[Federal Register Volume 62, Number 189 (Tuesday, September 30, 1997)]
[Rules and Regulations]
[Pages 51224-51272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25666]
[[Page 51223]]
_______________________________________________________________________
Part III
Department of Defense
General Services Administration
National Aeronautics and Space Administration
_______________________________________________________________________
48 CFR Part 1, et al.
Federal Acquisition Regulation; Part 15 Rewrite; Contracting by
Negotiation and Competitive Range Determination; Final Rule
48 CFR Chapter 1
Federal Acquisition Regulation; Small Entity Compliance Guide; Final
Rule
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 /
Rules and Regulations
[[Page 51224]]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 2, 3, 4, 5, 6, 7, 9, 11, 12, 13, 14, 15, 16, 17,
19, 24, 25, 27, 28, 31, 32, 33, 34, 35, 36, 42, 43, 44, 45, 49, 50,
52, and 53
[FAC 97-02; FAR Case 95-029]
RIN 9000-AH21
Federal Acquisition Regulation; Part 15 Rewrite; Contracting by
Negotiation and Competitive Range Determination
AGENCIES: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council have agreed to issue Federal
Acquisition Circular 97-02, a final rule which revises Part 15 of the
Federal Acquisition Regulation (FAR) and makes conforming changes to
other parts of the FAR. This regulatory action was subject to Office of
Management and Budget review under Executive Order 12866, dated
September 30, 1993. This is not a major rule under 5 U.S.C. 804.
DATES: Effective Date: October 10, 1997.
Applicability Date: The policies, provisions, and clauses of this
final rule are effective for all solicitations issued on or after
October 10, 1997. However, agencies may delay implementation of this
final rule until January 1, 1998, at which time it becomes mandatory
for all solicitations issued on or after that date. Agencies using the
new policies, provisions, and clauses before January 1, 1998, shall
ensure that the cover page of the solicitation for each acquisition
subject to this rule, and issued before January 1, 1998, contains a
notice that this rule applies to that acquisition. Any solicitation
issued before January 1, 1998, that does not contain such a
solicitation notice or the new provisions and clauses is automatically
conducted in accordance with the FAR excluding changes made by this
final rule.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC 20405 (202) 501-4755 for information
pertaining to status or publication schedules; For clarification of
content, Ralph DeStefano at (202) 501-1758 or Melissa Rider at (703)
602-0131; For contract pricing issues Jerry Olson at (202) 501-3221 or
Melissa Rider at (703) 602-0131. Please cite FAC 97-02, FAR case 95-
029.
SUPPLEMENTARY INFORMATION:
A. Background
On January 29, 1996, the FAR Council tasked an ad hoc interagency
committee to rewrite FAR Part 15, Contracting by Negotiation. The
rewrite originally was to be accomplished in two phases. Phase I,
consisting of the rewrite of FAR 15.000, 15.1, 15.2, 15.3, 15.4, 15.6,
and 15.10, covering acquisition techniques and source selection, was
published for public comment in the Federal Register at 61 FR 48380 on
September 12, 1996. In the interest of increasing outreach to small
entities, two public meetings were held to discuss the proposed rule:
in Washington, DC, on November 8, 1996, and in Kansas City, MO, on
November 18, 1996. The public comment period closed on November 26,
1996. The Government received 1541 comments from 100 respondents and
considered all comments in drafting revisions to the rule. Due to the
significant changes made as a result of public comments, the FAR
Council decided to publish a revised proposed rule, that included
previously unpublished, Phase II, proposed changes covering Subparts
15.5, 15.7, 15.8, and 15.9, and that incorporated changes made as a
result of public comments submitted in response to FAR Case 96-303,
Competitive Range Determinations. The revised proposed rule was
published in the Federal Register on May 14, 1997 (62 FR 26639). The
public comment period closed on July 14, 1997. The Government received
841 comments from 80 respondents and considered all the comments in
drafting the final rule.
Case Summary
This final rule modifies concepts and processes in the current FAR
Part 15, introduces new policies, and incorporates changes in pricing
and unsolicited proposal policy. In addition, the sequence in which the
information is presented has been revised to facilitate use of the
regulation. The final rule does not alter the full and open competition
provisions of FAR Part 6. The goals of this rewrite are to infuse
innovative techniques into the source selection process, simplify the
process, and facilitate the acquisition of best value. The rewrite
emphasizes the need for contracting officers to use effective and
efficient acquisition methods, and eliminates regulations that impose
unnecessary burdens on industry and on Government contracting officers.
The following were considered in drafting this final rule:
information received in connection with public meetings held on January
25, 1996, November 8, 1996, and November 18, 1996; public comments
received in response to three advance notices of proposed rulemaking
(60 FR 63023, December 8, 1995; 60 FR 65360, December 19, 1995; and 60
FR 67113, December 28, 1995); public comments received in response to
publication of the Phase I proposed rule in the Federal Register (61 FR
48380, September 12, 1996); public comments received in response to
publication of the revised proposed rule in the Federal Register (62 FR
26639, May 14, 1997); public comments received in response to
publication of the Competitive Range Determinations proposed rule in
the Federal Register (61 FR 40116, July 31, 1996); inputs received over
the Acquisition Reform Network (an Internet forum); inputs received
from members of Congress and Congressional staff, Government agencies,
the Defense Acquisition Regulations Council, the Civilian Agency
Acquisition Council, and the Office of Federal Procurement Policy
(OFPP); inputs received in response to other notices of the rewrite in
various print media and conferences; and inputs received from
Government fora such as the Front-Line Professional's Forum and the
Federal Procurement Executive Association.
Summary of Changes
This final rule reengineers the processes used to contract by
negotiation, with the intent of reducing the resources necessary for
source selection and reducing time to contract award. The goals of the
FAR Part 15 Rewrite are to ensure that the Government, when contracting
by negotiation, receives the best value, while ensuring the fair
treatment of offerors. The final rule reengineers the acquisition
process in the current FAR and incorporates changes to the proposed
rule by:
Supporting more open exchanges between the Government and
industry, allowing industry to better understand the requirement and
the Government to better understand industry proposals;
Reestablishing the ``late is late'' rule for receipt of
proposals, responses to requests for information, and modifications;
Emphasizing that no offeror, otherwise eligible to submit
a proposal in response to a Government solicitation, will be excluded
from the competitive range without its proposal being initially
reviewed and evaluated solely against all the evaluation factors
[[Page 51225]]
and significant subfactors in the solicitation;
Reiterating that all proposals received will be evaluated
based upon the criteria in the solicitation;
Reducing the bid and proposal costs for industry by
providing early feedback as to whether a proposal is truly competitive;
Eliminating mandatory forms currently used as cover sheets
for submitting cost or pricing data (SF 1411) and information other
than cost or pricing data (SF 1448);
Simplifying the exception to obtaining cost or pricing
data for modifications to contracts for commercial items;
Revising guidance pertaining to field pricing to reflect
the need for greater flexibility and teamwork in today's acquisition
environment;
Simplifying guidance pertaining to unbalanced pricing to
reflect its use as a proposal analysis technique designed to assess
risk and protect the Government's economic interest;
Eliminating the requirement for a separate determination
and findings supporting cost-plus-fixed-fee contracts;
Realigning fee limitations with statute, and permitting
the contracting officer's signature on the price negotiation memorandum
or other documentation of the negotiated price to serve as a
determination that fee limits have not been exceeded;
Increasing the scope of discussions;
Requiring that adverse past performance to which an
offeror has not had an opportunity to respond be brought to the
offeror's attention before it can be the determining factor for
exclusion from the competitive range;
Requiring that all adverse past performance information be
brought to the offeror's attention during discussions, if the offeror
is placed in the competitive range;
Changing the standard for admission into the competitive
range (to all proposals most highly rated) and implementing Section
4103 of the Clinger-Cohen Act of 1996 (Pub. L. 104-106); and
Streamlining the post-competitive range process by
enhancing the ability of the parties to communicate and document
understandings reached during discussions.
B. Regulatory Flexibility Act
A Final Regulatory Flexibility Analysis (FRFA) has been performed
and will be provided to the Chief Counsel for Advocacy of the Small
Business Administration. Because of the broad range of acquisitions
impacted by this rule and the extensive public response to both of the
proposed rules, the Final Regulatory Flexibility Analysis is published
in its entirety:
Final Regulatory Flexibility Analysis
[FAR Case 95-029, FAR Part 15 Rewrite]
This final regulatory flexibility analysis has been prepared
consistent with the criteria of 5 U.S.C. 604.
1. Succinct statement of the need for, and the objectives of,
the rule.
Historically, the executive branch has undertaken a continuous
improvement approach to the acquisition process, particularly since
the end of World War II. In 1947, the National Security Act
established an acquisition process for the Department of Defense.
Since that time, at least six major executive branch commissions
have separately examined the problems of effectively managing
Federal acquisition. In 1972, the Commission on Government
Procurement recommended that a consolidated Federal Acquisition
Regulation (FAR) be established. Later, the Packard Commission
called for a simpler and clearer acquisition framework. In addition,
the FAR System, composed of the Defense Acquisition Regulations
Council, the Civilian Agency Acquisition Council, and the Federal
Acquisition Regulatory Council, has been active in the maintenance
and continuous improvement of the FAR for many years now.
Congress has also participated substantially in the reform of
Federal acquisition practices. Section 800 of Public Law 101-510
(the National Defense Authorization Act for Fiscal Year 1991)
directed the Department of Defense to establish the ``DoD Advisory
Panel on Streamlining and Codifying Acquisition Laws.'' The panel
recommended changes to acquisition statutes in order to improve the
efficiency and effectiveness of the acquisition process, while
keeping in mind the need to provide a fair and open acquisition
system. The panel's recommendations, published in January 1993,
formed the basis of the reforms contained in the Federal Acquisition
Streamlining Act of 1994 and the Clinger-Cohen Act of 1996.
The Part 15 rewrite is a normal product of the continuous
improvement process employed for maintenance of the FAR. It is worth
noting that in the past few years several other parts of the FAR
have also been rewritten, including Part 13, Simplified Acquisition
Procedures; Part 37, Service Contracting; and Part 45, Government
Property. The Part 15 rewrite, like the rewrite of these other FAR
parts, conforms with the general reform philosophy espoused by the
Clinton-Gore Administration. Vice President Gore, in the Report of
the National Performance Review: Creating a Government that Works
Better & Costs Less recognized the need for deregulation in the
acquisition process. The report, published in 1993, emphasized that
acquisition regulations should be rewritten to provide for
empowerment and flexibility. According to the report, the
acquisition regulations should: shift from rigid rules to guiding
principles; promote decision making at the lowest possible level;
end unnecessary regulatory requirements; foster competitiveness and
commercial practices; and shift to a new emphasis on choosing ``best
value'' products.
We decided to revise Part 15 for several reasons. In 1995, DoD
conducted a survey of the defense industry, military departments,
and defense agencies to ascertain which parts of the FAR were most
in need of revision. The responses indicated a general consensus
that Part 15 was one of the parts that would most benefit from such
an effort. Secondly, within the Government, the preponderance of
contracting expenditures are accomplished using Part 15 procedures.
Finally, the results of a 1991 FAR Improvement Study conducted by
the General Services Administration indicated that Subparts 15.6,
Source Selection, and 15.8, Price Negotiation, were the most
difficult parts of the FAR to use.
On January 29, 1996, the FAR Council tasked an ad hoc
interagency committee to rewrite FAR Part 15, Contracting by
Negotiation. The rewrite was to be accomplished in two phases. Phase
I, consisting of the rewrite of FAR Subparts 15.000, 15.1, 5.2,
15.3, 15.4, 15.6, and 15.10 covering acquisition techniques and
source selection, was published for public comment in the Federal
Register at 61 FR 48380 on September 12, 1996. In the interest of
increasing outreach to small entities, two public meetings were held
to discuss the proposed rule: in Washington, DC, on November 8,
1996, and in Kansas City, MO, on November 18, 996. In addition, the
opportunity for an evening public meeting was publicized in the
September 12, 1996, Federal Register notice to accommodate schedule
constraints that may prevent small entities from being represented
at the public meetings. The public comment period closed on November
26, 1996. We received 1541 comments from 100 respondents. Due to the
significant changes made as a result of analyzing and resolving
public comments, we decided to publish a second proposed rule. All
of the comments received were considered in drafting the second
proposed rule. The rule was expanded to include the Phase II
proposed changes, covering Subparts 15.5, 15.7, 15.8, and 15.9. The
revised rule also subsumed FAR Case 96-303, Competitive Range
Determinations, and addressed the related public comments. The
second proposed rule was published in the Federal Register on May
14, 1997 (62 FR 26639). We received 841 comments from 80 respondents
and considered all the comments in drafting the final rule.
The goal of the rewrite is to infuse innovative techniques into
the source selection process, simplify the acquisition process,
incorporate changes in pricing and unsolicited proposal policy, and
facilitate the acquisition of best value products and services. The
rewrite emphasizes the use of effective and efficient acquisition
methods and eliminates unnecessary burdens imposed on industry and
Government. Elimination of burdens and creation of a simplified,
efficient, and impartial acquisition process benefits all
participants in Government contracting, especially small businesses.
In addition, the rule revises the sequence in which Part 15
information is presented to facilitate use of the regulation.
[[Page 51226]]
2. Summary of the significant issues raised by the public
comments in response to the initial regulatory flexibility analysis,
a summary of the assessment of the agency of such issues, and a
statement of any changes made in the proposed rule as a result of
such comments.
Several significant issues were raised by the public comments.
We have addressed these issues as follows:
Competitive range determinations. Some respondents
expressed concern that the shift in competitive range policy to
encourage retaining only those offerors rated most highly rather
than all those with a reasonable chance of award may inhibit awards
to small entities. This revision is consistent with the philosophy
of Section 4103 of the Clinger-Cohen Act of 1996. The competitive
range guidance in the final rule indicates that contracting officers
shall establish a competitive range comprised of only those
proposals most highly rated. In contrast, the current FAR advises
contracting officers ``when there is doubt as to whether a proposal
is in the competitive range, the proposal should be included.'' We
considered retaining the existing FAR standard for inclusion in the
competitive range, but ultimately rejected it because there are
readily discernible benefits from including only the most highly
rated offers in the competitive range. First, those included will
know that they have a good chance of winning the competition--making
it in their best interests to compete aggressively. Second, those
eliminated from the range are spared the cost of pursuing an award
they have little or no chance of winning. Retaining marginal offers
in the range imposes additional, and largely futile, effort and cost
on both the Government and industry. We also note that comments
received from Government agencies indicate that award is nearly
always made to one of the three most highly rated offerors in the
competitive range. Therefore, including an offeror that is not most
highly rated in the competitive range would not likely impact the
final award decision. This final rule ensures that offerors with
little probability of success, are advised early on that their
competitive position does not merit additional expense in a largely
futile attempt to secure the contract.
This knowledge will benefit both large and small entities, but
will be especially beneficial to small entities that have
constrained budgets. These entities will be able to conserve scarce
bid and proposal funds and employ their resources on more productive
business opportunities. In addition, the new standard has the
derivative benefit of encouraging offerors to submit better, more
robust initial proposals in recognition of the fact that only the
most highly rated proposals will be included in the competitive
range.
Limiting the competitive range in the interest of
efficiency. Some respondents expressed concern that allowing the
contracting officer to limit the competitive range in the interest
of efficiency would provide a level of discretion to contracting
officers that could lead to abuses. The comments expressed a concern
that offerors might be excluded from the competitive range for
arbitrary reasons unrelated to the actual procurement. In addition,
one small business submitted a public comment in support of the
efficient competitive range.
This language implements the requirements of Section 4103 of the
Clinger-Cohen Act of 1996 to permit contracting officers, in certain
circumstances, to reduce the number of proposals in the competitive
range to the ``greatest number that will permit an efficient
competition among the offerors rated most highly.'' Under this final
rule, source selection officials will continue to establish
evaluation factors and identify them in the solicitation, including
any preferences for small entities. The contracting officer may
further reduce the number of proposals that would otherwise be in
the competitive range to the greatest number that will permit an
efficient competition among the most highly rated offerors only if
offerors have been advised of this possibility in the solicitation,
and only after evaluating all proposals received in accordance with
the criteria specified in the solicitation.
Expanded exchanges throughout the acquisition process.
Some respondents expressed concerns that the increased exchanges
between the Government and industry throughout the acquisition
process increased the risk of unfair practices. The final rule
encourages earlier and more meaningful exchanges of information
between the Government and potential contractors to achieve a better
understanding of the Government's requirements and the offerors'
proposals. This rule contains limits on exchanges that preclude
favoring one offeror over another, revealing offerors' technical
solutions, revealing prices without the offerors' permission, and
knowingly furnishing source selection information. In addition, the
guidance in the final rule has been revised to alert contracting
officers of the safeguards contained at 3.104, Procurement
Integrity, and 24.2, Freedom of Information Act.
Use of neutral past performance evaluations. Some
respondents expressed concerns that neutral past performance
evaluations are not adequately defined, and that the rule does not
contain sufficient implementing guidance. One respondent suggested
that, to avoid abuses of neutral rating, offerors granted such
ratings should be required to submit a record of their lack of
opportunity to acquire a record of relevant past performance. The
second proposed rule contained a definition of neutral rating, and
asked respondents to provide suggestions for a better definition. We
received only one such suggestion, and, upon analysis, we found that
the suggestion did not actually provide a definition of neutral
rating but, rather, provided a way to limit the application of
neutral ratings. Instead, the final rule includes language based on
41 U.S.C. 405(j)(2) providing offerors, without a previous
performance history, a rating that neither rewards nor penalizes the
offeror. We selected this alternative to allow the facts of the
instant acquisition to be used in determining what rating scheme
would satisfy requirements of the statute.
Ability of offerors to address adverse past performance
information before it can be used in a source selection.
Respondents, especially the small business community, expressed
concerns that offerors might be excluded from a competition on the
basis of incorrect past performance information that they have not
had the opportunity to address. In response to this concern, the
final rule provides that, when conducting communications prior to
establishing the competitive range, offerors, including small
entities, shall be granted the opportunity to explain situations
that contributed to an adverse past performance rating to which they
have not had a previous opportunity to respond, before such ratings
can be the determining factor for exclusion from the competitive
range.
Impact of oral presentations on small entities.
Respondents expressed concerns that the use of oral presentations
may present barriers to the participation of small entities in
Government procurement because they may be costly and require skills
that small entities may not easily attain. The final rule requires
contracting officers to consider, among other factors, the impact on
small businesses, including cost, before using oral presentations.
In fact, based on a recommendation from the Small Business
Administration, the final rule also contains guidance on selecting
alternatives to in-person presentations (e.g., teleconferencing).
Generally, oral presentations are expected to be less costly to
prepare than formal written proposals. Experience accumulated by
agencies that have already used oral presentations indicates that
use of this technique has either improved participation by small
entities, or has had no adverse impact on their level of
participation.
The Nuclear Regulatory Commission (NRC) and the
Departments of the Army, Energy, HHS, and Treasury submitted
comments describing their experiences in using oral presentations.
The Department of Energy (DoE) indicated that small businesses that
had not previously participated in DoE procurements, competed on
procurements using oral presentations. Ft. Sam Houston in San
Antonio indicated that by using oral presentations, the lead time on
a recent procurement for outpatient clinics was five months,
compared to a lead-time of 13-15 months on previous procurements
that did not use oral presentations. They further indicated that
proposals that previously required ``at least two trips with a two-
wheel dolly'' were reduced to one envelope as a result of using oral
presentations. The Centers for Disease Control (CDC) stated that in
using oral presentations they have always been able to award the
contract ahead of their 180-day lead-time target and have been able
to save the Government thousands of dollars. The CDC has used oral
presentations almost exclusively on small business set-asides, and
comments from the offerors have been very positive. The NRC reports
that in no case did a large business receive an award for work that
was previously performed by a small business.
Estimate of the number of small entities affected by
the rule. Several respondents representing small entities expressed
concerns regarding the estimate in the initial regulatory
flexibility analysis of small
[[Page 51227]]
entities impacted by the proposed rule. We have researched the
statistics available in the Federal Procurement Data System, and
have revised our estimate. Our discussion of the revised estimate is
included in paragraph 3.
Whether or not this is a major rule, subject to OMB
review and analysis under Executive Order 12866. Respondents
expressed concern as to whether this rule should be deemed a major
rule. The Administrator, Office of Information and Regulatory
Affairs, Office of Management and Budget, has determined that this
is a significant rule, under Executive Order 12866, subject to OMB
review and analysis. However, this is not a major rule, as defined
in the Small Business Regulatory Enforcement Fairness Act (SBREFA),
5 U.S.C. 804, because it does not meet the criteria identified at 5
U.S.C. 804(2). In accordance with the requirements of 5 U.S.C. 801
(as added by Subtitle E of Public Law 104-121), a copy of the rule
will be provided to Congress and GAO.
3. Description of and an estimate of the number of small
entities to which the rule will apply or an explanation of why no
such estimate is available.
This rule will apply to all entities, large and small,
(including educational and nonprofit), that offer supplies or
services to the Government in acquisitions using the Part 15
procedures. As a result of comments received in response to the
proposed rule and the initial regulatory flexibility analyses, we
have revised our estimate of the number of small entities that will
be impacted by the rule.
Upon further review and analysis, we have identified an
error in the supporting data for the initial regulatory flexibility
analyses. The figure of 602,000 was described as ``Estimated number
of entities impacted by rule'' while in fact that figure is actually
the product of the estimated number of actions impacted by the rule
multiplied by the average number of participants in each action.
This figure is not the estimated number of entities impacted by the
rule, as it does not take into account the average number of actions
in which each entity participated, and therefore is significantly
larger than the actual number of entities impacted by the rule. In
the next step in the supporting data calculation, this amount was
properly divided by 25, the estimated number of actions in which
each entity participates. The result, 24,080, was properly
identified as the ``Estimated total number of entities affected by
the rule.''
Based on Federal Procurement Data System (FPDS)
statistics for fiscal year 1996, we estimate that 17,717 small
businesses received awards valued at $100,000 or more. This
statistic includes small businesses receiving awards in response to
Part 15 procedures as well as sealed bids. This statistic does not
include small entities other than small businesses, e.g., small
nonprofit organizations and small local governments. Current data
collection categories do not provide this information. Information
quantifying the number of unsuccessful offerors that are small
entities is not collected at this time. Therefore, although we
recognize that the number of small entities impacted by this rule is
greater than the number of small entities receiving awards under
Part 15 procedures, we do not have data that quantifies this
difference.
One respondent to the proposed rule indicated that
approximately 28,000 to 30,000 small businesses participate in DoD
acquisitions, and estimated that 200,000 to 500,000 participate
Governmentwide. We cannot confirm either estimate, however,
available data seems to contradict the Governmentwide estimate.
According to the 1994 Report on Small Business and Competition,
submitted to the President by the Administrator and the Chief
Counsel for Advocacy of the Small Business Administration for
inclusion in The State of Small Business: A Report of the President
1994, estimates of the number of individual companies competing for
Federal contract awards vary between 42,000 and 50,000 (Atch 1).
This includes large as well as small entities. The 1995 Report (the
most recent version available at the time this final regulatory
flexibility analysis was prepared) does not update this estimate.
However, the 1995 Report does indicate that the overall number of
small businesses in the U.S. economy has increased.
FPDS statistics for fiscal year 1996 (the most recent
FPDS statistics available at the time this analysis was prepared)
indicate that there were 17,717 small businesses that received
government contract awards over $100,000 (Atch 2). FPDS advises
that, of the approximately 17,717 Governmentwide small business
awardees, 10,696 received contract awards from DoD (Atch 3).
Application of the resulting ratio to the upper limit of the
respondent's estimated range (28,000 to 30,000 small businesses
participating in DoD procurement) provides an estimate of about
49,692 small businesses participating in Governmentwide
acquisitions. This estimate is probably higher than the actual
number of such small businesses, as it is close to the estimates
referenced in the President's report cited above that include both
large and small entities.
Based on this analysis, we estimate that the number of
small entities affected by this rule is no more than 49,692, or
approximately 50,000.
4. Description of the projected reporting, recordkeeping and
other compliance requirements of the rule, including an estimate of
the classes of small entities that will be subject to the
requirement and the type of professional skills necessary for
preparation of the report or record.
This rule will impose no new reporting or recordkeeping
requirements on large or small entities. The rule removes the
requirement for the use of certain Government forms and formats in
responding to requests for proposal. Offerors may extend the
proposal acceptance period as part of proposal revisions instead of
having to submit a separate, formal confirmation of the extension.
Offerors may identify their authorized negotiators without using a
Government-required format. The Standard Form 1417, Presolicitation
Notice and Response, is no longer required for negotiated
acquisitions using Part 15 procedures.
5. Description of the steps the agency has taken to minimize the
significant economic impact on small entities consistent with the
stated objectives of applicable statutes, including a statement of
the factual, policy, and legal reasons for selecting the alternative
adopted in the final rule and why each one of the other significant
alternatives to the rule considered by the agency which affect the
impact on small entities was rejected.
In developing the policies and procedures contained in the final
rule, we considered the available alternative approaches, and the
impacts, adverse and beneficial, of each of the alternatives to
large offerors, small offerors, and the Government. Some of the
options were bounded by statutory requirements and a preference for
an impartial, efficient, and accessible acquisition system in which
appropriate information is readily available to all participants.
The final rule does not provide for flexible compliance by small
entities because source selection officials will continue to
establish evaluation factors as provided in FAR 15.3, Source
selection, including any applicable preferences for small entities.
There are five significant areas in which we were able to
minimize the impact on small entities:
Competitive range policy. We considered alternatives in
the following areas in order to minimize the impact on small
entities--
(a) Total bid and proposal costs borne by offerors, including
small entities. As an alternative to the language contained in the
final rule, we considered whether the potential payoff of receiving
an award outweighed the additional cost to an offeror of staying in
a competition without having a realistic chance of winning, i.e.,
whether the long shots came in often enough to make it worth the
extra cost of taking the chance. We also note that information
provided by agencies in public comments responding to the proposed
rule indicates that award is nearly always made to one of the three
most highly rated offerors. We have received no comments that
contradict this understanding. The benefits to offerors of including
only the most highly rated offers in the competitive range are that
those included will know that they have a good chance of winning the
competition, making it in their best interests to compete
aggressively, and those eliminated from the range are spared the
cost of pursuing an award when they have little, if any, chance of
winning.
(b) Impacts on resources and cash flow. A smaller competitive
range enables faster progress toward contract award. Therefore, all
offerors excluded from the competitive range expend less resources
on a competition they have little or no chance of winning. The
resources of these offerors can then be applied to the pursuit of
other more promising business opportunities. Successful offerors
receive contract awards faster, thereby improving their cash flow.
Therefore, we decided not to retain the current FAR standard of
including all proposals with a reasonable chance of being selected
for award, and including any proposals for which there is doubt,
i.e., ``when in doubt, leave them in,'' because this standard
[[Page 51228]]
prolongs the award process and increases the costs to offerors with
little or no chance of winning.
(c) Perception of barriers to submitting a proposal. The initial
proposed rule contained a solicitation provision that identified a
target number of offerors to be included in the competitive range.
Public comments indicated that this created a perception that
proposals would not be properly evaluated against the evaluation
criteria in the solicitation prior to establishment of the
competitive range. Respondents indicated that they would view this
as a barrier to submitting proposals and competing on Government
contracting opportunities. Therefore, we have revised the final rule
to eliminate this solicitation provision, and to emphasize that all
proposals received are evaluated against all the evaluation factors
and significant subfactors in the solicitation before the
competitive range is established.
(d) Limiting the competitive range in the interest of
efficiency. The language in the final rule implements Section 4103
of the Clinger-Cohen Act of 1996, that allows contracting officers,
in certain circumstances, to reduce the number of proposals in the
competitive range to the greatest number that will permit an
efficient competition among the most highly rated offerors. We
considered three alternatives to the language contained in the final
rule--
(1) Include at least one small business proposal in the
competitive range. At the suggestion of the Small Business
Administration Office of Advocacy, we considered imposing a
requirement to have at least one small business in the competitive
range whenever any small businesses submit proposals. We did not
adopt this alternative for two reasons. First, as noted above,
public comments from agencies indicate that awards are nearly always
made to the one of the three most highly rated proposals going into
the competitive range. This is true even when small businesses win
full and open competitions. The incidence of award to an offeror
other than one of the three such proposals is so small that it does
not support keeping any business, particularly a small business with
limited bid and proposal resources, in a competition that the
business has virtually no chance of winning. Second, this
recommendation could conflict with the requirements of Section 4103
of the Clinger-Cohen Act to include the most highly rated proposals
in the competitive range, if the small business proposal is not
among the most highly rated.
(2) Provide examples of the factors to be considered in limiting
the competitive range. The proposed rule contained a list of factors
for the contracting officer to consider in establishing the
competitive range. As a result of public comments raising concerns
about the list, we revised the final rule to delete the list of
factors. This permits the facts of the instant acquisition to guide
the judgment of the contracting officer in exercising this
authority, instead of attempting to impose a static list on all
circumstances. Both small and large offerors should benefit from
this flexibility. The goal of our final rule language is to allow
all participants in the process, both industry and Government, to
optimize their resources.
(3) Provide a definition of efficiency. The proposed rule did
not define an efficient competition. We received several public
comments suggesting that such a definition be provided. Our
assessment is that the definition of an efficient competition
depends on the facts of the instant acquisition. Instead of imposing
a definition that may not be appropriate in certain circumstances,
we chose to describe the process for limiting the competitive range
for the purpose of efficiency. This enables the contracting officer
to exercise this authority appropriately in varying circumstances--
all offerors should benefit from this approach.
(e) Responding to adverse past performance information. We
considered alternatives relating to two issues in this area.
(1) Prohibition on the use of certain types of past performance
information. The proposed rule did not prohibit the use of adverse
past performance information. Several public comments suggested that
past performance information on contracts in litigation or dispute
should not be used until the litigation or dispute is resolved. The
rule requires the contracting officer to evaluate the currency,
relevance, source, context, and general trend of the past
performance information. We did not adopt this alternative because
the requirement to evaluate the context of the information already
addresses this concern. In addition, we were concerned that the
suggested alternative may encourage litigation for the purpose of
avoiding the inclusion of adverse past performance information in
future acquisitions.
(2) Responding to adverse past performance information. The
proposed rule did not require contracting officers to allow offerors
to respond to adverse past performance information prior to
discussions. Some public comments recommended that contracting
officers identify any adverse past performance information to the
offeror immediately upon receiving the information. They further
suggested that the offeror be allowed to respond to such information
regardless of the stage of the acquisition. Other public comments
recommended that offerors be afforded an opportunity to respond to
adverse past performance information on which they had not
previously had an opportunity to respond. We revised the final rule
to accommodate these recommendations. The initial proposed rule
authorized communication regarding adverse past performance
information. In the second proposed rule, we revised this guidance
to state that contracting officers, when conducting communications
with offerors before establishment of the competitive range, shall
address adverse past performance information on which the offeror
has not previously had the opportunity to comment. We revised the
final rule to require that offerors, including small entities, shall
be granted the opportunity to explain situations that contributed to
an adverse past performance rating to which they have not had a
previous opportunity to respond before such ratings can be the
determining factor for exclusion from the competitive range. These
revisions, together with the requirement to discuss all deficiencies
and significant weaknesses with those offerors in the competitive
range, ensure that adverse past performance to which an offeror has
not had the opportunity to respond will be addressed any time it can
affect the outcome of the acquisition. We did not revise the rule to
permit offerors to address past performance information to which
they have already had an opportunity to respond because the
solicitation provides offerors with the opportunity to address
problems encountered on previous contracts and related corrective
actions. In addition, FAR Subpart 42.15, Contractor performance
information, already contains formal rebuttal procedures. We did not
revise the rule to permit all offerors to address past performance
information to which they have not had a previous opportunity to
comment because it would prolong the evaluation process by allowing
such exchanges when they will not make a difference in the source
selection decision.
(f) Neutral past performance evaluations. We considered
alternatives relating to two aspects of neutral past performance
ratings--
(1) Definition of neutral past performance evaluations. The
proposed rules provided a definition of neutral past performance
evaluations. Public comments recommended that we revise the
definition and provide detailed instructions on how to apply neutral
past performance ratings in any source selection. 41 U.S.C.
405(j)(2) requires offerors without a previous performance history,
to be given a rating that neither rewards nor penalizes the offeror.
We did not adopt the public comment recommendations, opting instead
to revise the final rule to reflect the statutory language, so that
the facts of the instant acquisition would be used in determining
what rating scheme is appropriate. This alternative provides for
flexible compliance to satisfy requirements of the statute.
(2) Limiting the instances of neutral evaluations. The proposed
rule listed examples of information that may be considered to avoid
assigning neutral past performance ratings. One public comment
recommended that, in the interest of fairness to all businesses, as
well as the minority contractors represented by the respondent, the
Government should assign neutral past performance ratings only where
the preponderance of the evidence demonstrates that the offeror
lacked an opportunity to acquire a record on relevant past
performance. In order to minimize the use of neutral past
performance ratings, we revised the final rule to indicate that
contracting officers ``should'' (rather than ``may'') take into
account a broad range of information related to past performance
when performing past performance evaluations.
(g) Providing for increased exchanges between the Government and
industry throughout the acquisition process.
(1) Clarifications. We drafted the rule to allow as much free
exchange of information between offerors and the Government as
possible, while still permitting award without discussions and
complying with applicable statutes. The proposed rule did not
differentiate between exchanges of
[[Page 51229]]
information when award without discussions was contemplated versus
when a competitive range would be established. Public comment
pointed out that the proposed rule language may allow exchanges
beyond what is permitted by applicable statute when making award
without discussions. In drafting the second proposed rule, we
limited these exchanges. The resulting language still permits more
exchange of information between offerors and the Government than the
current FAR. This policy is expected to help offerors, especially
small entities that may not be familiar with proposal preparation,
by permitting easy clarification of limited aspects of their
proposals.
(2) Communications. Public comments indicated that the second
proposed rule did not establish a ``bright line'' distinction
between when communications conducted in order to establish a
competitive range end, and when discussions begin. Small businesses
were concerned that the Government may conduct inappropriate
communications with selected offerors prior to the establishment of
the competitive range to the detriment of small businesses. We
revised the final rule to accommodate this concern by clearly
defining when discussions begin. We adopted this alternative to
preclude the occurrence of the inappropriate communications that
concerned small businesses.
(3) Discussions. The initial proposed rule contained the
existing FAR guidance regarding the type and amount of information
that should be exchanged during discussions.
In response to public comments, the second proposed rule
requires a more robust exchange of information during discussions.
The language requires the Government to identify, in addition to
significant weaknesses and deficiencies, other aspects of an
offeror's proposal that could be enhanced materially to improve the
offeror's potential for award. This change should benefit all
offerors, including small businesses, because it permits offerors to
develop a better understanding of the Government's evaluation of
their proposal, and permits them to optimize their potential for
award.
(h) Oral presentations. The existing FAR does not address oral
presentations. The proposed rule included general guidelines for the
use of oral presentations to provide consistent and impartial
Governmentwide application of this technique. We considered
alternatives in two aspects of oral presentations.
(1) Methods for recording oral presentations. Some public
comments in response to the second proposed rule recommended that
the rule should require the Government to prepare a formal,
verifiable record of each oral presentation, to place the record in
the source selection files, and to provide copies of their own
records to offerors. We revised the final rule to allow contracting
officers to provide each offeror a copy of that offeror's record,
but did not require the Government to make a verifiable record. A
requirement for the Government to make a verifiable record of each
presentation is not consistent with the objective of this rule to
streamline the acquisition process.
(2) Oral presentations and award without discussions. The second
proposed rule text on oral presentations did not refer users to the
limits on communications set forth elsewhere in the rule. Public
comments expressed concerns that the oral presentations might be
detrimental to small businesses because, depending on the stage of
the acquisition, the atmosphere of oral presentations could be
conducive to inappropriate exchanges of information between selected
offerors and the Government. We revised the final rule to help users
of this technique understand the limits on exchanges of information
during the conduct of oral presentations.
C. Paperwork Reduction Act
The following information collection requirements have been
approved by the Office of Management and Budget (OMB) and apply to FAR
Part 15: 9000-0037, Standard Form 1417, Presolicitation Notice and
Response; 9000-0044, Bid/Offer Acceptance Period; and 9000-0048,
Authorized Negotiators. While the Paperwork Reduction Act applies
because the rule revises existing information collection requirements,
resulting in a slight decrease in the estimated burden, it has been
determined that this rule does not materially affect the burden already
approved by OMB. Optional forms 307, 308, and 309 do not require
independent clearance under the Paperwork Reduction Act because they do
not request information beyond identity, date, address, and contact.
Therefore, no adjustments to these information collection requirements
are sought at this time.
List of Subjects in 48 CFR Parts 1, 2, 3, 4, 5, 6, 7, 9, 11, 12,
13, 14, 15, 16, 17, 19, 24, 25, 27, 28, 31, 32, 33, 34, 35, 36, 42,
43, 44, 45, 49, 50, 52, and 53
Government procurement.
Dated: September 22, 1997
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Federal Acquisition Circular--FAC 97-02
Federal Acquisition Circular (FAC) 97-02 is issued under the
authority of the Secretary of Defense, the Administrator of General
Services, and the Administrtator for the National Aeronatics and Space
Administration.
The policies, provisions, and clauses of this final rule are
effective for all solicitations issued on or after October 10, 1997.
However, agencies may delay implementation of this final rule until
January 1, 1998, at which time it becomes mandatory for all
solicitations issued on or after that date. Agencies using the new
policies, provisions, and clauses before January 1, 1998, shall ensure
that the cover page of the solicitation for each acquisition subject to
this rule, and issued before January 1, 1998, contains a notice that
this rule applies to that acquisition. Any solicitation issued before
January 1, 1998, that does not contain such a solicitation notice or
the new provisions and clauses is automatically conducted in accordance
with the FAR excluding changes made by this final rule.
Dated: September 19, 1997.
Eleanor R. Spector,
Director, Defense Procurement, Department of Defense.
Dated: September 10, 1997.
Ida M. Ustad,
Deputy Associate Administrator, Office of Acquisition Policy, General
Services Administration.
Dated: September 10, 1997.
Tom Luedtke,
Deputy Associate Administrator for Procurement National Aeronautics and
Space Administration.
Therefore, 48 CFR Parts 1, 2, 3, 4, 5, 6, 7, 9, 11, 12, 13, 14, 15,
16, 17, 19, 24, 25, 27, 28, 31, 32, 33, 34, 35, 36, 42, 43, 44, 45, 49,
50, 52, and 53 are amended as set forth below:
1. The authority citation for 48 CFR Parts 1, , 3, 4, 5, 6, 7, 9,
11, 12, 13, 14, 15, 16, 17, 19, 24, 25, 27, 28, 31, 32, 33, 34, 35, 36,
42, 43, 44, 45, 49, 50, 52, and 53 continues to read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM
2. Section 1.102-2 is amended by adding paragraph (c)(3) to read as
follows:
1.102-2 Performance standards.
* * * * *
(c) * * *
(3) The Government shall exercise discretion, use sound business
judgment, and comply with applicable laws and regulations in dealing
with contractors and prospective contractors. All contractors and
prospective contractors shall be treated fairly and impartially but
need not be treated the same.
* * * * *
3. Section 1.106 is amended in the table following the introductory
paragraph by removing the following entries:
1.106 OMB Approval under the Paperwork Reduction Act.
------------------------------------------------------------------------
OMB control
FAR segment No.
------------------------------------------------------------------------
* * * *
SF 1411.................................................... 9000-0013
[[Page 51230]]
* * * *
SF 1448.................................................... 9000-0013
* * * *
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PART 2--DEFINITIONS OF WORDS AND TERMS
4. Section 2.101 is amended by inserting, in alphabetical order,
the definition ``Best value'' to read as follows:
2.101 Definitions.
* * * * *
Best value means the expected outcome of an acquisition that, in
the Government's estimation, provides the greatest overall benefit in
response to the requirement.
* * * * *
PART 4--ADMINISTRATIVE MATTERS
5. Subpart 4.10 is added to read as follows:
Subpart 4.10--Contract Line Items
4.1001 Policy.
Contracts may identify the items or services to be acquired as
separately identified line items. Contract line items should provide
unit prices or lump sum prices for separately identifiable contract
deliverables, and associated delivery schedules or performance periods.
Line items may be further subdivided or stratified for administrative
purposes (e.g., to provide for traceable accounting classification
citations).
PART 5--PUBLICIZING CONTRACT ACTIONS
6. Section 5.102 is amended by adding paragraph (a)(7) to read as
follows:
5.102 Availability of solicitations.
(a) * * *
(7) If electronic commerce is employed in the solicitation process,
availability of the RFP may be limited to the electronic medium.
* * * * *
PART 6--COMPETITION REQUIREMENTS
7. Section 6.101 is amended by revising paragraph (b) to read as
follows:
6.101 Policy.
* * * * *
(b) Contracting officers shall provide for full and open
competition through use of the competitive procedure(s) contained in
this subpart that are best suited to the circumstances of the contract
action and consistent with the need to fulfill the Government's
requirements efficiently (10 U.S.C. 2304 and 41 U.S.C. 253).
PART 7--ACQUISITION PLANNING
8. Section 7.105 is amended by revising paragraph (b)(5) to read as
follows:
7.105 Contents of written acquisition plans.
* * * * *
(b) * * *
(5) Budgeting and funding. Include budget estimates, explain how
they were derived, and discuss the schedule for obtaining adequate
funds at the time they are required (see subpart 32.7).
* * * * *
PART 11--DESCRIBING AGENCY NEEDS
9. Section 11.002 is amended at the end of paragraph (d) by adding
the following sentence:
11.002 Policy.
* * * * *
(d) * * * Environmental objectives, such as pollution prevention
(e.g., promoting waste reduction, source reduction, energy efficiency
and maximum practicable recovered material content) (see part 23) shall
be considered when describing Government requirements for supplies and
services, and when developing source selection factors for competitive
negotiated acquisitions (see 15.304), when appropriate.
* * * * *
10. Subpart 11.8 is added to read as follows:
Subpart 11.8--Testing
11.801 Preaward in-use evaluation.
Supplies may be evaluated under comparable in-use conditions
without a further test plan, provided offerors are so advised in the
solicitation. The results of such tests or demonstrations may be used
to rate the proposal, to determine technical acceptability, or
otherwise to evaluate the proposal (see 15.305).
PART 14--SEALED BIDDING
14.201-6 [Amended]
11. Section 14.201-6 is amended by removing and reserving paragraph
(n).
12. Section 14.404-1 is amended in paragraph (e)(1) by removing the
reference ``15.103'' and inserting ``paragraph (f) of this
subsection''; and by adding paragraph (f) to read as follows:
14.404-1 Cancellation of invitations after opening.
* * * * *
(f) When the agency head has determined, in accordance with
paragraph (e)(1) of this subsection, that an invitation for bids should
be canceled and that use of negotiation is in the Government's
interest, the contracting officer may negotiate (in accordance with
part 15, as appropriate) and make award without issuing a new
solicitation provided--
(1) Each responsible bidder in the sealed bid acquisition has been
given notice that negotiations will be conducted and has been given an
opportunity to participate in negotiations; and
(2) The award is made to the responsible bidder offering the lowest
negotiated price.
13. Part 15 is revised to read as follows:
PART 15--CONTRACTING BY NEGOTIATION
Sec.
15.000 Scope of part.
15.001 Definitions.
15.002 Types of negotiated acquisition.
Subpart 15.1--Source Selection Processes and Techniques
15.100 Scope of subpart.
15.101 Best value continuum.
15.101-1 Tradeoff process.
15.101-2 Lowest price technically acceptable source selection
process.
15.102 Oral presentations.
Subpart 15.2--Solicitation and Receipt of Proposals and Information
15.200 Scope of subpart.
15.201 Exchanges with industry before receipt of proposals.
15.202 Advisory multi-step process.
15.203 Requests for proposals.
15.204 Contract format.
15.204-1 Uniform contract format.
Table 15-1--Uniform Contract Format
15.204-2 Part I--The Schedule.
15.204-3 Part II--Contract Clauses.
15.204-4 Part III--List of Documents, Exhibits, and Other
Attachments.
15.204-5 Part IV--Representations and Instructions.
15.205 Issuing solicitations.
15.206 Amending the solicitation.
15.207 Handling proposals and information.
15.208 Submission, modification, revision, and withdrawal of
proposals.
15.209 Solicitation provisions and contract clauses.
15.210 Forms.
[[Page 51231]]
Subpart 15.3--Source Selection
15.300 Scope of subpart.
15.301 Definitions.
15.302 Source selection objective.
15.303 Responsibilities.
15.304 Evaluation factors and significant subfactors.
15.305 Proposal evaluation.
15.306 Exchanges with offerors after receipt of proposals.
15.307 Proposal revisions.
15.308 Source selection decision.
Subpart 15.4--Contract Pricing
15.400 Scope of subpart.
15.401 Definitions.
15.402 Pricing policy.
15.403 Obtaining cost or pricing data.
15.403-1 Prohibition on obtaining cost or pricing data (10 U.S.C.
2306a and 41 U.S.C. 254b).
15.403-2 Other circumstances where cost or pricing data are not
required.
15.403-3 Requiring information other than cost or pricing data.
15.403-4 Requiring cost or pricing data (10 U.S.C. 2306a and 41
U.S.C. 254b).
15.403-5 Instructions for submission of cost or pricing data or
information other than cost or pricing data.
15.404 Proposal analysis.
15.404-1 Proposal analysis techniques.
15.404-2 Information to support proposal analysis.
15.404-3 Subcontract pricing considerations.
15.404-4 Profit.
15.405 Price negotiation.
15.406 Documentation.
15.406-1 Prenegotiation objectives.
15.406-2 Certificate of Current Cost or Pricing Data.
15.406-3 Documenting the negotiation.
15.407 Special cost or pricing areas.
15.407-1 Defective cost or pricing data.
15.407-2 Make-or-buy programs.
15.407-3 Forward pricing rate agreements.
15.407-4 Should-cost review.
15.407-5 Estimating systems.
15.408 Solicitation provisions and contract clauses.
Table 15-2--Instructions for Submitting Cost or Pricing Data Are
Required
Subpart 15.5--Preaward, Award, and Postaward Notifications, Protests,
and Mistakes
15.501 Definition.
15.502 Applicability.
15.503 Notifications to unsuccessful offerors.
15.504 Award to successful offeror.
15.505 Preaward debriefing of offerors.
15.506 Postaward debriefing of offerors.
15.507 Protests against award.
15.508 Discovery of mistakes.
15.509 Forms.
Subpart 15.6--Unsolicited Proposals
15.600 Scope of subpart.
15.601 Definitions.
15.602 Policy.
15.603 General.
15.604 Agency points of contact.
15.605 Content of unsolicited proposals.
15.606 Agency procedures.
15.606-1 Receipt and initial review.
15.606-2 Evaluation.
15.607 Criteria for acceptance and negotiation of an unsolicited
proposal.
15.608 Prohibitions.
15.609 Limited use of data.
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
15.000 Scope of part.
This part prescribes policies and procedures governing competitive
and noncompetitive negotiated acquisitions. A contract awarded using
other than sealed bidding procedures is a negotiated contract (see
14.101).
15.001 Definitions.
As used in this part--
Proposal modification is a change made to a proposal before the
solicitation closing date and time, or made in response to an
amendment, or made to correct a mistake at any time before award.
Proposal revision is a change to a proposal made after the
solicitation closing date, at the request of or as allowed by a
contracting officer, as the result of negotiations.
15.002 Types of negotiated acquisition.
(a) Sole source acquisitions. When contracting in a sole source
environment, the request for proposals (RFP) should be tailored to
remove unnecessary information and requirements; e.g., evaluation
criteria and voluminous proposal preparation instructions.
(b) Competitive acquisitions. When contracting in a competitive
environment, the procedures of this part are intended to minimize the
complexity of the solicitation, the evaluation, and the source
selection decision, while maintaining a process designed to foster an
impartial and comprehensive evaluation of offerors' proposals, leading
to selection of the proposal representing the best value to the
Government (see 2.101).
Subpart 15.1--Source Selection Processes and Techniques
15.100 Scope of subpart.
This subpart describes some of the acquisition processes and
techniques that may be used to design competitive acquisition
strategies suitable for the specific circumstances of the acquisition.
15.101 Best value continuum.
An agency can obtain best value in negotiated acquisitions by using
any one or a combination of source selection approaches. In different
types of acquisitions, the relative importance of cost or price may
vary. For example, in acquisitions where the requirement is clearly
definable and the risk of unsuccessful contract performance is minimal,
cost or price may play a dominant role in source selection. The less
definitive the requirement, the more development work required, or the
greater the performance risk, the more technical or past performance
considerations may play a dominant role in source selection.
15.101-1 Tradeoff process.
(a) A tradeoff process is appropriate when it may be in the best
interest of the Government to consider award to other than the lowest
priced offeror or other than the highest technically rated offeror.
(b) When using a tradeoff process, the following apply:
(1) All evaluation factors and significant subfactors that will
affect contract award and their relative importance shall be clearly
stated in the solicitation; and
(2) The solicitation shall state whether all evaluation factors
other than cost or price, when combined, are significantly more
important than, approximately equal to, or significantly less important
than cost or price.
(c) This process permits tradeoffs among cost or price and non-cost
factors and allows the Government to accept other than the lowest
priced proposal. The perceived benefits of the higher priced proposal
shall merit the additional cost, and the rationale for tradeoffs must
be documented in the file in accordance with 15.406.
15.101-2 Lowest price technically acceptable source selection process.
(a) The lowest price technically acceptable source selection
process is appropriate when best value is expected to result from
selection of the technically acceptable proposal with the lowest
evaluated price.
(b) When using the lowest price technically acceptable process, the
following apply:
(1) The evaluation factors and significant subfactors that
establish the requirements of acceptability shall be set forth in the
solicitation. Solicitations shall specify that award will be made on
the basis of the lowest evaluated price of proposals meeting or
exceeding the acceptability standards for non-cost factors. If the
contracting officer documents the file pursuant to 15.304(c)(3)(iii),
past performance need not be an evaluation factor in lowest price
technically acceptable source selections. If the contracting officer
elects to consider past performance as
[[Page 51232]]
an evaluation factor, it shall be evaluated in accordance with 15.305.
However, the comparative assessment in 15.305(a)(2)(i) does not apply.
If the contracting officer determines that a small business' past
performance is not acceptable, the matter shall be referred to the
Small Business Administration for a Certificate of Competency
determination, in accordance with the procedures contained in subpart
19.6 and 15 U.S.C. 637(b)(7)).
(2) Tradeoffs are not permitted.
(3) Proposals are evaluated for acceptability but not ranked using
the non-cost/price factors.
(4) Exchanges may occur (see 15.306).
15.102 Oral presentations.
(a) Oral presentations by offerors as requested by the Government
may substitute for, or augment, written information. Use of oral
presentations as a substitute for portions of a proposal can be
effective in streamlining the source selection process. Oral
presentations may occur at any time in the acquisition process, and are
subject to the same restrictions as written information, regarding
timing (see 15.208) and content (see 15.306). Oral presentations
provide an opportunity for dialogue among the parties. Pre-recorded
videotaped presentations that lack real-time interactive dialogue are
not considered oral presentations for the purposes of this section,
although they may be included in offeror submissions, when appropriate.
(b) The solicitation may require each offeror to submit part of its
proposal through oral presentations. However, certifications,
representations, and a signed offer sheet (including any exceptions to
the Government's terms and conditions) shall be submitted in writing.
(c) Information pertaining to areas such as an offeror's
capability, past performance, work plans or approaches, staffing
resources, transition plans, or sample tasks (or other types of tests)
may be suitable for oral presentations. In deciding what information to
obtain through an oral presentation, consider the following:
(1) The Government's ability to adequately evaluate the
information;
(2) The need to incorporate any information into the resultant
contract;
(3) The impact on the efficiency of the acquisition; and
(4) The impact (including cost) on small businesses. In considering
the costs of oral presentations, contracting officers should also
consider alternatives to on-site oral presentations (e.g.,
teleconferencing, video teleconferencing).
(d) When oral presentations are required, the solicitation shall
provide offerors with sufficient information to prepare them.
Accordingly, the solicitation may describe--
(1) The types of information to be presented orally and the
associated evaluation factors that will be used;
(2) The qualifications for personnel that will be required to
provide the oral presentation(s);
(3) The requirements for, and any limitations and/or prohibitions
on, the use of written material or other media to supplement the oral
presentations;
(4) The location, date, and time for the oral presentations;
(5) The restrictions governing the time permitted for each oral
presentation; and
(6) The scope and content of exchanges that may occur between the
Government's participants and the offeror's representatives as part of
the oral presentations, including whether or not discussions (see
15.306(d)) will be permitted during oral presentations.
(e) The contracting officer shall maintain a record of oral
presentations to document what the Government relied upon in making the
source selection decision. The method and level of detail of the record
(e.g., videotaping, audio tape recording, written record, Government
notes, copies of offeror briefing slides or presentation notes) shall
be at the discretion of the source selection authority. A copy of the
record placed in the file may be provided to the offeror.
(f) When an oral presentation includes information that the parties
intend to include in the contract as material terms or conditions, the
information shall be put in writing. Incorporation by reference of oral
statements is not permitted.
(g) If, during an oral presentation, the Government conducts
discussions (see 15.306(d)), the Government must comply with 15.306 and
15.307.
Subpart 15.2--Solicitation and Receipt of Proposals and Information
15.200 Scope of subpart.
This subpart prescribes policies and procedures for--
(a) Exchanging information with industry prior to receipt of
proposals;
(b) Preparing and issuing requests for proposals (RFPs) and
requests for information (RFIs); and
(c) Receiving proposals and information.
15.201 Exchanges with industry before receipt of proposals.
(a) Exchanges of information among all interested parties, from the
earliest identification of a requirement through receipt of proposals,
are encouraged. Any exchange of information must be consistent with
procurement integrity requirements (see 3.104). Interested parties
include potential offerors, end users, Government acquisition and
supporting personnel, and others involved in the conduct or outcome of
the acquisition.
(b) The purpose of exchanging information is to improve the
understanding of Government requirements and industry capabilities,
thereby allowing potential offerors to judge whether or how they can
satisfy the Government's requirements, and enhancing the Government's
ability to obtain quality supplies and services, including
construction, at reasonable prices, and increase efficiency in proposal
preparation, proposal evaluation, negotiation, and contract award.
(c) Agencies are encouraged to promote early exchanges of
information about future acquisitions. An early exchange of information
among industry and the program manager, contracting officer, and other
participants in the acquisition process can identify and resolve
concerns regarding the acquisition strategy, including proposed
contract type, terms and conditions, and acquisition planning
schedules; the feasibility of the requirement, including performance
requirements, statements of work, and data requirements; the
suitability of the proposal instructions and evaluation criteria,
including the approach for assessing past performance information; the
availability of reference documents; and any other industry concerns or
questions. Some techniques to promote early exchanges of information
are--
(1) Industry or small business conferences;
(2) Public hearings;
(3) Market research, as described in part 10;
(4) One-on-one meetings with potential offerors (any that are
substantially involved with potential contract terms and conditions
should include the contracting officer; also see paragraph (f) of this
section regarding restrictions on disclosure of information);
(5) Presolicitation notices;
(6) Draft RFPs;
(7) RFIs;
(8) Presolicitation or preproposal conferences; and
(9) Site visits.
[[Page 51233]]
(d) The special notices of procurement matters at 5.205(c), or
electronic notices, may be used to publicize the Government's
requirement or solicit information from industry.
(e) RFIs may be used when the Government does not presently intend
to award a contract, but wants to obtain price, delivery, other market
information, or capabilities for planning purposes. Responses to these
notices are not offers and cannot be accepted by the Government to form
a binding contract. There is no required format for RFIs.
(f) General information about agency mission needs and future
requirements may be disclosed at any time.
After release of the solicitation, the contracting officer shall be
the focal point of any exchange with potential offerors. When specific
information about a proposed acquisition that would be necessary for
the preparation of proposals is disclosed to one or more potential
offerors, that information shall be made available to the public as
soon as practicable, but no later than the next general release of
information, in order to avoid creating an unfair competitive
advantage. Information provided to a particular offeror in response to
that offeror's request shall not be disclosed if doing so would reveal
the potential offeror's confidential business strategy, and would be
protected under 3.104 or subpart 24.2. When a presolicitation or
preproposal conference is conducted, materials distributed at the
conference should be made available to all potential offerors, upon
request.
15.202 Advisory multi-step process.
(a) The agency may publish a presolicitation notice (see 5.204)
that provides a general description of the scope or purpose of the
acquisition and invites potential offerors to submit information that
allows the Government to advise the offerors about their potential to
be viable competitors. The presolicitation notice should identify the
information that must be submitted and the criteria that will be used
in making the initial evaluation. Information sought may be limited to
a statement of qualifications and other appropriate information (e.g.,
proposed technical concept, past performance, and limited pricing
information). At a minimum, the notice shall contain sufficient
information to permit a potential offeror to make an informed decision
about whether to participate in the acquisition. This process should
not be used for multi-step acquisitions where it would result in
offerors being required to submit identical information in response to
the notice and in response to the initial step of the acquisition.
(b) The agency shall evaluate all responses in accordance with the
criteria stated in the notice, and shall advise each respondent in
writing either that it will be invited to participate in the resultant
acquisition or, based on the information submitted, that it is unlikely
to be a viable competitor. The agency shall advise respondents
considered not to be viable competitors of the general basis for that
opinion. The agency shall inform all respondents that, notwithstanding
the advice provided by the Government in response to their submissions,
they may participate in the resultant acquisition.
15.203 Requests for proposals.
(a) Requests for proposals (RFPs) are used in negotiated
acquisitions to communicate Government requirements to prospective
contractors and to solicit proposals. RFPs for competitive acquisitions
shall, at a minimum, describe the--
(1) Government's requirement;
(2) Anticipated terms and conditions that will apply to the
contract:
(i) The solicitation may authorize offerors to propose alternative
terms and conditions, including the contract line item number (CLIN)
structure; and
(ii) When alternative CLIN structures are permitted, the evaluation
approach should consider the potential impact on other terms and
conditions or the requirement (e.g., place of performance or payment
and funding requirements) (see 15.206);
(3) Information required to be in the offeror's proposal; and
(4) Factors and significant subfactors that will be used to
evaluate the proposal and their relative importance.
(b) An RFP may be issued for OMB Circular A-76 studies. See subpart
7.3 for additional information regarding cost comparisons between
Government and contractor performance.
(c) Electronic commerce may be used to issue RFPs and to receive
proposals, modifications, and revisions. In this case, the RFP shall
specify the electronic commerce method(s) that offerors may use (see
subpart 4.5).
(d) Contracting officers may issue RFPs and/or authorize receipt of
proposals, modifications, or revisions by facsimile.
(1) In deciding whether or not to use facsimiles, the contracting
officer should consider factors such as--
(i) Anticipated proposal size and volume;
(ii) Urgency of the requirement;
(iii) Availability and suitability of electronic commerce methods;
and
(iv) Adequacy of administrative procedures and controls for
receiving, identifying, recording, and safeguarding facsimile
proposals, and ensuring their timely delivery to the designated
proposal delivery location.
(2) If facsimile proposals are authorized, contracting officers may
request offeror(s) to provide the complete, original signed proposal at
a later date.
(e) Letter RFPs may be used in sole source acquisitions and other
appropriate circumstances. Use of a letter RFP does not relieve the
contracting officer from complying with other FAR requirements. Letter
RFPs should be as complete as possible and, at a minimum, should
contain the following:
(1) RFP number and date;
(2) Name, address (including electronic address and facsimile
address, if appropriate), and telephone number of the contracting
officer;
(3) Type of contract contemplated;
(4) Quantity, description, and required delivery dates for the
item;
(5) Applicable certifications and representations;
(6) Anticipated contract terms and conditions;
(7) Instructions to offerors and evaluation criteria for other than
sole source actions;
(8) Proposal due date and time; and
(9) Other relevant information; e.g., incentives, variations in
delivery schedule, cost proposal support, and data requirements.
(f) Oral RFPs are authorized when processing a written solicitation
would delay the acquisition of supplies or services to the detriment of
the Government and a notice is not required under 5.202 (e.g.,
perishable items and support of contingency operations or other
emergency situations). Use of an oral RFP does not relieve the
contracting officer from complying with other FAR requirements.
(1) The contract files supporting oral solicitations should
include--
(i) A description of the requirement;
(ii) Rationale for use of an oral solicitation;
(iii) Sources solicited, including the date, time, name of
individuals contacted, and prices offered; and
(iv) The solicitation number provided to the prospective offerors.
(2) The information furnished to potential offerors under oral
solicitations should include appropriate items from paragraph (e) of
this section.
15.204 Contract format.
The use of a uniform contract format facilitates preparation of the
solicitation
[[Page 51234]]
and contract as well as reference to, and use of, those documents by
offerors, contractors, and contract administrators. The uniform
contract format need not be used for the following:
(a) Construction and architect-engineer contracts (see part 36).
(b) Subsistence contracts.
(c) Supplies or services contracts requiring special contract
formats prescribed elsewhere in this part that are inconsistent with
the uniform format.
(d) Letter requests for proposals (see 15.203(e)).
(e) Contracts exempted by the agency head or designee.
15.204-1 Uniform contract format.
(a) Contracting officers shall prepare solicitations and resulting
contracts using the uniform contract format outlined in Table 15-1 of
this subsection.
(b) Solicitations using the uniform contract format shall include
Parts I, II, III, and IV (see 15.204-2 through 15.204-5). Upon award,
contracting officers shall not physically include Part IV in the
resulting contract, but shall retain it in the contract file. Section K
shall be incorporated by reference in the contract.
Table 15-1.--Uniform Contract Format
------------------------------------------------------------------------
Section Title
------------------------------------------------------------------------
Part I--The Schedule
------------------------------------------------------------------------
A.............................. Solicitation/contract form.
B.............................. Supplies or services and prices/costs.
C.............................. Description/specifications/statement of
work.
D.............................. Packaging and marking.
E.............................. Inspection and acceptance.
F.............................. Deliveries or performance.
G.............................. Contract administration data.
H.............................. Special contract requirements.
------------------------------------------------------------------------
Part II--Contract Clauses
------------------------------------------------------------------------
I.............................. Contract clauses.
------------------------------------------------------------------------
Part III--List of Documents, Exhibits, and Other Attachments
------------------------------------------------------------------------
J.............................. List of attachments.
------------------------------------------------------------------------
Part IV--Representations and Instructions.
------------------------------------------------------------------------
K.............................. Representations, certifications, and
other statements of offerors or
respondents.
L.............................. Instructions, conditions, and notices
to offerors or respondents.
M.............................. Evaluation factors for award.
------------------------------------------------------------------------
15.204-2 Part I--The Schedule.
The contracting officer shall prepare the contract Schedule as
follows:
(a) Section A, Solicitation/contract form. (1) Optional Form (OF)
308, Solicitation and Offer-Negotiated Acquisition, or Standard Form
(SF) 33, Solicitation, Offer and Award, may be used to prepare RFPs.
(2) When other than OF 308 or SF 33 is used, include the following
information on the first page of the solicitation:
(i) Name, address, and location of issuing activity, including room
and building where proposals or information must be submitted.
(ii) Solicitation number.
(iii) Date of issuance.
(iv) Closing date and time.
(v) Number of pages.
(vi) Requisition or other purchase authority.
(vii) Brief description of item or service.
(viii) Requirement for the offeror to provide its name and complete
address, including street, city, county, state, and zip code, and
electronic address (including facsimile address), if appropriate.
(ix) Offer expiration date.
(b) Section B, Supplies or services and prices/costs. Include a
brief description of the supplies or services; e.g., item number,
national stock number/part number if applicable, nouns, nomenclature,
and quantities. (This includes incidental deliverables such as manuals
and reports.)
(c) Section C, Description/specifications/statement of work.
Include any description or specifications needed in addition to Section
B (see part 11, Describing Agency Needs).
(d) Section D, Packaging and marking. Provide packaging, packing,
preservation, and marking requirements, if any.
(e) Section E, Inspection and acceptance. Include inspection,
acceptance, quality assurance, and reliability requirements (see part
46, Quality Assurance).
(f) Section F, Deliveries or performance. Specify the requirements
for time, place, and method of delivery or performance (see subpart
11.4, Delivery or Performance Schedules, and 47.301-1).
(g) Section G, Contract administration data. Include any required
accounting and appropriation data and any required contract
administration information or instructions other than those on the
solicitation form. Include a statement that the offeror should include
the payment address in the proposal, if it is different from that shown
for the offeror.
(h) Section H, Special contract requirements. Include a clear
statement of any special contract requirements that are not included in
Section I, Contract clauses, or in other sections of the uniform
contract format.
15.204-3 Part II--Contract Clauses.
Section I, Contract clauses. The contracting officer shall include
in this section the clauses required by law or by this part and any
additional clauses expected to be included in any resulting contract,
if these clauses are not required in any other section of the uniform
contract format. An index may be inserted if this section's format is
particularly complex.
15.204-4 Part III--List of Documents, Exhibits, and Other Attachments.
Section J, List of attachments. The contracting officer shall list
the title, date, and number of pages for each attached document,
exhibit, and other attachment. Cross-references to material in other
sections may be inserted, as appropriate.
15.204-5 Part IV--Representations and Instructions.
The contracting officer shall prepare the representations and
instructions as follows:
(a) Section K, Representations, certifications, and other
statements of offerors. Include in this section those solicitation
provisions that require representations, certifications, or the
submission of other information by offerors.
(b) Section L, Instructions, conditions, and notices to offerors or
respondents. Insert in this section solicitation provisions and other
information and instructions not required elsewhere to guide offerors
or respondents in preparing proposals or responses to requests for
information. Prospective offerors or respondents may be instructed to
submit proposals or information in a specific format or severable parts
to facilitate evaluation. The instructions may specify further
organization of proposal or response parts, such as--
(1) Administrative;
(2) Management;
(3) Technical;
(4) Past performance; and
(5) Cost or pricing data (see Table 15-2 of 15.408) or information
other than cost or pricing data.
(c) Section M, Evaluation factors for award. Identify all
significant factors and any significant subfactors that will be
considered in awarding the contract and their relative importance (see
15.304(d)). The contracting officer shall insert one of the phrases in
15.304(e).
[[Page 51235]]
15.205 Issuing solicitations.
(a) The contracting officer shall issue solicitations to potential
sources in accordance with the policies and procedures in 5.102,
19.202-4, and part 6.
(b) A master solicitation, as described in 14.203-3, may also be
used for negotiated acquisitions.
15.206 Amending the solicitation.
(a) When, either before or after receipt of proposals, the
Government changes its requirements or terms and conditions, the
contracting officer shall amend the solicitation.
(b) Amendments issued before the established time and date for
receipt of proposals shall be issued to all parties receiving the
solicitation.
(c) Amendments issued after the established time and date for
receipt of proposals shall be issued to all offerors that have not been
eliminated from the competition.
(d) If a proposal of interest to the Government involves a
departure from the stated requirements, the contracting officer shall
amend the solicitation, provided this can be done without revealing to
the other offerors the alternate solution proposed or any other
information that is entitled to protection (see 15.207(b) and
15.306(e)).
(e) If, in the judgment of the contracting officer, based on market
research or otherwise, an amendment proposed for issuance after offers
have been received is so substantial as to exceed what prospective
offerors reasonably could have anticipated, so that additional sources
likely would have submitted offers had the substance of the amendment
been known to them, the contracting officer shall cancel the original
solicitation and issue a new one, regardless of the stage of the
acquisition.
(f) Oral notices may be used when time is of the essence. The
contracting officer shall document the contract file and formalize the
notice with an amendment (see subpart 4.5, Electronic Commerce in
Contracting).
(g) At a minimum, the following information should be included in
each amendment:
(1) Name and address of issuing activity.
(2) Solicitation number and date.
(3) Amendment number and date.
(4) Number of pages.
(5) Description of the change being made.
(6) Government point of contact and phone number (and electronic or
facsimile address, if appropriate).
(7) Revision to solicitation closing date, if applicable.
15.207 Handling proposals and information.
(a) Upon receipt at the location specified in the solicitation,
proposals and information received in response to a request for
information (RFI) shall be marked with the date and time of receipt and
shall be transmitted to the designated officials.
(b) Proposals shall be safeguarded from unauthorized disclosure
throughout the source selection process. (See 3.104 regarding the
disclosure of source selection information (41 U.S.C. 423)).
Information received in response to an RFI shall be safeguarded
adequately from unauthorized disclosure.
(c) If any portion of a proposal received by the contracting
officer electronically or by facsimile is unreadable, the contracting
officer immediately shall notify the offeror and permit the offeror to
resubmit the unreadable portion of the proposal. The method and time
for resubmission shall be prescribed by the contracting officer after
consultation with the offeror, and documented in the file. The
resubmission shall be considered as if it were received at the date and
time of the original unreadable submission for the purpose of
determining timeliness under 15.208(a), provided the offeror complies
with the time and format requirements for resubmission prescribed by
the contracting officer.
15.208 Submission, modification, revision, and withdrawal of
proposals.
(a) Offerors are responsible for submitting offers, and any
revisions and modifications to them, so as to reach the Government
office designated in the solicitation on time. If an emergency or
unanticipated event interrupts normal Government processes so that
proposals cannot be received at the office designated for receipt of
proposals by the exact time specified in the solicitation, and urgent
Government requirements preclude amendment of the solicitation closing
date, the time specified for receipt of proposals will be deemed to be
extended to the same time of day specified in the solicitation on the
first work day on which normal Government processes resume. If no time
is specified in the solicitation, the time for receipt is 4:30 p.m.,
local time, for the designated Government office on the date that
proposals are due.
(b) Proposals, and modifications to them, that are received in the
designated Government office after the exact time specified are ``late
and shall be considered only if--
(1) They are received before award is made; and
(2) The circumstances meet the specific requirements of 52.215-
1(c)(3)(i).
(c) The contracting officer shall promptly notify any offeror if
its proposal, modification, or revision was received late, and shall
inform the offeror whether or not it will be considered, unless
contract award is imminent and the notice prescribed in 15.503(b) would
suffice.
(d) When a late proposal or modification is transmitted to a
contracting office in the United States or Canada by registered or
certified mail or by U.S. Postal Service Express Mail Next Day Service-
Post Office to Addressee and is received before award, the offeror
shall be promptly notified substantially in accordance with the notice
in 14.304-2, appropriately modified to relate to proposals.
(e) Late proposals and modifications that are not considered shall
be held unopened, unless opened for identification, until after award
and then retained with other unsuccessful proposals.
(f) The following shall, if available, be included in the
contracting office files for each late proposal, response to request
for information, or modification:
(1) The date of mailing, filing, or delivery.
(2) The date and hour of receipt.
(3) Whether or not considered for award.
(4) The envelope, wrapper, or other evidence of date of submission.
(g) Proposals may be withdrawn at any time before award. Written
proposals are withdrawn upon receipt by the contracting officer of a
written notice of withdrawal. Oral proposals in response to oral
solicitations may be withdrawn orally. The contracting officer shall
document the contract file when such oral withdrawals are made. One
copy of withdrawn proposals should be retained in the contract file
(see 4.803(a)(10)). Extra copies of the withdrawn proposals may be
destroyed or returned to the offeror at the offeror's request.
Extremely bulky proposals shall only be returned at the offeror's
request and expense.
(h) Upon withdrawal of an electronically transmitted proposal, the
data received shall not be viewed and shall be purged from primary and
backup data storage systems.
15.209 Solicitation provisions and contract clauses.
When contracting by negotiation--
(a) The contracting officer shall insert the provision at 52.215-1,
Instructions to Offerors--Competitive Acquisition, in all competitive
solicitations where the
[[Page 51236]]
Government intends to award a contract without discussions.
(1) If the Government intends to make award after discussions with
offerors within the competitive range, the contracting officer shall
use the basic provision with its Alternate I.
(2) If the Government would be willing to accept alternate
proposals, the contracting officer shall alter the basic clause to add
a paragraph (c)(9) substantially the same as Alternate II.
(b)(1) The contracting officer shall insert the clause at 52.215-2,
Audit and Records-Negotiation (10 U.S.C. 2313, 41 U.S.C. 254d, and OMB
Circular No. A-133), in solicitations and contracts except those for--
(i) Acquisitions not exceeding the simplified acquisition
threshold;
(ii) The acquisition of utility services at rates not exceeding
those established to apply uniformly to the general public, plus any
applicable reasonable connection charge; or
(iii) The acquisition of commercial items exempted under 15.403-1.
(2) For facilities acquisitions, the contracting officer shall use
the clause with its Alternate I.
(3) For cost-reimbursement contracts with educational institutions
and other nonprofit organizations, the contracting officer shall use
the clause with its Alternate II.
(4) When the examination of records by the Comptroller General is
waived in accordance with 25.901, the contracting officer shall use the
clause with its Alternate III.
(c) When issuing a solicitation for information or planning
purposes, the contracting officer shall insert the provision at 52.215-
3, Request for Information or Solicitation for Planning Purposes, and
clearly mark on the face of the solicitation that it is for information
or planning purposes.
(d) The contracting officer shall insert the provision at 52.215-4,
Type of Business Organization, in all solicitations.
(e) The contracting officer shall insert the provision at 52.215-5,
Facsimile Proposals, in solicitations if facsimile proposals are
authorized (see 15.203(d)).
(f) The contracting officer shall insert the provision at 52.215-6,
Place of Performance, in solicitations unless the place of performance
is specified by the Government.
(g) The contracting officer shall insert the provision at 52.215-7,
Annual Representations and Certifications--Negotiation, in
solicitations if annual representations and certifications are used
(see 14.213).
(h) The contracting officer shall insert the clause at 52.215-8,
Order of Precedence--Uniform Contract Format, in solicitations and
contracts using the format at 15.204.
15.210 Forms.
Prescribed forms are not required to prepare solicitations
described in this part. The following forms may be used at the
discretion of the contracting officer:
(a) Standard Form 33, Solicitation, Offer, and Award, and Optional
Form 308, Solicitation and Offer-- Negotiated Acquisition, may be used
to issue RFPs and RFIs.
(b) Standard Form 30, Amendment of Solicitation/Modification of
Contract, and Optional Form 309, Amendment of Solicitation, may be used
to amend solicitations of negotiated contracts.
(c) Optional Form 17, Offer Label, may be furnished with each
request for proposal.
Subpart 15.3--Source Selection
15.300 Scope of subpart.
This subpart prescribes policies and procedures for selection of a
source or sources in competitive negotiated acquisitions.
15.301 Definitions.
Deficiency, as used in this subpart, is a material failure of a
proposal to meet a Government requirement or a combination of
significant weaknesses in a proposal that increases the risk of
unsuccessful contract performance to an unacceptable level.
Weakness, as used in this subpart, is a flaw in the proposal that
increases the risk of unsuccessful contract performance. A
``significant weakness'' in the proposal is a flaw that appreciably
increases the risk of unsuccessful contract performance.
15.302 Source selection objective.
The objective of source selection is to select the proposal that
represents the best value.
15.303 Responsibilities.
(a) Agency heads are responsible for source selection. The
contracting officer is designated as the source selection authority,
unless the agency head appoints another individual for a particular
acquisition or group of acquisitions.
(b) The source selection authority shall--
(1) Establish an evaluation team, tailored for the particular
acquisition, that includes appropriate contracting, legal, logistics,
technical, and other expertise to ensure a comprehensive evaluation of
offers;
(2) Approve the source selection strategy or acquisition plan, if
applicable, before solicitation release;
(3) Ensure consistency among the solicitation requirements, notices
to offerors, proposal preparation instructions, evaluation factors and
subfactors, solicitation provisions or contract clauses, and data
requirements;
(4) Ensure that proposals are evaluated based solely on the factors
and subfactors contained in the solicitation (10 U.S.C. 2305(b)(1) and
41 U.S.C. 253b(d)(3));
(5) Consider the recommendations of advisory boards or panels (if
any); and
(6) Select the source or sources whose proposal is the best value
to the Government (10 U.S.C. 2305(b)(4)(B) and 41 U.S.C. 253b(d)(3)).
(c) The contracting officer shall--
(1) After release of a solicitation, serve as the focal point for
inquiries from actual or prospective offerors;
(2) After receipt of proposals, control exchanges with offerors in
accordance with 15.306; and
(3) Award the contract(s).
15.304 Evaluation factors and significant subfactors.
(a) The award decision is based on evaluation factors and
significant subfactors that are tailored to the acquisition.
(b) Evaluation factors and significant subfactors must--
(1) Represent the key areas of importance and emphasis to be
considered in the source selection decision; and
(2) Support meaningful comparison and discrimination between and
among competing proposals.
(c) The evaluation factors and significant subfactors that apply to
an acquisition and their relative importance are within the broad
discretion of agency acquisition officials, subject to the following
requirements:
(1) Price or cost to the Government shall be evaluated in every
source selection (10 U.S.C. 2305(a)(3)(A) (ii) and 41 U.S.C.
253a(c)(1)(B)) (also see part 36 for architect-engineer contracts);
(2) The quality of the product or service shall be addressed in
every source selection through consideration of one or more non-cost
evaluation factors such as past performance, compliance with
solicitation requirements, technical excellence, management capability,
personnel qualifications, and prior experience (10 U.S.C. 2305(a)(3)
(A)(i) and 41 U.S.C. 253a(c)(1)(A)); and (3)(i) Except as set forth in
paragraph (c)(3)(iii) of this section, past performance shall be
[[Page 51237]]
evaluated in all source selections for negotiated competitive
acquisitions expected to exceed $1,000,000.
(ii) Except as set forth in paragraph (c)(3)(iii) of this section,
past performance shall be evaluated in all source selections for
negotiated competitive acquisitions issued on or after January 1, 1999,
for acquisitions expected to exceed $100,000. Agencies should develop
phase-in schedules that meet or exceed this schedule.
(iii) Past performance need not be evaluated if the contracting
officer documents the reason past performance is not an appropriate
evaluation factor for the acquisition (OFPP Policy Letter 92-5).
(d) All factors and significant subfactors that will affect
contract award and their relative importance shall be stated clearly in
the solicitation (10 U.S.C. 2305(a)(2)(A)(i) and 41 U.S.C.
253a(b)(1)(A)) (see 15.204-5(c)). The rating method need not be
disclosed in the solicitation. The general approach for evaluating past
performance information shall be described.
(e) The solicitation shall also state, at a minimum, whether all
evaluation factors other than cost or price, when combined, are--
(1) Significantly more important than cost or price;
(2) Approximately equal to cost or price; or
(3) Significantly less important than cost or price (10 U.S.C.
2305(a)(3)(A)(iii) and 41 U.S.C. 253a(c)(1)(C)).
15.305 Proposal evaluation.
(a) Proposal evaluation is an assessment of the proposal and the
offeror's ability to perform the prospective contract successfully. An
agency shall evaluate competitive proposals and then assess their
relative qualities solely on the factors and subfactors specified in
the solicitation. Evaluations may be conducted using any rating method
or combination of methods, including color or adjectival ratings,
numerical weights, and ordinal rankings. The relative strengths,
deficiencies, significant weaknesses, and risks supporting proposal
evaluation shall be documented in the contract file.
(1) Cost or price evaluation. Normally, competition establishes
price reasonableness. Therefore, when contracting on a firm-fixed-price
or fixed-price with economic price adjustment basis, comparison of the
proposed prices will usually satisfy the requirement to perform a price
analysis, and a cost analysis need not be performed. In limited
situations, a cost analysis (see 15.403-1(c)(1)(i)(B)) may be
appropriate to establish reasonableness of the otherwise successful
offeror's price. When contracting on a cost-reimbursement basis,
evaluations shall include a cost realism analysis to determine what the
Government should realistically expect to pay for the proposed effort,
the offeror's understanding of the work, and the offeror's ability to
perform the contract. Cost realism analyses may also be used on fixed-
price incentive contracts or, in exceptional cases, on other
competitive fixed-price-type contracts (see 15.404-1(d)(3)). The
contracting officer shall document the cost or price evaluation.
(2) Past performance evaluation. (i) Past performance information
is one indicator of an offeror's ability to perform the contract
successfully. The currency and relevance of the information, source of
the information, context of the data, and general trends in
contractor's performance shall be considered (41 U.S.C. 401). This
comparative assessment of past performance information is separate from
the responsibility determination required under subpart 9.1.
(ii) The solicitation shall describe the approach for evaluating
past performance, including evaluating offerors with no relevant
performance history, and shall provide offerors an opportunity to
identify past or current contracts (including Federal, State, and local
government and private) for efforts similar to the Government
requirement. The solicitation shall also authorize offerors to provide
information on problems encountered on the identified contracts and the
offeror corrective actions. The Government shall consider this
information, as well as information obtained from any other sources,
when evaluating the offeror past performance. The source selection
authority shall determine the relevance of similar past performance
information.
(iii) The evaluation should take into account past performance
information regarding predecessor companies, key personnel who have
relevant experience, or subcontractors that will perform major or
critical aspects of the requirement when such information is relevant
to the instant acquisition.
(iv) In the case of an offeror without a record of relevant past
performance or for whom information on past performance is not
available, the offeror may not be evaluated favorably or unfavorably on
past performance.
(3) Technical evaluation. When tradeoffs are performed (see 15.101-
1), the source selection records shall include--
(i) An assessment of each offeror's ability to accomplish the
technical requirements; and
(ii) A summary, matrix, or quantitative ranking, along with
appropriate supporting narrative, of each technical proposal using the
evaluation factors.
(4) Cost information. Cost information may be provided to members
of the technical evaluation team in accordance with agency procedures.
(b) The source selection authority may reject all proposals
received in response to a solicitation, if doing so is in the best
interest of the Government.
(c) For restrictions on the use of support contractor personnel in
proposal evaluation, see 37.203(d).
15.306 Exchanges with offerors after receipt of proposals.
(a) Clarifications and award without discussions. (1)
Clarifications are limited exchanges, between the Government and
offerors, that may occur when award without discussions is
contemplated.
(2) If award will be made without conducting discussions, offerors
may be given the opportunity to clarify certain aspects of proposals
(e.g., the relevance of an offeror's past performance information and
adverse past performance information to which the offeror has not
previously had an opportunity to respond) or to resolve minor or
clerical errors.
(3) Award may be made without discussions if the solicitation
states that the Government intends to evaluate proposals and make award
without discussions. If the solicitation contains such a notice and the
Government determines it is necessary to conduct discussions, the
rationale for doing so shall be documented in the contract file (see
the provision at 52.215-1) (10 U.S.C. 2305(b)(4)(A)(ii) and 41 U.S.C.
253b(d)(1)(B)).
(b) Communications with offerors before establishment of the
competitive range. Communications are exchanges, between the Government
and offerors, after receipt of proposals, leading to establishment of
the competitive range. If a competitive range is to be established,
these communications--
(1) Shall be limited to the offerors described in paragraphs
(b)(1)(i) and (b)(1)(ii) of this section and--
(i) Shall be held with offerors whose past performance information
is the determining factor preventing them from being placed within the
competitive range. Such communications shall address adverse past
performance information to which
[[Page 51238]]
an offeror has not had a prior opportunity to respond; and
(ii) May only be held with those offerors (other than offerors
under paragraph (b)(1)(i) of this section) whose exclusion from, or
inclusion in, the competitive range is uncertain;
(2) May be conducted to enhance Government understanding of
proposals; allow reasonable interpretation of the proposal; or
facilitate the Government's evaluation process. Such communications
shall not be used to cure proposal deficiencies or material omissions,
materially alter the technical or cost elements of the proposal, and/or
otherwise revise the proposal. Such communications may be considered in
rating proposals for the purpose of establishing the competitive range;
(3) Are for the purpose of addressing issues that must be explored
to determine whether a proposal should be placed in the competitive
range. Such communications shall not provide an opportunity for the
offeror to revise its proposal, but may address--
(i) Ambiguities in the proposal or other concerns (e.g., perceived
deficiencies, weaknesses, errors, omissions, or mistakes (see 14.407));
and
(ii) Information relating to relevant past performance; and
(4) Shall address adverse past performance information to which the
offeror has not previously had an opportunity to comment.
(c) Competitive range. (1) Agencies shall evaluate all proposals in
accordance with 15.305(a), and, if discussions are to be conducted,
establish the competitive range. Based on the ratings of each proposal
against all evaluation criteria, the contracting officer shall
establish a competitive range comprised of all of the most highly rated
proposals, unless the range is further reduced for purposes of
efficiency pursuant to paragraph (c)(2) of this section.
(2) After evaluating all proposals in accordance with 15.305(a) and
paragraph (c)(1) of this section, the contracting officer may determine
that the number of most highly rated proposals that might otherwise be
included in the competitive range exceeds the number at which an
efficient competition can be conducted. Provided the solicitation
notifies offerors that the competitive range can be limited for
purposes of efficiency (see 52.215-1(f)(4)), the contracting officer
may limit the number of proposals in the competitive range to the
greatest number that will permit an efficient competition among the
most highly rated proposals (10 U.S.C. 2305(b)(4) and 41 U.S.C.
253b(d)).
(3) If the contracting officer, after complying with paragraph
(d)(3) of this section, decides that an offeror's proposal should no
longer be included in the competitive range, the proposal shall be
eliminated from consideration for award. Written notice of this
decision shall be provided to unsuccessful offerors in accordance with
15.503.
(4) Offerors excluded or otherwise eliminated from the competitive
range may request a debriefing (see 15.505 and 15.506).
(d) Exchanges with offerors after establishment of the competitive
range. Negotiations are exchanges, in either a competitive or sole
source environment, between the Government and offerors, that are
undertaken with the intent of allowing the offeror to revise its
proposal. These negotiations may include bargaining. Bargaining
includes persuasion, alteration of assumptions and positions, give-and-
take, and may apply to price, schedule, technical requirements, type of
contract, or other terms of a proposed contract. When negotiations are
conducted in a competitive acquisition, they take place after
establishment of the competitive range and are called discussions.
(1) Discussions are tailored to each offeror's proposal, and shall
be conducted by the contracting officer with each offeror within the
competitive range.
(2) The primary objective of discussions is to maximize the
Government's ability to obtain best value, based on the requirement and
the evaluation factors set forth in the solicitation.
(3) The contracting officer shall, subject to paragraphs (d)(4) and
(e) of this section and 15.307(a), indicate to, or discuss with, each
offeror still being considered for award, significant weaknesses,
deficiencies, and other aspects of its proposal (such as cost, price,
technical approach, past performance, and terms and conditions) that
could, in the opinion of the contracting officer, be altered or
explained to enhance materially the proposal's potential for award. The
scope and extent of discussions are a matter of contracting officer
judgment. In discussing other aspects of the proposal, the Government
may, in situations where the solicitation stated that evaluation credit
would be given for technical solutions exceeding any mandatory
minimums, negotiate with offerors for increased performance beyond any
mandatory minimums, and the Government may suggest to offerors that
have exceeded any mandatory minimums (in ways that are not integral to
the design), that their proposals would be more competitive if the
excesses were removed and the offered price decreased.
(4) If, after discussions have begun, an offeror originally in the
competitive range is no longer considered to be among the most highly
rated offerors being considered for award, that offeror may be
eliminated from the competitive range whether or not all material
aspects of the proposal have been discussed, or whether or not the
offeror has been afforded an opportunity to submit a proposal revision
(see 15.307(a) and 15.503(a)(1)).
(e) Limits on exchanges. Government personnel involved in the
acquisition shall not engage in conduct that--
(1) Favors one offeror over another;
(2) Reveals an offeror's technical solution, including unique
technology, innovative and unique uses of commercial items, or any
information that would compromise an offeror's intellectual property to
another offeror;
(3) Reveals an offerors price without that offeror's permission.
However, the contracting officer may inform an offeror that its price
is considered by the Government to be too high, or too low, and reveal
the results of the analysis supporting that conclusion. It is also
permissible, at the Government's discretion, to indicate to all
offerors the cost or price that the Government's price analysis, market
research, and other reviews have identified as reasonable (41 U.S.C.
423(h)(1)(2));
(4) Reveals the names of individuals providing reference
information about an offeror's past performance; or
(5) Knowingly furnishes source selection information in violation
of 3.104 and 41 U.S.C. 423(h)(1)(2).
15.307 Proposal revisions.
(a) If an offerors proposal is eliminated or otherwise removed from
the competitive range, no further revisions to that offeror's proposal
shall be accepted or considered.
(b) The contracting officer may request or allow proposal revisions
to clarify and document understandings reached during negotiations. At
the conclusion of discussions, each offeror still in the competitive
range shall be given an opportunity to submit a final proposal
revision. The contracting officer is required to establish a common
cut-off date only for receipt of final proposal revisions. Requests for
final proposal revisions shall advise offerors that the final proposal
revisions shall be in writing and that the
[[Page 51239]]
Government intends to make award without obtaining further revisions.
15.308 Source selection decision.
The source selection authority's (SSA) decision shall be based on a
comparative assessment of proposals against all source selection
criteria in the solicitation. While the SSA may use reports and
analyses prepared by others, the source selection decision shall
represent the SSA's independent judgment. The source selection decision
shall be documented, and the documentation shall include the rationale
for any business judgments and tradeoffs made or relied on by the SSA,
including benefits associated with additional costs. Although the
rationale for the selection decision must be documented, that
documentation need not quantify the tradeoffs that led to the decision.
Subpart 15.4--Contract Pricing
15.400 Scope of subpart.
This subpart prescribes the cost and price negotiation policies and
procedures for pricing negotiated prime contracts (including
subcontracts) and contract modifications, including modifications to
contracts awarded by sealed bidding.
15.401 Definitions.
Cost or pricing data (10 U.S.C. 2306a(h)(1) and 41 U.S.C. 254b)
means all facts that, as of the date of price agreement or, if
applicable, an earlier date agreed upon between the parties that is as
close as practicable to the date of agreement on price, prudent buyers
and sellers would reasonably expect to affect price negotiations
significantly. Cost or pricing data are data requiring certification in
accordance with 15.406-2. Cost or pricing data are factual, not
judgmental; and are verifiable. While they do not indicate the accuracy
of the prospective contractor's judgment about estimated future costs
or projections, they do include the data forming the basis for that
judgment. Cost or pricing data are more than historical accounting
data; they are all the facts that can be reasonably expected to
contribute to the soundness of estimates of future costs and to the
validity of determinations of costs already incurred. They also include
such factors as: vendor quotations; nonrecurring costs; information on
changes in production methods and in production or purchasing volume;
data supporting projections of business prospects and objectives and
related operations costs; unit-cost trends such as those associated
with labor efficiency; make-or-buy decisions; estimated resources to
attain business goals; and information on management decisions that
could have a significant bearing on costs.
Cost realism means that the costs in an offeror's proposal are
realistic for the work to be performed; reflect a clear understanding
of the requirements; and are consistent with the various elements of
the offeror's technical proposal.
Forward pricing rate agreement means a written agreement negotiated
between a contractor and the Government to make certain rates available
during a specified period for use in pricing contracts or
modifications. Such rates represent reasonable projections of specific
costs that are not easily estimated for, identified with, or generated
by a specific contract, contract end item, or task. These projections
may include rates for such things as labor, indirect costs, material
obsolescence and usage, spare parts provisioning, and material
handling.
Forward pricing rate recommendation means a rate set unilaterally
by the administrative contracting officer for use by the Government in
negotiations or other contract actions when forward pricing rate
agreement negotiations have not been completed or when the contractor
will not agree to a forward pricing rate agreement.
Information other than cost or pricing data means any type of
information that is not required to be certified in accordance with
15.406-2 and is necessary to determine price reasonableness or cost
realism. For example, such information may include pricing, sales, or
cost information, and includes cost or pricing data for which
certification is determined inapplicable after submission.
Price, as used in this subpart, means cost plus any fee or profit
applicable to the contract type.
Subcontract, as used in this subpart, also includes a transfer of
commercial items between divisions, subsidiaries, or affiliates of a
contractor or a subcontractor (10 U.S.C. 2306a(h)(2) and 41 U.S.C.
254b(h)(2)).
15.402 Pricing policy.
Contracting officers shall--
(a) Purchase supplies and services from responsible sources at fair
and reasonable prices. In establishing the reasonableness of the
offered prices, the contracting officer shall not obtain more
information than is necessary. To the extent that cost or pricing data
are not required by 15.403-4, the contracting officer shall generally
use the following order of preference in determining the type of
information required:
(1) No additional information from the offeror, if the price is
based on adequate price competition, except as provided by 15.403-3(b).
(2) Information other than cost or pricing data:
(i) Information related to prices (e.g., established catalog or
market prices or previous contract prices), relying first on
information available within the Government; second, on information
obtained from sources other than the offeror; and, if necessary, on
information obtained from the offeror. When obtaining information from
the offeror is necessary, unless an exception under 15.403-1(b) (1) or
(2) applies, such information submitted by the offeror shall include,
at a minimum, appropriate information on the prices at which the same
or similar items have been sold previously, adequate for evaluating the
reasonableness of the price.
(ii) Cost information, that does not meet the definition of cost or
pricing data at 15.401.
(3) Cost or pricing data. The contracting officer should use every
means available to ascertain whether a fair and reasonable price can be
determined before requesting cost or pricing data. Contracting officers
shall not require unnecessarily the submission of cost or pricing data,
because it leads to increased proposal preparation costs, generally
extends acquisition lead time, and consumes additional contractor and
Government resources.
(b) Price each contract separately and independently and not--
(1) Use proposed price reductions under other contracts as an
evaluation factor; or
(2) Consider losses or profits realized or anticipated under other
contracts.
(c) Not include in a contract price any amount for a specified
contingency to the extent that the contract provides for a price
adjustment based upon the occurrence of that contingency.
15.403 Obtaining cost or pricing data.
15.403-1 Prohibition on obtaining cost or pricing data (10 U.S.C.
2306a and 41 U.S.C. 254b).
(a) Cost or pricing data shall not be obtained for acquisitions at
or below the simplified acquisition threshold.
(b) Exceptions to cost or pricing data requirements. The
contracting officer shall not require submission of cost or pricing
data to support any action (contracts, subcontracts, or modifications)
(but may require information other than cost or pricing data to support
a determination of price reasonableness or cost realism)--
[[Page 51240]]
(1) When the contracting officer determines that prices agreed upon
are based on adequate price competition (see standards in paragraph
(c)(1) of this subsection);
(2) When the contracting officer determines that prices agreed upon
are based on prices set by law or regulation (see standards in
paragraph (c)(2) of this subsection);
(3) When a commercial item is being acquired (see standards in
paragraph (c)(3) of this subsection);
(4) When a waiver has been granted (see standards in paragraph
(c)(4) of this subsection); or
(5) When modifying a contract or subcontract for commercial items
(see standards in paragraph (c)(3) of this subsection).
(c) Standards for exceptions from cost or pricing data
requirements--(1) Adequate price competition. A price is based on
adequate price competition if--
(i) Two or more responsible offerors, competing independently,
submit priced offers that satisfy the Government's expressed
requirement and if--
(A) Award will be made to the offeror whose proposal represents the
best value (see 2.101) where price is a substantial factor in source
selection; and
(B) There is no finding that the price of the otherwise successful
offeror is unreasonable. Any finding that the price is unreasonable
must be supported by a statement of the facts and approved at a level
above the contracting officer;
(ii) There was a reasonable expectation, based on market research
or other assessment, that two or more responsible offerors, competing
independently, would submit priced offers in response to the
solicitation's expressed requirement, even though only one offer is
received from a responsible offeror and if--
(A) Based on the offer received, the contracting officer can
reasonably conclude that the offer was submitted with the expectation
of competition, e.g., circumstances indicate that--
(1) The offeror believed that at least one other offeror was
capable of submitting a meaningful offer; and
(2) The offeror had no reason to believe that other potential
offerors did not intend to submit an offer; and
(B) The determination that the proposed price is based on adequate
price competition, is reasonable, and is approved at a level above the
contracting officer; or
(iii) Price analysis clearly demonstrates that the proposed price
is reasonable in comparison with current or recent prices for the same
or similar items, adjusted to reflect changes in market conditions,
economic conditions, quantities, or terms and conditions under
contracts that resulted from adequate price competition.
(2) Prices set by law or regulation. Pronouncements in the form of
periodic rulings, reviews, or similar actions of a governmental body,
or embodied in the laws, are sufficient to set a price.
(3) Commercial items. Any acquisition for an item that meets the
commercial item definition in 2.101, or any modification, as defined in
paragraph (c)(1) or (2) of that definition, that does not change the
item from a commercial item to a noncommercial item, is exempt from the
requirement for cost or pricing data.
(4) Waivers. The head of the contracting activity (HCA) may,
without power of delegation, waive the requirement for submission of
cost or pricing data in exceptional cases. The authorization for the
waiver and the supporting rationale shall be in writing. The HCA may
consider waiving the requirement if the price can be determined to be
fair and reasonable without submission of cost or pricing data. For
example, if cost or pricing data were furnished on previous production
buys and the contracting officer determines such data are sufficient,
when combined with updated information, a waiver may be granted. If the
HCA has waived the requirement for submission of cost or pricing data,
the contractor or higher-tier subcontractor to whom the waiver relates
shall be considered as having been required to provide cost or pricing
data. Consequently, award of any lower-tier subcontract expected to
exceed the cost or pricing data threshold requires the submission of
cost or pricing data unless an exception otherwise applies to the
subcontract or the waiver specifically includes that subcontract.
15.403-2 Other circumstances where cost or pricing data are not
required.
(a) The exercise of an option at the price established at contract
award or initial negotiation does not require submission of cost or
pricing data.
(b) Cost or pricing data are not required for proposals used solely
for overrun funding or interim billing price adjustments.
15.403-3 Requiring information other than cost or pricing data.
(a) General. (1) The contracting officer is responsible for
obtaining information that is adequate for evaluating the
reasonableness of the price or determining cost realism. However, the
contracting officer should not obtain more information than is
necessary for determining the reasonableness of the price or evaluating
cost realism. To the extent necessary to determine the reasonableness
of the price, the contracting officer shall require submission of
information from the offeror. Unless an exception under 15.403-1(b)(1)
or (2) applies, such information submitted by the offeror shall
include, at a minimum, appropriate information on the prices at which
the same item or similar items have previously been sold, adequate for
determining the reasonableness of the price (10 U.S.C. 2306a(d)(1) and
41 U.S.C. 254b(d)(1)).
(2) The contractor's format for submitting such information should
be used (see 15.403-5(b)(2)).
(3) The contracting officer shall ensure that information used to
support price negotiations is sufficiently current to permit
negotiation of a fair and reasonable price. Requests for updated
offeror information should be limited to information that affects the
adequacy of the proposal for negotiations, such as changes in price
lists. Such data shall not be certified in accordance with 15.406-2.
(b) Adequate price competition. When adequate price competition
exists (see 15.403-1(c)(1)), generally no additional information is
necessary to determine the reasonableness of price. However, if there
are unusual circumstances where it is concluded that additional
information is necessary to determine the reasonableness of price, the
contracting officer shall, to the maximum extent practicable, obtain
the additional information from sources other than the offeror. In
addition, the contracting officer may request information to determine
the cost realism of competing offers or to evaluate competing
approaches.
(c) Limitations relating to commercial items (10 U.S.C. 2306a(d)(2)
and 41 U.S.C. 254b(d)). (1) Requests for sales data relating to
commercial items shall be limited to data for the same or similar items
during a relevant time period.
(2) The contracting officer shall, to the maximum extent
practicable, limit the scope of the request for information relating to
commercial items to include only information that is in the form
regularly maintained by the offeror as part of its commercial
operations.
(3) Information obtained relating to commercial items that is
exempt from disclosure under 24.202(a) or the Freedom of Information
Act (5 U.S.C. 552(b)) shall not be disclosed outside the Government.
[[Page 51241]]
15.403-4 Requiring cost or pricing data (10 U.S.C. 2306a and 41 U.S.C.
254b).
(a)(1) Cost or pricing data shall be obtained only if the
contracting officer concludes that none of the exceptions in 15.403-
1(b) applies. However, if the contracting officer has sufficient
information available to determine price reasonableness, then a waiver
under the exception at 15.403-1(b)(4) should be considered. The
threshold for obtaining cost or pricing data is $500,000. Unless an
exception applies, cost or pricing data are required before
accomplishing any of the following actions expected to exceed the
current threshold or, in the case of existing contracts, the threshold
specified in the contract:
(i) The award of any negotiated contract (except for undefinitized
actions such as letter contracts).
(ii) The award of a subcontract at any tier, if the contractor and
each higher-tier subcontractor have been required to furnish cost or
pricing data (but see waivers at 15.403-1(c)(4)).
(iii) The modification of any sealed bid or negotiated contract
(whether or not cost or pricing data were initially required) or any
subcontract covered by paragraph (a)(1)(ii) of this subsection. Price
adjustment amounts shall consider both increases and decreases (e.g., a
$150,000 modification resulting from a reduction of $350,000 and an
increase of $200,000 is a pricing adjustment exceeding $500,000). This
requirement does not apply when unrelated and separately priced changes
for which cost or pricing data would not otherwise be required are
included for administrative convenience in the same modification.
Negotiated final pricing actions (such as termination settlements and
total final price agreements for fixed-price incentive and
redeterminable contracts) are contract modifications requiring cost or
pricing data if the total final price agreement for such settlements or
agreements exceeds the pertinent threshold set forth at paragraph
(a)(1) of this subsection, or the partial termination settlement plus
the estimate to complete the continued portion of the contract exceeds
the pertinent threshold set forth at paragraph (a)(1) of this
subsection (see 49.105(c)(15)).
(2) Unless prohibited because an exception at 15.403-1(b) applies,
the head of the contracting activity, without power of delegation, may
authorize the contracting officer to obtain cost or pricing data for
pricing actions below the pertinent threshold in paragraph (a)(1) of
this subsection, provided the action exceeds the simplified acquisition
threshold. The head of the contracting activity shall justify the
requirement for cost or pricing data. The documentation shall include a
written finding that cost or pricing data are necessary to determine
whether the price is fair and reasonable and the facts supporting that
finding.
(b) When cost or pricing data are required, the contracting officer
shall require the contractor or prospective contractor to submit to the
contracting officer (and to have any subcontractor or prospective
subcontractor submit to the prime contractor or appropriate
subcontractor tier) the following in support of any proposal:
(1) The cost or pricing data.
(2) A certificate of current cost or pricing data, in the format
specified in 15.406-2, certifying that to the best of its knowledge and
belief, the cost or pricing data were accurate, complete, and current
as of the date of agreement on price or, if applicable, an earlier date
agreed upon between the parties that is as close as practicable to the
date of agreement on price.
(c) If cost or pricing data are requested and submitted by an
offeror, but an exception is later found to apply, the data shall not
be considered cost or pricing data as defined in 15.401 and shall not
be certified in accordance with 15.406-2.
(d) The requirements of this subsection also apply to contracts
entered into by an agency on behalf of a foreign government.
15.403-5 Instructions for submission of cost or pricing data or
information other than cost or pricing data.
(a) Taking into consideration the policy at 15.402, the contracting
officer shall specify in the solicitation (see 15.408 (l) and (m))--
(1) Whether cost or pricing data are required;
(2) That, in lieu of submitting cost or pricing data, the offeror
may submit a request for exception from the requirement to submit cost
or pricing data;
(3) Any information other than cost or pricing data that is
required; and
(4) Necessary preaward or postaward access to offeror's records.
(b)(1) Unless required to be submitted on one of the termination
forms specified in Subpart 49.6, the contracting officer may require
submission of cost or pricing data in the format indicated in Table 15-
2 of 15.408, specify an alternative format, or permit submission in the
contractor's format.
(2) Information other than cost or pricing data may be submitted in
the offeror's own format unless the contracting officer decides that
use of a specific format is essential and the format has been described
in the solicitation.
(3) Data supporting forward pricing rate agreements or final
indirect cost proposals shall be submitted in a form acceptable to the
contracting officer.
15.404 Proposal analysis.
15.404-1 Proposal analysis techniques.
(a) General. The objective of proposal analysis is to ensure that
the final agreed-to price is fair and reasonable.
(1) The contracting officer is responsible for evaluating the
reasonableness of the offered prices. The analytical techniques and
procedures described in this section may be used, singly or in
combination with others, to ensure that the final price is fair and
reasonable. The complexity and circumstances of each acquisition should
determine the level of detail of the analysis required.
(2) Price analysis shall be used when cost or pricing data are not
required (see paragraph (b) of this subsection and 15.404-3).
(3) Cost analysis shall be used to evaluate the reasonableness of
individual cost elements when cost or pricing data are required. Price
analysis should be used to verify that the overall price offered is
fair and reasonable.
(4) Cost analysis may also be used to evaluate information other
than cost or pricing data to determine cost reasonableness or cost
realism.
(5) The contracting officer may request the advice and assistance
of other experts to ensure that an appropriate analysis is performed.
(6) Recommendations or conclusions regarding the Government's
review or analysis of an offeror's or contractor's proposal shall not
be disclosed to the offeror or contractor without the concurrence of
the contracting officer. Any discrepancy or mistake of fact (such as
duplications, omissions, and errors in computation) contained in the
cost or pricing data or information other than cost or pricing data
submitted in support of a proposal shall be brought to the contracting
officer's attention for appropriate action.
(7) The Air Force Institute of Technology (AFIT) and the Federal
Acquisition Institute (FAI) jointly prepared a five-volume set of
Contract Pricing Resource Guides to guide pricing and negotiation
personnel. The five guides are: I Price Analysis, II Quantitative
Techniques for Contract Pricing, III Cost Analysis, IV Advanced Issues
in Contract Pricing, and V Federal Contract Negotiation Techniques.
These references provide detailed discussion and examples
[[Page 51242]]
applying pricing policies to pricing problems. They are to be used for
instruction and professional guidance. However, they are not directive
and should be considered informational only. Free copies of the
references are available on the World Wide Web, Internet address http:/
/www.gsa.gov/fai.
(b) Price analysis. (1) Price analysis is the process of examining
and evaluating a proposed price without evaluating its separate cost
elements and proposed profit.
(2) The Government may use various price analysis techniques and
procedures to ensure a fair and reasonable price, given the
circumstances surrounding the acquisition. Examples of such techniques
include, but are not limited to the following:
(i) Comparison of proposed prices received in response to the
solicitation.
(ii) Comparison of previously proposed prices and contract prices
with current proposed prices for the same or similar end items, if both
the validity of the comparison and the reasonableness of the previous
price(s) can be established.
(iii) Use of parametric estimating methods/application of rough
yardsticks (such as dollars per pound or per horsepower, or other
units) to highlight significant inconsistencies that warrant additional
pricing inquiry.
(iv) Comparison with competitive published price lists, published
market prices of commodities, similar indexes, and discount or rebate
arrangements.
(v) Comparison of proposed prices with independent Government cost
estimates.
(vi) Comparison of proposed prices with prices obtained through
market research for the same or similar items.
(c) Cost analysis. (1) Cost analysis is the review and evaluation
of the separate cost elements and profit in an offeror's or
contractor's proposal (including cost or pricing data or information
other than cost or pricing data), and the application of judgment to
determine how well the proposed costs represent what the cost of the
contract should be, assuming reasonable economy and efficiency.
(2) The Government may use various cost analysis techniques and
procedures to ensure a fair and reasonable price, given the
circumstances of the acquisition. Such techniques and procedures
include the following:
(i) Verification of cost or pricing data and evaluation of cost
elements, including--
(A) The necessity for, and reasonableness of, proposed costs,
including allowances for contingencies;
(B) Projection of the offeror's cost trends, on the basis of
current and historical cost or pricing data;
(C) Reasonableness of estimates generated by appropriately
calibrated and validated parametric models or cost-estimating
relationships; and
(D) The application of audited or negotiated indirect cost rates,
labor rates, and cost of money or other factors.
(ii) Evaluating the effect of the offeror's current practices on
future costs. In conducting this evaluation, the contracting officer
shall ensure that the effects of inefficient or uneconomical past
practices are not projected into the future. In pricing production of
recently developed complex equipment, the contracting officer should
perform a trend analysis of basic labor and materials, even in periods
of relative price stability.
(iii) Comparison of costs proposed by the offeror for individual
cost elements with--
(A) Actual costs previously incurred by the same offeror;
(B) Previous cost estimates from the offeror or from other offerors
for the same or similar items;
(C) Other cost estimates received in response to the Government's
request;
(D) Independent Government cost estimates by technical personnel;
and
(E) Forecasts of planned expenditures.
(iv) Verification that the offeror's cost submissions are in
accordance with the contract cost principles and procedures in part 31
and, when applicable, the requirements and procedures in 48 CFR Chapter
99 (Appendix to the FAR looseleaf edition), Cost Accounting Standards.
(v) Review to determine whether any cost or pricing data necessary
to make the contractor's proposal accurate, complete, and current have
not been either submitted or identified in writing by the contractor.
If there are such data, the contracting officer shall attempt to obtain
them and negotiate, using them or making satisfactory allowance for the
incomplete data.
(vi) Analysis of the results of any make-or-buy program reviews, in
evaluating subcontract costs (see 15.407-2).
(d) Cost realism analysis. (1) Cost realism analysis is the process
of independently reviewing and evaluating specific elements of each
offeror's proposed cost estimate to determine whether the estimated
proposed cost elements are realistic for the work to be performed;
reflect a clear understanding of the requirements; and are consistent
with the unique methods of performance and materials described in the
offeror's technical proposal.
(2) Cost realism analyses shall be performed on cost-reimbursement
contracts to determine the probable cost of performance for each
offeror.
(i) The probable cost may differ from the proposed cost and should
reflect the Government's best estimate of the cost of any contract that
is most likely to result from the offeror's proposal. The probable cost
shall be used for purposes of evaluation to determine the best value.
(ii) The probable cost is determined by adjusting each offeror's
proposed cost, and fee when appropriate, to reflect any additions or
reductions in cost elements to realistic levels based on the results of
the cost realism analysis.
(3) Cost realism analyses may also be used on competitive fixed-
price incentive contracts or, in exceptional cases, on other
competitive fixed-price-type contracts when new requirements may not be
fully understood by competing offerors, there are quality concerns, or
past experience indicates that contractors proposed costs have resulted
in quality or service shortfalls. Results of the analysis may be used
in performance risk assessments and responsibility determinations.
However, proposals shall be evaluated using the criteria in the
solicitation, and the offered prices shall not be adjusted as a result
of the analysis.
(e) Technical analysis. (1) The contracting officer may request
that personnel having specialized knowledge, skills, experience, or
capability in engineering, science, or management perform a technical
analysis of the proposed types and quantities of materials, labor,
processes, special tooling, facilities, the reasonableness of scrap and
spoilage, and other associated factors set forth in the proposal(s) in
order to determine the need for and reasonableness of the proposed
resources, assuming reasonable economy and efficiency.
(2) At a minimum, the technical analysis should examine the types
and quantities of material proposed and the need for the types and
quantities of labor hours and the labor mix. Any other data that may be
pertinent to an assessment of the offeror's ability to accomplish the
technical requirements or to the cost or price analysis of the service
or product being proposed should also be included in the analysis.
(f) Unit prices. (1) Except when pricing an item on the basis of
adequate price competition or catalog or market price, unit prices
shall reflect the intrinsic value of an item or service and shall be in
proportion to an item's base cost (e.g., manufacturing or acquisition
costs). Any method of distributing costs
[[Page 51243]]
to line items that distorts the unit prices shall not be used. For
example, distributing costs equally among line items is not acceptable
except when there is little or no variation in base cost.
(2) Except for the acquisition of commercial items, contracting
officers shall require that offerors identify in their proposals those
items of supply that they will not manufacture or to which they will
not contribute significant value, unless adequate price competition is
expected (10 U.S.C. 2304 and 41 U.S.C. 254(d)(5)(A)(i)). Such
information shall be used to determine whether the intrinsic value of
an item has been distorted through application of overhead and whether
such items should be considered for breakout. The contracting officer
may require such information in all other negotiated contracts when
appropriate.
(g) Unbalanced pricing. (1) Unbalanced pricing may increase
performance risk and could result in payment of unreasonably high
prices. Unbalanced pricing exists when, despite an acceptable total
evaluated price, the price of one or more contract line items is
significantly over or understated as indicated by the application of
cost or price analysis techniques. The greatest risks associated with
unbalanced pricing occur when--
(i) Startup work, mobilization, first articles, or first article
testing are separate line items;
(ii) Base quantities and option quantities are separate line items;
or
(iii) The evaluated price is the aggregate of estimated quantities
to be ordered under separate line items of an indefinite-delivery
contract.
(2) All offers with separately priced line items or subline items
shall be analyzed to determine if the prices are unbalanced. If cost or
price analysis techniques indicate that an offer is unbalanced, the
contracting officer shall--
(i) Consider the risks to the Government associated with the
unbalanced pricing in determining the competitive range and in making
the source selection decision; and
(ii) Consider whether award of the contract will result in paying
unreasonably high prices for contract performance.
(3) An offer may be rejected if the contracting officer determines
that the lack of balance poses an unacceptable risk to the Government.
15.404-2 Information to support proposal analysis.
(a) Field pricing assistance. (1) The contracting officer should
request field pricing assistance when the information available at the
buying activity is inadequate to determine a fair and reasonable price.
Such requests shall be tailored to reflect the minimum essential
supplementary information needed to conduct a technical or cost or
pricing analysis.
(2) Field pricing assistance generally is directed at obtaining
technical, audit, and special reports associated with the cost elements
of a proposal, including subcontracts. Information on related pricing
practices and history may also be obtained. Field pricing assistance
may also include information relative to the business, technical,
production, or other capabilities and practices of an offeror. The type
of information and level of detail requested will vary in accordance
with the specialized resources available at the buying activity and the
magnitude and complexity of the required analysis.
(3) When field pricing assistance is requested, contracting
officers are encouraged to team with appropriate field experts
throughout the acquisition process, including negotiations. Early
communication with these experts will assist in determining the extent
of assistance required, the specific areas for which assistance is
needed, a realistic review schedule, and the information necessary to
perform the review.
(4) When requesting field pricing assistance on a contractor's
request for equitable adjustment, the contracting officer shall provide
the information listed in 43.204(b)(5).
(5) Field pricing information and other reports may include
proprietary or source selection information (see 3.104-4 (j) and (k)).
Such information shall be appropriately identified and protected
accordingly.
(b) Reporting field pricing information. (1) Depending upon the
extent and complexity of the field pricing review, results, including
supporting rationale, may be reported directly to the contracting
officer orally, in writing, or by any other method acceptable to the
contracting officer.
(i) Whenever circumstances permit, the contracting officer and
field pricing experts are encouraged to use telephonic and/or
electronic means to request and transmit pricing information.
(ii) When it is necessary to have written technical and audit
reports, the contracting officer shall request that the audit agency
concurrently forward the audit report to the requesting contracting
officer and the administrative contracting officer (ACO). The completed
field pricing assistance results may reference audit information, but
need not reconcile the audit recommendations and technical
recommendations. A copy of the information submitted to the contracting
officer by field pricing personnel shall be provided to the audit
agency.
(2) Audit and field pricing information, whether written or
reported telephonically or electronically, shall be made a part of the
official contract file (see 4.807(f)).
(c) Audit assistance for prime contracts or subcontracts. (1) The
contracting officer may contact the cognizant audit office directly,
particularly when an audit is the only field pricing support required.
The audit office shall send the audit report, or otherwise transmit the
audit recommendations, directly to the contracting officer.
(i) The auditor shall not reveal the audit conclusions or
recommendations to the offeror/contractor without obtaining the
concurrence of the contracting officer. However, the auditor may
discuss statements of facts with the contractor.
(ii) The contracting officer should be notified immediately of any
information disclosed to the auditor after submission of a report that
may significantly affect the audit findings and, if necessary, a
supplemental audit report shall be issued.
(2) The contracting officer shall not request a separate preaward
audit of indirect costs unless the information already available from
an existing audit, completed within the preceding 12 months, is
considered inadequate for determining the reasonableness of the
proposed indirect costs (41 U.S.C. 254d and 10 U.S.C. 2313).
(3) The auditor is responsible for the scope and depth of the
audit. Copies of updated information that will significantly affect the
audit should be provided to the auditor by the contracting officer.
(4) General access to the offeror's books and financial records is
limited to the auditor. This limitation does not preclude the
contracting officer or the ACO, or their representatives, from
requesting that the offeror provide or make available any data or
records necessary to analyze the offeror's proposal.
(d) Deficient proposals. The ACO or the auditor, as appropriate,
shall notify the contracting officer immediately if the data provided
for review is so deficient as to preclude review or audit, or if the
contractor or offeror has denied access to any records considered
essential to conduct a satisfactory review or audit. Oral notifications
shall
[[Page 51244]]
be confirmed promptly in writing, including a description of deficient
or denied data or records. The contracting officer immediately shall
take appropriate action to obtain the required data. Should the
offeror/contractor again refuse to provide adequate data, or provide
access to necessary data, the contracting officer shall withhold the
award or price adjustment and refer the contract action to a higher
authority, providing details of the attempts made to resolve the matter
and a statement of the practicability of obtaining the supplies or
services from another source.
15.404-3 Subcontract pricing considerations.
(a) The contracting officer is responsible for the determination of
price reasonableness for the prime contract, including subcontracting
costs. The contracting officer should consider whether a contractor or
subcontractor has an approved purchasing system, has performed cost or
price analysis of proposed subcontractor prices, or has negotiated the
subcontract prices before negotiation of the prime contract, in
determining the reasonableness of the prime contract price. This does
not relieve the contracting officer from the responsibility to analyze
the contractor's submission, including subcontractor's cost or pricing
data.
(b) The prime contractor or subcontractor shall--
(1) Conduct appropriate cost or price analyses to establish the
reasonableness of proposed subcontract prices;
(2) Include the results of these analyses in the price proposal;
and
(3) When required by paragraph (c) of this subsection, submit
subcontractor cost or pricing data to the Government as part of its own
cost or pricing data.
(c) Any contractor or subcontractor that is required to submit cost
or pricing data also shall obtain and analyze cost or pricing data
before awarding any subcontract, purchase order, or modification
expected to exceed the cost or pricing data threshold, unless an
exception in 15.403-1(b) applies to that action.
(1) The contractor shall submit, or cause to be submitted by the
subcontractor(s), cost or pricing data to the Government for
subcontracts that are the lower of either--
(i) $10,000,000 or more; or
(ii) Both more than the pertinent cost or pricing data threshold
and more than 10 percent of the prime contractor's proposed price,
unless the contracting officer believes such submission is unnecessary.
(2) The contracting officer may require the contractor or
subcontractor to submit to the Government (or cause submission of)
subcontractor cost or pricing data below the thresholds in paragraph
(c)(1) of this subsection that the contracting officer considers
necessary for adequately pricing the prime contract.
(3) Subcontractor cost or pricing data shall be submitted in the
format provided in Table 15-2 of 15.408 or the alternate format
specified in the solicitation.
(4) Subcontractor cost or pricing data shall be current, accurate,
and complete as of the date of price agreement, or, if applicable, an
earlier date agreed upon by the parties and specified on the
contractor's Certificate of Current Cost or Pricing Data. The
contractor shall update subcontractor's data, as appropriate, during
source selection and negotiations.
(5) If there is more than one prospective subcontractor for any
given work, the contractor need only submit to the Government cost or
pricing data for the prospective subcontractor most likely to receive
the award.
15.404-4 Profit.
(a) General. This subsection prescribes policies for establishing
the profit or fee portion of the Government prenegotiation objective in
price negotiations based on cost analysis.
(1) Profit or fee prenegotiation objectives do not necessarily
represent net income to contractors. Rather, they represent that
element of the potential total remuneration that contractors may
receive for contract performance over and above allowable costs. This
potential remuneration element and the Government's estimate of
allowable costs to be incurred in contract performance together equal
the Government's total prenegotiation objective. Just as actual costs
may vary from estimated costs, the contractor's actual realized profit
or fee may vary from negotiated profit or fee, because of such factors
as efficiency of performance, incurrence of costs the Government does
not recognize as allowable, and the contract type.
(2) It is in the Government's interest to offer contractors
opportunities for financial rewards sufficient to stimulate efficient
contract performance, attract the best capabilities of qualified large
and small business concerns to Government contracts, and maintain a
viable industrial base.
(3) Both the Government and contractors should be concerned with
profit as a motivator of efficient and effective contract performance.
Negotiations aimed merely at reducing prices by reducing profit,
without proper recognition of the function of profit, are not in the
Government's interest. Negotiation of extremely low profits, use of
historical averages, or automatic application of predetermined
percentages to total estimated costs do not provide proper motivation
for optimum contract performance.
(b) Policy. (1) Structured approaches (see paragraph (d) of this
subsection) for determining profit or fee prenegotiation objectives
provide a discipline for ensuring that all relevant factors are
considered. Subject to the authorities in 1.301(c), agencies making
noncompetitive contract awards over $100,000 totaling $50 million or
more a year--
(i) Shall use a structured approach for determining the profit or
fee objective in those acquisitions that require cost analysis; and
(ii) May prescribe specific exemptions for situations in which
mandatory use of a structured approach would be clearly inappropriate.
(2) Agencies may use another agency's structured approach.
(c) Contracting officer responsibilities. (1) When the price
negotiation is not based on cost analysis, contracting officers are not
required to analyze profit.
(2) When the price negotiation is based on cost analysis,
contracting officers in agencies that have a structured approach shall
use it to analyze profit. When not using a structured approach,
contracting officers shall comply with paragraph (d)(1) of this
subsection in developing profit or fee prenegotiation objectives.
(3) Contracting officers shall use the Government prenegotiation
cost objective amounts as the basis for calculating the profit or fee
prenegotiation objective. Before applying profit or fee factors, the
contracting officer shall exclude any facilities capital cost of money
included in the cost objective amounts. If the prospective contractor
fails to identify or propose facilities capital cost of money in a
proposal for a contract that will be subject to the cost principles for
contracts with commercial organizations (see subpart 31.2), facilities
capital cost of money will not be an allowable cost in any resulting
contract (see 15.408(i)).
(4)(i) The contracting officer shall not negotiate a price or fee
that exceeds the following statutory limitations, imposed by 10 U.S.C.
2306(e) and 41 U.S.C. 254(b):
(A) For experimental, developmental, or research work performed
under a cost-plus-fixed-fee contract, the fee shall
[[Page 51245]]
not exceed 15 percent of the contract's estimated cost, excluding fee.
(B) For architect-engineer services for public works or utilities,
the contract price or the estimated cost and fee for production and
delivery of designs, plans, drawings, and specifications shall not
exceed 6 percent of the estimated cost of construction of the public
work or utility, excluding fees.
(C) For other cost-plus-fixed-fee contracts, the fee shall not
exceed 10 percent of the contract's estimated cost, excluding fee.
(ii) The contracting officer's signature on the price negotiation
memorandum or other documentation supporting determination of fair and
reasonable price documents the contracting officer's determination that
the statutory price or fee limitations have not been exceeded.
(5) The contracting officer shall not require any prospective
contractor to submit breakouts or supporting rationale for its profit
or fee objective but may consider it, if it is submitted voluntarily.
(6) If a change or modification calls for essentially the same type
and mix of work as the basic contract and is of relatively small dollar
value compared to the total contract value, the contracting officer may
use the basic contract's profit or fee rate as the prenegotiation
objective for that change or modification.
(d) Profit-analysis factors--(1) Common factors. Unless it is
clearly inappropriate or not applicable, each factor outlined in
paragraphs (d)(1)(i) through (vi) of this subsection shall be
considered by agencies in developing their structured approaches and by
contracting officers in analyzing profit, whether or not using a
structured approach.
(i) Contractor effort. This factor measures the complexity of the
work and the resources required of the prospective contractor for
contract performance. Greater profit opportunity should be provided
under contracts requiring a high degree of professional and managerial
skill and to prospective contractors whose skills, facilities, and
technical assets can be expected to lead to efficient and economical
contract performance. The subfactors in paragraphs (d)(1)(i)(A) through
(D) of this subsection shall be considered in determining contractor
effort, but they may be modified in specific situations to accommodate
differences in the categories used by prospective contractors for
listing costs--
(A) Material acquisition. This subfactor measures the managerial
and technical effort needed to obtain the required purchased parts and
material, subcontracted items, and special tooling. Considerations
include the complexity of the items required, the number of purchase
orders and subcontracts to be awarded and administered, whether
established sources are available or new or second sources must be
developed, and whether material will be obtained through routine
purchase orders or through complex subcontracts requiring detailed
specifications. Profit consideration should correspond to the
managerial and technical effort involved.
(B) Conversion direct labor. This subfactor measures the
contribution of direct engineering, manufacturing, and other labor to
converting the raw materials, data, and subcontracted items into the
contract items. Considerations include the diversity of engineering,
scientific, and manufacturing labor skills required and the amount and
quality of supervision and coordination needed to perform the contract
task.
(C) Conversion-related indirect costs. This subfactor measures how
much the indirect costs contribute to contract performance. The labor
elements in the allocable indirect costs should be given the profit
consideration they would receive if treated as direct labor. The other
elements of indirect costs should be evaluated to determine whether
they merit only limited profit consideration because of their routine
nature, or are elements that contribute significantly to the proposed
contract.
(D) General management. This subfactor measures the prospective
contractor's other indirect costs and general and administrative (G&A)
expense, their composition, and how much they contribute to contract
performance. Considerations include how labor in the overhead pools
would be treated if it were direct labor, whether elements within the
pools are routine expenses or instead are elements that contribute
significantly to the proposed contract, and whether the elements
require routine as opposed to unusual managerial effort and attention.
(ii) Contract cost risk. (A) This factor measures the degree of
cost responsibility and associated risk that the prospective contractor
will assume as a result of the contract type contemplated and
considering the reliability of the cost estimate in relation to the
complexity and duration of the contract task. Determination of contract
type should be closely related to the risks involved in timely, cost-
effective, and efficient performance. This factor should compensate
contractors proportionately for assuming greater cost risks.
(B) The contractor assumes the greatest cost risk in a closely
priced firm-fixed-price contract under which it agrees to perform a
complex undertaking on time and at a predetermined price. Some firm-
fixed-price contracts may entail substantially less cost risk than
others because, for example, the contract task is less complex or many
of the contractor's costs are known at the time of price agreement, in
which case the risk factor should be reduced accordingly. The
contractor assumes the least cost risk in a cost-plus-fixed-fee level-
of-effort contract, under which it is reimbursed those costs determined
to be allocable and allowable, plus the fixed fee.
(C) In evaluating assumption of cost risk, contracting officers
shall, except in unusual circumstances, treat time-and-materials,
labor-hour, and firm-fixed-price, level-of-effort term contracts as
cost-plus-fixed-fee contracts.
(iii) Federal socioeconomic programs. This factor measures the
degree of support given by the prospective contractor to Federal
socioeconomic programs, such as those involving small business
concerns, small business concerns owned and controlled by socially and
economically disadvantaged individuals, women-owned small business
concerns, handicapped sheltered workshops, and energy conservation.
Greater profit opportunity should be provided contractors that have
displayed unusual initiative in these programs.
(iv) Capital investments. This factor takes into account the
contribution of contractor investments to efficient and economical
contract performance.
(v) Cost-control and other past accomplishments. This factor allows
additional profit opportunities to a prospective contractor that has
previously demonstrated its ability to perform similar tasks
effectively and economically. In addition, consideration should be
given to measures taken by the prospective contractor that result in
productivity improvements, and other cost-reduction accomplishments
that will benefit the Government in follow-on contracts.
(vi) Independent development. Under this factor, the contractor may
be provided additional profit opportunities in recognition of
independent development efforts relevant to the contract end item
without Government assistance. The contracting officer should consider
whether the development cost was recovered directly or indirectly from
Government sources.
[[Page 51246]]
(2) Additional factors. In order to foster achievement of program
objectives, each agency may include additional factors in its
structured approach or take them into account in the profit analysis of
individual contract actions.
15.405 Price negotiation.
(a) The purpose of performing cost or price analysis is to develop
a negotiation position that permits the contracting officer and the
offeror an opportunity to reach agreement on a fair and reasonable
price. A fair and reasonable price does not require that agreement be
reached on every element of cost, nor is it mandatory that the agreed
price be within the contracting officer's initial negotiation position.
Taking into consideration the advisory recommendations, reports of
contributing specialists, and the current status of the contractor's
purchasing system, the contracting officer is responsible for
exercising the requisite judgment needed to reach a negotiated
settlement with the offeror and is solely responsible for the final
price agreement. However, when significant audit or other specialist
recommendations are not adopted, the contracting officer should provide
rationale that supports the negotiation result in the price negotiation
documentation.
(b) The contracting officer's primary concern is the overall price
the Government will actually pay. The contracting officer's objective
is to negotiate a contract of a type and with a price providing the
contractor the greatest incentive for efficient and economical
performance. The negotiation of a contract type and a price are related
and should be considered together with the issues of risk and
uncertainty to the contractor and the Government. Therefore, the
contracting officer should not become preoccupied with any single
element and should balance the contract type, cost, and profit or fee
negotiated to achieve a total result--a price that is fair and
reasonable to both the Government and the contractor.
(c) The Government's cost objective and proposed pricing
arrangement directly affect the profit or fee objective. Because profit
or fee is only one of several interrelated variables, the contracting
officer shall not agree on profit or fee without concurrent agreement
on cost and type of contract.
(d) If, however, the contractor insists on a price or demands a
profit or fee that the contracting officer considers unreasonable, and
the contracting officer has taken all authorized actions (including
determining the feasibility of developing an alternative source)
without success, the contracting officer shall refer the contract
action to a level above the contracting officer. Disposition of the
action should be documented.
15.406 Documentation.
15.406-1 Prenegotiation objectives.
(a) The prenegotiation objectives establish the Government's
initial negotiation position. They assist in the contracting officer's
determination of fair and reasonable price. They should be based on the
results of the contracting officer's analysis of the offeror's
proposal, taking into consideration all pertinent information including
field pricing assistance, audit reports and technical analysis, fact-
finding results, independent Government cost estimates and price
histories.
(b) The contracting officer shall establish prenegotiation
objectives before the negotiation of any pricing action. The scope and
depth of the analysis supporting the objectives should be directly
related to the dollar value, importance, and complexity of the pricing
action. When cost analysis is required, the contracting officer shall
document the pertinent issues to be negotiated, the cost objectives,
and a profit or fee objective.
15.406-2 Certificate of Current Cost or Pricing Data.
(a) When cost or pricing data are required, the contracting officer
shall require the contractor to execute a Certificate of Current Cost
or Pricing Data, using the format in this paragraph, and shall include
the executed certificate in the contract file.
CERTIFICATE OF CURRENT COST OR PRICING DATA
This is to certify that, to the best of my knowledge and belief,
the cost or pricing data (as defined in section 15.401 of the
Federal Acquisition Regulation (FAR) and required under FAR
subsection 15.403-4) submitted, either actually or by specific
identification in writing, to the Contracting Officer or to the
Contracting Officer's representative in support of ____* are
accurate, complete, and current as of ____**. This certification
includes the cost or pricing data supporting any advance agreements
and forward pricing rate agreements between the offeror and the
Government that are part of the proposal.
Firm-------------------------------------------------------------------
Signature--------------------------------------------------------------
Name-------------------------------------------------------------------
Title------------------------------------------------------------------
Date of execution***---------------------------------------------------
* Identify the proposal, request for price adjustment, or other
submission involved, giving the appropriate identifying number
(e.g., RFP No.).
** Insert the day, month, and year when price negotiations were
concluded and price agreement was reached or, if applicable, an
earlier date agreed upon between the parties that is as close as
practicable to the date of agreement on price.
*** Insert the day, month, and year of signing, which should be
as close as practicable to the date when the price negotiations were
concluded and the contract price was agreed to. (End of certificate)
(b) The certificate does not constitute a representation as to the
accuracy of the contractor's judgment on the estimate of future costs
or projections. It applies to the data upon which the judgment or
estimate was based. This distinction between fact and judgment should
be clearly understood. If the contractor had information reasonably
available at the time of agreement showing that the negotiated price
was not based on accurate, complete, and current data, the contractor's
responsibility is not limited by any lack of personal knowledge of the
information on the part of its negotiators.
(c) The contracting officer and contractor are encouraged to reach
a prior agreement on criteria for establishing closing or cutoff dates
when appropriate in order to minimize delays associated with proposal
updates. Closing or cutoff dates should be included as part of the data
submitted with the proposal and, before agreement on price, data should
be updated by the contractor to the latest closing or cutoff dates for
which the data are available. Use of cutoff dates coinciding with
reports is acceptable, as certain data may not be reasonably available
before normal periodic closing dates (e.g., actual indirect costs).
Data within the contractor's or a subcontractor's organization on
matters significant to contractor management and to the Government will
be treated as reasonably available. What is significant depends upon
the circumstances of each acquisition.
(d) Possession of a Certificate of Current Cost or Pricing Data is
not a substitute for examining and analyzing the contractor's proposal.
(e) If cost or pricing data are requested by the Government and
submitted by an offeror, but an exception is later found to apply, the
data shall not be considered cost or pricing data and shall not be
certified in accordance with this subsection.
15.406-3 Documenting the negotiation.
(a) The contracting officer shall document in the contract file the
principal elements of the negotiated
[[Page 51247]]
agreement. The documentation (e.g., price negotiation memorandum (PNM))
shall include the following:
(1) The purpose of the negotiation.
(2) A description of the acquisition, including appropriate
identifying numbers (e.g., RFP No.).
(3) The name, position, and organization of each person
representing the contractor and the Government in the negotiation.
(4) The current status of any contractor systems (e.g., purchasing,
estimating, accounting, and compensation) to the extent they affected
and were considered in the negotiation.
(5) If cost or pricing data were not required in the case of any
price negotiation exceeding the cost or pricing data threshold, the
exception used and the basis for it.
(6) If cost or pricing data were required, the extent to which the
contracting officer--
(i) Relied on the cost or pricing data submitted and used them in
negotiating the price;
(ii) Recognized as inaccurate, incomplete, or noncurrent any cost
or pricing data submitted; the action taken by the contracting officer
and the contractor as a result; and the effect of the defective data on
the price negotiated; or
(iii) Determined that an exception applied after the data were
submitted and, therefore, considered not to be cost or pricing data.
(7) A summary of the contractor's proposal, any field pricing
assistance recommendations, including the reasons for any pertinent
variances from them, the Government's negotiation objective, and the
negotiated position. Where the determination of price reasonableness is
based on cost analysis, the summary shall address each major cost
element. When determination of price reasonableness is based on price
analysis, the summary shall include the source and type of data used to
support the determination.
(8) The most significant facts or considerations controlling the
establishment of the prenegotiation objectives and the negotiated
agreement including an explanation of any significant differences
between the two positions.
(9) To the extent such direction has a significant effect on the
action, a discussion and quantification of the impact of direction
given by Congress, other agencies, and higher-level officials (i.e.,
officials who would not normally exercise authority during the award
and review process for the instant contract action).
(10) The basis for the profit or fee prenegotiation objective and
the profit or fee negotiated.
(11) Documentation of fair and reasonable pricing.
(b) Whenever field pricing assistance has been obtained, the
contracting officer shall forward a copy of the negotiation
documentation to the office(s) providing assistance. When appropriate,
information on how advisory field support can be made more effective
should be provided separately.
15.407 Special cost or pricing areas.
15.407-1 Defective cost or pricing data.
(a) If, before agreement on price, the contracting officer learns
that any cost or pricing data submitted are inaccurate, incomplete, or
noncurrent, the contracting officer shall immediately bring the matter
to the attention of the prospective contractor, whether the defective
data increase or decrease the contract price. The contracting officer
shall consider any new data submitted to correct the deficiency, or
consider the inaccuracy, incompleteness, or noncurrency of the data
when negotiating the contract price. The price negotiation memorandum
shall reflect the adjustments made to the data or the corrected data
used to negotiate the contract price.
(b)(1) If, after award, cost or pricing data are found to be
inaccurate, incomplete, or noncurrent as of the date of final agreement
on price or an earlier date agreed upon by the parties given on the
contractor's or subcontractor's Certificate of Current Cost or Pricing
Data, the Government is entitled to a price adjustment, including
profit or fee, of any significant amount by which the price was
increased because of the defective data. This entitlement is ensured by
including in the contract one of the clauses prescribed in 15.408 (b)
and (c) and is set forth in the clauses at 52.215-10, Price Reduction
for Defective Cost or Pricing Data, and 52.215-11, Price Reduction for
Defective Cost or Pricing Data--Modifications. The clauses give the
Government the right to a price adjustment for defects in cost or
pricing data submitted by the contractor, a prospective subcontractor,
or an actual subcontractor.
(2) In arriving at a price adjustment, the contracting officer
shall consider the time by which the cost or pricing data became
reasonably available to the contractor, and the extent to which the
Government relied upon the defective data.
(3) The clauses referred to in paragraph (b)(1) of this subsection
recognize that the Government's right to a price adjustment is not
affected by any of the following circumstances:
(i) The contractor or subcontractor was a sole source supplier or
otherwise was in a superior bargaining position;
(ii) The contracting officer should have known that the cost or
pricing data in issue were defective even though the contractor or
subcontractor took no affirmative action to bring the character of the
data to the attention of the contracting officer;
(iii) The contract was based on an agreement about the total cost
of the contract and there was no agreement about the cost of each item
procured under such contract; or
(iv) Cost or pricing data were required; however, the contractor or
subcontractor did not submit a Certificate of Current Cost or Pricing
Data relating to the contract.
(4) Subject to paragraphs (b)(5) and (6) of this subsection, the
contracting officer shall allow an offset for any understated cost or
pricing data submitted in support of price negotiations, up to the
amount of the Government's claim for overstated pricing data arising
out of the same pricing action (e.g., the initial pricing of the same
contract or the pricing of the same change order).
(5) An offset shall be allowed only in an amount supported by the
facts and if the contractor--
(i) Certifies to the contracting officer that, to the best of the
contractor's knowledge and belief, the contractor is entitled to the
offset in the amount requested; and
(ii) Proves that the cost or pricing data were available before the
``as of'' date specified on the Certificate of Current Cost or Pricing
Data but were not submitted. Such offsets need not be in the same cost
groupings (e.g., material, direct labor, or indirect costs).
(6) An offset shall not be allowed if--
(i) The understated data were known by the contractor to be
understated before the ``as of'' date specified on the Certificate of
Current Cost or Pricing Data; or
(ii) The Government proves that the facts demonstrate that the
price would not have increased in the amount to be offset even if the
available data had been submitted before the ``as of'' date specified
on the Certificate of Current Cost or Pricing Data.
(7)(i) In addition to the price adjustment, the Government is
entitled to recovery of any overpayment plus interest on the
overpayments. The Government is also entitled to penalty
[[Page 51248]]
amounts on certain of these overpayments. Overpayment occurs only when
payment is made for supplies or services accepted by the Government.
Overpayments do not result from amounts paid for contract financing, as
defined in 32.902.
(ii) In calculating the interest amount due, the contracting
officer shall--
(A) Determine the defective pricing amounts that have been overpaid
to the contractor;
(B) Consider the date of each overpayment (the date of overpayment
for this interest calculation shall be the date payment was made for
the related completed and accepted contract items; or for subcontract
defective pricing, the date payment was made to the prime contractor,
based on prime contract progress billings or deliveries, which included
payments for a completed and accepted subcontract item); and
(C) Apply the underpayment interest rate(s) in effect for each
quarter from the time of overpayment to the time of repayment,
utilizing rate(s) prescribed by the Secretary of the Treasury under 26
U.S.C. 6621(a)(2).
(iii) In arriving at the amount due for penalties on contracts
where the submission of defective cost or pricing data was a knowing
submission, the contracting officer shall obtain an amount equal to the
amount of overpayment made. Before taking any contractual actions
concerning penalties, the contracting officer shall obtain the advice
of counsel.
(iv) In the demand letter, the contracting officer shall separately
include--
(A) The repayment amount;
(B) The penalty amount (if any);
(C) The interest amount through a specified date; and
(D) A statement that interest will continue to accrue until
repayment is made.
(c) If, after award, the contracting officer learns or suspects
that the data furnished were not accurate, complete, and current, or
were not adequately verified by the contractor as of the time of
negotiation, the contracting officer shall request an audit to evaluate
the accuracy, completeness, and currency of the data. The Government
may evaluate the profit-cost relationships only if the audit reveals
that the data certified by the contractor were defective. The
contracting officer shall not reprice the contract solely because the
profit was greater than forecast or because a contingency specified in
the submission failed to materialize.
(d) For each advisory audit received based on a postaward review
that indicates defective pricing, the contracting officer shall make a
determination as to whether or not the data submitted were defective
and relied upon. Before making such a determination, the contracting
officer should give the contractor an opportunity to support the
accuracy, completeness, and currency of the data in question. The
contracting officer shall prepare a memorandum documenting both the
determination and any corrective action taken as a result. The
contracting officer shall send one copy of this memorandum to the
auditor and, if the contract has been assigned for administration, one
copy to the administrative contracting officer (ACO). A copy of the
memorandum or other notice of the contracting officer's determination
shall be provided to the contractor.
(e) If both the contractor and subcontractor submitted, and the
contractor certified, or should have certified, cost or pricing data,
the Government has the right, under the clauses at 52.215-10, Price
Reduction for Defective Cost or Pricing Data, and 52.215-11, Price
Reduction for Defective Cost or Pricing Data--Modifications, to reduce
the prime contract price if it was significantly increased because a
subcontractor submitted defective data. This right applies whether
these data supported subcontract cost estimates or supported firm
agreements between subcontractor and contractor.
(f) If Government audit discloses defective subcontractor cost or
pricing data, the information necessary to support a reduction in prime
contract and subcontract prices may be available only from the
Government. To the extent necessary to secure a prime contract price
reduction, the contracting officer should make this information
available to the prime contractor or appropriate subcontractors, upon
request. If release of the information would compromise Government
security or disclose trade secrets or confidential business
information, the contracting officer shall release it only under
conditions that will protect it from improper disclosure. Information
made available under this paragraph shall be limited to that used as
the basis for the prime contract price reduction. In order to afford an
opportunity for corrective action, the contracting officer should give
the prime contractor reasonable advance notice before determining to
reduce the prime contract price.
(1) When a prime contractor includes defective subcontract data in
arriving at the price but later awards the subcontract to a lower
priced subcontractor (or does not subcontract for the work), any
adjustment in the prime contract price due to defective subcontract
data is limited to the difference (plus applicable indirect cost and
profit markups) between the subcontract price used for pricing the
prime contract, and either the actual subcontract price or the actual
cost to the contractor, if not subcontracted, provided the data on
which the actual subcontract price is based are not themselves
defective.
(2) Under cost-reimbursement contracts and under all fixed-price
contracts except firm-fixed-price contracts and fixed-price contracts
with economic price adjustment, payments to subcontractors that are
higher than they would be had there been no defective subcontractor
cost or pricing data shall be the basis for disallowance or
nonrecognition of costs under the clauses prescribed in 15.408 (b) and
(c). The Government has a continuing and direct financial interest in
such payments that is unaffected by the initial agreement on prime
contract price.
15.407-2 Make-or-buy programs.
(a) General. The prime contractor is responsible for managing
contract performance, including planning, placing, and administering
subcontracts as necessary to ensure the lowest overall cost and
technical risk to the Government. When make-or-buy programs are
required, the Government may reserve the right to review and agree on
the contractor's make-or-buy program when necessary to ensure
negotiation of reasonable contract prices, satisfactory performance, or
implementation of socioeconomic policies. Consent to subcontracts and
review of contractors' purchasing systems are separate actions covered
in part 44.
(b) Definitions. As used in this subsection--
Buy item means an item or work effort to be produced or performed
by a subcontractor.
Make item means an item or work effort to be produced or performed
by the prime contractor or its affiliates, subsidiaries, or divisions.
Make-or-buy program means that part of a contractor's written plan
for a contract identifying those major items to be produced or work
efforts to be performed in the prime contractor's facilities and those
to be subcontracted.
(c) Acquisitions requiring make-or-buy programs. (1) Contracting
officers may require prospective contractors to submit make-or-buy
program plans for negotiated acquisitions requiring cost or
[[Page 51249]]
pricing data whose estimated value is $10 million or more, except when
the proposed contract is for research or development and, if prototypes
or hardware are involved, no significant follow-on production is
anticipated.
(2) Contracting officers may require prospective contractors to
submit make-or-buy programs for negotiated acquisitions whose estimated
value is under $10 million only if the contracting officer--
(i) Determines that the information is necessary; and
(ii) Documents the reasons in the contract file.
(d) Solicitation requirements. When prospective contractors are
required to submit proposed make-or-buy programs, the solicitation
shall include--
(1) A statement that the program and required supporting
information must accompany the offer; and
(2) A description of factors to be used in evaluating the proposed
program, such as capability, capacity, availability of small, small
disadvantaged, and women-owned small business concerns for
subcontracting, establishment of new facilities in or near labor
surplus areas, delivery or performance schedules, control of technical
and schedule interfaces, proprietary processes, technical superiority
or exclusiveness, and technical risks involved.
(e) Program requirements. To support a make-or-buy program, the
following information shall be supplied by the contractor in its
proposal:
(1) Items and work included. The information required from a
contractor in a make-or-buy program shall be confined to those major
items or work efforts that normally would require company management
review of the make-or-buy decision because they are complex, costly,
needed in large quantities, or require additional facilities to
produce. Raw materials, commercial items (see 2.101), and off-the-shelf
items (see 46.101) shall not be included, unless their potential impact
on contract cost or schedule is critical. Normally, make-or-buy
programs should not include items or work efforts estimated to cost
less than 1 percent of the total estimated contract price or any
minimum dollar amount set by the agency.
(2) The offeror's program should include or be supported by the
following information:
(i) A description of each major item or work effort.
(ii) Categorization of each major item or work effort as ``must
make,'' ``must buy, or ``can either make or buy.''
(iii) For each item or work effort categorized as ``can either make
or buy,'' a proposal either to ``make'' or to ``buy.''
(iv) Reasons for categorizing items and work efforts as ``must
make'' or ``must buy,'' and proposing to ``make'' or to ``buy'' those
categorized as ``can either make or buy.'' The reasons must include the
consideration given to the evaluation factors described in the
solicitation and must be in sufficient detail to permit the contracting
officer to evaluate the categorization or proposal.
(v) Designation of the plant or division proposed to make each item
or perform each work effort, and a statement as to whether the existing
or proposed new facility is in or near a labor surplus area.
(vi) Identification of proposed subcontractors, if known, and their
location and size status (also see Subpart 19.7 for subcontracting plan
requirements).
(vii) Any recommendations to defer make-or-buy decisions when
categorization of some items or work efforts is impracticable at the
time of submission.
(viii) Any other information the contracting officer requires in
order to evaluate the program.
(f) Evaluation, negotiation, and agreement. Contracting officers
shall evaluate and negotiate proposed make-or-buy programs as soon as
practicable after their receipt and before contract award.
(1) When the program is to be incorporated in the contract and the
design status of the product being acquired does not permit accurate
precontract identification of major items or work efforts, the
contracting officer shall notify the prospective contractor in writing
that these items or efforts, when identifiable, shall be added under
the clause at 52.215-9, Changes or Additions to Make-or-Buy Program.
(2) Contracting officers normally shall not agree to proposed
``make items'' when the products or services are not regularly
manufactured or provided by the contractor
and are available--quality, quantity, delivery, and other essential
factors considered--from another firm at equal or lower prices, or when
they are regularly manufactured or provided by the contractor, but are
available--quality, quantity, delivery, and other essential factors
considered-- from another firm at lower prices. However, the
contracting officer may agree to these as ``make items'' if an overall
lower Governmentwide cost would result or it is otherwise in the best
interest of the Government. If this situation occurs in any fixed-price
incentive or cost-plus-incentive-fee contract, the contracting officer
shall specify these items in the contract and state that they are
subject to paragraph (d) of the clause at 52.215-9, Changes or
Additions to Make-or-Buy Program (see 15.408(a)). If the contractor
proposes to reverse the categorization of such items during contract
performance, the contract price shall be subject to equitable
reduction.
(g) Incorporating make-or-buy programs in contracts. The
contracting officer may incorporate the make-or-buy program in
negotiated contracts for--
(1) Major systems (see part 34) or their subsystems or components,
regardless of contract type; or
(2) Other supplies and services if--
(i) The contract is a cost-reimbursable contract, or a cost-sharing
contract in which the contractor's share of the cost is less than 25
percent; and
(ii) The contracting officer determines that technical or cost
risks justify Government review and approval of changes or additions to
the make-or-buy program.
15.407-3 Forward pricing rate agreements.
(a) When cost or pricing data are required, offerors are required
to describe any forward pricing rate agreements (FPRA's) in each
specific pricing proposal to which the rates apply and to identify the
latest cost or pricing data already submitted in accordance with the
agreement. All data submitted in connection with the agreement, updated
as necessary, form a part of the total data that the offeror certifies
to be accurate, complete, and current at the time of agreement on price
for an initial contract or for a contract modification.
(b) Contracting officers will use FPRA rates as bases for pricing
all contracts, modifications, and other contractual actions to be
performed during the period covered by the agreement. Conditions that
may affect the agreement's validity shall be reported promptly to the
ACO. If the ACO determines that a changed condition invalidates the
agreement, the ACO shall notify all interested parties of the extent of
its effect and status of efforts to establish a revised FPRA.
(c) Contracting officers shall not require certification at the
time of agreement for data supplied in support of FPRA's or other
advance agreements. When a forward pricing rate agreement or other
advance agreement is used to price a contract action that requires a
certificate, the certificate supporting that contract action shall
cover the data supplied to support the FPRA or other
[[Page 51250]]
advance agreement, and all other data supporting the action.
15.407-4 Should-cost review.
(a) General. (1) Should-cost reviews are a specialized form of cost
analysis. Should-cost reviews differ from traditional evaluation
methods because they do not assume that a contractor's historical costs
reflect efficient and economical operation. Instead, these reviews
evaluate the economy and efficiency of the contractor's existing work
force, methods, materials, facilities, operating systems, and
management. These reviews are accomplished by a multi-functional team
of Government contracting, contract administration, pricing, audit, and
engineering representatives. The objective of should-cost reviews is to
promote both short and long-range improvements in the contractor's
economy and efficiency in order to reduce the cost of performance of
Government contracts. In addition, by providing rationale for any
recommendations and quantifying their impact on cost, the Government
will be better able to develop realistic objectives for negotiation.
(2) There are two types of should-cost reviews--program should-cost
review (see paragraph (b) of this subsection) and overhead should-cost
review (see paragraph (c) of this subsection). These should-cost
reviews may be performed together or independently. The scope of a
should-cost review can range from a large-scale review examining the
contractor's entire operation (including plant-wide overhead and
selected major subcontractors) to a small-scale tailored review
examining specific portions of a contractor's operation.
(b) Program should-cost review. (1) A program should-cost review is
used to evaluate significant elements of direct costs, such as material
and labor, and associated indirect costs, usually associated with the
production of major systems. When a program should-cost review is
conducted relative to a contractor proposal, a separate audit report on
the proposal is required.
(2) A program should-cost review should be considered, particularly
in the case of a major system acquisition (see part 34), when--
(i) Some initial production has already taken place;
(ii) The contract will be awarded on a sole source basis;
(iii) There are future year production requirements for substantial
quantities of like items;
(iv) The items being acquired have a history of increasing costs;
(v) The work is sufficiently defined to permit an effective
analysis and major changes are unlikely;
(vi) Sufficient time is available to plan and adequately conduct
the should-cost review; and
(vii) Personnel with the required skills are available or can be
assigned for the duration of the should-cost review.
(3) The contracting officer should decide which elements of the
contractor's operation have the greatest potential for cost savings and
assign the available personnel resources accordingly. The expertise of
on-site Government personnel should be used, when appropriate. While
the particular elements to be analyzed are a function of the contract
work task, elements such as manufacturing, pricing and accounting,
management and organization, and subcontract and vendor management are
normally reviewed in a should-cost review.
(4) In acquisitions for which a program should-cost review is
conducted, a separate program should-cost review team report, prepared
in accordance with agency procedures, is required. The contracting
officer shall consider the findings and recommendations contained in
the program should-cost review team report when negotiating the
contract price. After completing the negotiation, the contracting
officer shall provide the ACO a report of any identified uneconomical
or inefficient practices, together with a report of correction or
disposition agreements reached with the contractor. The contracting
officer shall establish a follow-up plan to monitor the correction of
the uneconomical or inefficient practices.
(5) When a program should-cost review is planned, the contracting
officer should state this fact in the acquisition plan or acquisition
plan updates (see subpart 7.1) and in the solicitation.
(c) Overhead should-cost review. (1) An overhead should-cost review
is used to evaluate indirect costs, such as fringe benefits, shipping
and receiving, facilities and equipment, depreciation, plant
maintenance and security, taxes, and general and administrative
activities.
It is normally used to evaluate and negotiate an FPRA with the
contractor. When an overhead should-cost review is conducted, a
separate audit report is required.
(2) The following factors should be considered when selecting
contractor sites for overhead should-cost reviews:
(i) Dollar amount of Government business.
(ii) Level of Government participation.
(iii) Level of noncompetitive Government contracts.
(iv) Volume of proposal activity.
(v) Major system or program.
(vi) Corporate reorganizations, mergers, acquisitions, or
takeovers.
(vii) Other conditions (e.g., changes in accounting systems,
management, or business activity).
(3) The objective of the overhead should-cost review is to evaluate
significant indirect cost elements in-depth, and identify and recommend
corrective actions regarding inefficient and uneconomical practices. If
it is conducted in conjunction with a program should-cost review, a
separate overhead should-cost review report is not required. However,
the findings and recommendations of the overhead should-cost team, or
any separate overhead should-cost review report, shall be provided to
the ACO. The ACO should use this information to form the basis for the
Government position in negotiating an FPRA with the contractor. The ACO
shall establish a follow-up plan to monitor the correction of the
uneconomical or inefficient practices.
15.407-5 Estimating systems.
(a) Using an acceptable estimating system for proposal preparation
benefits both the Government and the contractor by increasing the
accuracy and reliability of individual proposals. Cognizant audit
activities, when it is appropriate to do so, shall establish and manage
regular programs for reviewing selected contractors' estimating systems
or methods, in order to reduce the scope of reviews to be performed on
individual proposals, expedite the negotiation process, and increase
the reliability of proposals. The results of estimating system reviews
shall be documented in survey reports.
(b) The auditor shall send a copy of the estimating system survey
report and a copy of the official notice of corrective action required
to each contracting office and contract administration office having
substantial business with that contractor. Significant deficiencies not
corrected by the contractor shall be a consideration in subsequent
proposal analyses and negotiations.
15.408 Solicitation provisions and contract clauses.
(a) Changes or Additions to Make-or-Buy Program. The contracting
officer shall insert the clause at 52.215-9, Changes or Additions to
Make-or-Buy Program, in solicitations and contracts when it is
contemplated that a make-or-
[[Page 51251]]
buy program will be incorporated in the contract. If a less economical
``make'' or ``buy'' categorization is selected for one or more items of
significant value, the contracting officer shall use the clause with--
(1) Its Alternate I, if a fixed-price incentive contract is
contemplated; or
(2) Its Alternate II, if a cost-plus-incentive-fee contract is
contemplated.
(b) Price Reduction for Defective Cost or Pricing Data. The
contracting officer shall, when contracting by negotiation, insert the
clause at 52.215-10, Price Reduction for Defective Cost or Pricing
Data, in solicitations and contracts when it is contemplated that cost
or pricing data will be required from the contractor or any
subcontractor (see 15.403-4).
(c) Price Reduction for Defective Cost or Pricing Data--
Modifications. The contracting officer shall, when contracting by
negotiation, insert the clause at 52.215-11, Price Reduction for
Defective Cost or Pricing Data-- Modifications, in solicitations and
contracts when it is contemplated that cost or pricing data will be
required from the contractor or any subcontractor (see 15.403-4) for
the pricing of contract modifications, and the clause prescribed in
paragraph (b) of this section has not been included.
(d) Subcontractor Cost or Pricing Data. The contracting officer
shall insert the clause at 52.215-12, Subcontractor Cost or Pricing
Data, in solicitations and contracts when the clause prescribed in
paragraph (b) of this section is included.
(e) Subcontractor Cost or Pricing Data-- Modifications. The
contracting officer shall insert the clause at 52.215-13, Subcontractor
Cost or Pricing Data--Modifications, in solicitations and contracts
when the clause prescribed in paragraph (c) of this section is
included.
(f) Integrity of Unit Prices. (1) The contracting officer shall
insert the clause at 52.215-14, Integrity of Unit Prices, in
solicitations and contracts except for--
(i) Acquisitions at or below the simplified acquisition threshold;
(ii) Construction or architect-engineer services under part 36;
(iii) Utility services under part 41;
(iv) Service contracts where supplies are not required;
(v) Acquisitions of commercial items; and
(vi) Contracts for petroleum products.
(2) The contracting officer shall insert the clause with its
Alternate I when contracting without adequate price competition or when
prescribed by agency regulations.
(g) Termination of Defined Benefit Pension Plans. The contracting
officer shall insert the clause at 52.215-15, Termination of Defined
Benefit Pension Plans, in solicitations and contracts for which it is
anticipated that cost or pricing data will be required or for which any
preaward or postaward cost determinations will be subject to part 31.
(h) Facilities Capital Cost of Money. The contracting officer shall
insert the provision at 52.215-16, Facilities Capital Cost of Money, in
solicitations expected to result in contracts that are subject to the
cost principles for contracts with commercial organizations (see
subpart 31.2).
(i) Waiver of Facilities Capital Cost of Money. If the prospective
contractor does not propose facilities capital cost of money in its
offer, the contracting officer shall insert the clause at 52.215-17,
Waiver of Facilities Capital Cost of Money, in the resulting contract.
(j) Reversion or Adjustment of Plans for Postretirement Benefits
(PRB) Other Than Pensions. The contracting officer shall insert the
clause at 52.215-18, Reversion or Adjustment of Plans for
Postretirement Benefits (PRB) Other Than Pensions, in solicitations and
contracts for which it is anticipated that cost or pricing data will be
required or for which any preaward or postaward cost determinations
will be subject to part 31.
(k) Notification of Ownership Changes. The contracting officer
shall insert the clause at 52.215-19, Notification of Ownership
Changes, in solicitations and contracts for which it is contemplated
that cost or pricing data will be required or for which any preaward or
postaward cost determination will be subject to subpart 31.2.
(l) Requirements for Cost or Pricing Data or Information Other Than
Cost or Pricing Data. Considering the hierarchy at 15.402, the
contracting officer may insert the provision at 52.215-20, Requirements
for Cost or Pricing Data or Information Other Than Cost or Pricing
Data, in solicitations if it is reasonably certain that cost or pricing
data or information other than cost or pricing data will be required.
This provision also provides instructions to offerors on how to request
an exception. The contracting officer shall--
(1) Use the provision with its Alternate I to specify a format for
cost or pricing data other than the format required by Table 15-2 of
this section;
(2) Use the provision with its Alternate II if copies of the
proposal are to be sent to the ACO and contract auditor;
(3) Use the provision with its Alternate III if submission via
electronic media is required; and
(4) Replace the basic provision with its Alternate IV if cost or
pricing data are not expected to be required because an exception may
apply, but information other than cost or pricing data is required as
described in 15.403-3.
(m) Requirements for Cost or Pricing Data or Information Other Than
Cost or Pricing Data--Modifications. Considering the hierarchy at
15.402, the contracting officer may insert the clause at 52.215-21,
Requirements for Cost or Pricing Data or Information Other Than Cost or
Pricing Data--Modifications, in solicitations and contracts if it is
reasonably certain that cost or pricing data or information other than
cost or pricing data will be required for modifications. This clause
also provides instructions to contractors on how to request an
exception. The contracting officer shall--
(1) Use the clause with its Alternate I to specify a format for
cost or pricing data other than the format required by Table 15-2 of
this section;
(2) Use the clause with its Alternate II if copies of the proposal
are to be sent to the ACO and contract auditor;
(3) Use the clause with its Alternate III if submission via
electronic media is required; and
(4) Replace the basic clause with its Alternate IV if cost or
pricing data are not expected to be required because an exception may
apply, but information other than cost or pricing data is required as
described in 15.403-3.
Table 15-2--Instructions for Submitting Cost/Price Proposals When Cost
or Pricing Data Are Required
This document provides instructions for preparing a contract
pricing proposal when cost or pricing data are required.
Note 1: There is a clear distinction between submitting cost or
pricing data and merely making available books, records, and other
documents without identification. The requirement for submission of
cost or pricing data is met when all accurate cost or pricing data
reasonably available to the offeror have been submitted, either
actually or by specific identification, to the Contracting Officer
or an authorized representative. As later information comes into
your possession, it should be submitted promptly to the Contracting
Officer in a manner that clearly shows how the information relates
to the offeror's price proposal. The requirement for submission of
cost or pricing data continues up to the time of agreement on price,
or an earlier date agreed upon between the parties if applicable.
Note 2: By submitting your proposal, you grant the Contracting
Officer or an authorized representative the right to examine records
that formed the basis for the pricing proposal. That examination can
take place at any time before award. It may include those books,
records, documents, and other types of
[[Page 51252]]
factual information (regardless of form or whether the information
is specifically referenced or included in the proposal as the basis
for pricing) that will permit an adequate evaluation of the proposed
price.
I. General Instructions
A. You must provide the following information on the first page
of your pricing proposal:
(1) Solicitation, contract, and/or modification number;
(2) Name and address of offeror;
(3) Name and telephone number of point of contact;
(4) Name of contract administration office (if available);
(5) Type of contract action (that is, new contract, change
order, price revision/redetermination, letter contract, unpriced
order, or other);
(6) Proposed cost; profit or fee; and total;
(7) Whether you will require the use of Government property in
the performance of the contract, and, if so, what property;
(8) Whether your organization is subject to cost accounting
standards; whether your organization has submitted a CASB Disclosure
Statement, and if it has been determined adequate; whether you have
been notified that you are or may be in noncompliance with your
Disclosure Statement or CAS, and, if yes, an explanation; whether
any aspect of this proposal is inconsistent with your disclosed
practices or applicable CAS, and, if so, an explanation; and whether
the proposal is consistent with your established estimating and
accounting principles and procedures and FAR Part 31, Cost
Principles, and, if not, an explanation;
(9) The following statement: This proposal reflects our
estimates and/or actual costs as of this date and conforms with the
instructions in FAR 15.403-5(b)(1) and Table 15-2. By submitting
this proposal, we grant the Contracting Officer and authorized
representative(s) the right to examine, at any time before award,
those records, which include books, documents, accounting procedures
and practices, and other data, regardless of type and form or
whether such supporting information is specifically referenced or
included in the proposal as the basis for pricing, that will permit
an adequate evaluation of the proposed price.
(10) Date of submission; and
(11) Name, title and signature of authorized representative.
B. In submitting your proposal, you must include an index,
appropriately referenced, of all the cost or pricing data and
information accompanying or identified in the proposal. In addition,
you must annotate any future additions and/or revisions, up to the
date of agreement on price, or an earlier date agreed upon by the
parties, on a supplemental index.
C. As part of the specific information required, you must
submit, with your proposal, cost or pricing data (that is, data that
are verifiable and factual and otherwise as defined at FAR 15.401).
You must clearly identify on your cover sheet that cost or pricing
data are included as part of the proposal. In addition, you must
submit with your proposal any information reasonably required to
explain your estimating process, including--
(1) The judgmental factors applied and the mathematical or other
methods used in the estimate, including those used in projecting
from known data; and
(2) The nature and amount of any contingencies included in the
proposed price.
D. You must show the relationship between contract line item
prices and the total contract price. You must attach cost-element
breakdowns for each proposed line item, using the appropriate format
prescribed in the ``Formats for Submission of Line Item Summaries''
section of this table. You must furnish supporting breakdowns for
each cost element, consistent with your cost accounting system.
E. When more than one contract line item is proposed, you must
also provide summary total amounts covering all line items for each
element of cost.
F. Whenever you have incurred costs for work performed before
submission of a proposal, you must identify those costs in your
cost/price proposal.
G. If you have reached an agreement with Government
representatives on use of forward pricing rates/factors, identify
the agreement, include a copy, and describe its nature.
H. As soon as practicable after final agreement on price or an
earlier date agreed to by the parties, but before the award
resulting from the proposal, you must, under the conditions stated
in FAR 15.406-2, submit a Certificate of Current Cost or Pricing
Data.
II. Cost Elements
Depending on your system, you must provide breakdowns for the
following basic cost elements, as applicable:
A. Materials and services. Provide a consolidated priced summary
of individual material quantities included in the various tasks,
orders, or contract line items being proposed and the basis for
pricing (vendor quotes, invoice prices, etc.). Include raw
materials, parts, components, assemblies, and services to be
produced or performed by others. For all items proposed, identify
the item and show the source, quantity, and price. Conduct price
analyses of all subcontractor proposals. Conduct cost analyses for
all subcontracts when cost or pricing data are submitted by the
subcontractor. Include these analyses as part of your own cost or
pricing data submissions for subcontracts expected to exceed the
appropriate threshold in FAR 15.403-4. Submit the subcontractor cost
or pricing data as part of your own cost or pricing data as required
in paragraph IIA(2) of this table. These requirements also apply to
all subcontractors if required to submit cost or pricing data.
(1) Adequate Price Competition. Provide data showing the degree
of competition and the basis for establishing the source and
reasonableness of price for those acquisitions (such as
subcontracts, purchase orders, material order, etc.) exceeding, or
expected to exceed, the appropriate threshold set forth at FAR
15.403-4 priced on the basis of adequate price competition. For
interorganizational transfers priced at other than the cost of
comparable competitive commercial work of the division, subsidiary,
or affiliate of the contractor, explain the pricing method (see FAR
31.205-26(e)).
(2) All Other. Obtain cost or pricing data from prospective
sources for those acquisitions (such as subcontracts, purchase
orders, material order, etc.) exceeding the threshold set forth in
FAR 15.403-4 and not otherwise exempt, in accordance with FAR
15.403-1(b) (i.e., adequate price competition, commercial items,
prices set by law or regulation or waiver). Also provide data
showing the basis for establishing source and reasonableness of
price. In addition, provide a summary of your cost analysis and a
copy of cost or pricing data submitted by the prospective source in
support of each subcontract, or purchase order that is the lower of
either $10,000,000 or more, or both more than the pertinent cost or
pricing data threshold and more than 10 percent of the prime
contractor's proposed price. The Contracting Officer may require you
to submit cost or pricing data in support of proposals in lower
amounts. Subcontractor cost or pricing data must be accurate,
complete and current as of the date of final price agreement, or an
earlier date agreed upon by the parties, given on the prime
contractor's Certificate of Current Cost or Pricing Data. The prime
contractor is responsible for updating a prospective subcontractor's
data. For standard commercial items fabricated by the offeror that
are generally stocked in inventory, provide a separate cost
breakdown, if priced based on cost. For interorganizational
transfers priced at cost, provide a separate breakdown of cost
elements. Analyze the cost or pricing data and submit the results of
your analysis of the prospective source's proposal. When submission
of a prospective source's cost or pricing data is required as
described in this paragraph, it must be included along with your own
cost or pricing data submission, as part of your own cost or pricing
data. You must also submit any other cost or pricing data obtained
from a subcontractor, either actually or by specific identification,
along with the results of any analysis performed on that data.
B. Direct Labor. Provide a time-phased (e.g., monthly,
quarterly, etc.) breakdown of labor hours, rates, and cost by
appropriate category, and furnish bases for estimates.
C. Indirect Costs. Indicate how you have computed and applied
your indirect costs, including cost breakdowns. Show trends and
budgetary data to provide a basis for evaluating the reasonableness
of proposed rates. Indicate the rates used and provide an
appropriate explanation.
D. Other Costs. List all other costs not otherwise included in
the categories described above (e.g., special tooling, travel,
computer and consultant services, preservation, packaging and
packing, spoilage and rework, and Federal excise tax on finished
articles) and provide bases for pricing.
E. Royalties. If royalties exceed $1,500, you must provide the
following information on a
[[Page 51253]]
separate page for each separate royalty or license fee:
(1) Name and address of licensor.
(2) Date of license agreement.
(3) Patent numbers.
(4) Patent application serial numbers, or other basis on which
the royalty is payable.
(5) Brief description (including any part or model numbers of
each contract item or component on which the royalty is payable).
(6) Percentage or dollar rate of royalty per unit.
(7) Unit price of contract item.
(8) Number of units.
(9) Total dollar amount of royalties.
(10) If specifically requested by the Contracting Officer, a
copy of the current license agreement and identification of
applicable claims of specific patents (see FAR 27.204 and 31.205-
37).
F. Facilities Capital Cost of Money. When you elect to claim
facilities capital cost of money as an allowable cost, you must
submit Form CASB-CMF and show the calculation of the proposed amount
(see FAR 31.205-10).
III. Formats for Submission of Line Item Summaries
A. New Contracts (Including Letter Contracts)
Proposed contract Proposed contract
Cost elements estimate--total cost estimate--unit cost Reference
(1) (2) (3) (4)
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Column and Instruction
(1) Enter appropriate cost elements.
(2) Enter those necessary and reasonable costs that, in your
judgment, will properly be incurred in efficient contract
performance. When any of the costs in this column have already been
incurred (e.g., under a letter contract), describe them on an
attached supporting page. When preproduction or startup costs are
significant, or when specifically requested to do so by the
Contracting Officer, provide a full identification and explanation
of them.
(3) Optional, unless required by the Contracting Officer.
(4) Identify the attachment in which the information supporting
the specific cost element may be found. (Attach separate pages as
necessary.)
B. Change Orders, Modifications, and Claims
Cost of
Estimated cost deleted work Net cost to be Cost of work Net cost of
Cost elements of all work already deleted added change Reference
deleted performed
(1) (2) (3) (4) (5) (6) (7)
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Column and Instruction
(1) Enter appropriate cost elements.
(2) Include the current estimates of what the cost would have
been to complete the deleted work not yet performed (not the
original proposal estimates), and the cost of deleted work already
performed.
(3) Include the incurred cost of deleted work already performed,
using actuals incurred if possible, or, if actuals are not
available, estimates from your accounting records. Attach a detailed
inventory of work, materials, parts, components, and hardware
already purchased, manufactured, or performed and deleted by the
change, indicating the cost and proposed disposition of each line
item. Also, if you desire to retain these items or any portion of
them, indicate the amount offered for them.
(4) Enter the net cost to be deleted, which is the estimated
cost of all deleted work less the cost of deleted work already
performed. Column (2) minus Column (3) equals Column (4).
(5) Enter your estimate for cost of work added by the change.
When nonrecurring costs are significant, or when specifically
requested to do so by the Contracting Officer, provide a full
identification and explanation of them. When any of the costs in
this column have already been incurred, describe them on an attached
supporting schedule.
(6) Enter the net cost of change, which is the cost of work
added, less the net cost to be deleted. Column (5) minus Column (4)
equals Column (6). When this result is negative, place the amount in
parentheses.
(7) Identify the attachment in which the information supporting
the specific cost element may be found. (Attach separate pages as
necessary.)
C. Price Revision/Redetermination
Number of Number of Incurred cost-- Incurred Total Estimated
Cutoff units units to be Contract Redetermination Difference Cost Incurred cost-- completed units cost--work incurred cost to Estimated Reference
date completed completed amount proposal amount elements preproduction in process cost complete total cost
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)
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(Use as applicable).
Column and Instruction
(1) Enter the cutoff date required by the contract, if
applicable.
(2) Enter the number of units completed during the period for
which experienced costs of production are being submitted.
(3) Enter the number of units remaining to be completed under
the contract.
(4) Enter the cumulative contract amount.
(5) Enter your redetermination proposal amount.
(6) Enter the difference between the contract amount and the
redetermination proposal amount. When this result is negative, place
the amount in parentheses. Column (4) minus Column (5) equals Column
(6).
[[Page 51254]]
(7) Enter appropriate cost elements. When residual inventory
exists, the final costs established under fixed-price-incentive and
fixed-price-redeterminable arrangements should be net of the fair
market value of such inventory. In support of subcontract costs,
submit a listing of all subcontracts subject to repricing action,
annotated as to their status.
(8) Enter all costs incurred under the contract before starting
production and other nonrecurring costs (usually referred to as
startup costs) from your books and records as of the cutoff date.
These include such costs as preproduction engineering, special plant
rearrangement, training program, and any identifiable nonrecurring
costs such as initial rework, spoilage, pilot runs, etc. In the
event the amounts are not segregated in or otherwise available from
your records, enter in this column your best estimates. Explain the
basis for each estimate and how the costs are charged on your
accounting records (e.g., included in production costs as direct
engineering labor, charged to manufacturing overhead). Also show how
the costs would be allocated to the units at their various stages of
contract completion.
(9) Enter in Column (9) the production costs from your books and
records (exclusive of preproduction costs reported in Column (8)) of
the units completed as of the cutoff date.
(10) Enter in Column (10) the costs of work in process as
determined from your records or inventories at the cutoff date. When
the amounts for work in process are not available in your records
but reliable estimates for them can be made, enter the estimated
amounts in Column (10) and enter in Column (9) the differences
between the total incurred costs (exclusive of preproduction costs)
as of the cutoff date and these estimates. Explain the basis for the
estimates, including identification of any provision for experienced
or anticipated allowances, such as shrinkage, rework, design
changes, etc. Furnish experienced unit or lot costs (or labor hours)
from inception of contract to the cutoff date, improvement curves,
and any other available production cost history pertaining to the
item(s) to which your proposal relates.
(11) Enter total incurred costs (Total of Columns (8), (9), and
(10)).
(12) Enter those necessary and reasonable costs that in your
judgment will properly be incurred in completing the remaining work
to be performed under the contract with respect to the item(s) to
which your proposal relates.
(13) Enter total estimated cost (Total of Columns (11) and
(12)).
(14) Identify the attachment in which the information supporting
the specific cost element may be found. (Attach separate pages as
necessary.)
Subpart 15.5--Preaward, Award, and Postaward Notifications,
Protests, and Mistakes
15.501 Definition.
Day, as used in this subpart, has the meaning set forth at 33.101.
15.502 Applicability.
This subpart applies to competitive proposals, as described in
6.102(b), and a combination of competitive procedures, as described in
6.102(c). The procedures in 15.504, 15.506, 15.507, 15.508, and 15.509,
with reasonable modification, should be followed for sole source
acquisitions and acquisitions described in 6.102(d)(1) and (2).
15.503 Notifications to unsuccessful offerors.
(a) Preaward notices--(1) Preaward notices of exclusion from
competitive range. The contracting officer shall notify offerors
promptly in writing when their proposals are excluded from the
competitive range or otherwise eliminated from the competition. The
notice shall state the basis for the determination and that a proposal
revision will not be considered.
(2) Preaward notices for small business set-asides. In addition to
the notice in paragraph (a)(1) of this section, when using a small
business set-aside (see subpart 19.5), upon completion of negotiations
and determinations of responsibility, but prior to award, the
contracting officer shall notify each offeror in writing of the name
and location of the apparent successful offeror. The notice shall also
state that
(i) The Government will not consider subsequent revisions of the
offeror's proposal; and
(ii) No response is required unless a basis exists to challenge the
small business size status of the apparent successful offeror. The
notice is not required when the contracting officer determines in
writing that the urgency of the requirement necessitates award without
delay or when the contract is entered into under the 8(a) program (see
19.805-2).
(b) Postaward notices. (1) Within 3 days after the date of contract
award, the contracting officer shall provide written notification to
each offeror whose proposal was in the competitive range but was not
selected for award (10 U.S.C. 2305(b)(5) and 41 U.S.C. 253b(c)) or had
not been previously notified under paragraph (a) of this section. The
notice shall include--
(i) The number of offerors solicited;
(ii) The number of proposals received;
(iii) The name and address of each offeror receiving an award;
(iv) The items, quantities, and any stated unit prices of each
award. If the number of items or other factors makes listing any stated
unit prices impracticable at that time, only the total contract price
need be furnished in the notice. However, the items, quantities, and
any stated unit prices of each award shall be made publicly available,
upon request; and
(v) In general terms, the reason(s) the offeror's proposal was not
accepted, unless the price information in paragraph (b)(1)(iv) of this
section readily reveals the reason. In no event shall an offeror's cost
breakdown, profit, overhead rates, trade secrets, manufacturing
processes and techniques, or other confidential business information be
disclosed to any other offeror.
(2) Upon request, the contracting officer shall furnish the
information described in paragraph (b)(1) of this section to
unsuccessful offerors in solicitations using simplified acquisition
procedures in part 13.
(3) Upon request, the contracting officer shall provide the
information in paragraph (b)(1) of this section to unsuccessful
offerors that received a preaward notice of exclusion from the
competitive range.
15.504 Award to successful offeror.
The contracting officer shall award a contract to the successful
offeror by furnishing the executed contract or other notice of the
award to that offeror.
(a) If the award document includes information that is different
than the latest signed proposal, as amended by the offeror's written
correspondence, both the offeror and the contracting officer shall sign
the contract award.
(b) When an award is made to an offeror for less than all of the
items that may be awarded and additional items are being withheld for
subsequent award, each notice shall state that the Government may make
subsequent awards on those additional items within the proposal
acceptance period.
(c) If the Optional Form (OF) 307, Contract Award, Standard Form
(SF) 26, Award/Contract, or SF 33, Solicitation, Offer and Award, is
not used to award the contract, the first page of the award document
shall contain the Government's acceptance statement from Block 15 of
that form, exclusive of the Item 3 reference language, and shall
contain the contracting officer's name, signature, and date. In
addition, if the award document includes information
[[Page 51255]]
that is different than the signed proposal, as amended by the offeror's
written correspondence, the first page shall include the contractor's
agreement statement from Block 14 of the OF 307 and the signature of
the contractor's authorized representative.
15.505 Preaward debriefing of offerors.
Offerors excluded from the competitive range or otherwise excluded
from the competition before award may request a debriefing before award
(10 U.S.C. 2305(b)(6)(A) and 41 U.S.C. 253b(f)-(h)).
(a)(1) The offeror may request a preaward debriefing by submitting
a written request for debriefing to the contracting officer within 3
days after receipt of the notice of exclusion from the competition.
(2) At the offeror's request, this debriefing may be delayed until
after award. If the debriefing is delayed until after award, it shall
include all information normally provided in a postaward debriefing
(see 15.506(d)). Debriefings delayed pursuant to this paragraph could
affect the timeliness of any protest filed subsequent to the
debriefing.
(3) If the offeror does not submit a timely request, the offeror
need not be given either a preaward or a postaward debriefing. Offerors
are entitled to no more than one debriefing for each proposal.
(b) The contracting officer shall make every effort to debrief the
unsuccessful offeror as soon as practicable, but may refuse the request
for a debriefing if, for compelling reasons, it is not in the best
interests of the Government to conduct a debriefing at that time. The
rationale for delaying the debriefing shall be documented in the
contract file. If the contracting officer delays the debriefing, it
shall be provided no later than the time postaward debriefings are
provided under 15.506. In that event, the contracting officer shall
include the information at 15.506(d) in the debriefing.
(c) Debriefings may be done orally, in writing, or by any other
method acceptable to the contracting officer.
(d) The contracting officer should normally chair any debriefing
session held. Individuals who conducted the evaluations shall provide
support.
(e) At a minimum, preaward debriefings shall include--
(1) The agency's evaluation of significant elements in the
offeror's proposal;
(2) A summary of the rationale for eliminating the offeror from the
competition; and
(3) Reasonable responses to relevant questions about whether source
selection procedures contained in the solicitation, applicable
regulations, and other applicable authorities were followed in the
process of eliminating the offeror from the competition.
(f) Preaward debriefings shall not disclose--
(1) The number of offerors;
(2) The identity of other offerors;
(3) The content of other offerors proposals;
(4) The ranking of other offerors;
(5) The evaluation of other offerors; or
(6) Any of the information prohibited in 15.506(e).
(g) An official summary of the debriefing shall be included in the
contract file.
15.506 Postaward debriefing of offerors.
(a)(1) An offeror, upon its written request received by the agency
within 3 days after the date on which that offeror has received
notification of contract award in accordance with 15.503(b), shall be
debriefed and furnished the basis for the selection decision and
contract award.
(2) To the maximum extent practicable, the debriefing should occur
within 5 days after receipt of the written request. Offerors that
requested a postaward debriefing in lieu of a preaward debriefing, or
whose debriefing was delayed for compelling reasons beyond contract
award, also should be debriefed within this time period.
(3) An offeror that was notified of exclusion from the competition
(see 15.505(a)), but failed to submit a timely request, is not entitled
to a debriefing.
(4)(i) Untimely debriefing requests may be accommodated.
(ii) Government accommodation of a request for delayed debriefing
pursuant to 15.505(a)(2), or any untimely debriefing request, does not
automatically extend the deadlines for filing protests. Debriefings
delayed pursuant to 15.505(a)(2) could affect the timeliness of any
protest filed subsequent to the debriefing.
(b) Debriefings of successful and unsuccessful offerors may be done
orally, in writing, or by any other method acceptable to the
contracting officer.
(c) The contracting officer should normally chair any debriefing
session held. Individuals who conducted the evaluations shall provide
support.
(d) At a minimum, the debriefing information shall include--
(1) The Government's evaluation of the significant weaknesses or
deficiencies in the offeror's proposal, if applicable;
(2) The overall evaluated cost or price (including unit prices),
and technical rating, if applicable, of the successful offeror and the
debriefed offeror, and past performance information on the debriefed
offeror;
(3) The overall ranking of all offerors, when any ranking was
developed by the agency during the source selection;
(4) A summary of the rationale for award;
(5) For acquisitions of commercial items, the make and model of the
item to be delivered by the successful offeror; and
(6) Reasonable responses to relevant questions about whether source
selection procedures contained in the solicitation, applicable
regulations, and other applicable authorities were followed.
(e) The debriefing shall not include point-by-point comparisons of
the debriefed offeror's proposal with those of other offerors.
Moreover, the debriefing shall not reveal any information prohibited
from disclosure by 24.202 or exempt from release under the Freedom of
Information Act (5 U.S.C. 552) including--
(1) Trade secrets;
(2) Privileged or confidential manufacturing processes and
techniques;
(3) Commercial and financial information that is privileged or
confidential, including cost breakdowns, profit, indirect cost rates,
and similar information; and
(4) The names of individuals providing reference information about
an offeror's past performance.
(f) An official summary of the debriefing shall be included in the
contract file.
15.507 Protests against award.
(a) Protests against award in negotiated acquisitions shall be
handled in accordance with part 33. Use of agency protest procedures
that incorporate the alternative dispute resolution provisions of
Executive Order 12979 is encouraged for both preaward and postaward
protests.
(b) If a protest causes the agency, within 1 year of contract
award, to--
(1) Issue a new solicitation on the protested contract award, the
contracting officer shall provide the information in paragraph (c) of
this section to all prospective offerors for the new solicitation; or
(2) Issue a new request for revised proposals on the protested
contract award, the contracting officer shall provide the information
in paragraph (c) of this section to offerors that were in the
competitive range and are requested to submit revised proposals.
[[Page 51256]]
(c) The following information will be provided to appropriate
parties:
(1) Information provided to unsuccessful offerors in any
debriefings conducted on the original award regarding the successful
offeror's proposal; and
(2) Other nonproprietary information that would have been provided
to the original offerors.
15.508 Discovery of mistakes.
Mistakes in a contractor's proposal that are disclosed after award
shall be processed substantially in accordance with the procedures for
mistakes in bids at 14.407-4.
15.509 Forms.
Optional Form 307, Contract Award, Standard Form (SF) 26, Award/
Contract, or SF 33, Solicitation, Offer and Award, may be used to award
negotiated contracts in which the signature of both parties on a single
document is appropriate. If these forms are not used, the award
document shall incorporate the agreement and award language from the OF
307.
Subpart 15.6--Unsolicited Proposals
15.600 Scope of subpart.
This subpart sets forth policies and procedures concerning the
submission, receipt, evaluation, and acceptance or rejection of
unsolicited proposals.
15.601 Definitions.
As used in this subpart--
Advertising material means material designed to acquaint the
Government with a prospective contractor's present products, services,
or potential capabilities, or designed to stimulate the Government's
interest in buying such products or services.
Commercial item offer means an offer of a commercial item that the
vendor wishes to see introduced in the Government's supply system as an
alternate or a replacement for an existing supply item. This term does
not include innovative or unique configurations or uses of commercial
items that are being offered for further development and that may be
submitted as an unsolicited proposal.
Contribution means a concept, suggestion, or idea presented to the
Government for its use with no indication that the source intends to
devote any further effort to it on the Government's behalf.
Unsolicited proposal means a written proposal for a new or
innovative idea that is submitted to an agency on the initiative of the
offeror for the purpose of obtaining a contract with the Government,
and that is not in response to a request for proposals, Broad Agency
Announcement, Small Business Innovation Research topic, Small Business
Technology Transfer Research topic, Program Research and Development
Announcement, or any other Government-initiated solicitation or
program.
15.602 Policy.
It is the policy of the Government to encourage the submission of
new and innovative ideas in response to Broad Agency Announcements,
Small Business Innovation Research topics, Small Business Technology
Transfer Research topics, Program Research and Development
Announcements, or any other Government-initiated solicitation or
program. When the new and innovative ideas do not fall under topic
areas publicized under those programs or techniques, the ideas may be
submitted as unsolicited proposals.
15.603 General.
(a) Unsolicited proposals allow unique and innovative ideas or
approaches that have been developed outside the Government to be made
available to Government agencies for use in accomplishment of their
missions. Unsolicited proposals are offered with the intent that the
Government will enter into a contract with the offeror for research and
development or other efforts supporting the Government mission, and
often represent a substantial investment of time and effort by the
offeror.
(b) Advertising material, commercial item offers, or contributions,
as defined in 15.601, or routine correspondence on technical issues,
are not unsolicited proposals.
(c) A valid unsolicited proposal must--
(1) Be innovative and unique;
(2) Be independently originated and developed by the offeror;
(3) Be prepared without Government supervision, endorsement,
direction, or direct Government involvement;
(4) Include sufficient detail to permit a determination that
Government support could be worthwhile and the proposed work could
benefit the agency's research and development or other mission
responsibilities; and
(5) Not be an advance proposal for a known agency requirement that
can be acquired by competitive methods.
(d) Unsolicited proposals in response to a publicized general
statement of agency needs are considered to be independently
originated.
15.604 Agency points of contact.
(a) Preliminary contact with agency technical or other appropriate
personnel before preparing a detailed unsolicited proposal or
submitting proprietary information to the Government may save
considerable time and effort for both parties (see 15.201). Agencies
shall make available to potential offerors of unsolicited proposals at
least the following information:
(1) Definition (see 15.601) and content (see 15.605) of an
unsolicited proposal acceptable for formal evaluation.
(2) Requirements concerning responsible prospective contractors
(see subpart 9.1), and organizational conflicts of interest (see
subpart 9.5).
(3) Guidance on preferred methods for submitting ideas/concepts to
the Government, such as any agency: upcoming solicitations; Broad
Agency Announcements; Small Business Innovation Research programs;
Small Business Technology Transfer Research programs; Program Research
and Development Announcements; or grant programs.
(4) Agency points of contact for information regarding advertising,
contributions, and other types of transactions similar to unsolicited
proposals.
(5) Information sources on agency objectives and areas of potential
interest.
(6) Procedures for submission and evaluation of unsolicited
proposals.
(7) Instructions for identifying and marking proprietary
information so that it is protected and restrictive legends conform to
15.609.
(b) Only the cognizant contracting officer has the authority to
bind the Government regarding unsolicited proposals.
15.605 Content of unsolicited proposals.
Unsolicited proposals should contain the following information to
permit consideration in an objective and timely manner:
(a) Basic information including--
(1) Offeror's name and address and type of organization; e.g.,
profit, nonprofit, educational, small business;
(2) Names and telephone numbers of technical and business personnel
to be contacted for evaluation or negotiation purposes;
(3) Identification of proprietary data to be used only for
evaluation purposes;
(4) Names of other Federal, State, or local agencies or parties
receiving the proposal or funding the proposed effort;
(5) Date of submission; and
(6) Signature of a person authorized to represent and contractually
obligate the offeror.
(b) Technical information including--
(1) Concise title and abstract (approximately 200 words) of the
proposed effort;
[[Page 51257]]
(2) A reasonably complete discussion stating the objectives of the
effort or activity, the method of approach and extent of effort to be
employed, the nature and extent of the anticipated results, and the
manner in which the work will help to support accomplishment of the
agency's mission;
(3) Names and biographical information on the offeror's key
personnel who would be involved, including alternates; and
(4) Type of support needed from the agency; e.g., facilities,
equipment, materials, or personnel resources.
(c) Supporting information including--
(1) Proposed price or total estimated cost for the effort in
sufficient detail for meaningful evaluation;
(2) Period of time for which the proposal is valid (a 6-month
minimum is suggested);
(3) Type of contract preferred;
(4) Proposed duration of effort;
(5) Brief description of the organization, previous experience,
relevant past performance, and facilities to be used;
(6) Other statements, if applicable, about organizational conflicts
of interest, security clearances, and environmental impacts; and
(7) The names and telephone numbers of agency technical or other
agency points of contact already contacted regarding the proposal.
15.606 Agency procedures.
(a) Agencies shall establish procedures for controlling the
receipt, evaluation, and timely disposition of unsolicited proposals
consistent with the requirements of this subpart. The procedures shall
include controls on the reproduction and disposition of proposal
material, particularly data identified by the offeror as subject to
duplication, use, or disclosure restrictions.
(b) Agencies shall establish agency points of contact (see 15.604)
to coordinate the receipt and handling of unsolicited proposals.
15.606-1 Receipt and initial review.
(a) Before initiating a comprehensive evaluation, the agency
contact point shall determine if the proposal--
(1) Is a valid unsolicited proposal, meeting the requirements of
15.603(c);
(2) Is suitable for submission in response to an existing agency
requirement (see 15.602);
(3) Is related to the agency mission;
(4) Contains sufficient technical and cost information for
evaluation;
(5) Has been approved by a responsible official or other
representative authorized to obligate the offeror contractually; and
(6) Complies with the marking requirements of 15.609.
(b) If the proposal meets these requirements, the contact point
shall promptly acknowledge receipt and process the proposal.
(c) If a proposal is rejected because the proposal does not meet
the requirements of paragraph (a) of this subsection, the agency
contact point shall promptly inform the offeror of the reasons for
rejection in writing and of the proposed disposition of the unsolicited
proposal.
15.606-2 Evaluation.
(a) Comprehensive evaluations shall be coordinated by the agency
contact point, who shall attach or imprint on each unsolicited
proposal, circulated for evaluation, the legend required by 15.609(d).
When performing a comprehensive evaluation of an unsolicited proposal,
evaluators shall consider the following factors, in addition to any
others appropriate for the particular proposal:
(1) Unique, innovative and meritorious methods, approaches, or
concepts demonstrated by the proposal;
(2) Overall scientific, technical, or socioeconomic merits of the
proposal;
(3) Potential contribution of the effort to the agency's specific
mission;
(4) The offeror's capabilities, related experience, facilities,
techniques, or unique combinations of these that are integral factors
for achieving the proposal objectives;
(5) The qualifications, capabilities, and experience of the
proposed principal investigator, team leader, or key personnel critical
to achieving the proposal objectives; and
(6) The realism of the proposed cost.
(b) The evaluators shall notify the agency point of contact of
their recommendations when the evaluation is completed.
15.607 Criteria for acceptance and negotiation of an unsolicited
proposal.
(a) A favorable comprehensive evaluation of an unsolicited proposal
does not, in itself, justify awarding a contract without providing for
full and open competition. The agency point of contact shall return an
unsolicited proposal to the offeror, citing reasons, when its
substance--
(1) Is available to the Government without restriction from another
source;
(2) Closely resembles a pending competitive acquisition
requirement;
(3) Does not relate to the activity's mission; or
(4) Does not demonstrate an innovative and unique method, approach,
or concept, or is otherwise not deemed a meritorious proposal.
(b) The contracting officer may commence negotiations on a sole
source basis only when--
(1) An unsolicited proposal has received a favorable comprehensive
evaluation;
(2) A justification and approval has been obtained (see 6.302-
1(a)(2)(i) for research proposals or other appropriate provisions of
subpart 6.3, and 6.303-2(b));
(3) The agency technical office sponsoring the contract furnishes
the necessary funds; and
(4) The contracting officer has complied with the synopsis
requirements of subpart 5.2.
15.608 Prohibitions.
(a) Government personnel shall not use any data, concept, idea, or
other part of an unsolicited proposal as the basis, or part of the
basis, for a solicitation or in negotiations with any other firm unless
the offeror is notified of and agrees to the intended use. However,
this prohibition does not preclude using any data, concept, or idea in
the proposal that also is available from another source without
restriction.
(b) Government personnel shall not disclose restrictively marked
information (see 3.104 and 15.609) included in an unsolicited proposal.
The disclosure of such information concerning trade secrets, processes,
operations, style of work, apparatus, and other matters, except as
authorized by law, may result in criminal penalties under 18 U.S.C.
1905.
15.609 Limited use of data.
(a) An unsolicited proposal may include data that the offeror does
not want disclosed to the public for any purpose or used by the
Government except for evaluation purposes. If the offeror wishes to
restrict the data, the title page must be marked with the following
legend:
Use and Disclosure of Data
This proposal includes data that shall not be disclosed outside
the Government and shall not be duplicated, used, or disclosed--in
whole or in part--for any purpose other than to evaluate this
proposal. However, if a contract is awarded to this offeror as a
result of--or in connection with--the submission of these data, the
Government shall have the right to duplicate, use, or disclose the
data to the extent provided in the resulting contract. This
restriction does not limit the Government's right to use information
contained in these data if they are obtained from another source
without restriction. The data subject to this restriction are
contained in Sheets [insert numbers or other identification of
sheets].
[[Page 51258]]
(b) The offeror shall also mark each sheet of data it wishes to
restrict with the following legend: Use or disclosure of data contained
on this sheet is subject to the restriction on the title page of this
proposal.
(c) The agency point of contact shall return to the offeror any
unsolicited proposal marked with a legend different from that provided
in paragraph (a) of this section. The return letter will state that the
proposal cannot be considered because it is impracticable for the
Government to comply with the legend and that the agency will consider
the proposal if it is resubmitted with the proper legend.
(d) The agency point of contact shall place a cover sheet on the
proposal or clearly mark it as follows, unless the offeror clearly
states in writing that no restrictions are imposed on the disclosure or
use of the data contained in the proposal:
Unsolicited Proposal--Use of Data Limited
All Government personnel must exercise extreme care to ensure
that the information in this proposal is not disclosed to an
individual who has not been authorized access to such data in
accordance with FAR 3.104, and is not duplicated, used, or disclosed
in whole or in part for any purpose other than evaluation of the
proposal, without the written permission of the offeror. If a
contract is awarded on the basis of this proposal, the terms of the
contract shall control disclosure and use. This notice does not
limit the Government's right to use information contained in the
proposal if it is obtainable from another source without
restriction. This is a Government notice, and shall not by itself be
construed to impose any liability upon the Government or Government
personnel for disclosure or use of data contained in this proposal.
(e) The notice in paragraph (d) of this section is used solely as a
manner of handling unsolicited proposals that will be compatible with
this subpart. However, the use of this notice shall not be used to
justify the withholding of a record, nor to improperly deny the public
access to a record, where an obligation is imposed on an agency by the
Freedom of Information Act, 5 U.S.C. 552, as amended. A prospective
offeror should identify trade secrets, commercial or financial
information, and privileged or confidential information to the
Government (see paragraph (a) of this section).
(f) When an agency receives an unsolicited proposal without any
restrictive legend from an educational or nonprofit organization or
institution, and an evaluation outside the Government is necessary, the
agency point of contact shall--
(1) Attach a cover sheet clearly marked with the legend in
paragraph (d) of this section;
(2) Change the beginning of this legend to read ``All Government
and non-Government personnel * * * ''; and
(3) Require any non-Government evaluator to agree in writing that
data in the proposal will not be disclosed to others outside the
Government.
(g) If the proposal is received with the restrictive legend (see
paragraph (a) of this section), the modified cover sheet shall also be
used and permission shall be obtained from the offeror before release
of the proposal for evaluation by non-Government personnel.
(h) When an agency receives an unsolicited proposal with or without
a restrictive legend from other than an educational or nonprofit
organization or institution, and evaluation by Government personnel
outside the agency or by experts outside of the Government is
necessary, written permission must be obtained from the offeror before
release of the proposal for evaluation. The agency point of contact
shall--
(1) Clearly mark the cover sheet with the legend in paragraph (d)
or as modified in paragraph (f) of this section; and
(2) Obtain a written agreement from any non-Government evaluator
stating that data in the proposal will not be disclosed to persons
outside the Government.
PART 16--TYPES OF CONTRACTS
14. Section 16.306 is amended by revising paragraph (c) to read as
follows:
16.306 Cost-plus-fixed-fee contracts.
* * * * *
(c) Limitations. No cost-plus-fixed-fee contract shall be awarded
unless the contracting officer complies with all limitations in 16.301-
3.
* * * * *
PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS
15. Section 36.520 is added to read as follows:
36.520 Contracting by negotiation.
The contracting officer shall insert in solicitations for
construction the provision at 52.236-28, Preparation of Offers--
Construction, when contracting by negotiation.
PART 42--CONTRACT ADMINISTRATION
16. Section 42.705-1 is amended by revising paragraph (b)(2) to
read as follows:
42.705-1 Contracting officer determination procedure.
* * * * *
(b) * * *
(2) The auditor shall submit to the contracting officer an advisory
audit report identifying any relevant advance agreements or restrictive
terms of specific contracts.
* * * * *
42.705-2 [Amended]
17. Section 42.705-2 is amended by removing paragraph (b)(2)(iii)
and redesignating paragraphs (b)(2)(iv) and (b)(2)(v) as (b)(2)(iii)
and (b)(2)(iv).
18. Section 42.1502 is amended by revising the first sentence of
paragraph (a) to read as follows:
42.1502 Policy.
(a) Except as provided in paragraph (b) of this section, agencies
shall prepare an evaluation of contractor performance for each contract
in excess of $1,000,000 (regardless of the date of contract award) and
for each contract in excess of $100,000 beginning not later than
January 1, 1998 (regardless of the date of contract award), at the time
the work under the contract is completed. * * *
* * * * *
19. Section 42.1503 is amended in paragraph (b) by adding a
sentence to the end of the paragraph to read as follows:
42.1503 Procedures.
* * * * *
(b) * * * A copy of the annual or final past performance evaluation
shall be provided to the contractor as soon as it is finalized.
* * * * *
20. Subpart 42.17 is added to read as follows:
Subpart 42.17--Forward Pricing Rate Agreements
42.1701 Procedures.
(a) Negotiation of forward pricing rate agreements (FPRA's) may be
requested by the contracting officer or the contractor or initiated by
the administrative contracting officer (ACO). In determining whether or
not to establish such an agreement, the ACO should consider whether the
benefits to be derived from the agreement are commensurate with the
effort of establishing and monitoring it. Normally, FPRA's should be
negotiated
[[Page 51259]]
only with contractors having a significant volume of Government
contract proposals. The cognizant contract administration agency shall
determine whether an FPRA will be established.
(b) The ACO shall obtain the contractor's proposal and require that
it include cost or pricing data that are accurate, complete, and
current as of the date of submission. The ACO shall invite the
cognizant contract auditor and contracting offices having a significant
interest to participate in developing a Government objective and in the
negotiations. Upon completing negotiations, the ACO shall prepare a
price negotiation memorandum (PNM) (see 15.406-3) and forward copies of
the PNM and FPRA to the cognizant auditor and to all contracting
offices that are known to be affected by the FPRA. A Certificate of
Current Cost or Pricing Data shall not be required at this time (see
15.407-3(c)).
(c) The FPRA shall provide specific terms and conditions covering
expiration, application, and data requirements for systematic
monitoring to ensure the validity of the rates. The agreement shall
provide for cancellation at the option of either party and shall
require the contractor to submit to the ACO and to the cognizant
contract auditor any significant change in cost or pricing data.
(d) When an FPRA is invalid, the contractor should submit and
negotiate a new proposal to reflect the changed conditions. If an FPRA
has not been established or has been invalidated, the ACO will issue a
forward pricing rate recommendation (FPRR) to buying activities with
documentation to assist negotiators. In the absence of an FPRA or FPRR,
the ACO shall include support for rates utilized.
(e) The ACO may negotiate continuous updates to the FPRA. The FPRA
will provide specific terms and conditions covering notification,
application, and data requirements for systematic monitoring to ensure
the validity of the rates.
PART 43--CONTRACT MODIFICATIONS
21. Section 43.301 is amended by revising the introductory text of
paragraph (a)(1) to read as follows:
43.301 Use of forms.
(a)(1) The Standard Form 30 (SF 30), Amendment of Solicitation/
Modification of Contract, exclusive of actions processed under part 15,
shall (except for the options stated in 43.301(a)(2) or actions
processed under part 15) be used for--
* * * * *
PART 49--TERMINATION OF CONTRACTS
22. Section 49.208 is amended by revising the third sentence of the
introductory paragraph to read as follows:
49.208 Equitable adjustment after partial termination.
* * * The contractor shall submit the proposal in the format of
Table 15-2 of 15.408.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
23. Section 52.215-1 is added to read as follows:
52.215-1 Instructions to Offerors--Competitive Acquisition.
As prescribed in 15.209(a), insert the following provision:
Instructions to Offerors--Competitive Acquisition (Oct 1997)
(a) Definitions. As used in this provision--
Discussions are negotiations that occur after establishment of
the competitive range that may, at the Contracting Officer's
discretion, result in the offeror being allowed to revise its
proposal.
In writing or written means any worded or numbered expression
which can be read, reproduced, and later communicated, and includes
electronically transmitted and stored information.
Proposal modification is a change made to a proposal before the
solicitation's closing date and time, or made in response to an
amendment, or made to correct a mistake at any time before award.
Proposal revision is a change to a proposal made after the
solicitation closing date, at the request of or as allowed by a
Contracting Officer as the result of negotiations.
Time, if stated as a number of days, is calculated using
calendar days, unless otherwise specified, and will include
Saturdays, Sundays, and legal holidays. However, if the last day
falls on a Saturday, Sunday, or legal holiday, then the period shall
include the next working day.
(b) Amendments to solicitations. If this solicitation is
amended, all terms and conditions that are not amended remain
unchanged. Offerors shall acknowledge receipt of any amendment to
this solicitation by the date and time specified in the
amendment(s).
(c) Submission, modification, revision, and withdrawal of
proposals. (1) Unless other methods (e.g., electronic commerce or
facsimile) are permitted in the solicitation, proposals and
modifications to proposals shall be submitted in paper media in
sealed envelopes or packages (i) addressed to the office specified
in the solicitation, and (ii) showing the time and date specified
for receipt, the solicitation number, and the name and address of
the offeror. Offerors using commercial carriers should ensure that
the proposal is marked on the outermost wrapper with the information
in paragraphs (c)(1)(i) and (c)(1)(ii) of this provision.
(2) The first page of the proposal must show--
(i) The solicitation number;
(ii) The name, address, and telephone and facsimile numbers of
the offeror (and electronic address if available);
(iii) A statement specifying the extent of agreement with all
terms, conditions, and provisions included in the solicitation and
agreement to furnish any or all items upon which prices are offered
at the price set opposite each item;
(iv) Names, titles, and telephone and facsimile numbers (and
electronic addresses if available) of persons authorized to
negotiate on the offeror's behalf with the Government in connection
with this solicitation; and
(v) Name, title, and signature of person authorized to sign the
proposal. Proposals signed by an agent shall be accompanied by
evidence of that agent's authority, unless that evidence has been
previously furnished to the issuing office.
(3) Late proposals and revisions. (i) Any proposal received at
the office designated in the solicitation after the exact time
specified for receipt of offers will not be considered unless it is
received before award is made and--
(A) It was sent by registered or certified mail not later than
the fifth calendar day before the date specified for receipt of
offers (e.g., an offer submitted in response to a solicitation
requiring receipt of offers by the 20th of the month must have been
mailed by the 15th);
(B) It was sent by mail (or telegram or facsimile, if
authorized) or hand-carried (including delivery by a commercial
carrier) if it is determined by the Government that the late receipt
was due primarily to Government mishandling after receipt at the
Government installation;
(C) It was sent by U.S. Postal Service
Express Mail Next Day Service-Post Office to Addressee, not
later than 5:00 p.m. at the place of mailing two working days prior
to the date specified for receipt of proposals. The term ``working
days'' excludes weekends and U.S. Federal holidays;
(D) It was transmitted through an electronic commerce method
authorized by the solicitation and was received at the initial point
of entry to the Government infrastructure not later than 5:00 p.m.
one working day prior to the date specified for receipt of
proposals; or
(E) There is acceptable evidence to establish that it was
received at the activity designated for receipt of offers and was
under the Government's control prior to the time set for receipt of
offers, and the Contracting Officer determines that accepting the
late offer would not unduly delay the procurement; or
(F) It is the only proposal received.
(ii) Any modification or revision of a proposal or response to
request for information, including any final proposal revision, is
subject to the same conditions as
[[Page 51260]]
in subparagraphs (c)(3)(i)(A) through (c)(3)(i)(E) of this
provision.
(iii) The only acceptable evidence to establish the date of
mailing of a late proposal or modification or revision sent either
by registered or certified mail is the U.S. or Canadian Postal
Service postmark both on the envelope or wrapper and on the original
receipt from the U.S. or Canadian Postal Service. Both postmarks
must show a legible date or the proposal, response to a request for
information, or modification or revision shall be processed as if
mailed late. ``Postmark'' means a printed, stamped, or otherwise
placed impression (exclusive of a postage meter machine impression)
that is readily identifiable without further action as having been
supplied and affixed by employees of the U.S. or Canadian Postal
Service on the date of mailing. Therefore, offerors or respondents
should request the postal clerk to place a legible hand cancellation
bull's eye postmark on both the receipt and the envelope or wrapper.
(iv) Acceptable evidence to establish the time of receipt at the
Government installation includes the time/date stamp of that
installation on the proposal wrapper, other documentary evidence of
receipt maintained by the installation, or oral testimony or
statements of Government personnel.
(v) The only acceptable evidence to establish the date of
mailing of a late offer, modification or revision, or withdrawal
sent by Express Mail Next Day Service-Post Office to Addressee is
the date entered by the post office receiving clerk on the ``Express
Mail Next Day Service-Post Office to Addressee'' label and the
postmark on both the envelope or wrapper and on the original receipt
from the U.S. Postal Service. ``Postmark'' has the same meaning as
defined in paragraph (c)(3)(iii) of this provision, excluding
postmarks of the Canadian Postal Service. Therefore, offerors or
respondents should request the postal clerk to place a legible hand
cancellation bull's eye postmark on both the receipt and the
envelope or wrapper.
(vi) Notwithstanding paragraph (c)(3)(i) of this provision, a
late modification or revision of an otherwise successful proposal
that makes its terms more favorable to the Government will be
considered at any time it is received and may be accepted.
(vii) Proposals may be withdrawn by written notice or telegram
(including mailgram) received at any time before award. If the
solicitation authorizes facsimile proposals, proposals may be
withdrawn via facsimile received at any time before award, subject
to the conditions specified in the provision entitled ``Facsimile
Proposals.'' Proposals may be withdrawn in person by an offeror or
an authorized representative, if the representative's identity is
made known and the representative signs a receipt for the proposal
before award.
(viii) If an emergency or unanticipated event interrupts normal
Government processes so that proposals cannot be received at the
office designated for receipt of proposals by the exact time
specified in the solicitation, and urgent Government requirements
preclude amendment of the solicitation or other notice of an
extension of the closing date, the time specified for receipt of
proposals will be deemed to be extended to the same time of day
specified in the solicitation on the first work day on which normal
Government processes resume. If no time is specified in the
solicitation, the time for receipt is 4:30 p.m., local time, for the
designated Government office.
(4) Unless otherwise specified in the solicitation, the offeror
may propose to provide any item or combination of items.
(5) Proposals submitted in response to this solicitation shall
be in English and in U.S. dollars, unless otherwise permitted by the
solicitation.
(6) Offerors may submit modifications to their proposals at any
time before the solicitation closing date and time, and may submit
modifications in response to an amendment, or to correct a mistake
at any time before award.
(7) Offerors may submit revised proposals only if requested or
allowed by the Contracting Officer.
(8) Proposals may be withdrawn at any time before award.
Withdrawals are effective upon receipt of notice by the Contracting
Officer.
(d) Offer expiration date. Proposals in response to this
solicitation will be valid for the number of days specified on the
solicitation cover sheet (unless a different period is proposed by
the offeror).
(e) Restriction on disclosure and use of data. Offerors that
include in their proposals data that they do not want disclosed to
the public for any purpose, or used by the Government except for
evaluation purposes, shall--
(1) Mark the title page with the following legend: This proposal
includes data that shall not be disclosed outside the Government and
shall not be duplicated, used, or disclosed--in whole or in part--
for any purpose other than to evaluate this proposal. If, however, a
contract is awarded to this offeror as a result of--or in connection
with-- the submission of this data, the Government shall have the
right to duplicate, use, or disclose the data to the extent provided
in the resulting contract. This restriction does not limit the
Government's right to use information contained in this data if it
is obtained from another source without restriction. The data
subject to this restriction are contained in sheets [insert numbers
or other identification of sheets]; and
(2) Mark each sheet of data it wishes to restrict with the
following legend: Use or disclosure of data contained on this sheet
is subject to the restriction on the title page of this proposal.
(f) Contract award. (1) The Government intends to award a
contract or contracts resulting from this solicitation to the
responsible offeror(s) whose proposal(s) represents the best value
after evaluation in accordance with the factors and subfactors in
the solicitation.
(2) The Government may reject any or all proposals if such
action is in the Government's interest.
(3) The Government may waive informalities and minor
irregularities in proposals received.
(4) The Government intends to evaluate proposals and award a
contract without discussions with offerors (except clarifications as
described in FAR 15.306(a)). Therefore, the offeror's initial
proposal should contain the offeror's best terms from a cost or
price and technical standpoint. The Government reserves the right to
conduct discussions if the Contracting Officer later determines them
to be necessary. If the Contracting Officer determines that the
number of proposals that would otherwise be in the competitive range
exceeds the number at which an efficient competition can be
conducted, the Contracting Officer may limit the number of proposals
in the competitive range to the greatest number that will permit an
efficient competition among the most highly rated proposals.
(5) The Government reserves the right to make an award on any
item for a quantity less than the quantity offered, at the unit cost
or prices offered, unless the offeror specifies otherwise in the
proposal.
(6) The Government reserves the right to make multiple awards
if, after considering the additional administrative costs, it is in
the Government's best interest to do so.
(7) Exchanges with offerors after receipt of a proposal do not
constitute a rejection or counteroffer by the Government.
(8) The Government may determine that a proposal is unacceptable
if the prices proposed are materially unbalanced between line items
or subline items. Unbalanced pricing exists when, despite an
acceptable total evaluated price, the price of one or more contract
line items is significantly overstated or understated as indicated
by the application of cost or price analysis techniques. A proposal
may be rejected if the Contracting Officer determines that the lack
of balance poses an unacceptable risk to the Government.
(9) If a cost realism analysis is performed, cost realism may be
considered by the source selection authority in evaluating
performance or schedule risk.
(10) A written award or acceptance of proposal mailed or
otherwise furnished to the successful offeror within the time
specified in the proposal shall result in a binding contract without
further action by either party.
(11) The Government may disclose the following information in
postaward debriefings to other offerors:
(i) The overall evaluated cost or price and technical rating of
the successful offeror;
(ii) The overall ranking of all offerors, when any ranking was
developed by the agency during source selection;
(iii) A summary of the rationale for award; and
(iv) For acquisitions of commercial items, the make and model of
the item to be delivered by the successful offeror. (End of
provision)
Alternate I (Oct 1997). As prescribed in 15.209(a)(1),
substitute the following paragraph (f)(4) for paragraph (f)(4) of
the basic provision:
(f)(4) The Government intends to evaluate proposals and award a
contract after conducting discussions with offerors whose proposals
have been determined to be within the competitive range. If the
Contracting Officer determines that the number of
[[Page 51261]]
proposals that would otherwise be in the competitive range exceeds
the number at which an efficient competition can be conducted, the
Contracting Officer may limit the number of proposals in the
competitive range to the greatest number that will permit an
efficient competition among the most highly rated proposals.
Therefore, the offeror's initial proposal should contain the
offeror's best terms from a price and technical standpoint.
Alternate II (Oct 1997). As prescribed in 15.209(a)(2), add a
paragraph (c)(9) substantially the same as the following to the
basic clause:
(9) Offerors may submit proposals that depart from stated
requirements. Such proposals shall clearly identify why the
acceptance of the proposal would be advantageous to the Government.
Any deviations from the terms and conditions of the solicitation, as
well as the comparative advantage to the Government, shall be
clearly identified and explicitly defined. The Government reserves
the right to amend the solicitation to allow all offerors an
opportunity to submit revised proposals based on the revised
requirements.
24. Sections 52.215-3 through 52.215-15 are revised to read as
follows:
52.215-3 Request for Information or Solicitation for Planning
Purposes.
As prescribed in 15.209(c), insert the following provision:
Request for Information or Solicitation for Planning Purposes (Oct
1997)
(a) The Government does not intend to award a contract on the
basis of this solicitation or to otherwise pay for the information
solicited except as an allowable cost under other contracts as
provided in subsection 31.205-18, Bid and proposal costs, of the
Federal Acquisition Regulation.
(b) Although ``proposal'' and ``offeror'' are used in this
Request for Information, your response will be treated as
information only. It shall not be used as a proposal.
(c) This solicitation is issued for the purpose of: [state
purpose]. (End of provision)
52.215-4 Type of Business Organization.
As prescribed in 15.209(d), insert the following provision:
Type of Business Organization (Oct 1997)
The offeror or respondent, by checking the applicable box,
represents that--
(a) It operates as {time} an individual, {time} a partnership,
{time} a nonprofit organization, {time} a joint venture, or
{time} a corporation incorporated under the laws of the State of
________.
(b) If the offeror or respondent is a foreign entity, it
operates as {time} an individual, {time} a partnership, {time} a
nonprofit organization, {time} a joint venture, or {time} a
corporation, registered for business in (country) ________.
(End of provision)
52.215-5 Facsimile Proposals.
As prescribed in 15.209(e), insert the following provision:
Facsimile Proposals (Oct 1997)
(a) Definition. Facsimile proposal, as used in this provision,
means a proposal, revision or modification of a proposal, or
withdrawal of a proposal that is transmitted to and received by the
Government via facsimile machine.
(b) Offerors may submit facsimile proposals as responses to this
solicitation. Facsimile proposals are subject to the same rules as
paper proposals.
(c) The telephone number of receiving facsimile equipment is:
[insert telephone number].
(d) If any portion of a facsimile proposal received by the
Contracting Officer is unreadable to the degree that conformance to
the essential requirements of the solicitation cannot be ascertained
from the document--
(1) The Contracting Officer immediately shall notify the offeror
and permit the offeror to resubmit the proposal;
(2) The method and time for resubmission shall be prescribed by
the Contracting Officer after consultation with the offeror; and
(3) The resubmission shall be considered as if it were received
at the date and time of the original unreadable submission for the
purpose of determining timeliness, provided the offeror complies
with the time and format requirements for resubmission prescribed by
the Contracting Officer.
(e) The Government reserves the right to make award solely on
the facsimile proposal. However, if requested to do so by the
Contracting Officer, the apparently successful offeror promptly
shall submit the complete original signed proposal. (End of
provision)
52.215-6 Place of Performance.
As prescribed in 15.209(f), insert the following provision:
Place of Performance (Oct 1997)
(a) The offeror or respondent, in the performance of any
contract resulting from this solicitation, {time} intends, {time}
does not intend [check applicable block] to use one or more plants
or facilities located at a different address from the address of the
offeror or respondent as indicated in this proposal or response to
request for information.
(b) If the offeror or respondent checks ``intends'' in paragraph
(a) of this provision, it shall insert in the following spaces the
required information:
------------------------------------------------------------------------
Place of performance (street Name and address of owner and
address, city, state, county, zip operator of the plant or facility
code) if other than offeror or respondent
------------------------------------------------------------------------
__________________................. __________________
__________________................. __________________
------------------------------------------------------------------------
(End of provision)
52.215-7 Annual Representations and Certifications--Negotiation.
As prescribed in 15.209(g), insert the following provision:
Annual Representations and Certifications--Negotiation (Oct 1997)
The offeror has [check the appropriate block]:
{time} (a) Submitted to the contracting office issuing this
solicitation, annual representations and certifications dated
________ [insert date of signature on submission] that are
incorporated herein by reference, and are current, accurate, and
complete as of the date of this proposal, except as follows [insert
changes that affect only this proposal; if ``none,'' so state]:
{time} (b) Enclosed its annual representations and
certifications. (End of provision)
52.215-8 Order of Precedence--Uniform Contract Format.
As prescribed in 15.209(h), insert the following clause:
Order of Precedence--Uniform Contract Format (Oct 1997)
Any inconsistency in this solicitation or contract shall be
resolved by giving precedence in the following order:
(a) The Schedule (excluding the specifications).
(b) Representations and other instructions.
(c) Contract clauses.
(d) Other documents, exhibits, and attachments.
(e) The specifications. (End of clause)
52.215-9 Changes or Additions to Make-or-Buy Program.
As prescribed in 15.408(a), insert the following clause:
Changes or Additions to Make-or-Buy Program (Oct 1997)
(a) The Contractor shall perform in accordance with the make-or-
buy program incorporated in this contract. If the Contractor
proposes to change the program, the Contractor shall, reasonably in
advance of the proposed change, (1) notify the Contracting Officer
in writing, and (2) submit justification in sufficient detail to
permit evaluation. Changes in the place of performance of any
``make'' items in the program are subject to this requirement.
(b) For items deferred at the time of negotiation of this
contract for later addition to the program, the Contractor shall, at
the earliest possible time--
(1) Notify the Contracting Officer of each proposed addition;
and
(2) Provide justification in sufficient detail to permit
evaluation.
(c) Modification of the make-or-buy program to incorporate
proposed changes or additions shall be effective upon the
Contractor's receipt of the Contracting Officer's written approval.
(End of clause)
Alternate I (Oct 1997). As prescribed in 15.408(a)(1) add the
following paragraph (d) to the basic clause:
(d) If the Contractor desires to reverse the categorization of
``make'' or ``buy'' for any item or items designated in the contract
as subject to this paragraph, it shall--
(1) Support its proposal with cost or pricing data when
permitted and necessary to support evaluation; and
(2) After approval is granted, promptly negotiate with the
Contracting Officer an equitable reduction in the contract price in
accordance with paragraph (k) of the Incentive Price Revision--Firm
Target clause
[[Page 51262]]
or paragraph (m) of the Incentive Price Revision--Successive Targets
clause of this contract.
Alternate II (Oct 1997). As prescribed in 15.408(a)(2), add the
following paragraph (d) to the basic clause:
(d) If the Contractor desires to reverse the categorization of
``make'' or ``buy'' for any item or items designated in the contract
as subject to this paragraph, it shall--
(1) Support its proposal with cost or pricing data to permit
evaluation; and
(2) After approval is granted, promptly negotiate with the
Contracting Officer an equitable reduction in the contract's total
estimated cost and fee in accordance with paragraph (e) of the
Incentive Fee clause of this contract.
52.215-10 Price Reduction for Defective Cost or Pricing Data.
As prescribed in 15.408(b), insert the following clause:
Price Reduction for Defective Cost or Pricing Data (Oct 1997)
(a) If any price, including profit or fee, negotiated in
connection with this contract, or any cost reimbursable under this
contract, was increased by any significant amount because--
(1) The Contractor or a subcontractor furnished cost or pricing
data that were not complete, accurate, and current as certified in
its Certificate of Current Cost or Pricing Data;
(2) A subcontractor or prospective subcontractor furnished the
Contractor cost or pricing data that were not complete, accurate,
and current as certified in the Contractor's Certificate of Current
Cost or Pricing Data; or
(3) Any of these parties furnished data of any description that
were not accurate, the price or cost shall be reduced accordingly
and the contract shall be modified to reflect the reduction.
(b) Any reduction in the contract price under paragraph (a) of
this clause due to defective data from a prospective subcontractor
that was not subsequently awarded the subcontract shall be limited
to the amount, plus applicable overhead and profit markup, by
which--
(1) The actual subcontract; or
(2) The actual cost to the Contractor, if there was no
subcontract, was less than the prospective subcontract cost estimate
submitted by the Contractor; provided, that the actual subcontract
price was not itself affected by defective cost or pricing data.
(c)(1) If the Contracting Officer determines under paragraph (a)
of this clause that a price or cost reduction should be made, the
Contractor agrees not to raise the following matters as a defense:
(i) The Contractor or subcontractor was a sole source supplier
or otherwise was in a superior bargaining position and thus the
price of the contract would not have been modified even if accurate,
complete, and current cost or pricing data had been submitted.
(ii) The Contracting Officer should have known that the cost or
pricing data in issue were defective even though the Contractor or
subcontractor took no affirmative action to bring the character of
the data to the attention of the Contracting Officer.
(iii) The contract was based on an agreement about the total
cost of the contract and there was no agreement about the cost of
each item procured under the contract.
(iv) The Contractor or subcontractor did not submit a
Certificate of Current Cost or Pricing Data.
(2)(i) Except as prohibited by subdivision (c)(2)(ii) of this
clause, an offset in an amount determined appropriate by the
Contracting Officer based upon the facts shall be allowed against
the amount of a contract price reduction if--
(A) The Contractor certifies to the Contracting Officer that, to
the best of the Contractor's knowledge and belief, the Contractor is
entitled to the offset in the amount requested; and
(B) The Contractor proves that the cost or pricing data were
available before the ``as of'' date specified on its Certificate of
Current Cost or Pricing Data, and that the data were not submitted
before such date.
(ii) An offset shall not be allowed if--
(A) The understated data were known by the Contractor to be
understated before the ``as of'' date specified on its Certificate
of Current Cost or Pricing Data; or
(B) The Government proves that the facts demonstrate that the
contract price would not have increased in the amount to be offset
even if the available data had been submitted before the ``as of''
date specified on its Certificate of Current Cost or Pricing Data.
(d) If any reduction in the contract price under this clause
reduces the price of items for which payment was made prior to the
date of the modification reflecting the price reduction, the
Contractor shall be liable to and shall pay the United States at the
time such overpayment is repaid--
(1) Simple interest on the amount of such overpayment to be
computed from the date(s) of overpayment to the Contractor to the
date the Government is repaid by the Contractor at the applicable
underpayment rate effective for each quarter prescribed by the
Secretary of the Treasury under 26 U.S.C. 6621(a)(2); and
(2) A penalty equal to the amount of the overpayment, if the
Contractor or subcontractor knowingly submitted cost or pricing data
that were incomplete, inaccurate, or noncurrent. (End of clause)
52.215-11 Price Reduction for Defective Cost or Pricing Data--
Modifications.
As prescribed in 15.408(c), insert the following clause:
Price Reduction for Defective Cost or Pricing Data--Modifications (Oct
1997)
(a) This clause shall become operative only for any modification
to this contract involving a pricing adjustment expected to exceed
the threshold for submission of cost or pricing data at FAR 15.403-
4, except that this clause does not apply to any modification if an
exception under FAR 15.403-1 applies.
(b) If any price, including profit or fee, negotiated in
connection with any modification under this clause, or any cost
reimbursable under this contract, was increased by any significant
amount because (1) the Contractor or a subcontractor furnished cost
or pricing data that were not complete, accurate, and current as
certified in its Certificate of Current Cost or Pricing Data, (2) a
subcontractor or prospective subcontractor furnished the Contractor
cost or pricing data that were not complete, accurate, and current
as certified in the Contractor's Certificate of Current Cost or
Pricing Data, or (3) any of these parties furnished data of any
description that were not accurate, the price or cost shall be
reduced accordingly and the contract shall be modified to reflect
the reduction. This right to a price reduction is limited to that
resulting from defects in data relating to modifications for which
this clause becomes operative under paragraph (a) of this clause.
(c) Any reduction in the contract price under paragraph (b) of
this clause due to defective data from a prospective subcontractor
that was not subsequently awarded the subcontract shall be limited
to the amount, plus applicable overhead and profit markup, by
which--
(1) The actual subcontract; or
(2) The actual cost to the Contractor, if there was no
subcontract, was less than the prospective subcontract cost estimate
submitted by the Contractor; provided, that the actual subcontract
price was not itself affected by defective cost or pricing data.
(d)(1) If the Contracting Officer determines under paragraph (b)
of this clause that a price or cost reduction should be made, the
Contractor agrees not to raise the following matters as a defense:
(i) The Contractor or subcontractor was a sole source supplier
or otherwise was in a superior bargaining position and thus the
price of the contract would not have been modified even if accurate,
complete, and current cost or pricing data had been submitted.
(ii) The Contracting Officer should have known that the cost or
pricing data in issue were defective even though the Contractor or
subcontractor took no affirmative action to bring the character of
the data to the attention of the Contracting Officer.
(iii) The contract was based on an agreement about the total
cost of the contract and there was no agreement about the cost of
each item procured under the contract.
(iv) The Contractor or subcontractor did not submit a
Certificate of Current Cost or Pricing Data.
(2)(i) Except as prohibited by subdivision (d)(2)(ii) of this
clause, an offset in an amount determined appropriate by the
Contracting Officer based upon the facts shall be allowed against
the amount of a contract price reduction if--
(A) The Contractor certifies to the Contracting Officer that, to
the best of the Contractor's knowledge and belief, the Contractor is
entitled to the offset in the amount requested; and
(B) The Contractor proves that the cost or pricing data were
available before the ``as of'' date specified on its Certificate of
Current Cost or Pricing Data, and that the data were not submitted
before such date.
(ii) An offset shall not be allowed if--
[[Page 51263]]
(A) The understated data were known by the Contractor to be
understated before the ``as of'' date specified on its Certificate
of Current Cost or Pricing Data; or
(B) The Government proves that the facts demonstrate that the
contract price would not have increased in the amount to be offset
even if the available data had been submitted before the ``as of''
date specified on its Certificate of Current Cost or Pricing Data.
(e) If any reduction in the contract price under this clause
reduces the price of items for which payment was made prior to the
date of the modification reflecting the price reduction, the
Contractor shall be liable to and shall pay the United States at the
time such overpayment is repaid--
(1) Simple interest on the amount of such overpayment to be
computed from the date(s) of overpayment to the Contractor to the
date the Government is repaid by the Contractor at the applicable
underpayment rate effective for each quarter prescribed by the
Secretary of the Treasury under 26 U.S.C. 6621(a)(2); and
(2) A penalty equal to the amount of the overpayment, if the
Contractor or subcontractor knowingly submitted cost or pricing data
that were incomplete, inaccurate, or noncurrent. (End of clause)
52.215-12 Subcontractor Cost or Pricing Data.
As prescribed in 15.408(d), insert the following clause:
Subcontractor Cost or Pricing Data (Oct 1997)
(a) Before awarding any subcontract expected to exceed the
threshold for submission of cost or pricing data at FAR 15.403-4, on
the date of agreement on price or the date of award, whichever is
later; or before pricing any subcontract modification involving a
pricing adjustment expected to exceed the threshold for submission
of cost or pricing data at FAR 15.403-4, the Contractor shall
require the subcontractor to submit cost or pricing data (actually
or by specific identification in writing), unless an exception under
FAR 15.403-1 applies.
(b) The Contractor shall require the subcontractor to certify in
substantially the form prescribed in FAR 15.406-2 that, to the best
of its knowledge and belief, the data submitted under paragraph (a)
of this clause were accurate, complete, and current as of the date
of agreement on the negotiated price of the subcontract or
subcontract modification.
(c) In each subcontract that exceeds the threshold for
submission of cost or pricing data at FAR 15.403-4, when entered
into, the Contractor shall insert either--
(1) The substance of this clause, including this paragraph (c),
if paragraph (a) of this clause requires submission of cost or
pricing data for the subcontract; or
(2) The substance of the clause at FAR 52.215-13, Subcontractor
Cost or Pricing Data--Modifications. (End of clause)
52.215-13 Subcontractor Cost or Pricing Data--Modifications.
As prescribed in 15.408(e), insert the following clause:
Subcontractor Cost or Pricing Data--Modifications (Oct 1997)
(a) The requirements of paragraphs (b) and (c) of this clause
shall--
(1) Become operative only for any modification to this contract
involving a pricing adjustment expected to exceed the threshold for
submission of cost or pricing data at FAR 15.403-4; and
(2) Be limited to such modifications.
(b) Before awarding any subcontract expected to exceed the
threshold for submission of cost or pricing data at FAR 15.403-4, on
the date of agreement on price or the date of award, whichever is
later; or before pricing any subcontract modification involving a
pricing adjustment expected to exceed the threshold for submission
of cost or pricing data at FAR 15.403-4, the Contractor shall
require the subcontractor to submit cost or pricing data (actually
or by specific identification in writing), unless an exception under
FAR 15.403-1 applies.
(c) The Contractor shall require the subcontractor to certify in
substantially the form prescribed in FAR 15.406-2 that, to the best
of its knowledge and belief, the data submitted under paragraph (b)
of this clause were accurate, complete, and current as of the date
of agreement on the negotiated price of the subcontract or
subcontract modification.
(d) The Contractor shall insert the substance of this clause,
including this paragraph (d), in each subcontract that exceeds the
threshold for submission of cost or pricing data at FAR 15.403-4 on
the date of agreement on price or the date of award, whichever is
later. (End of clause)
52.215-14 Integrity of Unit Prices.
As prescribed in 15.408(f)(1), insert the following clause:
Integrity of Unit Prices (Oct 1997)
(a) Any proposal submitted for the negotiation of prices for
items of supplies shall distribute costs within contracts on a basis
that ensures that unit prices are in proportion to the items' base
cost (e.g., manufacturing or acquisition costs). Any method of
distributing costs to line items that distorts unit prices shall not
be used. For example, distributing costs equally among line items is
not acceptable except when there is little or no variation in base
cost. Nothing in this paragraph requires submission of cost or
pricing data not otherwise required by law or regulation.
(b) When requested by the Contracting Officer, the Offeror/
Contractor shall also identify those supplies that it will not
manufacture or to which it will not contribute significant value.
(c) The Contractor shall insert the substance of this clause,
less paragraph (b), in all subcontracts for other than: acquisitions
at or below the simplified acquisition threshold in FAR Part 2;
construction or architect-engineer services under FAR Part 36;
utility services under FAR Part 41; services where supplies are not
required; commercial items; and petroleum products. (End of clause)
Alternate I (Oct 1997). As prescribed in 15.408(f)(2),
substitute the following paragraph (b) for paragraph (b) of the
basic clause:
(b) The Offeror/Contractor shall also identify those supplies
that it will not manufacture or to which it will not contribute
significant value.
52.215-15 Termination of Defined Benefit Pension Plans.
As prescribed in 15.408(g), insert the following clause:
Termination of Defined Benefit Pension Plans (Oct 1997)
The Contractor shall promptly notify the Contracting Officer in
writing when it determines that it will terminate a defined benefit
pension plan or otherwise recapture such pension fund assets. If
pension fund assets revert to the Contractor or are constructively
received by it under a termination or otherwise, the Contractor
shall make a refund or give a credit to the Government for its
equitable share as required by FAR 31.205-6(j)(4). The Contractor
shall include the substance of this clause in all subcontracts under
this contract that meet the applicability requirement of FAR
15.408(g). (End of clause)
52.215-16 [Removed]
25. Section 52.215-16 is removed.
52.215-30 [Redesignated as 52.215-16 and Amended]
26. Section 52.215-30 is redesignated as 52.215-16, amended in the
introductory text by removing the reference ``15.904(a)'' and inserting
``15.408(h),'' and revising the clause date to read ``(OCT 1997)''.
15.215-17 [Removed]
27. Section 52.215-17 is removed.
52.215-31 [Redesignated as 52.215-17 and Amended]
28. Section 52.215-31 is redesignated as 52.215-17, amended in the
introductory text by removing the reference ``15.904(b)'' and inserting
``15.408(i),'' and revising the clause date to read ``(OCT 1997)''.
29. Sections 52.215-18 through 52.215-21 are revised to read as
follows:
52.215-18 Reversion or Adjustment of Plans for Postretirement Benefits
(PRB) Other Than Pensions.
As prescribed in 15.408(j), insert the following clause:
Reversion or Adjustment of Plans for Postretirement Benefits (PRB)
Other Than Pensions (Oct 1997)
The Contractor shall promptly notify the Contracting Officer in
writing when it determines that it will terminate or reduce a PRB
plan. If PRB fund assets revert, or inure, to the Contractor or are
constructively received by it under a plan termination or otherwise,
the Contractor shall make a refund or give a credit to the
Government for its equitable share as required by FAR 31.205-
6(o)(6). The Contractor shall include the
[[Page 51264]]
substance of this clause in all subcontracts under this contract
that meet the applicability requirements of FAR 15.408(j). (End of
clause)
52.215-19 Notification of Ownership Changes.
As prescribed in 15.408(k), insert the following clause:
Notification of Ownership Changes (Oct 1997)
(a) The Contractor shall make the following notifications in
writing:
(1) When the Contractor becomes aware that a change in its
ownership has occurred, or is certain to occur, that could result in
changes in the valuation of its capitalized assets in the accounting
records, the Contractor shall notify the Administrative Contracting
Officer (ACO) within 30 days.
(2) The Contractor shall also notify the ACO within 30 days
whenever changes to asset valuations or any other cost changes have
occurred or are certain to occur as a result of a change in
ownership.
(b) The Contractor shall--
(1) Maintain current, accurate, and complete inventory records
of assets and their costs;
(2) Provide the ACO or designated representative ready access to
the records upon request;
(3) Ensure that all individual and grouped assets, their
capitalized values, accumulated depreciation or amortization, and
remaining useful lives are identified accurately before and after
each of the Contractor's ownership changes; and
(4) Retain and continue to maintain depreciation and
amortization schedules based on the asset records maintained before
each Contractor ownership change.
(c) The Contractor shall include the substance of this clause in
all subcontracts under this contract that meet the applicability
requirement of FAR 15.408(k). (End of clause)
52.215-20 Requirements for Cost or Pricing Data or Information Other
Than Cost or Pricing Data.
As prescribed in 15.408(l), insert the following provision:
Requirements for Cost or Pricing Data or Information Other Than Cost or
Pricing Data (Oct 1997)
(a) Exceptions from cost or pricing data. (1) In lieu of
submitting cost or pricing data, offerors may submit a written
request for exception by submitting the information described in the
following subparagraphs. The Contracting Officer may require
additional supporting information, but only to the extent necessary
to determine whether an exception should be granted, and whether the
price is fair and reasonable.
(i) Identification of the law or regulation establishing the
price offered. If the price is controlled under law by periodic
rulings, reviews, or similar actions of a governmental body, attach
a copy of the controlling document, unless it was previously
submitted to the contracting office.
(ii) Commercial item exception. For a commercial item exception,
the offeror shall submit, at a minimum, information on prices at
which the same item or similar items have previously been sold in
the commercial market that is adequate for evaluating the
reasonableness of the price for this acquisition. Such information
may include--
(A) For catalog items, a copy of or identification of the
catalog and its date, or the appropriate pages for the offered
items, or a statement that the catalog is on file in the buying
office to which the proposal is being submitted. Provide a copy or
describe current discount policies and price lists (published or
unpublished), e.g., wholesale, original equipment manufacturer, or
reseller. Also explain the basis of each offered price and its
relationship to the established catalog price, including how the
proposed price relates to the price of recent sales in quantities
similar to the proposed quantities;
(B) For market-priced items, the source and date or period of
the market quotation or other basis for market price, the base
amount, and applicable discounts. In addition, describe the nature
of the market;
(C) For items included on an active Federal Supply Service
Multiple Award Schedule contract, proof that an exception has been
granted for the schedule item.
(2) The offeror grants the Contracting Officer or an authorized
representative the right to examine, at any time before award,
books, records, documents, or other directly pertinent records to
verify any request for an exception under this provision, and the
reasonableness of price. For items priced using catalog or market
prices, or law or regulation, access does not extend to cost or
profit information or other data relevant solely to the offeror's
determination of the prices to be offered in the catalog or
marketplace.
(b) Requirements for cost or pricing data. If the offeror is not
granted an exception from the requirement to submit cost or pricing
data, the following applies:
(1) The offeror shall prepare and submit cost or pricing data
and supporting attachments in accordance with Table 15-2 of FAR
15.408.
(2) As soon as practicable after agreement on price, but before
contract award (except for unpriced actions such as letter
contracts), the offeror shall submit a Certificate of Current Cost
or Pricing Data, as prescribed by FAR 15.406-2. (End of provision)
Alternate I (Oct 1997). As prescribed in 15.408(l), substitute
the following paragraph (b)(1) for paragraph (b)(1) of the basic
provision:
(b)(1) The offeror shall submit cost or pricing data and
supporting attachments in the following format:
Alternate II (Oct 1997). As prescribed in 15.408(l), add the
following paragraph (c) to the basic provision:
(c) When the proposal is submitted, also submit one copy each
to: (1) the Administrative Contracting Officer, and (2) the Contract
Auditor.
Alternate III (Oct 1997). As prescribed in 15.408(l), add the
following paragraph (c) to the basic provision (if Alternate II is
also used, redesignate the following paragraph as paragraph (d)).
(c) Submit the cost portion of the proposal via the following
electronic media: [Insert media format, e.g., electronic spreadsheet
format, electronic mail, etc.]
Alternate IV (Oct 1997). As prescribed in 15.408(l), replace the
text of the basic provision with the following:
(a) Submission of cost or pricing data is not required.
(b) Provide information described below: [Insert description of
the information and the format that are required, including access
to records necessary to permit an adequate evaluation of the
proposed price in accordance with 15.403-3.]
52.215-21 Requirements for Cost or Pricing Data or Information Other
Than Cost or Pricing Data--Modifications.
As prescribed in 15.408(m), insert the following clause:
Requirements for Cost or Pricing Data or Information Other Than Cost or
Pricing Data--Modifications (Oct 1997)
(a) Exceptions from cost or pricing data. (1) In lieu of
submitting cost or pricing data for modifications under this
contract, for price adjustments expected to exceed the threshold set
forth at FAR 15.403-4 on the date of the agreement on price or the
date of the award, whichever is later, the Contractor may submit a
written request for exception by submitting the information
described in the following subparagraphs. The Contracting Officer
may require additional supporting information, but only to the
extent necessary to determine whether an exception should be
granted, and whether the price is fair and reasonable--
(i) Identification of the law or regulation establishing the
price offered. If the price is controlled under law by periodic
rulings, reviews, or similar actions of a governmental body, attach
a copy of the controlling document, unless it was previously
submitted to the contracting office.
(ii) Information on modifications of contracts or subcontracts
for commercial items. (A) If--
(1) The original contract or subcontract was granted an
exception from cost or pricing data requirements because the price
agreed upon was based on adequate price competition or prices set by
law or regulation, or was a contract or subcontract for the
acquisition of a commercial item; and
(2) The modification (to the contract or subcontract) is not
exempted based on one of these exceptions, then the Contractor may
provide information to establish that the modification would not
change the contract or subcontract from a contract or subcontract
for the acquisition of a commercial item to a contract or
subcontract for the acquisition of an item other than a commercial
item.
(B) For a commercial item exception, the Contractor shall
provide, at a minimum, information on prices at which the same item
or similar items have previously been sold that is adequate for
evaluating the reasonableness of the price of the modification. Such
information may include--
(1) For catalog items, a copy of or identification of the
catalog and its date, or the appropriate pages for the offered
items, or a statement that the catalog is on file in the buying
office to which the proposal is
[[Page 51265]]
being submitted. Provide a copy or describe current discount
policies and price lists (published or unpublished), e.g.,
wholesale, original equipment manufacturer, or reseller. Also
explain the basis of each offered price and its relationship to the
established catalog price, including how the proposed price relates
to the price of recent sales in quantities similar to the proposed
quantities.
(2) For market-priced items, the source and date or period of
the market quotation or other basis for market price, the base
amount, and applicable discounts. In addition, describe the nature
of the market.
(3) For items included on an active Federal Supply Service
Multiple Award Schedule contract, proof that an exception has been
granted for the schedule item.
(2) The Contractor grants the Contracting Officer or an
authorized representative the right to examine, at any time before
award, books, records, documents, or other directly pertinent
records to verify any request for an exception under this clause,
and the reasonableness of price. For items priced using catalog or
market prices, or law or regulation, access does not extend to cost
or profit information or other data relevant solely to the
Contractor's determination of the prices to be offered in the
catalog or marketplace.
(b) Requirements for cost or pricing data. If the Contractor is
not granted an exception from the requirement to submit cost or
pricing data, the following applies:
(1) The Contractor shall submit cost or pricing data and
supporting attachments in accordance with Table 15-2 of FAR 15.408.
(2) As soon as practicable after agreement on price, but before
award (except for unpriced actions), the Contractor shall submit a
Certificate of Current Cost or Pricing Data, as prescribed by FAR
15.406-2. (End of clause)
Alternate I (Oct 1997). As prescribed in 15.408(m), substitute
the following paragraph (b)(1) for paragraph (b)(1) of the basic
clause.
(1) The Contractor shall submit cost or pricing data and
supporting attachments prepared in the following format:
Alternate II (Oct 1997). As prescribed in 15.408(m), add the
following paragraph (c) to the basic clause:
(c) When the proposal is submitted, also submit one copy each
to: (1) the Administrative Contracting Officer, and (2) the Contract
Auditor.
Alternate III (Oct 1997). As prescribed in 15.408(m), add the
following paragraph (c) to the basic clause (if Alternate II is also
used, redesignate the following paragraph as paragraph (d)):
(c) Submit the cost portion of the proposal via the following
electronic media: [Insert media format]
Alternate IV (Oct 1997). As prescribed in 15.408(m), replace the
text of the basic clause with the following:
(a) Submission of cost or pricing data is not required.
(b) Provide information described below: [Insert description of
the information and the format that are required, including access
to records necessary to permit an adequate evaluation of the
proposed price in accordance with 15.403-3.]
52.215-22 through 52.215-42 [Removed]
30. Sections 52.215-22 through 52.215-42 are removed.
31. Section 52.216-5 is amended by revising the clause date to read
``(OCT 1997)'', paragraph (d)(1)(i)(A), and the introductory text of
(d)(1)(ii) to read as follows:
52.216-5 Price Redetermination--Prospective.
* * * * *
(d) * * *
(1) * * *
(i) * * *
(A) An estimate and breakdown of the costs of these supplies or
services in the format of Table 15-2, FAR 15.408, or in any other form
on which the parties may agree;
* * * * *
(ii) A statement of all costs incurred in performing this contract
through the end of the ______ month (see Note (3)) before the
submission of proposed prices in the format of Table 15-2, FAR 15.408
(or in any other form on which the parties may agree), with sufficient
supporting data to disclose unit costs and cost trends for--
* * * * *
32. Section 52.216-6 is amended by revising the clause date to read
``(OCT 1997)'', and paragraph (c)(1)(ii) to read as follows:
52.216-6 Price Redetermination--Retroactive.
* * * * *
(c) * * *
(1) * * *
(ii) A statement in the format of Table 15-2, FAR 15.408, or in
any other form on which the parties may agree, of all costs incurred
in performing the contract; and
* * * * *
33. Section 52.216-16 is amended by revising the clause date to
read (OCT 1997), and paragraph (c)(1) introductory text to read as
follows:
52.216-16 Incentive Price Revision--Firm Target.
* * * * *
(c) Data submission. (1) Within ______ [Contracting Officer
insert number of days] days after the end of the month in which the
Contractor has delivered the last unit of supplies and completed the
services specified by item number in paragraph (a) of this clause,
the Contractor shall sumbit in the format of Table 15-2, FAR 15.408,
or in any other form on which the parties agree--
* * * * *
34. Section 52.216-17 is amended by revising the date of the clause
to read ``(OCT 1997)'', the introductory text of paragraphs (c)(1)(ii)
and (iii), and the introductory text of paragraph (e) to read as
follows:
52.216-17 Incentive Price Revision--Successive Targets.
* * * * *
(c)(1) * * *
(ii) A detailed statement of all costs incurred in the
performance of this contract through the end of the month specified
above, in the format of Table 15-2, FAR 15.408 (or in any other form
on which the parties may agree), with sufficient supporting data to
disclose unit costs and cost trends for--
* * * * *
(iii) An estimate of costs of all supplies delivered and to be
delivered and all services performed and to be performed under this
contract, using the statement of costs incurred plus an estimate of
costs to complete performance, in the format of Table 15-2, FAR
15.408 (or in any other form on which the parties may agree),
together with--
* * * * *
(e) Submitting data for final price revision. Unless a firm
fixed price has been established in accordance with paragraph (d) of
this section within ______ [Contracting Officer insert number of
days] days after the end of the month in which the Contractor has
delivered the last unit of supplies and completed the services
specified by item number in paragraph (a) of this section, the
Contractor shall submit in the format of Table 15-2, FAR 15.408 (or
in any other form on which the parties agree)--
* * * * *
35. Section 52.236-28 is added to read as follows:
52.236-28 Preparation of Proposals--Construction.
As prescribed in 36.520, insert the following provision:
Preparation of Proposals--Construction (Oct 1997)
(a) Proposals must be (1) submitted on the forms furnished by
the Government or on copies of those forms, and (2) manually signed.
The person signing a proposal must initial each erasure or change
appearing on any proposal form.
(b) The proposal form may require offerors to submit proposed
prices for one or more items on various bases, including--
(1) Lump sum price;
(2) Alternate prices;
(3) Units of construction; or
(4) Any combination of paragraphs (b)(1) through (b)(3) of this
provision.
(c) If the solicitation requires submission of a proposal on all
items, failure to do so may result in the proposal being rejected
without further consideration. If a proposal on all items is not
required, offerors should insert the words ``no proposal'' in the
space provided for any item on which no price is submitted.
(d) Alternate proposals will not be considered unless this
solicitation authorizes their submission.
(End of provision)
[[Page 51266]]
PART 53--FORMS
36. Section 53.213 is amended by revising the section heading and
paragraph (a) to read as follows:
53.213 Simplified acquisition procedures (SF's 18, 30, 44, 1165, and
1449, and OF's 336, 347, and 348).
* * * * *
(a) SF 18 (Rev. 6/95), Request for Quotations, or SF 1449 (10/95
Ed.), olicitation/Contract/Order for Commercial Items. SF 18 is
prescribed for use in obtaining price, cost, delivery, and related
information from suppliers as specified in 13.107. SF 1449, as
prescribed in 53.212, or other agency forms/automated formats, may also
be used to obtain price, cost, delivery, and related information from
suppliers as specified in 13.107.
* * * * *
37. Section 53.214 is amended by revising the first sentence of
paragraph (a), paragraph (c); and the first sentence of paragraph (d)
to read as follows:
53.214 Sealed bidding.
* * * * *
(a) SF 26 (4/85), Award/Contract. SF 26 is prescribed for use in
awarding sealed bid contracts for supplies or services in which bids
were obtained on SF 33, Solicitation, Offer and Award, as specified in
14.408-1(d)(1). * * *
* * * * *
(c) SF 33 (Rev. 4/85), Solicitation, Offer and Award. SF 33 is
prescribed for use in soliciting bids for supplies or services and for
awarding the contracts that result from the bids, as specified in
14.201-2(a)(1), unless award is accomplished by SF 26. Pending issuance
of a new edition of the form, the reference in block 1 should be
amended to read 15 CFR 700 and in the Caution statement of ``block 9''
revise 52.215-10 to read 52.215-1.
(d) SF 1447 (5/88), Solicitation/Contract. SF 1447 is prescribed
for use in soliciting supplies or services and for awarding contracts
that result from the bids. * * *
* * * * *
38. Section 53.215-1 is revised to read as follows:
53.215-1 Solicitation and receipt of proposals.
The following forms are prescribed, as stated in the following
paragraphs, for use in contracting by negotiation (except for
construction, architect-engineer services, or acquisitions made using
simplified acquisition procedures):
(a) SF 26 (Rev. 4/85), Award/Contract. SF 26, prescribed in
53.214(a), may be used in entering into negotiated contracts in which
the signature of both parties on a single document is appropriate, as
specified in 15.509(b).
(b) SF 30 (Rev. 10/83), Amendment of Solicitation/Modification of
Contract. SF 30, prescribed in 53.243, may be used for amending
requests for proposals and for amending requests for information, as
specified in 15.210(b).
(c) SF 33 (Rev. 4/85), Solicitation, Offer and Award. SF 33,
prescribed in 53.214(c), may be used in connection with the
solicitation and award of negotiated contracts. Award of such contracts
may be made by either OF 307, SF 33, or SF 26, as specified in
53.214(c) and 15.509. Pending issuance of a new edition of the form,
the reference in ``block 1'' should be amended to read ``15 CFR 700''
and in the Caution statement of ``block 9'' revise 52.215-10 to read
52.215-1.
(d) OF 17 (Rev. 12/93), Offer Label. OF 17 may be furnished with
each request for proposals to facilitate identification and handling of
proposals, as specified in 15.210(c).
(e) OF 307 (9/97), Contract Award. OF 307 may be used to award
negotiated contracts as specified in 15.509(a).
(f) OF 308 (9/97), Solicitation and Offer-Negotiated Acquisition.
OF 308 may be used to support solicitation of negotiated contracts as
specified in 15.210(a). Award of such contracts may be made by OF 307,
as specified in 15.509(a).
(g) OF 309 (9/97), Amendment of Solicitation. OF 309 may be used to
amend solicitations of negotiated contracts, as specified in 15.210(b).
53.215-2 [Removed]
39. Section 53.215-2 is removed.
40. Section 53.243 is amended by revising the introductory
paragraph to read as follows:
53.243 Contract modifications (SF 30).
SF 30 (Rev. 10/83), Amendment of Solicitation/Modification of
Contract. SF 30 is prescribed for use in amending invitation for bids,
as specified in 14.208; modifying purchase and delivery orders, as
specified in 13.503(b); and modifying contracts, as specified in
42.1203(f), 43.301, 49.602-5, and elsewhere in this chapter. The form
may also be used to amend solicitations for negotiated contracts, as
specified in 15.210(b). Pending the publication of a new edition of the
form, Instruction (b), Item 3 (effective date), is revised in
paragraphs (3) and (5) as follows:
* * * * *
41. Section 53.249 is amended by adding a sentence to the end of
paragraphs (a)(2), (a)(3), and (a)(4) to read as follows:
53.249 Termination of contracts.
(a) * * *
(2) * * * Pending issuance of a new edition of the form, in the
``Note'' of the Certification on page 4, revise the references 15.804-
2, 15.804-2(a), and 15.804-6 to read 15.403, 15.406-2, and 15.408,
Table 15-2, respectively.
(3) * * * Pending issuance of a new edition of the form, in the
``Note'' of the Certification on page 4, revise the references
``15.804-2, 15.804-2(a), and 15.804-6'' to read ``15.403, 15.406-2, and
15.408, Table 15-2,'' respectively.
(4) * * * Pending issuance of a new edition of the form, in the
``Note'' of the Certification, revise the references ``15.804-2,
15.804-2(a), and 15.804-6'' to read ``15.403, 15.406-2, and 15.408,
Table 15-2,'' respectively.
* * * * *
53.301-1411 [Removed]
42. Section 53.301-1411 is removed.
53.301-1448 [Removed]
43. Section 53.301-1448 is removed.
44. Sections 53.302-307 through 53.302-309 are added to read as
follows:
53.302-307 Optional Form 307, Contract Award.
BILLING CODE 6820-EP-P
[[Page 51267]]
[GRAPHIC] [TIFF OMITTED] TR30SE97.002
[[Page 51268]]
53.302-308 Optional Form 308, Solicitation and Offer--Negotiated
Acquisition.
[GRAPHIC] [TIFF OMITTED] TR30SE97.003
[[Page 51269]]
53.302-309 Optional Form 309, Amendment of Solicitation.
[GRAPHIC] [TIFF OMITTED] TR30SE97.004
BILLING CODE 6820-EP-C
[[Page 51270]]
45. Amend the internal references throughout Chapter 1 as indicated
in the following table:
------------------------------------------------------------------------
Location Remove Insert
------------------------------------------------------------------------
1.106....................... 15.106.............. 15.209
1.106....................... 15.404.............. 15.2
1.106....................... 15.7................ 15.407-2
1.106....................... 15.8................ 15.4
1.106....................... 15.804-8............ 15.408
1.106....................... 15.812-1(b)......... 15.404-1(f)
1.106....................... 15.813-1 ....................
1.106....................... 15.813-2 ....................
1.106....................... 15.813-3 ....................
1.106....................... 15.813-6 ....................
1.106....................... 52.215-6............ 52.215-4
1.106....................... 52.215-11........... 52.215-1(c)(2)(iv)
1.106....................... 52.215-19........... 52.215-1(d)
1.106....................... 52.215-20........... 52.215-6
1.106....................... 52.215-21........... 52.215-9
1.106....................... 52.215-24........... 52.215-12
1.106....................... 52.215-25........... 52.215-13
1.106....................... 52.215-26........... 52.215-14
1.106....................... 52.215-40........... 52.215-19
1.106....................... 52.215-41........... 52.215-20
1.106....................... 52.215-42........... 52.215-21
2.101 (definition of 15.5................ 15.6
``offer'').
3.104-3 (paragraph (5) of 52.215-12........... 52.215-1(e)
definition ``Contractor bid
or proposal information'').
3.104-5(b).................. 15.411 and 15.413... 15.207
3.104-5(d)(3) introductory 52.215-12........... 52.215-1(e)
text.
3.501-2(c).................. 15.804-6(f)......... 15.408, Table 15-2,
paragraph A.,
column (2) under
``Formats for
Submission of Line
Item Summaries''.
3.501-2(c).................. 15.803(d)........... 15.405
5.204....................... 15.404.............. 15.201
5.303(b)(2)................. 15.1003(b).......... 15.503(b)
6.302-1(d)(2)............... (See 15.402(h)) ....................
7.105(a)(3)(iii)............ 15.810.............. 15.407-4
7.105(b)(3)................. 15.6................ 15.3
7.105(b)(11)................ 15.7................ 15.407-2
7.306(b).................... 15.6................ 15.3
9.306(j).................... 15.814.............. 15.404-1(g)
12.206...................... 15.6................ 15.3
12.209...................... 15.8................ 15.4
12.301(c)(2)................ 15.6................ 15.3
12.503(c)(2)................ 15.804.............. 15.403
12.504(a)(9)................ (see Subpart 15.1).. 15.209(b)
12.504(c)(2)................ 15.8................ 15.4
12.602(b)................... 15.6................ 15.3
13.106-2(c)(3).............. 15.1003(b)(2)....... 15.503(b)(2)
13.108(a)................... (See 15.402(e)) ....................
14.103-1(d)................. 15.804-2............ 15.403-4(a)(1)(iii)
14.105...................... 15.405.............. 15.201(e)
14.201-7(a)................. 15.804-2(a)(1)...... 15.403-4(a)(1)
14.201-7(b)(1).............. 15.804-2(a)(1)...... 15.403-4(a)(1)
14.201-7(c)(1).............. 15.804-2(a)(1)...... 15.403-4(a)(1)
14.207...................... 15.409.............. 15.201
14.404-2(g)................. 15.814.............. 15.404-1(g)
14.408-2(a)................. 15.805-2............ 15.404-1(b)
14.408-2(b)................. 15.814.............. 15.404-1(g)
14.503-1(c)(2).............. 15.413.............. 15.609
14.503-1(g)................. 15.1005 and 15.1006. 15.505 and 15.506
14.503-1(h)................. 15.412.............. 15.208(b) and (c)
16.104(b)................... 15.808-2............ 15.404-1(b)
16.301-3(a)(3).............. 15.903(d)........... 15.404-4(c)(4)(i)
16.505(b)(3)................ 15.804-1(b)(1)...... 15.403-1(c)(1)
16.603-2(c)(3).............. 15.8................ 15.4
16.603-4(b)(3).............. 15.804-1............ 15.403-1
17.106-1(c)(1).............. 15.804-6............ 15.408, Table 15-2,
Formats for
Submission of Line
Items Summaries
C(8).
19.202-6(a)................. 15.805-2............ 15.405
19.302(d)(1)................ 15.1003(a)(2)....... 15.503(a)(2)
19.806(a)................... 15.8 both times it 15.4
appears.
24.202(b)................... 15.804-5(b)......... 15.403-3(b)
[[Page 51271]]
25.405(e)................... 15.1003............. 15.503
25.901(b)................... 15.106(b)........... 15.209(b)
27.204-1(b)................. FAR 15.804.......... 15.403
27.204-2.................... 15.804.............. 15.403
27.407(a)(1)................ 15.4 or 15.5........ 15.2 or 15.6
27.407(b)................... 15.4 or 15.5........ 15.2 or 15.6
28.101-4(b)................. 15.610(a)........... 15.306(a)(2)
31.000...................... 15.805-3............ 15.404-1(c)
31.103(a)................... 15.805-3............ 15.404-1(c)
31.105(b)................... 15.805-3............ 15.404-1(c)
31.106-1 introductory 15.805-3............ 15.404-1(c)
paragraph.
31.109(g)................... 15.808, Price 15.406-3
negotiation
memorandum.
31.204(b)................... 15.805-3............ 15.404-1(c)
31.205-6(j)(4).............. certified (see (see 15.403-4)
15.804).
31.205-18(c)(1)(i)(A)....... 15.804.............. 15.403-4
31.205-18(c)(1)(i)(B)....... 15.804.............. 15.403-4
31.205-33(c)(1)............. 52.215-12........... 52.215-1(e)
31.205-26(e)................ 15.804-1............ 15.403-1(b)
31.205-42(c) introductory (See 15.804-6(f)) ....................
paragraph.
32.204...................... 15.606.............. 15.206
33.103(f)(3)................ 15.1006............. 15.505 or 15.506
33.104(c)(1)................ 15.1006............. 15.505 or 15.506
33.207(d)................... 15.804-2(a)(1)(iii). 15.403-4(a)(1)(iii)
34.005-2(a)(2).............. 15.404.............. 15.201
35.007(d)................... 15.406-5(b)......... 15.204-5(b)
35.007(e) introductory 15.605(e)........... 15.304
paragraph.
35.007(g)................... 15.409.............. 15.201
35.007(i)................... 15.5................ 15.6
35.008(d)................... 15.10............... 15.5
35.008(e)................... 15.805.............. 15.404-1(c)
36.214(b)(1)................ 15.804-1 and 15.804- 15.403-1 and 15.403-
2. 2
36.215...................... 15.903(d)(1)(iii)... 15.404-4(c)(4)(i)
36.303-2(a)................. 15.605.............. 15.304
36.606(a)................... 15.903(d)(1)(ii).... 15.404-4(c)(4)(i)
36.607(b)................... 15.1004, 15.006(b) 15.503, 15.506(b)
through (f), through (f),
15.1007(c); 15.507(c),
15.1006(d)(2) 15.506(d)(2)
through (d)(5). through (d)(5)
42.302(a)(4)................ 15.8................ 15.4
42.302(a)(5)................ 15.809.............. 15.407-3
43.204(b)(4)................ 15.805.............. 15.404-1(c)
44.202-2(a)(1).............. Subpart 15.7........ 15.407-2
44.305-3(a)(1).............. 15.804.............. 15.403
45.103(b)(1)................ 15.804-1............ 15.403-1
45.106(b)(2)(i)............. 15.804-1............ 15.403-1
45.302-2(c)................. Subpart 15.9........ 15.404-4
48.102(e)................... 15.903(d)........... 15.404-4(c)(4)(i)
49.105(c)(15)............... 15.804-4(h) and 15.403-4(a)(1) and
15.804. 15.403-4
49.110(a)................... 15.808(a) and 15.406-3 (twice).
15.808(b).
50.203(c)................... 15.103.............. 14.404-1(f)
52.212-2 provision date..... (Oct 1995).......... (Oct 1997).
52.212-2(a)................. 15.605.............. 15.304
52.214-26 clause date....... (Oct 1995).......... (Oct 1997).
52.214-26(e)................ 15.804-2(a)(1)...... 15.403-4(a)(1)
52.214-27 clause date....... (Oct 1995).......... (Oct 1997).
52.214-27(a)................ 15.804-2(a)(1) and 15.403-4(a)(1) and
15.804-1. 15.403-1(b)
52.214-28 clause date....... (Oct 1995).......... (Oct 1997).
52.214-28(a)(1)............. 15.804-2(a)(1)...... 15.403-4(a)(1)
52.214-28(b)................ 15.804-2(a)(1) both 15.403-4 (a)(1)
times it appears.
15.804-1............ 15.403-1(b)
52.214-28(c)................ 15.804-4............ 15.406-2
52.214-28(d)................ 15.804-2(a)(1)...... 15.403-4(a)(1)
52.214-34 introductory text. 15.407(l) ....................
52.214-35 introductory text. 15.407(m) ....................
52.215-2 introductory text.. 15.106(b)........... 15.209(b)
Alternate I............. 15.106(c)........... 15.209(b)(2)
Alternate II............ 15.106(c)........... 15.209(b)(3)
Alternate III........... 15.106(c)........... 15.209(b)(4)
52.216-25 clause date....... (Apr 1984).......... (Oct 1997).
52.216-25(c)................ 15.8................ 15.4
52.217-2 clause date........ (Jul 1996).......... (Oct 1997).
52.217-2(f)(1).............. 15.8................ 15.4
52.219-10 clause date....... (Oct 1995).......... (Oct 1997).
52.219-10(c)................ Subpart 15.9........ 15.404-4
52.244-1 clause date........ (Feb 1995).......... (Oct 1997).
52.244-1(g)................. 15.903(d)........... 15.404-4(c)(4)(i)
[[Page 51272]]
52.244-2 clause date........ (Feb 1997).......... (Oct 1997).
52.244-2(g)................. 15.903(d)........... 15.404-4(c)(4)(i)
52.244-3 clause date........ (Apr 1985).......... (Oct 1997).
52.244-3(b)................. 15.903(d)........... 15.404-4(c)(4)(i)
------------------------------------------------------------------------
[FR Doc. 97-25666 Filed 9-29-97; 8:45 am]
BILLING CODE 6820-EP-P