protest or complaint over unfilled orders. Second, assuming the low-risk manufacturers would pass testing, the early production orders enabled easy transition into full production because those manufacturers were already ramping up for production. Of the nine manufacturers awarded IDIQ contracts for test vehicles, the source selection committee assessed five as acceptably low in risk to receive LRIP contracts prior to testing. Although two of these manufacturers ultimately failed, three of the five that did meet DT-C1 requirements completed that phase of testing more prepared for production
than if starting from scratch.
This example demonstrates the
exchange for an
accelerated ramp-up of three MRAP manufacturers, the program bought 160 from OTC and Protected Vessels, Inc. (PVI), at a cost of $23 million, that it ultimately use (Hansen, 2008, June 10).
An additional aspect of the contracting strategy, intended to maximize program participation, allowed contractors to mitigate some of their production risks, performance risks and start-up costs by including all those costs up front in higher per-vehicle prices for lower order quantities. This stepladder pricing was considered one of the most valuable business attributes of the contracting strategy, yet it is a practice not condoned in traditional acquisition programs. In addition, it helped limit the Government’s liability in the event of a contract termination (Owen, 2008, p. 11). Alpha11 contracting was another
tool used successfully in prices with vendors up
that it front.
saved both time
and money by
establishing costs and the large volume of
contract actions (UCAs), engineering change proposals (ECPs), and modifications because time consuming negotiations did not have to be
11 There is no formal definition of Alpha Contracting. It is a theory of acquisition reform and in the
case of the MRAP program applied in a hybrid form due to the use of multiple manufacturers. Defined by Clements (2002, p. 58), “Alpha Contracting is a method of sole-source contracting that capitalizes on the teaming of the Government and the contractor early and throughout all stages of the acquisition process. It differs from the traditional sole-source contracting method in that it includes the contractor in the planning and development of the contract from the beginning of the process, thereby reducing the overall time to contract award.”