The Department of Defense has released a final rule to implement a section of the fiscal year 2023 National Defense Authorization Act that puts a limitation on the procurement of low-rate initial production, or LRIP, lots related to a major defense acquisition program under certain circumstances.
The final rule takes effect Thursday, April 25, according to a Federal Register notice.
Under Section 808 of the FY 2023 NDAA, the U.S. government may not purchase more than one LRIP lot associated with a major acquisition program if the milestone decision authority, at the time of Milestone B approval, authorizes the use of a fixed-price contract and the scope of work of such a contract includes both development and LRIP.
“Risk to a contractor is higher when the contractor must propose prices for multiple production lots of an item before the development and initial production of that item are complete,” the notice reads.
According to the final rule, the limitation may be waived by the service acquisition executive.
DOD released the final rule as an amendment to the Defense Federal Acquisition Regulation Supplement.
