Overview
FAR Subpart 42.11 establishes the policies and procedures for "production surveillance," a contract administration function used to monitor a contractor's progress and identify factors that might delay performance. It ensures the government maintains adequate oversight of supply and service contracts (excluding construction and Federal Supply Schedules) to protect its interests and ensure timely delivery.
Key Rules
- Applicability: Applies to all contracts for supplies and services, but specifically excludes construction contracts and Federal Supply Schedule (FSS) contracts.
- Criticality Designators: Contracting Officers must assign a criticality category to every contract to determine the level of oversight:
- A: Highest priority; includes DX-rated contracts, urgent requirements (6.302-2), and major systems.
- B: Essential for maintaining production/repair lines or preventing out-of-stock conditions.
- C: All other contracts not meeting "A" or "B" criteria.
- Surveillance Intensity: The extent of surveillance is based on the criticality designator, the contractor’s past performance, financial capability, and the complexity of the production plan.
- Simplified Acquisition Threshold (SAT): Production surveillance is generally not required for contracts at or below the SAT unless specific risks justify it.
- Non-Interference: Government personnel conducting surveillance must avoid any actions that could be interpreted as modifying the contract, waiving requirements, or providing grounds for a contractor claim.
- Use of Contractor Data: The government is required to make maximum use of the contractor’s existing data management and production control systems to avoid duplicative reporting.
Responsibilities
- Contracting Officer (CO):
- Assigns the appropriate Criticality Designator (A, B, or C).
- Determines the extent of surveillance if the contract is retained for administration.
- Inserts FAR Clause 52.242-2 (Production Progress Reports) when reporting is necessary.
- Contract Administration Office (CAO):
- Determines the specific extent of surveillance when administration is delegated.
- Reviews and verifies the accuracy of contractor-produced progress reports.
- Formally advises the CO of any potential or actual delays in performance, including recommendations for action.
- Contractor:
- Remains solely responsible for timely contract performance.
- Maintains production control systems and submits required progress reports as specified in the contract schedule.
Practical Implications
- Risk-Based Management: For contractors, a "Criticality Designator A" status means significantly higher government presence and more frequent data requests. Companies working on major systems or urgent defense needs should expect rigorous "eyes-on" surveillance of their industrial processes.
- Performance History Matters: A contractor’s history of performance is a specific factor in determining surveillance levels. A history of delays will lead to more intrusive government oversight, whereas a record of on-time delivery may reduce the administrative burden.
- System Integration: Because the FAR encourages the use of the contractor's own data systems, contractors with robust, transparent ERP (Enterprise Resource Planning) and production tracking systems can often satisfy surveillance requirements with less disruption than those with manual or opaque systems.
- Prevention of Constructive Changes: Contract administrators must be careful during site visits or progress reviews. If a government official suggests a change in process that results in a delay or increased cost, the contractor may have grounds for a claim, as the FAR explicitly warns against surveillance actions that result in "claims of waivers or changes."