DEFENCE  Course:

CONTRACT AND Diploma in

Contract
Drafting

RELATED CLAUSES
This assignment is submitted by Arshita Sharma, a student who had
undertaken Diploma Course in Contract Drafting offered by Enhelion
organisation.
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DEFENSE CONTRACT

What is a Defense Contract?

The federal government awards defense contracts to people or businesses. The contracts
are an agreement to produce goods or provide services in support of national defense of the
United States.

Who administers these Contracts?

The Defense Contract Management Agency (DCMA) is a federal government agency in the
United States that reports to the Under Secretary of Defense for Acquisition and
Sustainment. It is in charge of contract administration for the Department of Defense (DoD)
and other approved government entities. The organization's headquarters are in Fort Lee,
Virginia. DCMA is occasionally in charge of Foreign Military Sales contracts.

What is a Contractor?
A defense contractor, as defined by the Code of Federal Regulations, is “any individual, firm,
corporation, partnership, association, or other legal non-Federal entity that enters into a
contract directly with the DOD to furnish services, supplies, or construction” 1.

The word contractor is widely used in two situations within the military policy sector. The
term can refer to commercial firms with whom the Department of Defense enters into
contracts to offer goods and services. It can also refer to personnel recruited by the DOD to
do specific activities, generally through private firms, which are also regarded contractors in
the preceding sense. Military servicemembers, DOD career workers, or political appointees
are not considered contractors.

The contractors can generally be of two kinds

i. Contractors as Individuals
ii. Contractors as Companies

1
32 C.F.R. 158.3, “Definitions”

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1. Individual Contractors

Individual DOD contractors provide a wide range of organisational activities,

including as intelligence analysis and software development, as well as landscaping
and food service. Contractors provide benefits such as freeing up uniformed soldiers
to focus on responsibilities that only uniformed people can undertake; offering
knowledge in specialised disciplines such as linguistics or weapon system
maintenance; and providing a surge capability (quickly delivering critical support
capabilities tailored to specific military needs). Contractors can be less expensive in
the long term than keeping a permanent in-house capacity since they can be
recruited when a specific need emerges and released when their services are no
longer required.

2. Companies As Contractors

DOD contracts with numerous firms for various goods and services, but five
corporations dominate its contracting. In FY2015, these five businesses were the
only ones to earn more than $9 billion in DOD contracts, accounting for 28 percent
of all DOD contracted expenditures for the year. The five businesses are sometimes
referred to as the primes, referring to their function as prime contractors who
subcontract to other organisations.

The primes dominate contracts for both products and services, owing to the fact that
they also service the items they supply to the DOD. Health care providers are the
most numerous of the organisations with contracts that are more than 90% services,
followed by enterprises that provide professional services ranging from research to
managerial assistance. The majority of contractors—more than 70%—supply items,
and this includes the smallest firms in terms of contractual amounts, which often
deliver particular produced commodities.

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History of Defense Contract Drafting

Contracting has been used by the military to assist its operations since the beginning of our
country's existence. The successful administration of these contracts has been critical to the
well-being and success of our warfighters. It has aided in ensuring that contractors meet
their contractual obligations in terms of cost, time, and technical performance. To a
significant degree, the success of every procurement activity has and continues to be
determined by how well it is managed during its execution.

Major General Charles R. Henry formed the Defense Contract Administration Organization
(DCMC), a subordinate DLA command, on February 26, 1990, to supervise the newly unified
contract management activities. Contracts for shipbuilding and munitions factories were
kept by the armed forces.

Aircraft, space launch vehicles and spacecraft, medical and sustenance goods, electrical and
electronic commodities, military vehicles, ammunition, fuel, chemicals, and timber have all
been included in DCMC contract management. Furthermore, contract management at the
command now includes services spanning the entire acquisition life cycle, from acquisition
planning and strategy support to quality assurance and software surveillance through
contract closeout. DCMC now administers over 352,000 prime contracts valued over $855
billion. It covers more than 23,000 contractors worldwide 2.

CLAUSES RELATED TO THE DEFENSE CONTRACTS

The contract provisions listed below are included by reference into the Department of
Defense (DOD) Federal Acquisition Regulations (DFARS). Under this, if a protester can
establish that either the contracting agency or the contract awardee did not comply with
the conditions of the request, the contract award can be contested and set aside. A
successful protest can result in the decision to award the contract being reconsidered or the
contract being awarded to the protester instead of the original awardee. Even if a successful
protester is not granted the contract, the government agency may be required to reimburse
the protester's bid and proposal fees.

2
Janet A McDonnell, A History of Defense Contract Administration, (1999).

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The clauses mentioned below are related to defence contracts:

1. Clause 252.203-7000- This clause deals with compensation for former Department
of Defense employees that is prohibited by Statute.

It further reads as:

The Contractor shall not knowingly provide compensation to a covered DoD official
within 2 years after the official leaves DoD service, without first determining that the
official has sought and received, or has not received after 30 days of seeking, a
written opinion from the appropriate DoD ethics counselor regarding the applicability
of post-employment restrictions to the activities that the official is expected to
undertake on behalf of the Contractor.3

2. Clause 252.203-7001- This clause deals with special employment prohibition, i.e.
Prohibition on Persons Convicted of Fraud or Other Defense Contract-Related
Felonies.
It says that –

“Any individual who is convicted after September 29, 1988, of fraud or any other
felony arising out of a contract with the DoD is prohibited from serving— (1) In a
management or supervisory capacity on this contract; (2) On the board of directors
of the Contractor; (3) As a consultant, agent, or representative for the Contractor; or
(4) In any other capacity with the authority to influence, advise, or control the
decisions of the Contractor with regard to this contract”. 4

3. Clause 252.203-7004- This clause deals with display of DOD Hotline Poster.  

4. Clause 252.204-7000- This clause deals with the confidentiality of the organisation’s
information and the contractor is bound to do so, otherwise it would be considered
as Breach of his Duty.

5. Clause 252.223-7004: This clause deals with drug free working. The Contractor
undertakes to implement and maintain a programme to achieve the goal of a drug-
free workforce. While this paragraph specifies the conditions for such a programme,
contractors are invited to utilise alternate methods.
3
Acquisition.gov. 2021. DFARS | Acquisition.GOV. [online] Available at: <https://www.acquisition.gov/dfars>
[Accessed 8 October 2021].
4
DFARS, Part-252, Sec. 252.203-7001, Pg 252.2-2

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6. Clause 252.231-7000: This clause deals with Supplemental Cost Principles. The
clause reads as:

“When the allowability of costs under this contract is determined in accordance with
Part 31 of the Federal Acquisition Regulation (FAR), allowability shall also be
determined in accordance with Part 231 of the Defense FAR Supplement, in effect on
the date of this contract.”5

7. Clause 252.243-7001: This clause deals with Pricing of Contract Modifications.

This clause reads as:

“When costs are a factor in any price adjustment under this contract, the contract
cost principles and procedures in FAR Part 31 and DFARS Part 231, in effect on the
date of this contract, apply.”6

5
Acquisition.gov. 2021. DFARS | Acquisition.GOV. [online] Available at: <https://www.acquisition.gov/dfars>
[Accessed 8 October 2021].
6
Acquisition.gov. 2021. DFARS | Acquisition.GOV. [online] Available at: <https://www.acquisition.gov/dfars>
[Accessed 7 October 2021].

DEFENSE CONTRACT