34.005-3
Concept exploration contracts
Concept exploration contracts must be short-term, budget-aligned, and only continued if the concept remains promising and progress is satisfactory.
Overview
FAR 34.005-3 addresses the use of contracts during the concept exploration phase of major system acquisitions. It requires that, whenever possible, contracts for this phase should be of short duration and set at planned dollar levels. The primary purpose of these contracts is to refine proposed concepts and reduce technical uncertainties before moving forward. The scope of work must align with the Government’s budget for this phase. Follow-on contracts may be awarded if the concept remains promising, the contractor is making acceptable progress, and it is economically sensible to continue. This approach helps manage risk and ensures resources are allocated efficiently during early project development.
Key Rules
- Short-Term, Budgeted Contracts
- Contracts in the concept exploration phase should be short-term and set at planned funding levels.
- Scope Consistency
- The work scope must match the Government’s budget for the phase.
- Follow-On Contract Conditions
- Follow-on contracts are permitted if the concept is still promising, progress is acceptable, and it remains economically viable.
Responsibilities
- Contracting Officers: Structure contracts for short periods and planned budgets; ensure scope aligns with budget; assess progress and economic viability for follow-on awards.
- Contractors: Focus on refining concepts and reducing technical uncertainties; demonstrate progress and value to be considered for follow-on work.
- Agencies: Monitor contractor progress and ensure continued alignment with program goals and budgets.
Practical Implications
- This section ensures that early-stage project funding is controlled and risk is managed before committing to larger investments. Contractors must show tangible progress and value to secure additional work. Common pitfalls include over-scoping, exceeding budgets, or failing to demonstrate sufficient progress for follow-on contracts.