15.407-2
Make-or-buy programs
FAR 15.407-2 requires contractors to submit detailed make-or-buy programs for certain negotiated acquisitions, ensuring transparency and informed sourcing decisions that support cost, technical, and socioeconomic objectives.
Overview
FAR 15.407-2 establishes requirements for make-or-buy programs in negotiated acquisitions, particularly those requiring certified cost or pricing data. The regulation aims to ensure that prime contractors manage contract performance efficiently by making informed decisions about which items or work efforts to produce in-house (make) versus subcontract (buy), with the goal of minimizing cost and technical risk to the Government. The Government may require, review, and agree to a contractor’s make-or-buy program to support price negotiations, performance, and socioeconomic objectives.
Key Rules
- Applicability and Thresholds
- Make-or-buy programs may be required for negotiated acquisitions valued at $20 million or more (excluding certain R&D contracts), and for lower-value contracts if justified and documented by the contracting officer.
- Solicitation and Submission Requirements
- Solicitations must specify when a make-or-buy program is required and the evaluation factors. Contractors must submit detailed make-or-buy plans with their offers, covering major items or work efforts and supporting rationale.
- Program Content
- The program must identify major items, categorize them as "must make," "must buy," or "can either make or buy," and provide justifications, plant locations, subcontractor details, and recommendations for deferred decisions.
- Evaluation and Negotiation
- Contracting officers evaluate and negotiate make-or-buy programs before award, and may incorporate them into contracts, especially for major systems or high-risk cost-reimbursable contracts.
Responsibilities
- Contracting Officers: Determine when make-or-buy programs are required, evaluate submissions, negotiate terms, and incorporate programs into contracts as appropriate.
- Contractors: Prepare and submit comprehensive make-or-buy programs with required supporting information, and comply with any incorporated program requirements.
- Agencies: Oversee compliance, document decisions, and ensure alignment with cost, technical, and socioeconomic objectives.
Practical Implications
- This regulation ensures transparency and efficiency in sourcing decisions, supporting fair pricing and risk management. Contractors must be prepared to justify their make-or-buy choices and provide detailed documentation. Common pitfalls include incomplete submissions, lack of justification, or failure to consider socioeconomic factors.