DFARS Part 217: Special Contracting Methods

In plain English

DFARS Part 217 implements special contracting methods for DoD, including multiyear contracts, options, interagency acquisitions, exchanges of nonexcess property, vessel repair master agreements, identification of sources of supply, undefinitized contract actions (UCAs), replenishment parts, provisioning, over and above work, and a prohibition on reverse auctions. These methods can affect how contractors bid, perform, and get paid, so understanding them is important for compliance and successful contracting with DoD.

Key rules

• Before awarding a multiyear contract, the head of the agency must compare its cost to an annual procurement approach using present value analysis and award only if the multiyear contract results in lower cost. (217.170)
• Multiyear contracts for services may be for up to 5 years for certain types of services, even if funds are limited by statute to obligation only during the fiscal year of appropriation. (217.171)
• Multiyear contracts for supplies may be awarded if conditions in FAR 17.105-1(b) and additional DFARS conditions are met. (217.172)
• The ordering period of a task or delivery order contract awarded by DoD under 10 U.S.C. 3403 may be up to 5 years and may be extended for one or more successive periods. (217.204)
• Exercise an option only after determining that the contractor's record in SAM is active and the contractor's unique entity identifier, CAGE code, name, and physical address are correct. (217.207)
• UCAs must include a not-to-exceed price, a definitization schedule, and are subject to limitations on obligations before definitization, such as not obligating more than 50 percent of the not-to-exceed price. (217.7404-2, 217.7404-3, 217.7404-4)
• Contracting officers shall not use reverse auctions when procuring items designated by the requiring activity as at risk of becoming obsolete or for which there is no competitive marketplace. (217.7801)

Who does what

In practice

• When bidding on a multiyear contract, be aware that the government must perform a cost analysis and may award only if it expects lower costs than annual procurement.
• For task or delivery order contracts, the ordering period can be up to 5 years and may be extended, so plan your capacity and pricing accordingly.
• If you are in a UCA, submit a qualifying proposal as soon as possible to allow definitization and avoid the 50 percent obligation limit.
• For supply contracts, be prepared to identify your sources of supply, including the actual manufacturer, as required by the solicitation provision.

Common pitfalls

• Assuming that a multiyear contract will automatically be awarded without the required cost comparison; the agency must perform a present value analysis and award only if it results in lower cost.
• Failing to verify that your SAM registration is active and your unique entity identifier, CAGE code, name, and physical address are correct before the contracting officer exercises an option; this could prevent option exercise.
• In a UCA, not submitting a qualifying proposal promptly; if you wait until more than 50 percent of the not-to-exceed price is obligated, the government may not be able to obligate additional funds before definitization.
• Using reverse auctions for items designated by the requiring activity as at risk of becoming obsolete or for which there is no competitive marketplace; this is prohibited.

Written by AI from this part's codified text (2026-10-04); cited sections are checked against the part. A guide, not legal advice: the regulation text, the solicitation and your contract rule.