DoDI 5000.74, Defense Acquisition of Services, January 10, 2020, Incorporating Change 1 on June 24, 2021

DOD INSTRUCTION 5000.74

EFENSE ACQUISITION OF SERVICES

Originating Component: Office of the Under Secretary of Defense for Acquisition and Sustainment

Effective: January 10, 2020

Change 1 Effective: June 24, 2021

Releasability: Cleared for public release. Available on the Directives Division Website

at https://www.esd.whs.mil/DD/.

Reissues and Cancels: DoD Instruction 5000.74, “Defense Acquisition of Services,” January 5,

2016

Approved by: Ellen M. Lord, Under Secretary of Defense for Acquisition and

Sustainment

Change 1 Approved by: Stacy A. Cummings, Performing the Duties of the Under Secretary of

Defense for Acquisition and Sustainment

Purpose: In accordance with the authority in DoD Directive 5135.02, this issuance:

• Establishes policy, assigns responsibilities, and provides direction for the acquisition of services.

• Establishes a management structure for the acquisition of services and provides implementation

procedures.

DoDI 5000.74, January 10, 2020

Change 1, June 24, 2021

TABLE OF CONTENTS 2

TABLE OF CONTENTS

SECTION 1: GENERAL ISSUANCE INFORMATION .............................................................................. 4

1.1. Applicability. .................................................................................................................... 4

1.2. Policy. ............................................................................................................................... 5

a. Overarching Management Principles. ............................................................................ 5

b. General. .......................................................................................................................... 5

c. Requirements and Labor Sourcing. ................................................................................ 6

d. Contracting. .................................................................................................................... 7

1.3. Summary of Change 1. ..................................................................................................... 7

SECTION 2: RESPONSIBILITIES ......................................................................................................... 8

2.1. Under Secretary of Defense for Acquisition and Sustainment (USD(A&S))................... 8

2.2. Assistant Secretary of Defense for Acquisition (ASD(A)). .............................................. 8

2.3. Principal Director, Defense Pricing and Contracting (DPC). ........................................... 8

2.4. Under Secretary of Defense for Personnel and Readiness................................................ 9

2.5. Under Secretary of Defense (Comptroller)/Chief Financial Officer, Department of

Defense. .............................................................................................................................. 9

2.6. Under Secretary of Defense for Intelligence and Security. .............................................. 9

2.7. Director, Cost Assessment and Program Evaluation. ..................................................... 10

2.8. DoD Component Heads. ................................................................................................. 10

SECTION 3: SAES AND AUTHORITIES ............................................................................................ 11

3.1. SAE and CAE. ................................................................................................................ 11

3.2. Component SSM. ............................................................................................................ 11

3.3. Component Portfolio Manager (Category-Specific). ...................................................... 12

3.4. Functional Services Manager (FSM). ............................................................................. 13

3.5. Services Acquisition Decision Authority. ....................................................................... 14

a. Acquisition Decision Authority. .................................................................................. 14

b. Special Interest Requirements...................................................................................... 14

SECTION 4: PROCEDURES .............................................................................................................. 16

4.1. Services Acquisition Requirements Development. ......................................................... 16

a. Responsibility for Services Acquisition Requirements Development. ........................ 16

b. Considerations.............................................................................................................. 16

4.2. MFT Guidelines. ............................................................................................................. 16

4.3. SRRB. ............................................................................................................................. 17

4.4. Services Acquisition Strategy. ........................................................................................ 20

4.5. Performance Management Metrics. ................................................................................ 22

4.6. Independent Management Reviews. ............................................................................... 22

4.7. Timely Planning to Avoid Bridge Contracts. ................................................................. 23

4.8. Supporting Tools. ............................................................................................................ 24

a. Adaptive Acquisition Framework. ............................................................................... 24

b. Defense Acquisition Guidebook. ................................................................................. 24

c. Service Acquisition Mall.............................................................................................. 24

GLOSSARY ..................................................................................................................................... 25

G.1. Acronyms. ...................................................................................................................... 25

G.2. Definitions. ..................................................................................................................... 25

DoDI 5000.74, January 10, 2020

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TABLE OF CONTENTS 3

REFERENCES .................................................................................................................................. 28

TABLE

Table 1. S-CATs Decision Authorities ........................................................................................ 15

FIGURES

Figure 1. Adaptive Acquisition Framework .................................................................................. 5

Figure 2. Seven Steps to the Services Acquisition Process ........................................................... 6

Figure 3. Federal Category Structure ........................................................................................... 12

DoDI 5000.74, January 10, 2020

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SECTION 1: GENERAL ISSUANCE INFORMATION 4

SECTION 1: GENERAL ISSUANCE INFORMATION

1.1. APPLICABILITY.

a. This issuance applies to:

(1) OSD, the Military Departments (MILDEPs), the Office of the Chairman of the Joint

Chiefs of Staff and the Joint Staff, the Combatant Commands, the Office of Inspector General of

the Department of Defense, the Defense Agencies, the DoD Field Activities, and all other

organizational entities within the DoD (referred to collectively in this issuance as the “DoD

Components”).

(2) The acquisition of services from private sector entities by or for the DoD with a total

estimated acquisition value in current year dollars at or above the simplified acquisition

threshold, as defined in Subpart 2.101 of the Federal Acquisition Regulation (FAR), except those

excluded in Paragraph 1.1.b.

b. This issuance does not apply to:

(1) Services listed in Subpart 37.502 of the FAR.

(2) Services in direct support of a contingency, humanitarian, or peacekeeping operation.

This exemption will apply to the response and initial deployment phase, but will terminate as

soon as practical, based on conditions on the ground and a determination by the decision

authority as shown in Note 4 of Table 1.

(3) Services that are required to respond to and recover from an emergency or disaster

directly supporting an emergency declaration or a major disaster declaration by the President.

This exemption will only apply to the response and initial recovery phase and, will terminate as

soon as practical during the sustainment phase managing reconstruction and recovery efforts

based on conditions on the ground and a determination by the decision authority as shown in

Note 4 of Table 1.

(4) Research and development services and any related services.

(5) Services from DoD Federally Funded Research and Development Centers, which are

acquired in accordance with the management structure described in Subpart 35.017 of the FAR

and DoD Instruction (DoDI) 5000.77 and from DoD University Affiliated Research Centers,

which are acquired in accordance with the management structure described in the DoD

University-Affiliated Research Center (UARC) Management Plan.

(6) Construction services and any services relating to construction.

(7) Classified, cryptologic, and intelligence projects and service activities, except to the

extent practical at the discretion of senior officials and decision authorities.

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SECTION 1: GENERAL ISSUANCE INFORMATION 5

(8) Services that are managed and reviewed as part of acquisition programs under other

pathways of the Adaptive Acquisition Framework. However, it may apply to services in these

programs at the discretion of the decision authority responsible for the program.

1.2. POLICY.

a. Overarching Management Principles.

The overarching management principles that govern the defense acquisition system are

described in DoD Directive 5000.01, DoDI 5000.02, and DoDI 5000.02T. The purpose of the

defense acquisition system is to deliver effective and affordable solutions to the end user while

enabling execution at the speed of relevance. To achieve that objective, the DoD will employ an

adaptive acquisition framework comprising acquisition pathways (see Figure 1), each tailored for

the unique characteristics and risk profile of the capability being acquired. This issuance

describes the responsibilities of principal acquisition officials and the purpose and key

characteristics of the services acquisition pathway.

Figure 1. Adaptive Acquisition Framework

b. General.

(1) Acquisition of services is a command responsibility: unit, organization, and

installation commanders are responsible for the appropriate, efficient, and effective acquisition

of services by their organizations. Organizations will assign roles and responsibilities as outlined

in this issuance.

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(2) The steps outlined in Figure 2 will be used to ensure the use of proven, repeatable

processes and procedures contributing to successful services acquisitions.

Figure 2. Seven Steps to the Services Acquisition Process

(3) The evolving nature of industry-provided services capabilities, including innovative

processes for services and the use of technology in delivering services outcomes, should be

considered when acquiring services. These capabilities include, but are not limited to,

automation, improved or re-engineered processes (both internal and external to the DoD), and

the use of tools and techniques to improve the services management.

(4) The government workforce acquiring and managing services will be trained and

experienced in acquiring and managing acquisitions of services.

(5) Acquisitions of information technology services will comply with DoDI 5000.82 and

this issuance.

c. Requirements and Labor Sourcing.

(1) Contractor personnel, along with military and civilian manpower, are an element of

the DoD’s Total Force.

(2) Contractors will not be used to perform unauthorized personal services functions as

outlined in Subpart 37.104 of the FAR or inherently governmental functions as outlined at

Subpart 7.5 of the FAR; Subpart 207.5 of the Defense Federal Acquisition Regulation

Supplement (DFARS); Section 2463 of Title 10, United States Code (U.S.C.); and Office of

Federal Procurement Policy Letter 11-01. The reliance on contractors to perform functions that

are critical or closely associated with inherently governmental functions will be reviewed and

justified as outlined in Office of Federal Procurement Policy Letter 11-01, Subpart 7.503(e) of

the FAR, and Subpart 207.503 of the DFARS. Performance of these functions will be reduced to

the maximum extent practicable, as required by Section 2330a(e) of Title 10, U.S.C.

(3) Pursuant to Section 2461 of Title 10, U.S.C., Section 325 of Public Law 111-84, and

Section 742 of Division E of Public Law 115-141, civilian work may not be outsourced to

performance by contracted services.

(4) The Director, Office of Small Business Programs (OSBP) is required to review and

advise on any decisions to convert an activity performed by a small business concern to an

activity performed by a federal employee.

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d. Contracting.

(1) The DoD will use competitive procedures and incentive- and performance-based

contracting to the maximum extent practicable for the procurement of services to improve

productivity and performance consistent with DoD objectives.

(2) Services acquisitions will be structured and managed to provide opportunities for the

DoD to leverage small business capabilities and maximize competition.

(3) Existing government-wide contracts should be used to the maximum extent

practicable for services acquisitions for the Federal Category Structure shown in Figure 3.

(4) The acquisition strategy for services will provide appropriate mechanisms to identify

and manage intellectual property to allow both the government and industry a fair and reasonable

return on investment while enabling competitive and cost-effective transition to follow-on

service providers. Where competition is determined not to be feasible or practicable, acquisition

strategies will incorporate processes to generate improved performance or cost savings with the

sole source vendor, such as incentives and performance metrics.

(5) Line item structure will be in accordance with FAR 4.1005, including the required

Product or Service Code designating the category of goods or services being procured.

1.3. SUMMARY OF CHANGE 1.

This change:

a. Aligns this issuance with the Adaptive Acquisition Framework established in

DoDI 5000.02.

b. Organizes policy content to separate general acquisition policy from contracting policy.

c. Removes IT policy from this issuance so that it can be incorporated into DoDI 5000.82.

DoDI 5000.74, January 10, 2020

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SECTION 2: RESPONSIBILITIES 8

SECTION 2: RESPONSIBILITIES

2.1. UNDER SECRETARY OF DEFENSE FOR ACQUISITION AND SUSTAINMENT

(USD(A&S)).

The USD(A&S):

a. Develops, distributes, and oversees implementation of policies on the acquisition of

services across the DoD.

b. Serves as the senior official responsible for acquisition of services in the DoD

Components in the Fourth Estate in accordance with Section 2330(a)(3) of Title 10, U.S.C.

c. Serves as or designates a senior DoD decision authority for designated special interest

services acquisition category (S-CAT) as defined in Table 1.

d. May delegate decision authority to DoD Component heads with further delegation to the

Component Acquisition Executive (CAE).

e. Coordinates with the Under Secretary of Defense for Intelligence and Security to ensure

that security implications are addressed throughout the acquisition of services process.

2.2. ASSISTANT SECRETARY OF DEFENSE FOR ACQUISITION (ASD(A)).

Under the authority, direction, and control of the USD(A&S), the ASD(A):

a. Serves as the staff-level lead for services acquisition supporting the USD(A&S).

b. Develops implementing policies, procedures, and best practice guidelines for services

acquisitions consistent with Sections 2322 and 2330 of Title 10, U.S.C., in consultation with

Service Acquisition Executives (SAEs) and CAEs and Component Senior Services Managers

(SSMs).

c. Reviews DoD Component requests for waivers or requests for exemption to the

procedures in this issuance for approval when necessary.

d. May designate a Services Acquisition requirement as “Special Interest.”

2.3. PRINCIPAL DIRECTOR, DEFENSE PRICING AND CONTRACTING (DPC).

Under the authority, direction, and control of the ASD(A), the Principal Director, DPC:

a. Is responsible for all contracting and defense pricing policy matters in the DoD.

b. Develops and maintains the DFARS and its procedures, guidance, and information,

including those related to services acquisitions.

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c. Defines necessary data and information exchange with DoD Components to support

program assessments, portfolio trend analysis, and component improvements in the acquisition

of services.

d. Develops and implements a management structure that includes defining data elements

required to measure progress and performance of service acquisitions.

e. Coordinates with the OSD OSBP on proposed acquisition strategies and enterprise-wide

strategic sourcing.

2.4. UNDER SECRETARY OF DEFENSE FOR PERSONNEL AND READINESS.

The Under Secretary of Defense for Personnel and Readiness:

a. Is responsible for establishing and maintaining the policies and procedures, consistent

with statute and regulation, for determining workload alignment and workforce mix, as well as

the appropriateness of labor sources (i.e., military and civilian personnel and contracted services)

to perform certain functions.

b. Guides the collection of data regarding functions and missions performed by contractors,

the calculation of contractor full-time equivalents for direct labor, and the conduct and

completion of the annual reviews of services acquisitions.

c. Implements guidelines and procedures pertaining to work that is currently performed by a

contractor to be insourced by the government workforce.

d. Maintains policies and procedures regarding the conversion of workload performed by

one source of labor to a different source of labor, to include the conversion of work performed

by, or designated for performance by, civilian employees to contracted services.

2.5. UNDER SECRETARY OF DEFENSE (COMPTROLLER)/CHIEF FINANCIAL

OFFICER, DEPARTMENT OF DEFENSE.

The Under Secretary of Defense (Comptroller)/Chief Financial Officer, Department of Defense,

reviews costs incurred for services acquisition and makes programming recommendations as

appropriate and is jointly responsible with the Director, Cost Assessment and Program

Evaluation, for the data analysis and reporting oversight requirements in Section 2329 of

Title 10, U.S.C.

2.6. UNDER SECRETARY OF DEFENSE FOR INTELLIGENCE AND SECURITY.

The Under Secretary of Defense for Intelligence and Security coordinates with the USD(A&S) to

ensure that security implications are addressed throughout the acquisition of services process in

accordance with DoD security policy.

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2.7. DIRECTOR, COST ASSESSMENT AND PROGRAM EVALUATION.

The Director, Cost Assessment and Program Evaluation, establishes policies and procedures for

the collection of cost data and conducting cost estimates and is jointly responsible with the

Under Secretary of Defense (Comptroller)/Chief Financial Officer, Department of Defense, for

the data analysis and reporting oversight requirements in Section 2329 of Title 10, U.S.C.

2.8. DOD COMPONENT HEADS.

DoD Component heads:

a. Implement the policy and procedures in this issuance within their respective DoD

Component. When necessary, submit waivers or requests for exceptions to the provisions of this

issuance to the ASD(A) or designee.

b. Develop implementation guidance to support this issuance to best achieve cost, schedule,

and performance objectives, including encouraging the use of DoD-wide and best-in-class (BIC)

solutions when appropriate and consistent with statutory and regulatory requirements for the

acquisition of services.

c. Appoint a SSM who serves as the senior official responsible for the management of

acquisition of services for and on behalf of their respective component and implementation of the

procedures in this issuance, as follows.

(1) DoD Components Other than the MILDEPs.

A CAE exercises decision authority as delegated from the DoD Component head or the

USD(A&S).

(2) MILDEPs.

An SAE exercises decision authority in accordance with Section 2330 of Title 10, U.S.C.

Further delegation is allowed to the Service senior procurement executives.

d. Provide necessary data and information exchange to the USD(A&S) to support program

assessments, trend analysis, and component improvements in the acquisition of services.

e. Review and validate requirements for the acquisition of services in accordance with DoD

Component procedures.

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SECTION 3: SAES AND AUTHORITIES 11

SECTION 3: SAES AND AUTHORITIES

3.1. SAE AND CAE.

SAEs and CAEs will oversee implementation of this issuance on behalf of their respective DoD

Component.

3.2. COMPONENT SSM.

Component SSMs:

a. Are responsible for the planning, strategic sourcing, management, and oversight of

services acquisitions conducted by their component.

b. Work with key stakeholders within their component to:

(1) Establish appropriate management structures and processes as well as implement an

oversight framework to ensure effective implementation and execution of the acquisition of

services using this issuance.

(2) Develop processes to implement Services Requirements Review Boards (SRRBs) to

ensure requirements for the acquisition of services are reviewed, validated, and approved, and to

verify the need for the requirement at the appropriate level of review and approval within the

component.

(3) Identify opportunities to reduce duplication of requirements, to increase small

business (to include socio-economic concerns) participation as prime and subcontractors, and

increase overall acquisition efficiencies in the acquisition of services.

(4) Develop services forecasting tools to predict the renewal of requirements and new

requirements in order to support early acquisition planning, budget development, and

requirements approval, and to publish the forecast in accordance with the Small Business Act.

(5) Support acquisition strategy and independent management review processes for

services acquisitions in accordance with the S-CAT thresholds in Table 1.

(6) Review, develop, and use data and metrics to support strategic management

decisions, meet small business and competition goals, and document trends and costs in the

acquisition of services.

(7) Require training and development of the acquisition workforce supporting services

acquisitions.

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3.3. COMPONENT PORTFOLIO MANAGER (CATEGORY-SPECIFIC).

a. Pursuant to Section 2330 of Title 10, U.S.C., Component Portfolio Managers are

dedicated, full-time commodity managers to coordinate the procurement of key categories of

services within the component as may be appropriate.

b. Portfolio Managers will manage services in order to improve productivity and efficiency.

Requirements will be addressed from an appropriate enterprise-level (e.g., DoD Component-

wide, DoD-wide, or BIC solution) so that resulting contract awards are aligned with mission,

security, performance, and cost objectives.

c. Category-specific portfolios are based on the federal taxonomy. There are 19 categories

in the federal structure – 10 for common spending across the Federal Government and nine for

DoD-centric spend, as shown in Figure 3. A category may include services or products. The

DoD services structure consists of 14 categories, bolded in Figure 3. Information on how the

Federal Government is using strategic business practices on categories to buy smarter and more

like a single enterprise can be found at https://hallways.cap.gsa.gov/app/#/.

Figure 3. Federal Category Structure

d. Portfolio Managers will require service acquisitions to be executed efficiently and with

increased productivity by:

(1) Using and documenting market research to identify service providers within the

marketplace for specific services based upon their demonstrated competencies, performance, and

cost competitiveness.

(2) Maximizing small business participation to expand the competitive base of service

providers.

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(3) Using management controls and business intelligence systems to establish

appropriate oversight and sustain situational awareness of services acquisitions.

(4) Requiring services acquisitions to use performance-based requirements to the

maximum extent practicable and include identifiable and measurable cost, schedule, and

performance outcomes with consideration for quality and delivery.

(5) Enhancing services acquisition planning and coordination by using multi-functional

teams (MFTs).

(6) Minimizing the use of non-competitive bridge contract actions through early

requirement and acquisition planning.

(7) Identifying potential contract consolidation candidates and coordinating with the

appropriate OSBP to ensure compliance with applicable bundling and consolidation policy.

(8) Accomplishing market research to collect information to maximize reliance on the

commercial marketplace and to benefit from its capabilities, technologies, and competitive forces

to fulfill DoD needs.

(9) Completing a business case analysis on acquisitions of $50 million or more that may

significantly overlap with the requirements of an existing contract, DoD or government-wide

acquisition contract, or BIC contract.

3.4. FUNCTIONAL SERVICES MANAGER (FSM).

a. FSMs are responsible for the security, cost, schedule, and performance of a specific

service acquisition project. They are the lead for developing, coordinating, and resourcing the

requirement and overseeing it through the acquisition process. They require accomplishment of

project objectives and oversee acquisition of services to meet the user’s mission needs.

b. FSMs will be designated by the requiring activity under most circumstances. The FSM is

responsible for developing the preferred services acquisition solution, including securing SRRB

approval when necessary, considering the following:

(1) Initial acquisition strategy.

(2) Business approach.

(3) Assumptions.

(4) An assessment of project and mission risk.

(5) Technology development or other innovations (if any).

(6) Risk strategies.

(7) Cost targets.

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(8) Contract surveillance and oversight strategy.

(9) Market research.

(10) Performance metrics.

c. The FSM leads a multifunctional team through a services acquisition using the steps

outlined in Figure 2 (tailored as required).

d. The FSM is responsible for implementing effective risk management and tracking to

include:

(1) Identification of all known risks.

(2) Key assumptions.

(3) Probability of occurrence.

(4) Consequences of occurrence (in terms of cost, schedule, and performance) if not

mitigated.

(5) Analysis of mitigation options.

(6) Decisions about actions to mitigate risk, and execution of those actions.

e. The FSM will conduct reviews of the services acquisition project on a regular basis, and

reviews will be event-driven if transitioning between different phases of the acquisition process.

f. The FSM will capture support metrics and cost data, as appropriate, and track performance

against cost targets. The FSM will immediately notify the requiring activity when they become

aware of significant deviations from any parameter (e.g., cost, schedule, performance).

3.5. SERVICES ACQUISITION DECISION AUTHORITY.

a. Acquisition Decision Authority.

The designated decision authority for each S-CAT is listed in Table 1.

b. Special Interest Requirements.

For all requirements designated as special interest, the USD(A&S), Principal Director, DPC,

or designee is the decision authority in the acquisition chain of command. Staff and other

organizations and stakeholders provide support to this FSM management chain of command,

which is responsible for the execution of the services acquisition.

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Table 1. S-CATs Decision Authorities

Category Threshold

MILDEP and Fourth Estate

Authority

3 4

Acquisition Decision

S-CAT I

Acquisitions of services with an estimated total value of

$1 billion or more, or with an estimated total value in

any one year of more than $300 million

SAE, CAE or designee

Special

Interest

As designated by the ASD(A)

USD(A&S) or designee

S-CAT II

Acquisitions

$250 million

services with an estimated total

more, but less than $1 billion

value of

SAE, CAE, or designee

S-CAT III

Acquisitions of services with an estimated total value of

$100 million or more, but less than $250 million

Component SSM or designee

S-CAT IV

Acquisitions of services with an estimated total value of

$10 million or more, but less than $100 million

Component SSM or designee

S-CAT V

Acquisitions of services with an estimated total value

above the simplified acquisition threshold, but less than

$10 million

Component SSM or designee

Dollar threshold is determined based on the independent government cost estimate in current-year dollars, in accordance with

the DoD Handbook for Services Acquisition, Independent Government Cost Estimate.

The “Special Interest” designation is typically based on one or more of these factors: Technological complexity;

congressional or administration interest; a large commitment of resources; or whether the program is critical to the

achievement of a capability or set of capabilities, part of a system of systems; or a joint program.

In accordance with DPC memorandum, “Approval of Changes to the Decision Authorities of DoD Components for

Acquisition of Services,” dated June 21, 2016, as amended.

For services acquired in support of business systems; acquisition decision authorities will align with DoDI 5000.75.

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SECTION 4: PROCEDURES

4.1. SERVICES ACQUISITION REQUIREMENTS DEVELOPMENT.

a. Responsibility for Services Acquisition Requirements Development.

The decision authority listed in Table 1 or designee is responsible for ensuring qualified

FSMs oversee planning and execution of services acquisition requirements.

(1) The requiring activity will determine the need for an FSM with relevant training and

qualifications based on risk or complexity of the acquisition.

(2) In the absence of FSMs with relevant training and qualifications, an FSM with

functional expertise for a given services requirement will exercise management responsibilities

and be trained in accordance with the tools included in Paragraph 4.8.

(3) The FSM and his or her project team should leverage the tools and checklists

included in Paragraph 4.8.

b. Considerations.

The FSM and his or her project team should consider costs of labor skill mix and categories,

service levels, frequency of performance, and dictated quality levels when developing the

requirement to meet mission needs for services acquisition. Discrete costs of increased levels of

service or the next-higher labor category must be weighed against mission needs and budget

constraints to ensure the services to be acquired represent the best value to the government and

meet mission requirements.

4.2. MFT GUIDELINES.

a. The MFT will be led by the FSM assigned to the services acquisition requirement.

b. The FSM must engage with all functional stakeholders during the MFT formation process

to ensure the team is adequately staffed with required skillsets and has coordinated any necessary

training to execute the services acquisition.

c. The MFT assembled to develop the requirements should be comprised of individuals with

various critical functional skills (including subject matter experts), and may be unique to an

acquisition.

d. MFTs that support services acquisition requirements applicable to this issuance with a

total contract value of $500 million or more or an annual value of $250 million or more must

participate in a services acquisition workshop (SAW), or equivalent program, as provided by the

Defense Acquisition University (DAU). For multiple award, indefinite delivery, indefinite

quantity contracts, a SAW is not required for the base contract, but is required for any task order

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valued at $100 million or more. In cases where a SAW is required, it is required before a

services acquisition strategy will be approved.

(1) MILDEP, Joint Command, and Fourth Estate Component SSMs must electronically

submit an annual SAW 5-year forecast to [email protected] by October 1 each year. The 5-year

forecast must provide the projected number of SAWs for each fiscal year including requirement

names.

(2) Requiring activities may request a SAW that includes DAU staff consulting on

multiple-phase engagements during pre-award.

(3) SAW waivers may only be granted by the DoD Component SSM. For Special

Interest acquisitions, SAW waivers may only be granted by the decision authority.

(4) Although not required, requiring activities should consider applying the SAW

requirement to services acquisitions valued at $10 million or more, but less than the dollar cap

set forth in subparagraph d above.

e. The FSM or other personnel assigned to lead the MFT should understand the costs related

to the services being acquired. The representative must apply a cost analysis outlining these

discrete costs within the overall service requirement, coupled with initial market research and a

thorough screening of the requirement against the anticipated costs of the proposed services to

ensure an effective trade-off is made during the SRRB process between mission needs, cost, and

affordability. This ensures only the highest-priority services describing well-defined mission

requirements will be approved for acquisition.

4.3. SRRB.

a. An SRRB process will be used to review, validate, prioritize, and approve services

requirements to accurately inform the budget and acquisition processes. The SRRB should also

be conducted to build a contractual services forecast on an annual basis. A requirements review

process is critical to the final cost, schedule, and performance of an acquired service and should

be informed by current and accurate mission needs, spend data analysis, cost analysis, risk

analysis, and initial market research.

b. The SRRB will be conducted as early in the services acquisition process as practical

before a procurement request package is transferred over to a DoD Component’s contracting

office for execution. It will not be combined with contract review boards chaired by contracting

authorities that occur throughout the year and are focused on approving individual contract

actions before release of request for proposals.

c. DoD Components will use an SRRB process for services acquisitions with an estimated

total value $10 million or more. For an indefinite delivery, indefinite quantity contract, this

includes both the base contract and any task orders of $10 million or more. Although not

required, decision authorities should consider screening for requirements with an estimated total

value below $10 million which may benefit from the SRRB process.

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d. Although not required, DoD Components should consider using Contractual Services

Managers, SRRB engagement teams, or services acquisition management software tools if

appropriate to track and streamline SRRB processes and work with the requiring activity before

holding a board meeting.

e. An SRRB will review requirements for services acquisitions and is led by the organization

that requires those services. An SRRB will:

(1) Increase visibility of, and collaboration on, services requirements among all

stakeholders.

(2) Validate requirements before execution of approved acquisition strategy or execution

of a contract option.

(3) Provide for prioritization of services requirements to support funding decisions.

(4) Increase collaboration among stakeholders on key strategy decisions to optimize

services acquisitions and enable efficiencies.

(5) Foster proactive management by the DoD Components for services acquisitions.

(6) Identify and document opportunities for savings and cost avoidance that may be

realized through reduction in service delivery levels, outright cancellation to bring services

requirements in-house in accordance with Section 2463 of Title 10, U.S.C., or elimination of the

services altogether to fund higher-priority services requirements.

f. Requirements approval should be obtained from the assigned SRRB chair before financial

or contracting actions are initiated unless otherwise directed by the decision authority. The

seniority of the SRRB chair will be commensurate with the complexity, contract value, and

performance risk associated with the services requirement.

g. SRRBs provide a process for senior leaders to assess, review, and validate services

requirements. Requirements reviews should be appropriately tailored to include, but not be

limited to:

(1) Mission Need.

Explanation of the mission need for the requirement and the outcomes to be achieved

from acquiring services.

(2) Strategic Alignment.

How the requirement for services supports the broader organizational mission.

(3) Issues and Risks.

Both government and contractor issues and risks impacting the successful execution of

fulfilling the requirement.

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(4) Workforce Analysis.

An analysis of the decision to insource or outsource, including any past decisions and

why the requirement cannot be fulfilled with military or civilian personnel. Coordination with

the DoD Component Manpower and Personnel officials should be done in accordance with DoD

Directive 1100.4. The analysis should also take into consideration guidance outlined in

DoDI 1100.22, DoDI 7041.04 and Office of Management and Budget Circular A-76/Section

2461 of Title 10, U.S.C. In addition, the OSBP is required to review and advise on any decisions

to convert an activity performed by a small business concern to an activity performed by a

federal employee.

Relationship to Other Requirements. (5)

How the requirement for services impacts other requirements of the DoD Component

(positively or negatively).

Projected Cost of Requirement. (6)

Estimate of the forecasted cost of fulfilling the requirement, at least through the Future

Years Defense Program (5 years).

Prioritization. (7)

A determination as to whether the requirement for services is a lower-priority

requirement that can be reduced or eliminated with savings transferred to higher-priority

objectives or mission requirements.

Contract and Work Functions. (8)

A review and identification of contract and work functions that may be prohibited or

require heightened management attention, such as closely associated with inherently

governmental functions or critical functions. For additional guidance on identification, SRRBs

are recommended to use the DoD Handbook of Contract Function Checklists for Services

Acquisition, as needed.

(9) Metrics.

Performance management metrics should be considered to the maximum extent

practicable during the SRRB review and approval process.

h. SRRBs may be conducted on individual requirements. Comprehensive reviews enhance

the quality of requirements prioritization and services requirements risk assessments. These

reviews may be tiered at different levels of the organization as directed by DoD Component

guidance.

i. Organizations must track SRRB results, to include review goals, the cost baseline of

services requirements, number of services contracts in the organization and number reviewed,

value of efficiencies identified, and impact on meeting small business and competition goals.

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j. Although not required, organizations should consider integrating and aligning their SRRB

forecasting processes with program objective memorandum or other type of 5-year funding plans

identifying the specific capabilities needed to meet planning guidance objectives for their

mission.

4.4. SERVICES ACQUISITION STRATEGY.

a. The services acquisition strategy describes the plan to achieve the goals set in the services

acquisition. The services acquisition strategy document is called an Acquisition Plan when the

total cost of contracts for the acquisition program is estimated to be equal to or greater than the

threshold described in Subpart 207.103(d)(i)(B) of the DFARS. The services acquisition strategy

contains sufficient detail to allow senior leadership and the S-CAT decision authority to assess

whether the strategy makes good business sense, effectively implements laws and policies, and

reflects management’s priorities, including affordability.

b. Consistent with the size and complexity of the program, requiring activities will prepare

acquisition plans when the total cost of contracts for the acquisition program is estimated to be

equal to or greater than the threshold described in Subpart 207.103(d)(i)(B) of DFARS. The

contents of written acquisition plans must be consistent with Subpart 207.105 of the DFARS.

c. Requiring activities will document the management and oversight process for the

acquisition of services using streamlined documentation when the total cost of contracts for the

acquisition program is estimated to be above the simplified acquisition threshold, but less than

the threshold described in Subpart 207.103(d)(i)(B) of the DFARS. At a minimum,

documentation for the management and oversight process for the acquisition of services will

consider:

(1) Requirements development and management, which will include (tailored as

appropriate):

(a) The source of the requirement, the outcomes to be achieved and, if performance-

based, what metrics will be used to measure the outcomes.

(b) How the requirement was previously satisfied.

(d) A summary that addresses consolidated or bundled requirements, if it applies.

(e) A summary of the analysis of alternatives.

(2) Acquisition planning, which will include (tailored as appropriate):

(a) A description of the acquisition approach including appropriate milestones.

(b) Cost/price estimate for the total planned acquisition.

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(d) Implementation of performance-based services acquisition or rationale for not

using a performance-based services acquisition approach.

(e) Opportunities for small business, including socio-economic concerns, to

participate as prime and subcontractors.

(f) Proposed evaluation criteria and basis for award.

(g) If other than full and open competition, the rationale and its appropriate statutory

authority.

(h) Multi-year service contracting, if it applies in accordance with (Subpart 17.1 of

the FAR).

(i) Any required waivers or deviations.

(3) Solicitation and contract award documentation, which may include (tailored as

appropriate):

(a) The type of business arrangements anticipated (e.g., single contract, multiple

award task order contract, task order under existing multiple award contract).

(b) The duration of each business arrangement (base period and all option periods).

labor hour, or variations based on guidance found in Parts 12 or 16 of the FAR).

(4) A summary of the significant risk, issue, and opportunity assessment and

management plan, to include potential impacts on cost, schedule, and performance. Examples of

significant risk, issue, and opportunity areas requiring an assessment and management plan may

include:

(a) Acquisitions in which there is limited experience with the specific requirement

and there is a moderate to high risk of not completing the acquisition successfully.

(b) Acquisitions in which incentives (e.g., award fees, incentive fees) are to be

included.

(d) Acquisitions that are closely associated with inherently governmental functions.

(e) External assisted acquisitions that intend to employ authority in accordance with

Section 1535 of Title 31, U.S.C. (also known as “the Economy Act of 1933”) or full service,

internal assisted acquisitions under a non-Economy Act authority.

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(5) A summary of the existing and planned contract and performance management

approach.

(6) A summary of the plan for evaluating whether the metrics and any other measures

identified to guide the acquisition have been achieved.

4.5. PERFORMANCE MANAGEMENT METRICS.

a. It is an objective of the DoD to achieve efficiencies in procurements of services through

the use of:

(1) Performance-based services contracting.

(2) Competition.

(3) Program review spending analyses, and improved management of services contracts.

b. DoD Components will employ performance management metrics to the maximum extent

practicable to signal areas of potential risk (e.g., performance, cost, schedule, small business

participation, competition) to the DoD. Performance metrics signaling areas of potential risk are

not intended to restrict execution, but instead to alert and require higher-level awareness and

action to remedy potential cost, schedule, or performance issues.

c. Specific metrics can be tailored to the specific needs of the government customer for the

services and the requirement. However, the metrics must:

(1) Track and measure performance effectively.

(2) Support and inform acquisition planning for new contracts, contract renewals, and

contract re-competes.

(3) Be considered during the SRRB review and approval process.

4.6. INDEPENDENT MANAGEMENT REVIEWS.

a. DoD Components will establish procedures for periodic independent management reviews

of contracts with a total value of $100 million or more for services in their post-award period and

any additional contracts that the DoD Component deems necessary. The reviews may be

organized in a variety of different ways, such as annually or by milestone, on an individual

contract basis, by organization, or by specific portfolio/category. Pursuant to Section 2330 of

Title 10, U.S.C., the independent management reviews must be designed to evaluate at a

minimum:

(1) Contract performance in terms of costs, schedule, and requirements.

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(2) The use of contracting mechanisms, including the use of competition, the contract

structure and type, the definition of contract requirements, cost or pricing methods, the award

and negotiation of task orders, and management and oversight mechanisms.

(3) The contractor’s use, management, and oversight of subcontractors.

(4) The staffing of contract management and oversight functions.

(5) The extent of any pass-through charges by the contractor.

b. In addition to the matters required by Paragraph 4.6.a., DoD Components will provide for

procedures for the periodic review of contracts under which one contractor provides oversight

for services performed by other contractors. In particular, the procedures will be designed to

evaluate, at a minimum:

(1) The extent of the component’s reliance on the contractor to perform acquisition

functions closely associated with inherently governmental functions as defined in Section

2383(b)(3) of Title 10, U.S.C.

(2) The financial interest of any prime contractor performing acquisition functions in any

contract or subcontract with regard to which the contractor provided advice or recommendations

to the component.

4.7. TIMELY PLANNING TO AVOID BRIDGE CONTRACTS.

a. Pursuant to Section 2329(e) of Title 10, U.S.C., requirements owners must, to the extent

practicable, plan appropriately before the date of need for a service at a MILDEP, a Defense

Agency, a DoD Field Activity, a command, or a military installation to avoid the use of a bridge

contract to provide for continuation of a service to be performed through a services contract.

Such planning must include allowing time for a requirement to be validated, funding for the

services contract to be secured, and for a services contract to be entered into.

b. Upon the first use of a bridge contract to provide for continuation of a service to be

performed through a services contract, due to inadequate planning as determined by the S-CAT

decision authority, the requirements owner, along with the contracting officer or a designee of

the contracting officer for the contract, will:

(1) For a services contract in an amount less than $10 million, provide an update on the

status of the bridge contract (including the rationale for using the bridge contract) to the

commander or the senior civilian official of the Defense Agency concerned, DoD Field Activity

concerned, or military installation concerned, as applicable; or

(2) For a services contract in an amount equal to or greater than $10 million, provide an

update on the status of the bridge contract (including the rationale for using the bridge contract)

to the SAE of the MILDEP concerned, the head of the Defense Agency concerned, the

Combatant Commander concerned, or the USD(A&S), as applicable.

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c. Upon the second use of a bridge contract to provide for continuation of a service to be

performed through a services contract in an amount less than $10 million, due to inadequate

planning as determined by the S-CAT decision authority, the commander or senior civilian

official referred to in Paragraph b.(1) will provide notification of such use to the Vice Chief of

Staff of the armed force concerned and the SAE of the MILDEP concerned, the head of the

Defense Agency concerned, the Combatant Commander concerned, or the USD(A&S), as

applicable.

d. This section does not apply to:

(1) Service contracts in support of contingency operations, humanitarian assistance, or

disaster relief;

(2) Service contracts in support of a national security emergency declared with respect to

a named operation; or

(3) Service contracts entered into pursuant to an international agreement.

4.8. SUPPORTING TOOLS.

a. Adaptive Acquisition Framework.

The Adaptive Acquisition Framework website (https://aaf.dau.edu/) integrates acquisition

policies with the latest guidance and additional resources.

b. Defense Acquisition Guidebook.

The Defense Acquisition Guidebook (https://www.dau.edu/tools/dag) is a discretionary best

practice guide that has tutorials and additional information on acquisition policy.

c. Service Acquisition Mall.

The tools found on the DAU Service Acquisition Mall website

(https://www.dau.edu/tools/Documents/SAM/home.html) should be used to the maximum extent

practicable for the development of performance-based requirements.

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GLOSSARY 25

GLOSSARY

G.1. ACRONYMS.

CRONYM

EANING

ASD(A)

Assistant Secretary of Defense for Acquisition

BIC

best-in-class

CAE

Component Acquisition Executive

DAU

Defense Acquisition University

DFARS

Defense Federal Acquisition Regulation Supplement

DoDI

DoD instruction

DPC

Defense Pricing and Contracting

FAR

Federal Acquisition Regulation

FSM

Functional Services Manager

MFT

multi-functional team

MILDEP

Military Department

OSBP

Office of Small Business Programs

SAE

Service Acquisition Executive

SAW

services acquisition workshop

S-CAT

services acquisition category

SRRB

Services Requirements Review Board

SSM

Senior Services Manager

U.S.C.

United States Code

USD(A&S)

Under Secretary of Defense for Acquisition and Sustainment

G.2. DEFINITIONS.

These terms and their definitions are for the purpose of this issuance.

ERM

EFINITION

acquisition value

The total price or total estimated cost of the contract or task order,

including the base period and all options.

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GLOSSARY 26

ERM

EFINITION

BIC

A contract vehicle that has been designated by the Office of

Management and Budget as a preferred government-wide solution

that:

Allows acquisition experts to take advantage of pre-vetted,

government-wide contract solutions.

Supports a government-wide migration to solutions that are

mature and market-proven.

Assists in the optimization of spend, with the government-wide

category management framework.

Increases the transactional data available for agency-level and

government-wide analysis of buying behavior.

bundling

As defined in Subpart 2.101 of the FAR.

Contractual Services

Manager

A senior acquisition professional in the organization that facilitates

and oversees the acquisition of services contracts in a strategic

manner.

decision authority

The individual responsible for ensuring a proposed services

acquisition is consistent with DoD’s policies, procedures, and best

practices guidelines for the acquisition of services through approval

of the acquisition strategy.

Fourth Estate

DoD Components that do not belong to one of the three MILDEPs.

This includes organizations such as Defense Agencies, Defense Field

Activities, OSD offices, the Joint Staff, Unified Combatant

Commands, and others.

FSM

The lead for developing, coordinating, and resourcing the

requirement and overseeing it throughout the acquisition process.

MFT

Team composed of representatives from appropriate functional

disciplines working together and supporting the FSM to create

successful acquisition of services, identify and resolve issues, and

make sound and timely recommendations to facilitate decision-

making.

procurement request

package

A set of documents that describe the required services and supplies

so that a procurement can be initiated by the contracting office, and

when accepted, becomes the basis for a solicitation. It may include,

but is not limited to, the performance work statement, market

research report, acquisition strategy or plan, quality assurance

surveillance plan, and independent government cost estimate.

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GLOSSARY 27

ERM

EFINITION

requiring activity

The organization charged with meeting a mission and delivering

requirements. The requiring activity is responsible for obtaining

funding or developing the program objective memorandum. The

requiring activity may also be the organizational unit that submits a

written requirement or statement of need for services required by a

contract. The requiring activity is responsible for delivering the

services to meet the mission if a contract is not in effect. Finally, the

requiring activity provides a trained and qualified contracting

officer’s representatives capable of determining whether services

contract requirements are being performed in accordance with the

contract.

SAW

A facilitated workshop built around a specific acquisition and its

MFT. The SAW facilitation team mentors and guides the MFT in

developing their acquisition planning, market research, performance

requirements, request for proposals, source selection process, and

contractor performance assessment planning and execution

documents.

senior official

The authority responsible for the acquisitions of services within or

for an organization.

service contract

As defined in Subpart 37.101 of the FAR.

simplified acquisition

threshold

As defined in Subpart 2.101 of the FAR:

https://www.acquisition.gov/far/part-2#FAR_2_101

special interest

Services that, by their nature or the circumstances related to their

acquisition, deserve increased attention or care during planning,

review, approval, and oversight.

SSM

With respect to the acquisition of services, the individual at the

general or flag officer or Senior Executive Service level appointed by

the DoD Component senior official to be responsible for governance

in planning, execution, strategic sourcing, and management of

service acquisitions.

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REFERENCES 28

REFERENCES

Defense Acquisition University, “Defense Acquisition Guidebook,” current edition

Defense Acquisition University, Services Acquisition Mall

Defense Federal Acquisition Regulation Supplement, current edition

Director, Defense Procurement and Acquisition Policy Memorandum, “Approval of Changes to

the Decision Authorities of DoD Components for Acquisition of Services,” June 21, 2016

DoD Directive 1100.4, “Guidance for Manpower Management,” February 12, 2005

DoD Directive 5000.01, “The Defense Acquisition System,” September 9, 2020

DoD Directive 5135.02, “Under Secretary of Defense for Acquisition and Sustainment

(USD(A&S)),” July 15, 2020

DoD Handbook for Services Acquisition, Independent Government Cost Estimate, current

edition

DoD Handbook of Contract Function Checklists for Services Acquisition, May 2018

DoD Instruction 1100.22, “Policy and Procedures for Determining Workforce Mix,” April 12,

2010, as amended

DoD Instruction 5000.02, “Operation of the Adaptive Acquisition Framework,” January 23,

2020

DoD Instruction 5000.02T, “Operation of the Defense Acquisition System,” January 7, 2015, as

amended

DoD Instruction 5000.75, “Business Systems Requirements and Acquisition,” February 2, 2017,

as amended

DoD Instruction 5000.77, “DoD Federally Funded Research and Development Center (FFRDC)

Program,” January 31, 2018, as amended

DoD Instruction 5000.82, “Acquisition of Information Technology,” April 21, 2020

DoD Instruction 7041.04, “Estimating and Comparing the Full Costs of Civilian and Active Duty

Military Manpower and Contract Support,” July 3, 2013, as amended

Federal Acquisition Regulation, current edition

Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, “Performance of Inherently

Governmental and Critical Functions,” September 12, 2011

Office of Management and Budget Memorandum A-76, “Performance of Commercial

Activities,” August 4, 1983, as amended

Public Law 111-84, “National Defense Authorization Act for Fiscal Year 2010,” October 28,

2009

Public Law 115-141, “Consolidated Appropriations Act, 2018,” March 23, 2018

United States Code, Title 10

United States Code, Title 31 (also known as “The Economy Act of 1933”)

University-Affiliated Research Center (UARC) Management Plan, August 8, 2010

Available on the Internet at https://www.dau.edu/tools/Documents/SAM/home.html