PGI 217.7506 -SPARE PARTS BREAKOUT

PROGRAM

PART 1 -GENERAL

1-101 Applicability.

(a) The Spare Parts Breakout Program applies to—

(1) Any centrally managed replenishment or provisioned part (hereinafter referred to as “part”) for

military systems and equipment; and

(2) All DoD personnel involved with design control, acquisition, and management of such parts

including, but not limited to, project/program/system managers, technical personnel, contracting

officers, legal counsel, inventory managers, inspectors, and small business specialists and technical

advisors.

(b) The Spare Parts Breakout Program does not apply to—

(1) Component breakout (see DFARS 207.171);

(2) Foreign military sale peculiar items;

(3) Insurance items (e.g., one-time buy);

(4) Obsolete items;

(5) Phase-out items (e.g., life-of-type buy);

(6) Items with annual buy values below the thresholds developed by DoD components or field

activities;

(7) Parts being acquired under other specifically defined initial support programs; or

(8) Parts acquired through local purchase. 1-102 General.

(a) Significant resources are dedicated to the acquisition and management of parts for military

systems and equipment. The ability to competitively buy spares must be considered early in a

weapon system acquisition. Initially, repairable or consumable parts are identified and acquired

through a provisioning process; repairable or consumable parts acquired thereafter are for

replenishment.

(b) The objective of the DoD Spare Parts Breakout Program is to reduce costs through the use of

competitive procurement methods, or the purchase of parts directly from the actual manufacturer

rather than the prime contractor, while maintaining the integrity of the systems and equipment in

which the parts are to be used. The program is based on the application of sound management and

engineering judgment in—

(1) Determining the feasibility of acquiring parts by competitive procedures or direct purchase from

actual manufacturers; and
(2) Overcoming or removing constraints to breakout identified through the screening process

(technical review) described in 3-302.

(c) The breakout program includes procedures for screening and coding parts in order to provide

contracting officers summary information regarding technical data and sources of supply to meet the

Government's minimum requirements. This information assists the contracting officer in selecting

the method of contracting, identifying sources of supply, and making other decisions in the

preaward and award phases, with consideration for established parameters of system and equipment

integrity, readiness, and the opportunities to competitively acquire parts (see FAR/DFARS Part 6).

The identification of sources for parts, for example, requires knowledge of manufacturing sources,

additional operations performed after manufacture of parts possessing safety or other critical

characteristics, and the availability of technical data.

(d) The result of the screening process (technical review is indicated by an acquisition method code

(AMC) and an acquisition method suffix code (AMSC). The breakout program provides procedures

for both the initial assignment of an AMC and an AMSC to a part, and for the recurring review of

these codes (see 2-202 and 2-203(b)).

1-103.1 Acquisition method code (AMC).

A single digit numeric code, assigned by a DoD activity, to describe to the contracting officer and

other Government personnel the results of a technical review of a part and its suitability for

breakout.

1-103.10 Competition.

A contract action where two or more responsible sources, acting independently, can be solicited to

satisfy the Government's requirement.

1-103.11 Contractor technical information code (CTIC).

A two-digit alpha code assigned to a part by a prime contractor to furnish specific information

regarding the engineering, manufacturing, and technical aspects of that part.

1-103.12 Design control activity.

A contractor or Government activity having responsibility for the design of a given part, and for the

preparation and currency of engineering drawings and other technical data for that part. The design

control activity may or may not be the actual manufacturer. The design control activity is

synonymous with design activity as used by DoD STD-100.

1-103.13 Direct purchase.

The acquisition of a part from the actual manufacturer, including a prime contractor who is an

actual manufacturer of the part.

1-103.14 Engineering drawings.

See current versions of DoD STD-100 and DoDD 1000.

1-103.15 Extended dollar value.

The contract unit price of a part multiplied by the quantity purchased.
1-103.16 Full and open competition.

A contract action where all responsible sources are permitted to compete.

1-103.17 Full screening.

A detailed parts breakout process, including data collection, data evaluation, data completion,

technical evaluation, economic evaluation, and supply feedback, used to determine if parts can be

purchased directly from the actual manufacturer(s) or can be competed.

1-103.18 Immediate (live) buy.

A buy that must be executed as soon as possible to prevent unacceptable equipment readiness

reduction, unacceptable disruption in operational capability, and increased safety risks, or to avoid

other costs.

1-103.19 Life cycle buy value.

The total dollar value of all acquisitions that are estimated to occur over a part's remaining life

cycle.

1-103.2 Acquisition method code conference.

A conference that is generally held at the contractor's facility for the purpose of reviewing

contractor technical information codes (CTICs) and corresponding substantiating data for breakout.

1-103.20 Limited competition.

A competitive contract action where the provisions of full and open competition do not exist.

1-103.21 Limited screening.

A parts breakout process covering only selected points of data and technical evaluations, and should

only be used to support immediate buy requirements (see 3-301.3).

1-103.22 Manufacture.

The physical fabrication process that produces a part, or other item of supply. The physical

fabrication processes include, but are not limited to, machining, welding, soldering, brazing, heat

treating, braking, riveting, pressing, and chemical treatment.

1-103.23 Prime contractor.

A contractor having responsibility for design control and/or delivery of a system/equipment such as

aircraft, engines, ships, tanks, vehicles, guns and missiles, ground communications and electronics

systems, and test equipment.

1-103.24 Provisioning.

The process of determining and acquiring the range and quantity (depth) of spare and repair parts,

and support and test equipment required to operate and maintain an end item of materiel for an

initial period of service.

1-103.25 Qualification.
Any action (contractual or precontractual) that results in approval for a firm to supply items to the

Government without further testing beyond quality assurance demonstrations incident to acceptance

of an item. When prequalification is required, the Government must have a justification on file—

(a) Stating the need for qualification and why it must be done prior to award;

(b) Estimating likely cost of qualification; and

(c) Specifying all qualification requirements.

1-103.26 Replenishment part.

A part, repairable or consumable, purchased after provisioning of that part, for: replacement;

replenishment of stock; or use in the maintenance, overhaul, and repair of equipment such as

aircraft, engines, ships, tanks, vehicles, guns and missiles, ground communications and electronic

systems, ground support, and test equipment. As used in the breakout program, except when

distinction is necessary, the term “part” includes subassemblies, components, and subsystems as

defined by the current version of MIL-STD-280.

1-103.27 Reverse engineering.

A process by which parts are examined and analyzed to determine how they were manufactured, for

the purpose of developing a complete technical data package. The normal, expected result of reverse

engineering is the creation of a technical data package suitable for manufacture of an item by new

sources.

1-103.28 Selected item drawing.

See current version of DoD-STD-100, paragraph 201.4.5.

1-103.29 Source.

Any commercial or noncommercial organization that can supply a specified part. For coding

purposes, sources include actual manufacturers, prime contractors, vendors, dealers, surplus

dealers, distributors, and other firms.

1-103.3 Acquisition method suffix code (AMSC).

A single digit alpha code, assigned by a DoD activity, that provides the contracting officer and other

Government personnel with engineering, manufacturing, and technical information.

1-103.30 Source approval.

The Government review that must be completed before contract award.

1-103.31 Source control drawing.

See the current version of DoD-STD-100, paragraph 201.4.3.

1-103.32 Technical data.

Specifications, plans, drawings, standards, purchase descriptions, and such other data to describe

the Government's requirements for acquisition.
1-103.4 Actual manufacturer.

An individual, activity, or organization that performs the physical fabrication processes that produce

the deliverable part or other items of supply for the Government. The actual manufacturer must

produce the part in-house. The actual manufacturer may or may not be the design control activity.

1-103.5 Altered item drawing.

See current version of DoD STD-100, paragraphs 201.4.4 and 703.

1-103.6 Annual buy quantity.

The forecast quantity of a part required for the next 12 months.

1-103.7 Annual buy value (ABV).

The annual buy quantity of a part multiplied by its unit price.

1-103.8 Bailment.

The process whereby a part is loaned to a recipient with the agreement that the part will be

returned at an appointed time. The government retains legal title to such material even though the

borrowing organization has possession during the stated period.

1-103.9 Breakout.

The improvement of the acquisition status of a part resulting from a technical review and a

deliberate management decision. Examples are—

(a) The competitive acquisition of a part previously purchased noncompetitively; and

(b) The direct purchase of a part previously purchased from a prime contractor who is not the actual

manufacturer of the part.

1-103 Definitions.

1-104 General policies.

(a) The identification, selection, and screening of parts for breakout shall be made as early as

possible to determine the technical and economic considerations of the opportunities for breakout to

competition or direct purchase. Full and open competition is the preferred result of breakout

screening.

(b) A part shall be made a candidate for breakout screening based on its cost effectiveness for

breakout. Resources should be assigned and priority given to those parts with the greatest expected

return given their annual buy value, life cycle buy value, and likelihood of successful breakout, given

technical characteristics such as design and performance stability. Consideration of all such factors

is necessary to ensure the maximum return on investment in a given breakout program.

Occasionally, an item will not meet strict economic considerations for breakout, but action may be

required due to other considerations to avoid overpricing situations. Accordingly, there is no

minimum DoD threshold for breakout screening actions. DoD components and field activities will

develop annual buy thresholds for breakout screening that are consistent with economic

considerations and resources. Every effort should be made to complete the full screening of parts

that are expected to be subsequently replenished as they enter the inventory.
(c) Breakout improvement efforts shall continue through the life cycle of a part to improve its

breakout status (see 2-203) or until such time as the part is coded 1G, 2G, 1K, 2K, 1M, 2M, 1N, 2N,

1T, 2T, 1Z, or 2Z.

(d) No firm shall be denied the opportunity to demonstrate its ability to furnish a part that meets the

Government's needs, without regard to a part's annual buy value, where a restrictive AMC/AMSC is

assigned (see FAR 9.202). A firm must clearly demonstrate, normally at its own expense, that it can

satisfy the Government's requirements. The Government shall make a vigorous effort to expedite its

evaluation of such demonstration and to furnish a decision to the demonstrating firm within a

reasonable period of time. If a resolution cannot be made within 60 days, the offeror must be advised

of the status of the request and be provided with a good faith estimate of the date the evaluation will

be completed. Every reasonable effort shall be made to complete the review before a subsequent

acquisition is made. Also, restrictive codes and low annual buy value do not preclude consideration

of a surplus dealer or other nonmanufacturing source when the part offered was manufactured by an

approved source (see FAR 11.302). A potential surplus dealer or other nonmanufacturing source

must provide the Government with all the necessary evidence that proves the proposed part meets

the Government's requirements.

(e) The experience and knowledge accrued by contractors in the development, design, manufacture

and test of equipment may enhance the breakout decision making process. DoD activities may obtain

technical information from contractors when it is considered requisite to an informed coding

decision. The procedure for contracting for this information is provided in Part 4 of this document.

Contractor's technical information will be designated by CTICs. Only DoD activities shall assign

AMCs and AMSCs.

(f) DoD activities with breakout screening responsibilities shall develop, document, and advertise

programs that promote the development of qualified sources for parts that are currently being

purchased sole source. These programs should provide fair and reasonable technical assistance

(engineering or other technical data, parts on bailment, etc.) to contractors who prove they have

potential for becoming a qualified second source for an item. These programs should also provide

specially tailored incentives to successful firms so as to stimulate their investment in becoming

qualified, e.g., Government furnished equipment (GFE) or Government furnished material (GFM) for

reverse engineering and technical data package review and assistance.

(g) Departments and agencies shall identify the engineering support activity, design control activity,

actual manufacturer, and prime contractor for each part such that the information is readily

available to breakout and acquisition personnel.

1-105 Responsibilities.

(a) The Under Secretary of Defense (Acquisition and Sustainment) has authority for direction and

management of the DoD Spare Parts Breakout Program, including the establishment and

maintenance of implementing regulations.

(b) Departments and agencies shall perform audits to ensure that their respective activities comply

with the provisions of this program.

(c) Commanders of DoD activities with breakout screening responsibility shall—

(1) Implement a breakout program consistent with the requirements of this document.

(2) Assist in the identification and acquisition of necessary data rights and technical data, and the

review of restrictive legends on technical data, during system/equipment development and
production to allow, when feasible, breakout of parts.

(3) Designate a program manager to serve as the central focal point, communicate breakout policy,

ensure cost-effectiveness of screening actions and breakout program, provide assistance in

implementing breakout screening, monitor ongoing breakout efforts and achievements, and provide

surveillance over implementation of the breakout program. The program manager shall report only

to the Commander, or deputy, of the activity with breakout screening responsibility.

(4) Ensure that actions to remove impediments to breakout are continued as long as it is costeffective, or until no further breakout improvements can be made.

(5) Invite the activity's small business specialist and the resident small business administration's

procurement center representative, if any, to participate in all acquisition method coding

conferences at Government and contractor locations.

(6) Ensure timely engineering and technical support to other breakout activities regardless of

location.

(i) In the case of parts where contracting or inventory management responsibility has been

transferred, support shall include—

(A) Assignment of an AMC/AMSC prior to the transfer;

(B) Assignment of an AMC/AMSC when requested by the receiving activity to parts transferred

without such codes. The requesting activity may recommend an AMC/AMSC; and

(C) Full support of the receiving activities' breakout effort by providing timely engineering support

in revising existing AMC/AMSCs.

(ii) In all cases, support shall include, but not be limited to, furnishing all necessary technical data

and other information (such as code suspense date and procurement history) to permit acquisition in

accordance with the assigned AMC/AMSC (see 1-105(d)(6)).

(7) Ensure that appropriate surveillance is given to first time breakout parts.

(d) Breakout program managers shall be responsible for—

(1) Initiating the breakout process during the early phases of development and continuing the

process during the life of the part;

(2) Considering the need for contractor technical information codes (CTICs) and, when needed,

initiating a contract data requirement;

(3) Identifying, selecting, and screening in accordance with Part 3 of this document;

(4) Assigning an AMC/AMSC, using all available data, including CTICs;

(5) Responding promptly to a request for evaluation of additional sources or a review of assigned

codes. An evaluation not completed prior to an immediate buy shall be promptly completed for

future buys; and

(6) Documenting all assignments and changes, to include rationale for assigning the chosen code, in

a permanent file for each part. As a minimum, the file should identify the engineering support

activity, cognizant design control activity, actual manufacturer, prime contractor, known sources of
supply, and any other information needed to support AMC/AMSC assignments.

(e) Contracting officers responsible for the acquisition of replenishment parts shall—

(1) Consider the AMC/AMSC when developing the method of contracting, the list of sources to be

solicited, the type of contract, etc.; and

(2) Provide information that is inconsistent with the assigned AMC/AMSC (e.g., availability of

technical data or possible sources) to the activity responsible for code assignment with a request for

timely evaluation of the additional information. An urgent immediate buy need not be delayed if an

evaluation of the additional information cannot be completed in time to meet the required delivery

date.

PART 2 -BREAKOUT CODING

2-200 Scope.

This part provides parts breakout codes and prescribes responsibilities for their assignment and

management.

2-201.1 Acquisition method codes.

The following codes shall be assigned by DoD activities to describe the results of the spare parts

breakout screening:

(a) AMC 0. The part was not assigned AMC 1 through 5 when it entered the inventory, nor has it

ever completed screening. Use of this code is sometimes necessary but discouraged. Maximum effort

to determine the applicability of an alternate AMC is the objective. This code will never be used to

recode a part that already has AMC 1 through 5 assigned, and shall never be assigned as a result of

breakout screening. Maximum effort to determine the applicability of AMC 1 through 5 is the

objective.

(b) AMC 1. Suitable for competitive acquisition for the second or subsequent time.

(c) AMC 2. Suitable for competitive acquisition for the first time.

(d) AMC 3. Acquire, for the second or subsequent time, directly from the actual manufacturer.

(e) AMC 4. Acquire, for the first time, directly from the actual manufacturer.

(f) AMC 5. Acquire directly from a sole source contractor which is not the actual manufacturer.

2-201.2 Acquisition method suffix codes.

The following codes shall be assigned by DoD activities to further describe the acquisition method

code. Valid combinations of AMCs/AMSCs are indicated in paragraphs (a) through (z) of this

subsection and summarized in Exhibit I.

(a) AMSC A. The Government's right to use data in its possession is questionable. This code is only

applicable to parts under immediate buy requirements and for as long thereafter as rights to data

are still under review for resolution and appropriate coding. This code is assigned only at the

conclusion of limited screening, and it remains assigned until the full screening process resolves the

Government's rights to use data and results in assignment of a different AMSC. If one source is

available, AMCs 3, 4, or 5 are valid. If at least two sources exist, or if the data is adequate for an
alternate source to qualify in accordance with the design control activity's procedures, AMCs 1 or 2

are valid.

(b) AMSC B. This part must be acquired from a manufacturing source(s) specified on a source

control or selected item drawing as defined by the current version of DoD-STD-100. Suitable

technical data, Government data rights, or manufacturing knowledge are not available to permit

acquisition from other sources, nor qualification testing of another part, nor use of a second source

part in the intended application. Although, by DoD-STD-100 definition, altered and selected items

shall have an adequate technical data package, data review discloses that required data or data

rights are not in Government possession and cannot be economically obtained. If one source is

available, AMCs 3, 4, or 5 are valid. If at least two sources exist, AMCs 1 or 2 are valid.

(c) AMSC C. This part requires engineering source approval by the design control activity in order to

maintain the quality of the part. Existing unique design capability, engineering skills, and

manufacturing knowledge by the qualified source(s) require acquisition of the part from the

approved source(s). The approved source(s) retain data rights, manufacturing knowledge, or

technical data that are not economically available to the Government, and the data or knowledge is

essential to maintaining the quality of the part. An alternate source must qualify in accordance with

the design control activity's procedures, as approved by the cognizant Government engineering

activity. The qualification procedures must be approved by the Government engineering activity

having jurisdiction over the part in the intended application. If one source is approved, AMCs 3, 4, or

5 are valid. If at least two sources are approved or if data is adequate for an alternate source to

qualify in accordance with the design control activity's procedures, AMCs 1 or 2 are valid.

(d) AMSC D. The data needed to acquire this part competitively is not physically available, it cannot

be obtained economically, nor is it possible to draft adequate specifications or any other adequate,

economical description of the material for a competitive solicitation. AMCS 3, 4, or 5 are valid.

(e) AMSC E. (Reserved)

(f) AMSC F. (Reserved)

(g) AMSC G. The Government has rights to the technical data, the data package is complete, and

there are no technical data, engineering, tooling or manufacturing restrictions. (This is the only

AMSC that implies that parts are candidates for full and open competition. Other AMSCs such as K,

M, N, Q, and S may imply limited competition when two or more independent sources exist yet the

technical data package is inadequate for full and open competition.) AMCs 1 or 2 are valid.

(h) AMSC H. The Government physically does not have in its possession sufficient, accurate, or

legible data to purchase this part from other than the current source(s). This code is applicable only

to parts under immediate buy requirements and only for as long thereafter as the deficiency is under

review for resolution and appropriate recoding. This code is only assigned at the conclusion of

limited screening, and it remains assigned until the full screening process resolves physical data

questions and results in assignment of a different AMSC. If one source is available, AMCs 3, 4, or 5

are valid. If at least two sources exist, AMCs 1 or 2 are valid.

(i) AMSC I. (Not authorized)

(j) AMSC J. (Reserved)

(k) AMSC K. This part must be produced from class 1 castings and similar type forgings as approved

(controlled) by procedures contained in the current version of MIL-STD-2175. If one source has such

castings and cannot provide them to other sources, AMCs 3, 4, or 5 are valid. If at least two sources
have such castings or they can be provided to other sources AMCs 1 or 2 or valid.

(l) AMSC L. The annual buy value of this part falls below the screening threshold established by DoD

components and field activities. However, this part has been screened for additional known sources,

resulting in either confirmation that the initial source exists or that other sources may supply the

part. No additional screening was performed to identify the competitive or noncompetitive

conditions that would result in assignment of a different AMSC. This code shall not be used when

screening parts entering the inventory. This code shall be used only to replace AMSC O for parts

under the established screening threshold. If one source is available, AMCs 3, 4, or 5 are valid. If at

least two sources exist, AMCs 1 or 2 are valid.

(m) AMSC M. Manufacture of this part requires use of master or coordinated tooling. If only one set

of tooling exists and cannot be made available to another source for manufacture of this part, AMCs

3, 4, or 5 are valid. When the availability of existent or refurbishable tooling is available to two or

more sources, then AMCs 1 or 2 are valid.

(n) AMSC N. Manufacture of this part requires special test and/or inspection facilities to determine

and maintain ultra-precision quality for its function or system integrity. Substantiation and

inspection of the precision or quality cannot be accomplished without such specialized test or

inspection facilities. If the test cannot be made available for the competitive manufacture of the part,

the required test or inspection knowledge cannot be documented for reliable replication, or the

required physical test or inspection facilities and processes cannot be economically documented in a

TDP, valid AMCs are 3, 4, or 5. If the facilities or tests can be made available to two or more

competitive sources, AMCs 1 or 2 are valid.

(o) AMSC O. The part was not assigned an AMSC when it entered the inventory, nor has it ever

completed screening. Use of this code in conjunction with AMC 0 is sometimes necessary but

discouraged. Maximum effort to determine the applicability of an alternate AMSC is the objective.

Only AMC O is valid.

(p) AMSC P. The rights to use the data needed to purchase this part from additional source(s) are

not owned by the Government and cannot be purchased, developed, or otherwise obtained. It is

uneconomical to reverse engineer this part. This code is used in situations where the Government

has the data but does not own the rights to the data. If only one source has the rights or data to

manufacture this item, AMCs 3, 4, or 5 are valid. If two or more sources have the rights or data to

manufacture this item, AMCs 1 or 2 are valid.

(q) AMSC Q. The Government does not have adequate data, lacks rights to data, or both needed to

purchase this part from additional sources. The Government has been unable to economically buy

the data or rights to the data, although the part has been undergoing full screening for 12 or more

months. Breakout to competition has not been achieved, but current, continuing actions to obtain

necessary rights to data or adequate, reprocurement technical data indicate breakout to competition

is expected to be achieved. This part may be a candidate for reverse engineering or other techniques

to obtain technical data. All AMSC Q items are required to be reviewed within the timeframes cited

in 2-203(b). If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources exist, AMCs 1

or 2 are valid.

(r) AMSC R. The Government does not own the data or the rights to the data needed to purchase this

part from additional sources. It has been determined to be uneconomical to buy the data or rights to

the data. It is uneconomical to reverse engineer the part. This code is used when the Government

did not initially purchase the data and/or rights. If only one source has the rights or data to

manufacture this item, AMCs 3, 4, or 5 are valid. If two or more sources have the rights or data to
manufacture this item, AMCs 1 or 2 are valid.

(s) AMSC S. Acquisition of this item is restricted to Government approved source(s) because the

production of this item involves unclassified but militarily sensitive technology (see FAR Subpart

6.3). If one source is approved, AMCs 3, 4, or 5 are valid. If at least two sources are approved, AMCs

1 or 2 are valid.

(t) AMSC T. Acquisition of this part is controlled by qualified products list (QPL) procedures.

Competition for this part is limited to sources which are listed on or are qualified for listing on the

QPL at the time of award (see FAR Part 9 and DFARS Part 209). AMCs 1 or 2 are valid.

(u) AMSC U. The cost to the Government to breakout this part and acquire it competitively has been

determined to exceed the projected savings over the life span of the part. If one source is available,

AMCs 3, 4, or 5 are valid. If at least two sources exist, AMCs 1 or 2 are valid.

(v) AMSC V. This part has been designated a high reliability part under a formal reliability program.

Probability of failure would be unacceptable from the standpoint of safety of personnel and/or

equipment. The cognizant engineering activity has determined that data to define and control

reliability limits cannot be obtained nor is it possible to draft adequate specifications for this

purpose. If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources are available,

AMCs 1 or 2 are valid.

(w) AMSC W. (Reserved)

(x) AMSC X. (Not authorized)

(y) AMSC Y. The design of this part is unstable. Engineering, manufacturing, or performance

characteristics indicate that the required design objectives have not been achieved. Major changes

are contemplated because the part has a low process yield or has demonstrated marginal

performance during tests or service use. These changes will render the present part obsolete and

unusable in its present configuration. Limited acquisition from the present source is anticipated

pending configuration changes. If one source is available, AMCs 3, 4, or 5 are valid. If at least two

sources exist, AMCs 1 or 2 are valid.

(z) AMSC Z. This part is a commercial product, nondevelopmental item, or commercially available

off-the-shelf item. Commercial item descriptions, commercial vendor catalog or price lists, or

commercial manuals assigned a technical manual number apply. If one source is available, AMCs 3,

4, or 5 are valid. If at least two sources are available, AMCs 1 or 2 are valid.

2-201.3 Contractor technical information codes.

The following two-digit alpha codes shall be used by contractors, when contractor's assistance is

requested. These codes are assigned in accordance with the current version of MIL-STD-789 and

shall be considered during the initial assignment of an AMC/AMSC. For spare parts breakout,

requirements for contractor assistance through CTIC submission shall be accomplished as stated in

Part 4 of this document. Each CTIC submitted by a contractor must be accompanied by supporting

documentation that justifies the proposed code. These codes and supporting documentation,

transmitted by DD Form 1418, Contractor Technical Information Record, and DD Form 1418-1,

Technical Data Identification Checklist, are useful not only for code assignment during acquisition

coding conferences, but also for personnel conducting both full and limited screening of breakout

candidates. Personnel conducting full and limited screening of breakout candidates should use the

supporting documentation provided with CTICs as a source of information. However, they should not

allow this information to substitute for careful analysis and further investigation of the possibilities
of acquiring a part through competition or by direct purchase. The definitions for CTICs are—

(a) CTIC CB. Source(s) are specified on source control, altered item, or selected item

drawings/documents. (The contractor shall furnish a list of the sources with this code.)

(b) CTIC CC. Requires engineering source approval by the design control activity in order to

maintain the quality of the part. An alternate source must qualify in accordance with the design

control activity's procedures, as approved by the cognizant Government engineering activity.

(c) CTIC CG. There are no technical restrictions to competition.

(d) CTIC CK. Produced from class 1 castings (see the current version of MIL-STD-2175) and similar

type forgings. The process of developing and proving the acceptability of high-integrity castings and

forgings requires repetitive performance by a controlled source. Each casting or forging must be

produced along identical lines to those that resulted in initial acceptability of the part. (The

contractor shall furnish a list of known sources for obtaining castings/forgings with this code.)

(e) CTIC CM. Master or coordinated tooling is required to produce this part. This tooling is not

owned by the Government or, where owned, cannot be made available to other sources. (The

contractor shall furnish a list of the firms possessing the master or coordinated tooling with this

code.)

(f) CTIC CN. Requires special test and/or inspection facilities to determine and maintain ultraprecision quality for function or system integrity. Substantiation and inspection of the precision or

quality cannot be accomplished without such specialized test or inspection facilities. Other sources

in industry do not possess, nor would it be economically feasible for them to acquire facilities. (The

contractor shall furnish a list of the required facilities and their locations with this code.)

(g) CTIC CP. The rights to use the data needed to purchase this part from additional sources are not

owned by the Government and cannot be purchased.

(h) CTIC CV. A high reliability part under a formal reliability program. Probability of failure would be

unacceptable from the standpoint of safety of personnel and/or equipment. The cognizant

engineering activity has determined that data to define and control reliability limits cannot be

obtained nor is it possible to draft adequate specifications for this purpose. Continued control by the

existing source is necessary to ensure acceptable reliability. (The contractor shall identify the

existing source with this code.)

(i) CTIC CY. The design of this part is unstable. Engineering, manufacturing, or performance

characteristics indicate that the required design objectives have not been achieved. Major changes

are contemplated because the part has a low process yield or has demonstrated marginal

performance during tests or service use. These changes will render the present part obsolete and

unusable in its present configuration. Limited acquisition from the present source is anticipated

pending configuration changes. (The contractor shall identify the existing source with this code.)

2-201 Coding.

Three types of codes are used in the breakout program.

2-202 Assignment of codes.

The purpose of AMC/AMSC assignments is to provide the best possible technical assessment of how

a part can be acquired. The technical assessment should not be based on issues such as: are the
known sources actual manufacturers, or are there two actual manufacturers in existence; but rather

on factors such as the availability of adequate technical data, the Government's rights to use the

data, technical restrictions placed on the hardware (criticality, reliability, special testing, master

tooling, source approval, etc.) and the cost to breakout vice projected savings. In cases where there

is additional technical information that affects the way a part can be acquired, it should be made

available to the contracting officer, with the AMC/AMSC. Concerning the assignment of AMCs and

AMSCs, it is DoD policy that—

(a) The assignment of AMC/AMSCs to parts is the responsibility of the DoD component introducing

the equipment or system for which the parts are needed in the inventory. Subsequent screening is

the responsibility of the DoD component assigned technical responsibility.

(b) When two or more AMSCs apply, the most technically restrictive code will be assigned.

(c) Restricted combinations of AMC/AMSCs are reflected in the AMSC definitions. The Defense

Logistics Information Service will reject invalid code combinations, as shown in Exhibit I, submitted

for entry into the Federal catalog program (see 2-204.2).

(d) One-time acquisition of a part by a method other than indicated by the code does not require a

change to the AMC (e.g., when only one of a number of sources can meet a short delivery date, or

when only one manufacturing source is known but acceptable surplus parts are available from other

sources).

(e) After the first acquisition under AMC 2 or 4, the AMC shall be recoded 1 or 3 respectively.

(f) Both full and limited screening will result in the assignment or reassignment of an AMC/AMSC.

This assignment shall be based on the best technical judgment of breakout personnel and on

information gathered during the screening process.

(g) A part need not be coded as noncompetitive based on an initial market survey that only uncovers

one interested source. If the Government has sufficient technical data in its possession to enable

other sources to manufacture an acceptable part, and there are no technical restrictions on the part

that would preclude other sources from manufacturing it, the part should be coded competitive.

2-203 Improving part status.

(a) General. An effective breakout program requires that all reasonable actions be taken to improve

the acquisition status of parts. The potential for improvement of the acquisition status will vary with

individual circumstances. On one end of the spectrum are those parts with acquisition method suffix

codes of a temporary nature requiring vigorous follow-through improvement action (e.g., AMSCs A

and H); on the other end are those parts with codes suggesting a relative degree of permanence

(e.g., AMSC P). A code assigned to a part should never be considered fixed with respect to either

technical circumstance or time; today's technical constraint may be overcome by tomorrow's

technology and a contractor's rights to data, so zealously protected today, often become less

important with time. The application of breakout improvement effort must always consider

individual circumstances and overall benefits expected to be obtained.

(b) Code suspense dates. Every part whose breakout status can be improved shall be suspensed for

rescreening as appropriate. In general, the following codes cannot be improved: 1G, 2G, 1K, 2K, 1M,

2M, 1N, 2N, 1T, 2T, 1Z, or 2Z. The period between suspenses is a period for which an assigned

AMC/AMSC is considered active, and routine rescreening of parts with “valid” codes is not required.

Suspense dates may vary with the circumstance surrounding each part. A code reached as a result of

limited screening (3-304) shall not be assigned a suspense date exceeding 12 months; a code
reached as a result of full screening (3-303) shall not be assigned a suspense date exceeding 3 years.

In exceptional cases, where circumstances indicate that no change can be expected in a code over

an extended period, a suspense date not exceeding 5 years may be assigned in accordance with

controls established by the breakout activity. Items with a 1G or 2G code do not require a suspense

date.

2-204.1 Communication media.

Use the Federal catalog program formats, set forth in DoD Manual 4100.39-M, Defense Integrated

Data System (DIDS) Procedural Manual, communication media and operating instructions as

augmented by this document to disseminate AMCs and AMSCs.

2-204.2 Responsibilities.

(a) The Defense Logistics Information Service (DLIS) will—

(1) Receive and disseminate AMCs and AMSCs for each national stock number (NSN) to all

appropriate Government activities in consonance with scheduled Federal catalog program computer

cycles;

(2) Make the AMCs and AMSCs a part of the data bank of NSN item intelligence;

(3) Perpetuate the codes in all subsequent Federal catalog program transactions; e.g., entry of new

NSNs and Federal supply code (FSC) changes; and

(4) Reject invalid code combinations submitted for entry into the Federal catalog program.

(b) DoD activities responsible for the assignment of AMCs and AMSCs will—

(1) Transmit assigned codes for each NSN through normal cataloging channels to DLIS under

existing Federal catalog program procedures; and

(2) Notify DLIS by normal Federal catalog program maintenance procedures when a change in

coding is made.

2-204 Communication of codes.

PART 3 -IDENTIFICATION, SELECTION, AND SCREENING OF PARTS

3-300 General.

This part sets forth procedures for the identification, selection, and screening of parts.

3-301.1 Parts entering the inventory.

The breakout process should begin at the earliest possible stage of weapon systems acquisition.

Generally, a provisioned part will require subsequent replenishment. Provisioning or similar lists of

new parts are, therefore, the appropriate bases for selecting parts for screening. This is not to imply

that breakout must be done on all items as part of the provisioning process. Priorities shall be

applied to those parts offering the greatest opportunity for breakout and potential savings. The

major factors in making this determination are—

(a) The unit price;
(b) The projected quantity to be purchased over the part's life cycle; and

(c) The potential for screening to result in a part being successfully broken out, e.g., item stability,

cost, and completeness of technical data, etc.

3-301.2 Annual buy forecasts.

Annually, lists shall be prepared that identify all parts projected for purchase during the subsequent

12-month period. Priority should be given to those parts with the greatest expected return given

their annual buy value, life cycle buy value, and likelihood of successful breakout, given technical

characteristics such as design and performance stability and the availability of technical data. Parts

with an expired suspense date or a suspense date that will expire during the forecast period (see

2-203(b)), need only be subjected to the necessary steps of the full screening procedure (see 3-303).

Parts with a valid code that will not expire during the forecast period need not be screened. Parts

coded 0O shall be selected for full screening.

3-301.3 Immediate buy requirements.

An immediate buy requirement will be identified by the user or the item manager in consonance

with department/agency regulations. When an immediate buy requirement meeting the screening

criteria (see 1-104(b)) is generated for a part not assigned a current AMC/AMSC, the part shall be

promptly screened in accordance with either the full or limited screening procedures (see 3-303 and

3-304).

3-301.4 Suspect AMC/AMSC.

Whenever an AMC/AMSC is suspected of being inaccurate by anyone, including the contracting

officer, a rescreening shall be conducted for that part. Suspect codes include codes composed of

invalid combinations of AMCs and AMSCs, those which do not truly reflect how a part is actually

being acquired, and those suspected of being more restrictive than necessary for the next buy.

3-301 Identification and selection procedures.

3-302 Screening.

(a) Screening procedures include consideration and recording of the relevant facts pertaining to

breakout decisions. The objective of screening is to improve the acquisition status by determining

the potential for competition, or purchase from an actual manufacturer. Consideration of any

reasonable approach to establishing competition should be an integral part of the breakout process.

(b) Screening procedures may vary depending on circumstances related to the parts. No set rules

will provide complete guidance for making acquisition method decisions under all conditions

encountered in actual practice. An informed coding decision can be made without following the

procedures step-by-step in every case.

(c) Activities involved in screening are encouraged to develop supplemental procedures that prove

effective in meeting this program's objectives. These procedures should be tailored to the particular

activity's operating environment and the characteristics of the parts for which it is responsible.

Nevertheless, care should be taken in all cases to assure that—

(1) Responsible judgment is applied to all elements involved in the review of a part;

(2) The necessary supporting facts are produced, considered, and recorded in the breakout
screening file. The breakout screening file contains technical data and other documents concerning

screening of the part;

(3) All cost-effective alternatives are considered for establishing competition, or purchase from an

actual manufacturer (see 1-105(d)(6)); and

(4) When possible, the sequence of the review allows for accomplishing several screening steps

concurrently.

(d) Contractor participation in the decision making process extends only to providing technical

information. This technical information is provided by supporting documentation (DD Forms 1418,

Contractor Technical Information Record, and DD Form 1418-1, Technical Data Identification

Checklist) which includes the CTIC assignment. Government personnel shall substantiate the

breakout decision by reference to the CTIC and by careful review of the supporting documentation.

However, the CTIC provides guidance only, and it should be used as one of the inputs to arrive at an

acceptable AMC and AMSC coding.

(e) Contractor's technical information furnished in accordance with MIL-STD-789 may indicate areas

requiring additional research by the Government before screening can be completed. Seldom will

industry's contribution to the screening process enable the Government to assign an AMC or AMSC

without additional review.

(f) During the screening process, it may be appropriate to communicate with industry, particularly

potential manufacturers of a part, to determine the feasibility of establishing a competitive source

and to estimate the costs and technical risks involved.

(g) Coding conferences with industry shall be documented.

(h) Screening may disclose that a part is not suitable for competitive acquisition, but it may be

possible to break out the part for direct purchase from the actual manufacturer or to establish a

second source. Parts particularly suited to direct purchase are those where neither the design

control activity nor the prime contractor contribute additional value or whose data belong to the

actual manufacturer and will not be acquired by the Government, and where that manufacturer

exercises total responsibility for the part (design and quality control, testing, etc.), and where

additional operations performed by the prime contractor can be performed by the actual

manufacturer or by the Government.

(i) For each part that is screened, a file shall be established to document and justify the decisions

and results of all screening effort (see 1-105(d)(6)).

(j) Full and limited screening procedures are two elements of breakout programs. Other spare parts

initiatives to enhance breakout are reverse engineering, bailment, data rights challenges, and

publication of intended buy lists. Integration of other initiatives within the screening processes

developed at each activity is encouraged.

3-303.1 Data collection phase (step 1).

(a) Assemble all available data and establish a file for each part. Collect identification data, relevant

data obtained from industry, contracting and technical history data and current status of the part,

including—

(1) Normal identification required for cataloging and standardization review;
(2) All known sources;

(3) Historical contracting information, including the more recent awards, date of awards, and unit

price(s) for the quantities prescribed;

(4) Identification of the actual manufacturer(s), the latest unit price, and the quantity on which the

price is based. (When the actual manufacturer is not the design control activity, the design control

activity may be consulted to ensure the latest version of the item is being procured from the actual

manufacturer);

(5) Identification of the activity, Government or industry, having design control over the part and, if

industry, the cognizant Government engineering activity;

(6) The expected life in the military supply system;

(7) Record of any prior review for breakout, with results or findings; and

(8) Annual demand.

(b) In the case of complex items requiring large numbers of drawings, collection of a reasonable

technical data sample is sufficient for the initial technical data evaluation phase (steps 2-14).

3-303.2 Data evaluation phase (steps 2-14).

(a) Data evaluation is crucial to the whole review procedure. It involves determination of the

adequacy of the technical data package and the Government's rights to use the data for acquisition

purposes.

(b) The data evaluation process may be divided into two stages:

(1) A brief but intensive analysis of available data and documents regarding both technical matters

and data rights, leading to a decision whether to proceed with screening; and

(2) If the decision is to proceed with screening, further work is necessary to produce an adequate

technical data package, such as research of contract provisions, engineering work on data and

drawings, and requests to contractors for additional data.

(c) The steps in this phase are—

(1) Step 2. Are full Government rights established by the available data package? Evidence for an

affirmative answer would include the identification of Government drawings, incorporation by

reference of Government specifications or process descriptions in the public domain, or reference to

contract provisions giving the Government rights to data. If the answer is negative, proceed to step

3; if positive, proceed to step 6.

(2) Step 3. Are the contractor's limitations of the Government's rights to data established by the

available data package?

(i) The questions in step 2 and 3 are not exclusive. The incorporation in a drawing of contract

provisions reserving rights to the manufacturer, either in the whole design or in certain

manufacturing processes, would establish a clear affirmative answer to step 3 where there is

substantiating Government documentation. Parts not in this group shall be retained for further

processing (see step 20). Data rights that cannot be substantiated shall be challenged (see DFARS
Part 227, validation procedures).

(ii) In the case of clear contractor ownership of rights, proceed with steps 4 and 5.

(3) Step 4. Are there bases for competitive acquisition without using data subject to limitations on

use? This question requires consideration, for example, of the possibility of using performance

specifications or substitution of military or commercial specifications or bulletins for limited

elements of the manufacturing process. The use of sample copies is another possibility.

(4) Step 5. Can the Government buy the necessary rights to data? This is a preliminary question to

the full analysis (in steps 20 and 21 below) and is designed primarily to eliminate from further

consideration those items which incorporate established data restrictions and for which there are no

other bases for competitive acquisition nor is purchase of rights possible or feasible.

(5) Steps 6 and 7. Is the present technical data package adequate for competitive acquisition of a

reliable part?

(6) Steps 8 and 9. Specify omissions. The question in steps 6 and 7 requires a critical engineering

evaluation and should deal first with the physical completeness of the date—are any essential

dimensions, tolerances, processes, finishes, material specifications, or other vital elements of data

lacking from the package? If so, these omissions should be specified. A second element deals with

adequacy of the existing package to produce a part of the required performance, compatibility,

quality, and reliability. This will, of course, be related to the completeness of data. In some cases,

qualified engineering judgment may decide that, in spite of apparently complete data, the high

performance or other critical characteristics of the item require retention of the present source. If

such decision is made, the file shall include documentation in the form of specific information, such

as difficulties experienced by the present manufacturer in producing a satisfactory item or the

existence of unique production skills in the present source.

(7) Steps 10 and 11. Can the data be developed to make up a reliable technical data package? This

implies a survey of the specified omissions with careful consideration to determine the resources

available to supply each missing element. Such resources will vary from simple referencing of

standard engineering publications to more complex development of drawings with the alternatives of

either obtaining such drawings or developing performance specifications. In some cases, certain

elements of data are missing because they have been properly restricted. If, however, there has

been no advance substantiation of the right to restrict, the part should be further researched. If the

answer to this question is negative, proceed to step 12; if positive, proceed to step 13 or 14.

(8) Step 12. If the answer to the question in steps 10 and 11 is no, which condition is the prime

element in this decision, the lack of data or the unreliability of the data? Specific documentation is

needed to support this decision.

(9) Step 13 and 14. Estimate the time required to complete the data package. In those cases where

the data package is found inadequate and specific additions need to be developed, an estimate of the

time required for completion must be made in order to determine if breakout of the part is feasible

during this review cycle and to estimate at what point in the remaining life of the part the data

package could be available.

3-303.3 Data completion phase (steps 15-21).

(a) The data completion phase involves acquiring or developing the missing elements of information

to reach a determination on both adequacy of the technical data package and the restriction of

rights to data. It may involve various functional responsibilities, such as examination of past
contracts, queries directed to industry or to other Government agencies, inspection of the part,

reverse or other engineering work to develop drawings and write specifications, arrangements with

the present source for licensing or technical assistance to new manufacturers, and negotiations for

purchase of rights to data. Additional research and information requests should be expeditiously

initiated on those parts where there is a reasonable expectation of breakout. Because this phase is

time-consuming, it should take place concurrently with other phases of the review.

(b) At the beginning of the data completion phase, the part falls into one of the following four steps:

(1) Step 15. The data package is complete and adequate and the Government has sufficient rights

for acquisition purposes. Such parts require no further data analysis. Proceed to step 22.

(2) Step 16. The Government has rights to existing data. The data package is incomplete but there is

a reasonable expectation that the missing elements can be supplied. Proceed to step 19.

(3) Step 17. The data package is complete, but suitable Government rights to the data have not been

established. Proceed to step 20.

(4) Step 18. Neither rights nor completeness of data is adequately established; therefore, the part

requires further research. Proceed to step 20.

(c) Step 19. Obtain or develop the necessary data for a suitable data package. Reverse engineering

to develop acquisition data may be used if there is a clear indication that the costs of reverse

engineering will be less than the savings anticipated from competitive acquisition. If there is a

choice between reverse engineering and the purchase of data (step 21), the decision shall be made

on the basis of relative costs, quality, time, and other pertinent factors.

(d) Step 20. Establish the Government's and contractor's rights to the data. Where drawings and

data cannot be identified to a contract, the following guidelines should be applied:

(1) Where drawings and data bear legends that warn of copyright or patent rights, the effect of such

legends shall be resolved according to law and policy; however, the existence of patent or copyright

restrictions does not per se preclude securing competition with respect to the parts described (see

FAR Subpart 27.3/DFARS Subpart 227.3).

(2) If the technical data bears legends that limit the Government's right to use the data for breakout

and it is determined that reasonable grounds exist to question the current validity of the restrictive

markings, the contracting officer will be notified to initiate the validation procedures at DFARS

Subpart 227.4.

(3) Where drawings and data are unmarked and, therefore, free of limitation on their use, they shall

be considered available for use in acquisition, unless the acquiring office has clear evidence to the

contrary (see DFARS Subpart 227.4).

(4) The decision process in situations described in paragraphs (d)(1), (2), and (3) of this subsection

requires the exercise of sound discretion and judgment and embraces legal considerations. In no

case shall a decision be made without review and approval of that decision by legal counsel.

(5) If the validation procedures in paragraph (d)(2) of this subsection establish the Government's

right to use the data for breakout, the Government shall attempt to obtain competition pursuant to

the decisions resulting from concurrent technical and economic evaluation.

(e) Step 21. If restrictions on the use of data are established, determine whether the Government
can buy rights to the required data. Use the procedure in DFARS Subpart 227.4.

3-303.4 Technical evaluation phase (steps 22-37).

(a) Introduction.

(1) The purposes of technical evaluation are to determine the development status, design stability,

high performance, and/or critical characteristics such as safety of personnel and equipment; the

reliability and effective operation of the system and equipment in which the parts are to be used;

and to exercise technical judgment as to the feasibility of breaking out the parts. No simple and

universal rules apply to each determination. The application of experience and responsible judgment

is required. Technical considerations arise in several elements of the decision process, e.g., in

determining adequacy of the data package (steps 6-14).

(2) Certain manufacturing conditions may reduce the field of potential sources. However, these

conditions do not justify the restriction of competition by the assignment of restrictive AMCs for the

following reasons:

(i) Parts produced from class 1 castings and similar type forgings. The process of developing and

providing the acceptability of high-integrity castings and forgings requires repetitive performance by

a controlled source for each casting or forging along identical lines to those which result in initial

acceptability of the item. The particular manufacturer's process becomes the controlling factor with

regard to the acceptability of any such item. However, other firms can produce class 1 castings and

similar type forgings and provide the necessary inspection, or the part may be acquired from other

sources that use castings or forgings from approved (controlled) source(s).

(ii) Parts produced from master or coordinated tooling, e.g., numerically controlled tapes. Such parts

have features (contoured surfaces, hole locations, etc.) delineated according to unique master

tooling or tapes and are manufactured to minimum/maximum limits and must be replaceable without

additional tailoring or fitting. These parts cannot be manufactured or configured by a secondary

pattern or jigs independent of the master tooling and cannot be manufactured to requisite

tolerances of fit by use of commercial precision machinery. In this context, jigs and fixtures used

only for ease of production are not considered master tooling. However, master tooling may be

reproduced.

(iii) Parts requiring special test and/or inspection facilities to determine and maintain ultra-precision

quality for the function or system integrity. Substantiation and inspection of the precision or quality

cannot be accomplished without specialized test or inspection facilities. Testing is often done by the

actual manufacturer under actual operating use. However, such special test inspection facilities may

be available at other firms.

(b) Design procedures (steps 22-31).

(1) Step 22. Will a design change occur during anticipated lead time? If affirmative, proceed to step

23; if negative, proceed to step 24.

(2) Step 23. Specify the design change and assign an appropriate code.

(3) Step 24. Is a satisfactory part now being produced? Concurrently with the research and

completion of data, a technical determination is required as to the developmental status of the part.

With the frequent telescoping of the development/production cycle as well as constant product

improvement throughout the active life of equipment, parts are frequently subject to design

changes. The present source, if a prime contractor, is usually committed to incorporate the latest
changes in any deliveries under a production order. In considering the part for breakout, an

assessment must be made of the stability of design, so that in buying from a new source the

Government will not be purchasing an obsolete or incompatible part. The question of obsolescence

or noncompatibility is to some extent under Government control. Screening for breakout on parts

that are anticipated to undergo design change should be deferred until design stability is attained.

(4) Step 25. Can a satisfactory part be produced by a new source? Determine whether technical

reasons prohibit seeking a new source. The fact that the present source has not yet been able to

produce a satisfactory part (step 24) does not preclude another source from being successful. If the

answer to steps 24 or 25 is affirmative, proceed simultaneously to steps 27 and 38. If the answer to

step 25 is negative, proceed to step 26.

(5) Step 26. If the present source is producing an unsatisfactory part, but technical reasons prohibit

seeking a new source, specify the reasons.

(6) Step 27. Does the part require prior qualification or other approval testing? If the answer is

positive, proceed to step 28; if negative, proceed to step 32.

(8) Step 28. Specify the requirement.

(9) Step 29. Estimate the time required to qualify a new source.

(10) Step 30. Is there currently a qualified source?

(11) Step 31. Who is responsible for qualifications of the subcontractor, present prime contractor,

the Government, or an independent testing agency?

(i) If a qualified source is currently in existence, the review should consider who will be responsible

for qualification in the event of competitive acquisition. If qualification testing is such that it can be

performed by the selected source under a preproduction or first article clause in the contract, the

costs of initial approval should be reflected in the offers received. If the part requires initial

qualification tests by some other agency such as the present prime contractor, the Government, an

independent testing agent outside the Government, or by technical facilities within the departments,

out-of-pocket costs may be incurred if the part is competed. An estimate of qualification costs should

then be made and recorded in such cases.

(ii) Where facilities within the Government are not adequate for testing or qualification, or outside

agencies such as the equipment contractor cannot or will not do the job, the economics of

qualification may be unreasonable, and a narrative statement of these facts should replace the cost

estimate. Whenever possible, such as in the case of engine qualification tests, economy of combined

qualification tests should be considered.

(c) Quality assurance procedures (steps 32-33). Quality control and inspection is a primary

consideration when making a decision to breakout. Where the prime contractor performs quality

assurance functions beyond those of the part manufacturer or other sources, the Government may—

(1) Develop the same quality control and inspection capability in the manufacturer's plant;

(2) Assume the responsibility for quality; or

(3) Undertake to obtain the quality assurance services from another source, possibly the prime

contractor.
(4) Step 32. Who is now responsible for quality control and inspection of the part?

(5) Step 33. Can a new source be assigned responsibility for quality control? Is the level of the

quality assurance requirements specified in the system contract necessary for the screened part?

The minimum quality assurance procedures for each part shall be confirmed.

(i) A new source shall be considered if—

(A) Any essential responsibility (e.g., burn-in, reliability, maintainability) retained by the prime

contractor for the part and its relationship to the end item can be eliminated, shifted to the new

source, or assumed by the Government;

(B) The prime contractor will provide the needed quality assurance services;

(C) The Government can obtain competent, impartial services to perform quality assurance

responsibility; or

(D) The new source can maintain an adequate quality assurance program, inspection system, or

inspection appropriate for the part.

(ii) If the prime contractor has responsibility for quality that a new source cannot assume or obtain,

or that the Government cannot undertake or eliminate, consideration of the new source is precluded.

(d) Tooling procedures (steps 34-37).

(1) Step 34. Is tooling or other special equipment required?

(2) Step 35. Specify the type of tooling.

(3) Step 36. Estimate additional acquisition leadtime for setup and for tooling.

(4) Step 37. Does the Government possess this tooling? If tooling or special equipment is required

for production of the part, the types and quantities should be specified. Investigation can then be

made as to whether the Government possesses such tooling and can make it available to a new

source. A requirement for special tooling is not necessarily a deterrent to competitive solicitation for

parts. The Government may find it desirable to purchase the needed tooling and furnish it to the new

source. In this case, the costs can be determined with reasonable accuracy. However, if new sources

can provide the tooling or special equipment, this will be reflected in competitive prices and should

not normally require further analysis.

3-303.5 Economic evaluation phase (steps 38-56).

(a) Economic evaluation concerns identification and estimation of breakout savings and direct cost

offsets to breakout. The economic evaluation phase is composed of the three segments detailed in

paragraphs (b) through (d) of this subsection.

(b) Development of savings data (steps 38-40).

(1) Step 38. Estimate remaining program life cycle buy value.

(2) Step 39. Apply either a savings factor of 25 percent or one determined under local conditions and

experience.

(3) Step 40. Multiply the remaining program life cycle buy value by the savings factor to obtain the
expected future savings, if the part is coded for breakout.

(c) Computation of breakout costs (steps 41-47). Several groups of costs must be collected,

summarized and compared to estimated savings to properly determine the economics of breakout.

These costs include—

(1) Direct costs (steps 41-45). Direct costs of breakout normally include all expenditures that are

direct and wholly identifiable to a specific, successful breakout action, and that are not reflected in

the part unit price. Examples of direct costs include Government tooling or special test equipment,

qualification testing, quality control expenses, and industry participation costs (such as completion

of the Contractor Technical Information Data Record) if borne by the Government.

(i) Step 41. Estimate the cost to the Government for tooling or special equipment.

(ii) Step 42. Estimate the cost, if any, to the Government for qualifying the new source.

(iii) Step 43. Estimate the cost, if any, to the Government for assuring quality control, or the cost of

contracting for quality control.

(iv) Step 44. Estimate the cost to the Government for purchasing rights to data.

(v) Step 45. Add estimated total direct costs to the Government to breakout the item.

(2) Performance specification costs (steps 46-47).

(i) Step 46. Is the breakout candidate constructed to a performance specification?

(ii) Step 47. If the answer is yes in step 46, add performance specification breakout cost estimate

elements to the result of step 45. The addition of an unknown number of nonstocked parts that must

be stocked by the supply system for repairs is a significant element of cost associated with the

decision to compete a performance specification assembly. (The same situation does not arise with

respect to a design specification assembly, since virtually all spare parts used to repair such an

assembly are essentially identical to parts already in the assembly.) The cost of introducing these

nonstocked parts into the system includes—

(A) Additional catalog costs. The number of nonstocked parts forecasted to be in the competed

assembly, multiplied by the variable cost of cataloging per line item.

(B) Additional bin opening costs. The number of nonstocked parts forecasted to be in the competed

assembly, multiplied by the variable cost of a bin opening at each of the locations where the part is

to be stocked.

(C) Additional management costs. The number of nonstocked parts forecasted to be in the competed

assembly, multiplied by the variable cost of management per line item.

(D) Additional technical data costs. The cost of a new set of technical data for the competed

assembly, including the variable expenses of its production, reproduction, and distribution.

(E) Additional repair tools and test equipment costs. The costs of additional special tools and test

equipment not otherwise required by the existing assembly.

(F) Additional logistics support costs. The costs associated with the new item such as spare and

repair parts, technical manuals, and training.
(d) Comparison of savings and costs (steps 48-56). Compare estimated breakout costs to forecasted

breakout savings. If costs exceed estimated savings, it will be uneconomical to compete the part.

Performance specification parts should be analyzed to ensure that pertinent breakout costs have

been considered and, if it is not economical to breakout the part, whether an appropriate detailed

design data package reduces costs sufficiently to make breakout economical.

(1) Step 48. Compare total costs of breakout (step 47) to estimated savings (step 40).

(2) Step 49. Are costs of breakout greater or less than estimated savings? If greater, proceed to step

50; if yes, proceed to step 51.

(3) Step 50. Is the breakout candidate constructed to a performance specification? If no, proceed to

step 54; if yes, proceed to step 57.

(4) Step 51. Is it appropriate to obtain a detailed design data package? If yes, proceed to step 52; if

no, proceed to step 54. The decision to change a performance specification part to a detailed design

part obviously requires a critical engineering examination of the part itself, as well as a review of the

impact such a change might have on the operational effectiveness of the system in which the

equipment is to be employed. Acquisition of a performance specification part by a subsequently

acquired design specification subjects the Government to the additional hazard of losing the money

paid for the development of the design specification, should the design be altered during the

contracting leadtime period. Accordingly, the engineering evaluation should closely review design

stability over the anticipated contracting leadtime in order to avoid acquiring an obsolete or

nonstandard part if the decision is made to compete it.

(5) Step 52. Add the estimated cost of obtaining a detailed design data package to the results of step

45.

(6) Step 53. If the results of step 52 are less than the estimated savings, initiate action to obtain a

detailed design data package. Proceed to step 54 to code the part for a period until it can be

rescreened using the design specification package. The code determined in this screening shall be

assigned a suspense date commensurate with the leadtime required to obtain the detailed design

data package (see 2-203(b)).

(7) Step 54. Is the part manufactured by the prime contractor? If yes, code the part AMC 3; if no,

proceed to step 55.

(8) Step 55. Can the part be acquired directly from the actual manufacturer? If no, proceed to step

56; if yes, code the part AMC 3 or 4, as applicable.

(9) Step 56. Specify the reasons for inability to obtain the part from the actual manufacturer. Code

the part AMC 5.

3-303.6 Supply feedback phase (steps 57-65).

(a) The supply feedback phase of the analysis is the final screening phase for breakout parts. This

phase in completed for all AMC 2 parts to determine if sufficient time is available to break out on the

immediate buy and to communicate this information to the inventory manager responsible for the

requirement. First, all additional time factors required to break out the part are added. Total time is

subtracted from the immediate and future buy date and the result compared to the current date.

(Note: Not all time factors listed apply to each part screened.) If the result is the same or earlier

than the required contract date, the part is coded competitive and action is begun to qualify

additional sources as necessary. If the result is later than the required contract date, action to
compete the immediate buy quantity should be initiated if the inventory manager can find some

means of accepting later delivery. If this is impossible, the appropriate records should be annotated

for competitive acquisition of the next replenishment buy quantity. If late delivery is acceptable, the

inventory manager should compute requirements for the part and initiate an appropriate purchase

requisition.

(b) Procedures.

(1) Step 57. Add all additional time factors required to break out the part (steps 13, 14, 29, and 36).

(2) Step 58. Add the results of step 57 to the date of this review.

(3) Step 59. Compare the result of step 58 to the date that the contract or order must be placed.

(4) Step 60. Is the result of step 59 earlier than, later than, or the same as the contract or order

date? (If earlier or the same, proceed to step 61; if later, proceed to step 63.)

(5) Step 61. Can supply accept late delivery? If yes, proceed to step 62; if no, proceed to step 63.

(6) Step 62. Notify the inventory manager to compute requirements and initiate a purchase

requisition. Proceed to step 64.

(7) Step 63. Code the part AMC 2. Insufficient time to compete on this buy.

(8) Step 64. Code the part AMC 2.

(9) Step 65. Begin actions to qualify new sources, if required and possible.

3-303 Full screening procedures.

(a) Full screening procedures should be developed so that the potential is fully evaluated for

establishing competition or purchase from an actual manufacturer. Also, full screening procedures

should facilitate accurate and consistent acquisition method code assignment. It is expected that

each activity will develop its own operational screening procedures. A general model, full screening

decision process is provided below to support the development of activity level procedures and to

provide guidance regarding the general scope of these procedures. The full screening procedures

involve 65 steps in the decision process, and are divided into the following phases:

(1) Data collection.

(2) Data evaluation.

(3) Data completion.

(4) Technical evaluation.

(5) Economic evaluation.

(6) Supply feedback.

(b) The six phases describe different functions that must be achieved during screening. The nature

of the screening process does not permit clear distinction of one phase from another. Further, the

order of performance of these phases may not correspond to the order listed here. In fact, the

phases will often overlap and may be performed simultaneously. Their purpose is to identify the
different functions comprising the screening process.

(c) A summary flow chart of the decision steps is provided as Exhibit II to assist in understanding the

logical order of the full screening steps for various conditions. Use of the flow chart in connection

with the text that follows is essential to fully understand the order of the steps in the process.

3-304 Limited screening procedures.

(a) Limited screening procedures are only appropriate when the full screening process cannot be

completed for a part in sufficient time to support an immediate buy requirement. If limited screening

does not result in a competitive AMC and the part is characterized by a high buy value and high buy

quantity in the annual buy forecast, full screening procedures shall be immediately initiated.

(b) Limited screening procedures cover only the essential points of data and technical evaluations

more completely described in full screening procedures (see 3-303). Extensive legal review of rights

or technical review of data is not required; nor is backup information on type and extent of

qualification testing, quality control procedures and master tooling required. A summary flow chart

of the limited screening decision steps is provided at Exhibit III.

(c) The limited screening decision steps are followed sequentially if the answer to the question in

each step is affirmative. If any step is answered in the negative, proceed directly to step 10.

(1) Step 1. Assemble all available data and establish a file for each part. Collect identification data,

relevant data obtained from industry, contracting and technical history data and current status of

the part (see 3-303.1).

(2) Step 2. Do the available documents establish Government rights to use the data for acquisition

purposes? If the Government's rights to use data in its possession is questionable, resolution of the

rights must continue beyond award of the immediate buy.

(3) Step 3. Is the data package sufficient, accurate, and legible? If the Government does not have in

its possession sufficient, accurate, or legible data, action shall be promptly initiated to resolve the

deficiency for the next buy.

(4) Step 4. Is the design of the part stable over the anticipated acquisition lead time?

(5) Step 5. Is a satisfactory part now being produced?

(6) Step 6. Can the part be acquired from a new source without prior qualification testing or other

approval testing?

(7) Step 7. Can the Government or a new source be responsible for quality assurance?

(8) Step 8. Can the part be manufactured without master or coordinated tooling or other special

equipment; if no, is there more than one source that has the tooling or special equipment?

(9) Step 9. Assign AMC 2. Proceed to step 11.

(10) Step 10. Assign AMC 3, 4, or 5, as appropriate.

(11) Step 11. Establish the date of the next review (see 1-104(c) and 2-203(b)).

PART 4 -CONTRACTOR'S ASSISTANCE
4-400 General.

(a) Contractor's assistance in screening shall be requested on provisioned and replenishment parts

after consideration of the benefit expected from the contractor's technical information and the cost

to the Government of obtaining such assistance.

(b) Contractor's assistance shall not be requested for parts covered by Government/industry

specifications, commercially available parts or parts for which data is already available.

(c) Arrangements entered into with contractors to obtain technical information shall provide that—

(1) Contractors will exert their best effort to make impartial technical evaluations using applicable

technical data and the experience of competent personnel; and

(2) No costs to the Government will be incurred for duplicate screening of parts.

4-401 Contractor's technical evaluation procedures.

(a) Contractor's technical evaluation for the screening process shall be required contractually by

incorporating MIL-STD-789, which delineates the contractor's responsibilities and procedures and

prescribes use of the contractor DD Form 1418, Technical Information Record, and the DD Form

1418-1, Technical Data Identification Checklist, a copy of each document listed on DD Form 1418-1,

and other substantive data that was used in developing the contractor's recommendations.

(b) When MIL-STD-789 is incorporated in a contract, the DD Form 1423, Contract Data

Requirements List, shall specify the requirement for the submission of DD Form 1418, Technical

Information Record, and DD Form 1418-1, Technical Data Identification Checklist, in accordance

with MIL-STD-789.

PART 5 -REPORTING SYSTEM

5-500 General.

This part prescribes reports regarding the breakout program that cannot be obtained from other

sources. These reports are used to evaluate the effectiveness of breakout programs, establish a

baseline for all spare part acquisitions, and identify trends in spare parts acquisition.

5-501 Reports.

(a) Spare Parts Breakout Screening Report (RCS DD P&L(Q&SA)714A). This is a cumulative semiannual report reflecting the accomplishments of the breakout program. The report describes the

results of full and limited screening for provisioning and replenishment parts by number of different

NSNs for each AMC. Departments and agencies shall also maintain actual cost data attributable to

the Spare Parts Breakout Program which shall be forwarded on this report semi-annually.

(b) Spare Parts Acquisition Report (RCS DD P&L(Q&SA) 714B). This is a cumulative semi-annual

report for all purchases made of spare parts during the current fiscal year. This report describes the

number and extended dollar value of different NSNs purchased for each AMC. Departments and

agencies shall also maintain actual savings (or cost avoidance) data attributable to the Spare Parts

Breakout Program which shall be forwarded on this report semi-annually. Because of extraneous

factors such as contracting leadtimes and changes in spare parts requirements, this report will not

always reflect the acquisition of the parts screened during a reporting period (contained on the

Spare Parts Breakout Screening Report). Also, it will not show in all instances how the part was
actually acquired. This report is intended to be an indication of the success of the breakout program,

and designed to show trends in the coding and data available to buyers in the acquisition package.

5-502 Reporting procedures.

(a) Departments and agencies shall maintain and forward semi-annual reports. The second semiannual report in a fiscal year shall reflect cumulative totals for the current fiscal year using the

formats in Exhibits IV and V.

(b) The reports will be due no later than 45 days after the end of each period designated.

(c) Submissions will be made to the Under Secretary of Defense (Acquisition and Sustainment).

5-503 Reporting instructions.

(a) Spare parts breakout screening report. Using the format in Exhibit IV, provide the following—

(1) Enter reporting activity name, fiscal year, and period ending.

(2) For each AMC/AMSC listed, enter the number of different NSNs for which screening was

completed during the period. Show zeros where applicable. This should be done for both full and

limited screening.

(3) Report the total costs of the breakout program incurred for the period. Although this will be

primarily labor costs, it should also include appropriate prorated costs of ADP services, office

overhead, data retrieval service costs, etc. (see 3-303.5).

(b) Spare parts acquisition report. Using the format in Exhibit V, provide the following:

(1) Enter reporting activity name, fiscal year, and period ending.

(2) For each AMC/AMSC listed, enter the number of different NSNs purchased during the current

fiscal year and their extended dollar value.

(3) Report the actual breakout program savings or cost avoidances as measured by completed

acquisition (not anticipated acquisitions). Price differentials should be measured on each acquisition

where a breakout action has taken place. They should equal the difference between the previous

contract unit price and the current contract unit price, times the number of units purchased.

EXHIBIT I—VALID AMC/AMSC COMBINATIONS

Acquisition Method Code (AMC)

AMSC 0 1 2 3 4 5

A X o o o o o
B

Xooooo

CXooooo

DXXXooo

GXooXXX

HXooooo

KXooooo

LXooooo

MXooooo

NXooooo

OoXXXXX

PXooooo

QXooooo
R X o o o o o

S X o o o o o

T X o o X X X

U X o o o o o

V X o o o o o

Y X o o o o o

Z X o o o o o

o = VALID COMBINATION

X = INVALID COMBINATIONS

EXHIBIT II—FULL SCREENING DECISION PROCESS SUMMARY

FLOW CHART

EXHIBIT III—LIMITED SCREENING DECISION PROCESS SUMMARY FLOW CHART
EXHIBIT IV—SPARE PARTS BREAKOUT SCREENING REPORT

SPARE PARTS

BREAKOUT

SCREENING

REPORT

Report

Activity______________

Fiscal

Year_________________

Period

Ending___________________

N U M B E R O F N S

N s

AMC/AMSC LIMITED

SCREENING

FULL

SCREENING TOTAL SCREENING
*1G Only

1

**2G Only

2

3

4

5

TOTAL

SPARE PARTS

BREAKOUT

PROGRAM COSTS

$_____________

* Excluded from AMC

1 data

** Excluded from

AMC 2 data

EXHIBIT V—SPARE PARTS ACQUISITION REPORT

SPARE PARTS

ACQUISITION

REPORT

Report

Activity______________

Fiscal

Year_____________

Period

Ending___________________

P U R C H A S E

M A D E

AMC/AMSC NUMBER OF

NSNs

EXTENDED

DOLLAR

VALUE
*1G Only

1

**2G Only

2

3

4

5

TOTAL

SPARE PARTS

BREAKOUT

PROGRAM

SAVINGS OR

COST

AVOIDANCES

$______________

* Excluded from AMC

1 data

** Excluded from

AMC 2 data

Parent topic: PGI 217.75 -ACQUISITION OF REPLENISHMENT PARTS