§114 Multiyear Procurement

Summary

The Secretary may sign a multiyear contract for supplies or services if all these things are true. There must be enough money available to cover the payments needed in the fiscal year the contract starts plus any expected cancellation charge. The multiyear deal must be better than a one-year deal because it will cut costs, save administrative work, improve contractor performance or encourage good competition. The need for the supplies or services must be ongoing, not likely to change a lot in total amount or delivery rate, and the specifications must stay mostly stable. The contractor’s performance risk must not be too high. The contract must not block small businesses from competing. For a drug whose patent expired less than four years before the solicitation date, there must be no real chance that generics will appear during the contract and increase competition. If full funding for the whole contract term is not available at signing, the contract must state that later yearly payments depend on enough appropriations and must allow reasonable cancellation charges to cover one-time costs. If funds later are insufficient, the Secretary must cancel under that rule. Cancellation charges come from the original contract funds or, if needed, from other funds for the same purposes. The Secretary keeps the right to end contracts for convenience under other law and must make rules to run this program. Definitions: "appropriations" — meaning in section 1511 of title 31. "Multiyear contract" — runs beyond the fiscal year it starts but no later than the end of the fourth fiscal year after that; excludes construction and real estate leases. "Nonrecurring, unrecovered costs" — one-time costs the contractor reasonably incurred, as defined in the Secretary’s regulations.