Overview
FAR 17.605 establishes the rigorous standards and periodic review requirements for awarding, renewing, and extending Management and Operating (M&O) contracts. It emphasizes that due to the high expertise and continuity required for these unique efforts, the Government must exercise extraordinary diligence and maintain broad oversight rights.
Key Rules
- Pre-Award Due Diligence: Contracting officers must take "extraordinary steps" to verify a contractor’s technical and managerial capacity and ensure Organizational Conflicts of Interest (OCI) are mitigated before award.
- Government Intervention Rights: Contracts must be structured to grant the Government broad and continuing rights to involve itself in technical and managerial decision-making.
- Five-Year Review Cycle: Every M&O contract must be reviewed at least once every five years to determine if meaningful improvements in cost or performance are achievable.
- Authorization Levels: Any extension or renewal must be authorized at a level within the agency no lower than the level required for the original contract authorization.
- Replacement Criteria: Replacing an incumbent is primarily justified by the expectation of "meaningful improvement" and requires an analysis of the incumbent's past performance, the impact on national defense/safety, and the likelihood of a competitive field of offerors.
Practical Implications
- M&O contractors face a high barrier to entry but enjoy significant stability, as the Government prioritizes continuity and is often hesitant to change contractors unless substantial performance or cost benefits are proven.
- The mandatory five-year review serves as a critical "check-in" point where contractors must demonstrate their ongoing value to justify an extension rather than a new competition.