17.401 General
Source: FAR 17.401 on acquisition.gov
Leader company contracting is a rare, agency-controlled technique that enables a sole producer to help other firms become suppliers, used only when specific objectives and agency procedures are met.
Overview
- FAR 17.401 introduces leader company contracting as a specialized acquisition technique used only in exceptional circumstances and in accordance with agency-specific procedures. This method designates a developer or sole producer as the "leader company" to provide technical assistance and know-how to one or more "follower companies," enabling them to become additional sources of supply. The primary objectives include reducing delivery times, achieving geographic supplier dispersion, maximizing use of scarce resources, improving production economies, ensuring equipment uniformity and compatibility, resolving proprietary data issues, and facilitating the transition from development to production and competitive acquisition.
Key Rules
- Leader Company Contracting Defined
- Only used in special circumstances and must follow agency procedures.
- Designation of Leader and Follower Companies
- A developer or sole producer is selected as the leader to assist other companies (followers) in becoming suppliers.
- Objectives of the Technique
- Includes reducing delivery time, geographic dispersion, maximizing scarce resources, production economies, equipment standardization, resolving proprietary data issues, and easing transition to competitive production.
Responsibilities
- Contracting Officers: Must ensure use of this technique is justified, follows agency procedures, and meets one or more stated objectives.
- Contractors: Leader companies must provide agreed-upon assistance to followers; followers must utilize the assistance to become viable suppliers.
- Agencies: Must establish and enforce procedures for the use of leader company contracting and approve its application.
Practical Implications
- This section exists to provide a framework for expanding the supplier base and addressing unique production or supply challenges. It impacts contracting by allowing agencies to leverage the expertise of a sole producer to develop additional sources, but only under strict conditions. Common pitfalls include improper justification, failure to follow agency procedures, or not achieving the intended objectives.
Leader company contracting is an extraordinary acquisition technique that is limited to special circumstances and utilized only when its use is in accordance with agency procedures. A developer or sole producer of a product or system is designated under this acquisition technique to be the leader company, and to furnish assistance and know-how under an approved contract to one or more designated follower companies, so they can become a source of supply. The objectives of this technique are one or more of the following:
(a) Reduce delivery time.
(b) Achieve geographic dispersion of suppliers.
(c) Maximize the use of scarce tooling or special equipment.
(d) Achieve economies in production.
(e) Ensure uniformity and reliability in equipment, compatibility or standardization of components, and interchangeability of parts.
(f) Eliminate problems in the use of proprietary data that cannot be resolved by more satisfactory solutions.
(g) Facilitate the transition from development to production and to subsequent competitive acquisition of end items or major components.