FAR 17.105-2—Objectives.
Plain-English Summary
FAR 17.105-2 explains the policy objectives that justify using multi-year contracting. It does not itself authorize every multi-year contract; instead, it identifies the benefits the Government should seek when deciding whether a multi-year approach is appropriate. The section names eight specific objectives: lower costs, enhanced standardization, reduced administrative burden, continuity of production or performance, stabilization of contractor workforces, avoidance of repeated quality-control setup, broader competition, and incentives for productivity investments. In practice, this provision helps contracting officers and program officials evaluate whether a multi-year strategy is likely to produce measurable value over annual contracting. It is especially relevant when requirements involve startup costs, recurring production, long lead times, or opportunities for efficiency gains that are lost if the Government recompetes every year. The section is a planning and justification tool, helping agencies align acquisition strategy with mission needs and cost-effectiveness.
Key Rules
Seek lower overall cost
Multi-year contracting should be used when it can reduce total cost to the Government. This includes savings from avoiding repeated procurement actions and from spreading fixed costs over a longer performance period.
Promote standardization
The approach is encouraged when it helps maintain consistent products, services, or processes. Standardization can improve interoperability, simplify support, and reduce variation that would otherwise arise from annual changes in suppliers or specifications.
Reduce administrative burden
A multi-year contract can lessen the workload associated with repeated solicitations, awards, and contract administration. The goal is to save time and resources for both the Government and contractors by avoiding unnecessary annual recompetition and setup.
Maintain continuity of performance
The section favors multi-year contracting when uninterrupted production or service delivery is important. It can avoid annual startup costs, preproduction testing, make-ready expenses, and phaseout costs that occur when work is repeatedly started and stopped.
Stabilize the contractor workforce
Longer contract periods can help contractors retain trained personnel and avoid recurring hiring and layoff cycles. This stability can improve performance, reduce turnover, and support schedule reliability.
Avoid repeated quality setup
Multi-year contracting may be appropriate when the Government would otherwise need to establish new quality control techniques and procedures each year for a different contractor. Continuity with one contractor can reduce the risk and effort associated with revalidating quality systems.
Broaden competition
The policy recognizes that longer-term opportunities may attract firms that would not compete for smaller annual quantities, especially where startup costs are high. Multi-year contracting can therefore expand the competitive base and improve market participation.
Encourage productivity investment
A longer contract horizon can give contractors an incentive to invest in capital facilities, equipment, and advanced technology. Those investments may improve efficiency and lower long-term costs, which benefits the Government if the acquisition is structured appropriately.
Responsibilities
Contracting Officer
Evaluate whether a multi-year approach is likely to achieve one or more of the stated objectives and document the acquisition strategy accordingly. The contracting officer should consider cost, continuity, competition, and administrative impacts when deciding whether multi-year contracting is in the Government’s best interest.
Program/Requirements Officials
Identify mission needs that would benefit from continuity, standardization, or reduced startup and phaseout costs. They should provide the technical and operational rationale showing how a multi-year contract would support performance and efficiency goals.
Agency
Use multi-year contracting as a strategic tool when it advances procurement efficiency and mission outcomes. Agencies should support policies and planning processes that allow longer-term contracting where it produces measurable benefits.
Contractor
Assess whether the longer performance period justifies investments in workforce stability, facilities, equipment, technology, and quality systems. Contractors competing for multi-year awards should be prepared to show how they will realize and pass through efficiencies to the Government.
Practical Implications
This section is about the business case for multi-year contracting, not a blanket permission to use it in every situation. Contracting officers still need to ensure the acquisition is otherwise lawful, properly funded, and consistent with applicable multi-year contracting rules.
A common pitfall is focusing only on price and ignoring lifecycle effects such as startup, phaseout, quality-control setup, and administrative costs. The real question is whether the total cost and performance picture improves over time.
Another issue is assuming that longer contracts always increase competition. In some markets they may do the opposite, so agencies should examine the actual vendor base and barriers to entry.
For contractors, multi-year opportunities can justify investment in capacity and technology, but only if the contract structure and risk allocation support those investments. Firms should evaluate whether the expected volume and duration are sufficient to recover upfront costs.
In day-to-day administration, this policy encourages continuity and stability, but it also raises the stakes for performance monitoring because poor performance may persist longer if the Government does not manage the contract actively.
Official Regulatory Text
Use of multi-year contracting is encouraged to take advantage of one or more of the following: (a) Lower costs. (b) Enhancement of standardization. (c) Reduction of administrative burden in the placement and administration of contracts. (d) Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. (e) Stabilization of contractor work forces. (f) Avoidance of the need for establishing quality control techniques and procedures for a new contractor each year. (g) Broadening the competitive base with opportunity for participation by firms not otherwise willing or able to compete for lesser quantities, particularly in cases involving high startup costs. (h) Providing incentives to contractors to improve productivity through investment in capital facilities, equipment, and advanced technology.