DLA mission, 2014). According to the DLA's Web site, "With nearly $35 billion in annual sales, DLA buys, stores and distributes food, fuel, uniform apparel, pharmaceutical, medical and surgical products and equipment and weapons system repair parts for the military services and other customers worldwide" (DLA mission, 2014, para. 3). The Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics (OUSD (AT&L)'s Guide for Performance-Based Service Acquisition and the Seven Step Process (ACQ 265) (2009) describes the first article testing regimen requirements for the DLA: "Production testing is planned, conducted, and monitored by the materiel developer. FAT includes preproduction and initial production testing conducted to ensure that the contractor can furnish a product that meets the established technical criteria" (p. 120).

In sum, first article testing and approval ensures that the contractor can furnish a product that conforms to all contract requirements for acceptance (First article testing and approval, 2014). Defense Logistics Agency (DLA) acquisition costs, though, are often excessive because First Article Testing (FAT) requirements are often misapplied to DLA contracts, a problem that is investigated further through a systematic review of the secondary peer-reviewed, scholarly and governmental literature based on the research objectives and hypothesis outlined below.

Research Objective

The overarching objectives of this study were three-fold as follows:

1. To determine the frequency of misapplication of First Article Testing requirements to Defense Logistic Agency contracts;

2. To determine Engineering Support Agency and Defense Logistics Agency employee interpretations of First Article Testing requirements; and,

3. To provide Engineering Support and Defense Logistics Agency employees with First Article test requirement discriminators that will assist with appropriate First Article Test requirement application to Defense Logistics Agency contracts

Research Hypothesis/Research Questions

This study's hypothesis was that first article test requirements are not appropriately applied to Defense Logistics Agency contracts. The corresponding null hypothesis was that first article test requirements are appropriately applied to Defense Logistics Agency contracts. This study was also guided by the following research questions:

1. What major factors do Engineers and Defense Logistics Agency employees consider prior to applying First Article Test requirements to contracts?

2. What specific discriminators can be applied to First Article Test requirement decision making process?

Assumptions

For the purposes of this study, it was assumed that the surveys completed by the respondents were truthful, that the secondary data reviewed was accurate and that the findings that emerged from the literature review were sufficient to confirm or refute the study's guiding hypothesis.

Definitions of Terms

DoD:

This acronym means refers to the U.S. Department of Defense (DLA at a glance, 2014).

DLA:

This acronym stands for "Defense Logistics Agency" (DLA at a glance, 2014).

DLAD: This acronym stands for "Defense Logistics Acquisition Directive" (DLA at a glance, 2014).

FAR:

This acronym stands for "federal acquisition regulation" (Gourley, 2009).

FAT:

This acronym stands for "first article testing" (Gourley, 2009).

First Article: This term includes preproduction models, initial production samples, test samples, first lots, pilot models, and pilot lots; and approval involves testing and evaluating the first article for conformance with specified contract requirements before or in the initial stage of production under a contract (Guide for performance-based acquisition, 2009).

Limitations and Delimitations

This study was limited by the fact that although the Department of Defense is mentioned frequently in the secondary literature, there remains a paucity of timely and relevant studies concerning first article testing requirements and their corresponding effects on the costs of DoD acquisitions. The findings that emerged from this study are delimited to DoD acquisitions.

Chapter 2: Literature Review

Chapter Introduction

This chapter reviews the secondary literature to provide an overview of the U.S. Defense Logistics Agency including its mission, customers and activities and the role of first article testing in Department of Defense acquisitions. A summary of the research and important findings concerning these issues are presented in the chapter's conclusion.

Overview of Defense Logistics Agency

Today, the Defense Logistics Agency (DLA) is the contracting agency that is responsible for the logistical supply of all basic supplies used by the U.S. military, ranging from "weapons to fuel, and everyday items such as silverware and sandbags" (Harnitchek, 2014, p. 11). Although relatively low-profile when compared to many other Department of Defense organizations, the DLA provides mission-critical logistics services to the nation's armed forces. In this regard, the agency's director, Vice Admiral Mark Harnitchek, reports that, "As America's combat logistics support agency, the Defense Logistics Agency provides the Army, Navy, Air Force, Marine Corps, other federal agencies, and combined and allied forces with the full spectrum of logistics, acquisition and technical services" (2014, p. 11).

In fact, the DLA is currently responsible for procuring and redistributing virtually all of the items that are consumed by the country's armed forces, including materiel such as construction and barrier equipment, medical supplies, food, uniforms, fuel and more than 85% of the spare parts that are required by the U.S. armed forces (Harnitchek, 2014). Beyond the foregoing, the DLA is also responsible for the administration of reused military equipment, provides document automation and production services as well as catalogs and other logistics information products (DLA at a glance, 2014). Although services are provided by the DLA in 48 states, the agency is tasked with the provision of logistics support to the U.S. military wherever forces may be deployed, making the DLA a truly global organization (DLA at a glance, 2014).

Some salient key facts concerning the DLA include the following:

No civilian company performs the same type of mission as DLA, so comparisons are not really possible. In simple terms, in fiscal 2013 DLA provided $39 billion in sales and revenue. This along with the dollar value of services provided would rank the agency in the top 15th percentile of the Fortune 500.

The DLA employs more than 25,500 civilian and military employees.

The DLA supports roughly 2,400 weapon systems.

The DLA currently manages nine supply chains and nearly 6 million items.

The DLAM administers the storage and disposal of strategic and critical materials to support national defense.

The DLA operates in 48 states and 28 countries.

The DLA processes on average 98,475 requisitions and more than 9,000 contract actions a day.

The DLA manages 25 distribution centers worldwide. Co-locating with warfighters puts supplies where they are most needed and drives DLA's warehousing strategy. Positioning material closer to the customer allows us to improve military readiness and decrease customer wait time and cost, providing effective, efficient and innovative distribution solutions for our customers.

The DLA is a leader in DoD's efforts to supply the military services with alternative fuel and renewable energy solutions.

The DLA supports humanitarian relief efforts at home and abroad, to include the 2011 Japanese earthquake, and hurricanes Isaac and Sandy in 2012. For Isaac, DLA provided 2,138,000 meals and 1,853 gallons of diesel fuel to the Federal Emergency Management Agency. Sandy support included 6 million meals, 48 pallets of bottled water, 171,000 blankets and more than 9 million gallons of fuel for first responders.

The DLA provides logistics support to other federal agencies and state and local governments.

Fiscal 2013 Foreign Military Sales totaled $2.1 billion, supporting the security of 113 of America's allied nations (DLA at a glance, 2014, para. 3).

The primary level field activities for the DLA are set forth in Table 1 below.

Table 1

Primary level field activities for the Defense Logistics Agency

Location

Responsibilities

DLA Land and Maritime, Columbus, Ohio

Maritime and land weapons system supply chains.

DLA Aviation, Richmond, Va.

Aviation supply chain.

DLA Troop Support, Philadelphia

Subsistence, clothing, and textiles, medical, and construction and equipment supply chains.

DLA Energy, Fort Belvoir, Va.

Fuel, energy support and services, and bulk petroleum.

DLA Distribution, New Cumberland, Pa.

Worldwide network of 25 distribution depots and nine map support offices.

DLA Disposition Services, Battle Creek, Mich.

Reutilization, transfer, demilitarization, and environmental disposal and reuse.

DLA Strategic Materials, Fort Belvoir, Va.

Manages the strategic and critical raw material stockpile that supports national defense needs.

DLA Logistics Information Services, Battle Creek, Mich.

Manages a wide range of logistics information and identification systems.

DLA Document Services, Mechanicsburg, Pa.

Automated document production, printing services, digital conversion and document storage.

DLA Transaction Services, Wright-Patterson AFB, Ohio

Editing/routing of logistics transactions, network interoperability and eBusiness services.

Source: Adapted from DLA at a glance, 2014 at http://www.dla.mil/Pages/ataglance.aspx

Current DLA regional commands are set forth in Table 2 below.

Table 2

DLA Regional Commands

Location

Responsibilities

DLA Europe & Africa, Kaiserslautern, Germany

Focal point for U.S. European Command's and U.S. Africa Command's theater of operations.

DLA Pacific, Camp Smith, Hawaii

Focal point for U.S. Pacific Command's theater of operations.

DLA Central, MacDill AFB, Fla.

Focal point for U.S. Central Command's theater of operations.

Source: Adapted from DLA at a glance, 2014 at http://www.dla.mil/Pages/ataglance.aspx

Notwithstanding these broad-ranging responsibilities, the DLA's director recently advised that the demand for the majority of the commodities that the agency acquires and redistributes to the U.S. military has diminished in recent months, corresponding to the drawdown of U.S. military forces from Afghanistan. For instance, according to Harnitchek, "The trend mirrors the reeling in of logistics supply chains in the wake of every major U.S. war. In terms of the history of the military, this is really no different than what you see at the end of every conflict" (2014, p. 11).

Although the significant downsizing of the DLA was not unusual for the agency following such a major drawdown in military forces, the trend does have special implications for the DLA for the foreseeable future. As the DLA director emphasized, "We're going to be a lot smaller in terms of our people, our infrastructure, our inventory and our financial footprint. We have to be ready to significantly improve support at a whole lot less cost" (Harnitchek, 2014, p. 11). Prior to the terrorist attacks of September 11, 2001, the DLA provided between $18 billion and $20 billion worth of military supplies to the armed forces, with a peak in services being reaching in fiscal year 2011 when the amount of services provided for a single year totaled $46 billion (Harnitchek, 2014). That total declined to $35 billion for fiscal year 2014, and the DLA has committed to identifying another $13 billion in reductions by fiscal year 2019 (Harnitchek, 2014). The costs that are associated with the provision of these logistics services are significant, and these costs are also expected to decline as the amount of services provided is correspondingly reduced. According to Harnitchek, "There is a big effort here to right-size our inventory and then right-size the infrastructure that supports all those distribution chains" (2014, p. 11)

The deputy undersecretary of defense for logistics, Roger W. Kallock, points out that the foregoing figures roughly equate to about $200 million per day for logistics support, with all of the resources being invested in order to "buoy the passion of supporting the war-fighter with the right materiel at the right place, at the right time and at the right cost" (cited in Kutner, 2009, p. 53). As the deputy director of the Defense Logistics Agency, Navy Rear Admiral Raymond A. Archer III emphasizes, the U.S. Department of Defense may not have fully comprehended what is entailed in the acquisition and distribution of billions of dollars worth of commodities and materiel on a global basis. In this regard, Archer points out that:

I think our focus in the logistics community today is supporting the warfighter. It was not that way five years ago. I can remember sitting in meetings where the goal was the [size of the] inventory ... We were chasing the wrong goal" (cited in Kutner, 2009, p. 53).

In addition, the assistant director of the DLA also cited the centrality of the logistics function in ensuring that warfighters have the commodities and materiel they need on the battlefield. For example, Archer added that, "War-fighters are not enamored with logistics lingo. They just want to know where the stuff is. And I think that is all they need to worry about" (cited in Kutner, 2009, p. 53). Taken together, it is clear that the Defense Logistics Agency is an important part of the nation's defense network, and one of the first lines of evaluation it has for its acquisition of commodities and materiel is first article testing, which is discussed further below.

First Article Testing

First article testing (FAT) is used to determine if products conform to required contractual specifications (Frame, 2002). For the Department of Defense, the FAT process likewise serves this purpose, but as can be seen from the convoluted provisions set forth in Table 3 below, identifying first article testing requirements for the enormous array of commodities and materiel procured by the Defense Logistics Agency can be a challenging enterprise. At present, Subpart C contains the FAR and DLAD clauses and provisions that apply when first article test requirements are specified in the solicitation and a manual evaluation and award will be made as set forth in Table 3 below.

Table 3

Subpart C: First Article Test Clause/Provision List

Clause/Provision

Description

FAR 52.209-03 (SEP 1989)

FIRST ARTICLE APPROVAL-CONTRACTOR TESTING

Applies when first article approval is required and the testing will be performed by the contractor

FAR 52.209-04 (SEP 1989)

FIRST ARTICLE APPROVAL-GOVERNMENT TESTING

Applies when first article approval is required and the testing will be performed by the Government

DLAD 52.209-9016 (MAR 2009) EVALUATION OF OFFERS -- FIRST ARTICLE TESTING

Applies when FAR 52.209-4 applies and the Government's testing cost will be used as a factor in evaluating offers

DLAD 52.209-9016, ALT I (MAR 2009) EVALUATION OF OFFERS -- FIRST ARTICLE TESTING, ALTERNATE I

Applies when FAR 52.209-3 applies and the Government's cost to review the contractor's First Article Test Report will be used as a factor in evaluating offers.

DLAD 52.209-9017 (NOV 2013) FIRST ARTICLE -- CONTRACTOR TESTING -- ADDITIONAL REQUIREMENTS

Applies when first article approval is required and the testing will be performed by the contractor.

DLAD 52.209-9017, ALT III (SEP 2008) FIRST ARTICLE -- CONTRACTOR TESTING -- ADDITIONAL REQUIREMENTS, ALTERNATE III

Applies when first article approval is required and the testing will be performed by the contractor.

DLAD 52.209-9018 (NOV 2011) FIRST ARTICLE -- GOVERNMENT TEST -- ADDITIONAL REQUIREMENTS

Applies when first article approval is required and the testing will be performed by the Government.

DLAD 52.209-9018, ALT VI (SEP 2008) FIRST ARTICLE -- GOVERNMENT TEST -- ADDITIONAL REQUIREMENTS, ALT VI

Applies when first article approval is required and the testing will be performed by the Government

DLAD 52.209-9020 (SEP 2008) FIRST ARTICLE TESTING REQUIREMENT -- WAIVER APPROVED

When FAR 52.209-3 or 52.209-4 is applicable and it has been determined that the first article test and approval requirements will be waived for the awardee.

Note: The clauses and provisions in this subpart apply to solicitations which include a First Article Test requirement. Offerors are required to read and understand the full text of each clause, provision or notice and provide any required information as applicable. These clauses and provisions are only applicable when a manual award is being made that includes a first article test requirement.

A flowchart of the first article test process is provided at Appendix C.

Chapter Conclusion

This chapter provided a review of the secondary peer-reviewed, scholarly and governmental literature concerning the U.S. Defense Logistics Agency including its mission, customers and activities. In addition, this chapter provided a description of the role of first article testing in Department of Defense acquisitions including primary controlling governmental policies.

Chapter 3: Methodology

Research Methodology

As noted in the introductory chapter, this study was guided by two research questions as follows: (a) what major factors do Engineers and Defense Logistics Agency employees consider prior to applying First Article Test requirements to contracts?, and (b) what specific discriminators can be applied to First Article Test requirement decision making process? To develop informed answers to these research questions, the study used a mixed research methodology consisting of a qualitative analysis of the secondary literature and a survey of Engineers and Defense Logistics Agency employees using the data analysis and synthesis methods described below.

Data Collection, Analysis and Synthesis

Data collection is an important part of the knowledge acquisition phase that can be collected from a wide range of sources (Neuman, 2003). The secondary data for this study was collected from online governmental resources as well as reliable online research databases including EBSCO and Questia. The analysis of the secondary data was accomplished using a qualitative, systematic review of the relevant literature. This approach is congruent with the guidance provided by Fraenkel and Wallen (2001) who advise, "Researchers usually dig into the literature to find out what has already been written about the topic they are interested in investigating. Both the opinions of experts in the field and other research studies are of interest. Such reading is referred to as a review of the literature" (p. 48).

Moreover, there are a number of valuable outcomes achievable using a systematic review of the secondary literature. For instance, Wood and Ellis (2003) identified the following as being among the more important outcomes of a well conducted literature review:

1. It helps describe a topic of interest and refine either research questions or directions in which to look;

2. It presents a clear description and evaluation of the theories and concepts that have informed research into the topic of interest;

3. It clarifies the relationship to previous research and highlights where new research may contribute by identifying research possibilities which have been overlooked so far in the literature;

4. It provides insights into the topic of interest that are both methodological and substantive;

5. It demonstrates powers of critical analysis by, for instance, exposing taken for granted assumptions underpinning previous research and identifying the possibilities of replacing them with alternative assumptions;

6. It justifies any new research through a coherent critique of what has gone before and demonstrates why new research is both timely and important.

The primary quantitative data for this study was collected through the administration of an online survey to Engineers and Defense Logistics Agency employees concerning their views about first article testing and the costs of DoD acquisitions. Potential respondents who were known to the author as being active DLA employees involved in the acquisition field were recruited using email, word of mouth and telephone calls. All told, 13 practitioners completed the survey in time for inclusion in the data analysis. All respondents were consented electronically and assured of their anonymity in completing the online survey. Finally, the synthesis of the primary and secondary data was accomplished using the reciprocal interpretation technique described by Noblet and Hare (1988) wherein each study reviewed serves to inform the next.

Instrument

A proforma copy of the survey instrument administered using the online survey service, SurveyMonkey, is provided at Appendix B.

Reliability and Validity

Reliability refers to the stability and consistency of scores from some type of measurement scale; by contrast, validity refers to the establishment of substantive evidence that the measurement selected is actually measuring the intended metric (Chandler & Lyon, 2011). An important point made by Chandler and Lyon (2011) is that, "Measures can be reliable without being valid, but cannot be valid without being reliable" (p. 102). To enhance the reliability and validity of the findings that emerged from the survey of DoD practitioners, the study pilot tested the survey instrument on a small group to establish face validity and internal validity of the survey questions. No changes were required to the survey instrument following the pilot test except for the location of the open-ended comment section which was moved to the end of the survey instrument based on feedback from the group members.

Scope and Limitations

The scope of this study extended to all DoD acquisitions, limited to the United States.

Chapter 4: Data Analysis

Part One: Approaching an Acquisition

Salient sections from the three higher level regulatory documents (FAR 52.209-3 -- First Article Approval -- Contractor Testing, FAR 52.209-4 -- First Article Approval -- Government Testing and FAR Part 9, Subpart 9.3 -- First Article Testing and Approval) that currently control first article testing for the DoD are provided in Table 4 below. A summary of recent coverage of DLA and first article testing issues is provided at Appendix C

Table 4

Three Higher Level Regulatory Documents for First Article Testing

Article

Provisions

52.209-3 -- First Article Approval -- Contractor Testing

First Article Approval -- Contractor Testing (Sep 1989)

(c) If the first article is disapproved, the Contractor, upon Government request, shall repeat any or all first article tests. After each request for additional tests, the Contractor shall make any necessary changes, modifications, or repairs to the first article or select another first article for testing. All costs related to these tests are to be borne by the Contractor, including any and all costs for additional tests following a disapproval. The Contractor shall then conduct the tests and deliver another report to the Government under the terms and conditions and within the time specified by the Government. The Government shall take action on this report within the time specified in paragraph (b) above. The Government reserves the right to require an equitable adjustment of the contract price for any extension of the delivery schedule, or for any additional costs to the Government related to these tests.

(d) If the Contractor fails to deliver any first article report on time, or the Contracting Officer disapproves any first article, the Contractor shall be deemed to have failed to make delivery within the meaning of the Default clause of this contract.

(e) Unless otherwise provided in the contract, and if the approved first article is not consumed or destroyed in testing, the Contractor may deliver the approved first article as part of the contract quantity if it meets all contract requirements for acceptance.

(f) If the Government does not act within the time specified in paragraph (b) or (c) above, the Contracting Officer shall, upon timely written request from the Contractor, equitably adjust under the changes clause of this contract the delivery or performance dates and/or the contract price, and any other contractual term affected by the delay.

(g) Before first article approval, the acquisition of materials or components for, or the commencement of production of, the balance of the contract quantity is at the sole risk of the Contractor. Before first article approval, the costs thereof shall not be allocable to this contract for (1) progress payments, or (2) termination settlements if the contract is terminated for the convenience of the Government.

(h) The Government may waive the requirement for first article approval test where supplies identical or similar to those called for in the schedule have been previously furnished by the offeror/contractor and have been accepted by the Government. The offeror/contractor may request a waiver.

(End of Clause)

52.209-4 -- First Article Approval -- Government Testing.

First Article Approval -- Government Testing (Sep 1989)

(c) If the first article is disapproved, the Contractor, upon Government request, shall submit an additional first article for testing. After each request, the Contractor shall make any necessary changes, modifications, or repairs to the first article or select another first article for testing. All costs related to these tests are to be borne by the Contractor, including any and all costs for additional tests following a disapproval. The Contractor shall furnish any additional first article to the Government under the terms and conditions and within the time specified by the Government. The Government shall act on this first article within the time limit specified in paragraph (b) of this clause. The Government reserves the right to require an equitable adjustment of the contract price for any extension of the delivery schedule or for any additional costs to the Government related to these tests.

(d) If the Contractor fails to deliver any first article on time, or the Contracting Officer disapproves any first article, the Contractor shall be deemed to have failed to make delivery within the meaning of the Default clause of this contract.

(e) Unless otherwise provided in the contract, the Contractor -- (1) May deliver the approved first article as a part of the contract quantity, provided it meets all contract requirements for acceptance and was not consumed or destroyed in testing; and (2) Shall remove and dispose of any first article from the Government test facility at the Contractor's expense.

(f) If the Government does not act within the time specified in paragraph (b) or (c) of this clause, the Contracting Officer shall, upon timely written request from the Contractor, equitably adjust under the Changes clause of this contract the delivery or performance dates and/or the contract price, and any other contractual term affected by the delay.

(g) The Contractor is responsible for providing operating and maintenance instructions, spare parts support, and repair of the first article during any first article test.

(h) Before first article approval, the acquisition of materials or components for, or the commencement of production of, the balance of the contract quantity is at the sole risk of the Contractor. Before first article approval, the costs thereof shall not be allocable to this contract for (1) progress payments, or (2) termination settlements if the contract is terminated for the convenience of the Government.

(i) The Government may waive the requirement for first article approval test where supplies identical or similar to those called for in the schedule have been previously furnished by the Offeror/Contractor and have been accepted by the Government. The Offeror/Contractor may request a waiver.

(End of Clause)

Subpart 9.3 -- First Article Testing and Approval

Subpart 9.3 -- First Article Testing and Approval

9.301 Definition.

"Approval," as used in this subpart, means the contracting officer's written notification to the contractor accepting the test results of the first article.

9.302 General.

First article testing and approval (hereafter referred to as testing and approval) ensures that the contractor can furnish a product that conforms to all contract requirements for acceptance. Before requiring testing and approval, the contracting officer shall consider the (a) Impact on cost or time of delivery;

(b) Risk to the Government of foregoing such test; and (c) Availability of other, less costly, methods of ensuring the desired quality.

9.303 Use.

Testing and approval may be appropriate when

(a) The contractor has not previously furnished the product to the Government;

(b) The contractor previously furnished the product to the Government, but (1) There have been subsequent changes in processes or specifications;

(2) Production has been discontinued for an extended period of time; or (3) The product acquired under a previous contract developed a problem during its life;

(c) The product is described by a performance specification; or (d) It is essential to have an approved first article to serve as a manufacturing standard.

9.304 Exceptions.

Normally, testing and approval is not required in contracts for (a) Research or development;

(b) Products requiring qualification before award (e.g., when an applicable qualified products list exists (see Subpart 9.2));

(c) Products normally sold in the commercial market; or (d) Products covered by complete and detailed technical specifications, unless the requirements are so novel or exacting that it is questionable whether the products would meet the requirements without testing and approval.

9.305 Risk.

Before first article approval, the acquisition of materials or components, or commencement of production, is normally at the sole risk of the contractor. To minimize this risk, the contracting officer shall provide sufficient time in the delivery schedule for acquisition of materials and components, and for production after receipt of first article approval. When Government requirements preclude this action, the contracting officer may, before approval of the first article, authorize the contractor to acquire specific materials or components or commence production to the extent essential to meet the delivery schedule (see Alternate II of the clause at 52.209-3, First Article Approval -- Contractor Testing, and Alternate II of the clause at 52.209-4, First Article Approval -- Government Testing). Costs incurred based on this authorization are allocable to the contract for (1) Progress payments; and (2) Termination settlements if the contract is terminated for the convenience of the Government.

9.306 Solicitation requirements.

Solicitations containing a testing and approval requirement shall

(a) Provide, in the circumstance where the contractor is to be responsible for the first article approval testing

(1) The performance or other characteristics that the first article must meet for approval;

(2) The detailed technical requirements for the tests that must be performed for approval; and (3) The necessary data that must be submitted to the Government in the first article approval test report;

(b) Provide, in the circumstance where the Government is to be responsible for the first article approval testing

(1) The performance or other characteristics that the first article must meet for approval; and (2) The tests to which the first article will be subjected for approval;

(c) Inform offerors that the requirement may be waived when supplies identical or similar to those called for have previously been delivered by the offeror and accepted by the Government (see 52.209-3(h) and 52.209-4(i));

(d) Permit the submission of alternative offers, one including testing and approval and the other excluding testing and approval (if eligible under 9.306(c));

(e) State clearly the first article's relationship to the contract quantity (see paragraph (e) of the clause at 52.209-3, First Article Approval -- Contractor Testing, or 52.209-4, First Article Approval -- Government Testing);

(f) Contain a delivery schedule for the production quantity (see 12.104). The delivery schedule may

(1) Be the same whether or not testing and approval is waived; or (2) Provide for earlier delivery when testing and approval is waived and the Government desires earlier delivery. In the latter case, any resulting difference in delivery schedules shall not be a factor in evaluation for award. The clause at 52.209-4, First Article Approval -- Government Testing, shall contain the delivery schedule for the first article;

(g) Provide for the submission of contract numbers, if any, to document the offeror's eligibility under 9.306(c);

(h) State whether the approved first article will serve as a manufacturing standard; and (i) Include, when the Government is responsible for first article testing, the Government's estimated testing costs as a factor for use in evaluating offers (when appropriate).

(j) Inform offerors that the prices for first articles and first article tests in relation to production quantities shall not be materially unbalanced (see 15.404-1(g)) if first article test items or tests are to be separately priced.

9.307 Government administration procedures.

(a) Before the contractor ships the first article, or the first article test report, to the Government laboratory or other activity responsible for approval at the address specified in the contract, the contract administration office shall provide that activity with as much advance notification as is feasible of the forthcoming shipment, and (1) Advise that activity of the contractual requirements for testing and approval, or evaluation, as appropriate;

(2) Call attention to the notice requirement in paragraph (b) of the clause at 52.209-3, First Article Approval -- Contractor Testing, or 52.209-4, First Article Approval -- Government Testing; and (3) Request that the activity inform the contract administration office of the date when testing or evaluation will be completed.

(b) The Government laboratory or other activity responsible for first article testing or evaluation shall inform the contracting office whether to approve, conditionally approve, or disapprove the first article. The contracting officer shall then notify the contractor of the action taken and furnish a copy of the notice to the contract administration office. The notice shall include the first article shipment number, when available, and the applicable contract line item number. Any changes in the drawings, designs, or specifications determined by the contracting officer to be necessary shall be made under the Changes clause, and not by the notice of approval, conditional approval, or disapproval furnished the contractor.

9.308 Contract clauses.

9.308-1 Testing performed by the contractor.

(a)(1) The contracting officer shall insert the clause at 52.209-3, First Article Approval -- Contractor Testing, in solicitations and contracts when a fixed-price contract is contemplated and it is intended that the contract require

(i) First article approval; and (ii) That the contractor be required to conduct the first article testing.

(2) If it is intended that the contractor be required to produce the first article and the production quantity at the same facility, the contracting officer shall use the clause with its Alternate I.

(3) If it is necessary to authorize the contractor to purchase material or to commence production before first article approval, the contracting officer shall use the clause with its Alternate II.

(b)(1) The contracting officer shall insert a clause substantially the same as the clause at 52.209-3, First Article Approval -- Contractor Testing, in solicitations and contracts when a cost-reimbursement contract is contemplated and it is intended that the contract require

(i) First article approval; and (ii) That the contractor be required to conduct the first article test.

(2) If it is intended that the contractor be required to produce the first article and the production quantity at the same facility, the contracting officer shall use a clause substantially the same as the clause at 52.209-3, First Article Approval -- Contractor Testing, with its Alternate I.

(3) If it is necessary to authorize the contractor to purchase material or to commence production before first article approval, the contracting officer shall use a clause substantially the same as the clause at 52.209-3, First Article Approval -- Contractor Testing, with its Alternate II.

9.308-2 Testing performed by the Government.

(a)(1) The contracting officer shall insert the clause at 52.209-4, First Article Approval -- Government Testing, in solicitations and contracts when a fixed-price contract is contemplated and it is intended that the contract require first article approval and that the Government will be responsible for conducting the first article test.

(2) If it is intended that the contractor be required to produce the first article and the production quantity at the same facility, the contracting officer shall use the basic clause with its Alternate I.

(3) If it is necessary to authorize the contractor to purchase material or to commence production before first article approval, the contracting officer shall use the basic clause with its Alternate II.

(b)(1) The contracting officer shall insert a clause substantially the same as the clause at 52.209-4, First Article Approval -- Government Testing, in solicitations and contracts when a cost-reimbursement contract is contemplated and it is intended that the contract require first article approval and that the Government be responsible for conducting the first article test.

(2) If it is intended that the contractor be required to produce the first article and the production quantity at the same facility, the contracting officer shall use a clause substantially the same as the clause at 52.209-4, First Article Approval -- Government Testing, with its Alternate I.