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Subpart 936.7—Standard Forms for preference to renting third-partyContracting Architect-Engineer

owned equipment. Services and Dismantling, Demo

(c) It is the policy of the DOE to pay litation or Removal of improve

rental for construction equipment at

rates not higher than those prevailing ments

in the locality, except under unusual 936.702 Forms for use in contracting for

circumstances, and at as low a rate as architect-engineer services.

is consistent with securing modern

equipment in good operating condi(a) The contracting officer shall also tion. Costs of repair, job interruption include the additional terms at

due to poor equipment, transportation 952.236-70 in Standard Form 252 item

and in-transit rental may well offset 6.

any apparent savings in rental rates.

Rental paid shall be subject to any Subpart 936.70—Rental of Government price ceiling regulations Construction Equipment

that may be in effect.



936.7002 tal


936.7000 Scope of subpart.

This subpart se's forth general policy and instructions which shall be applied to rental of construction equipment for use by DOE contractors with cost-reimbursement type contracts.

936.7002-1 Rental agreements.

The terms and conditions governing rental by DOE of construction equipment from a cost-type construction contractor are set forth in 936.7301. Outline of agreement for rental of contractor-owned construction equipment. This form of agreement is designed for use as an appendix to a DOE cost-type construction contract. It may be modified for rental of equipment under other contractual arrangements and it may be modified for use as a separate contract or as an attachment to a subcontract. Some of the aspects of this agreement to which particular attention should be given are set forth in 936.7002-2 through 936.7002-9.

936.7001 General policy.

(a) It is the policy of the DOE to use presently owned DOE construction equipment to the fullest extent. Careful investigation shall be made of the equipment available, not only at the field office concerned, but at other field offices, to determine whether such equipment can be economically utilized on the job. The Procurement Executive or designee, can assist in the investigation of excess equipment available in other offices.

(b) It is the policy of the DOE to rent construction equipment, where available, rather than purchase it, unless in the case of third-partyowned equipment, the contracting activity determines that accrued rentals on a particular item of equipment will approximate the cost of ownership of it except, however, that individual items of construction equipment having an original cost of less than $1,000 ordinarily should be purchased and not rented. Where it is clearly to the advantage of the Government, items having a cost of less than $1,000 may be rented with the approval of the Head of the Contracting Activity. Whenever it is practical, cost and other factors considered, Contractorowned equipment shall be rented in

936.7002-2 Rental period.

The base rental period shall extend from the time the equipment is accepted at the job site until the contractor is notified in writing by DOE's representative that the equipment is no longer required. Subject to applicable limitations covered in the rental agreement form, the contractor shall be paid rental during the in-transit time and during the time required for equipment repair or replacement prior to return to the contractor.

936.7002-3 Rental rates.

(a) Rates for rental of contractorowned equipment shall be fair and eq. uitable. The rental rates contemplate

that the DOE will pay incoming and would be paid during a single shift. outgoing transportations costs and Therefore, the rental agreement form rental during in-transit time for both provides for payments for overtime at inbound and outbound transportation a rate equal to one-half the rate for of equipment; however, terms more fa- the first shift. vorable to DOE may be negotiated where appropriate. The rental rates to 936.7002-5 Insurance. be paid for the use of contractor

(a) Generally, rental rates should inowned equipment under normal condi

clude the cost of insurance or self-intions should not exceed 65 percent of

surance covering loss of or damage to the rates quoted in the latest edition

the equipment during rental periods. of the Associated Equipment Distributor's (A.E.D.) “Compilation of Average

The rental agreement for contractorRental Rates for Construction Equip

owned equipment is so worded. ment.” However, Heads of Contracting

(b) However, if the contracting offiActivities may approve rates in excess

cer determines that it is not practical of 65 percent of the current A.E.D.

to include the cost of such insurance schedule when local conditions require

in the rental rates, paragraphs 3(d) higher rates. When it becomes neces

and 7(a) shall be amended as indicated sary as a general practice to exceed 65

in the applicable notes following these percent of the current A.E.D. sched

paragraphs in 936.7301. ule, Heads of the Contracting Activi

936.7002-6 Rental limitation. ties shall be advised.

(b) For items of equipment that are The rental agreement form provides not covered by the A.E.D. schedule, that when the total amount of rental use the latest edition of “Contractors' paid to the contractor for any one unit Equipment Ownership Expense" docu- of equipment equals 75 percent of the ment published by the Associated mutually agreed value of that unit, as General Contractors of America, Inc., set forth in the initial inspection and information on prevailing local report, the equipment is to remain rates for developing rates that would available for the work under the conbe consistent with the 35 percent re- struction contract as long as it will be duction of the A.E.D. rates (i.e., taking required without any further rental into consideration the expenses paid payments to the contractor. The by the Government under the rental rental ceiling of 75 percent of the agreement).

agreed-upon value of the equipment [49 FR 12016, Mar. 28, 1984; 49 FR 38951,

applies to all rental paid, including Oct. 2, 1984)

rental paid during in-transit time to

and from the site of the work and 936.7002–4 Application of rates.

down time from any operating repairs (a) Rental rates shall be based upon

or restoring of the equipment after it one shift of 8 hours per day, 40 hours

is no longer needed at the site. The per week, or 176 hours per month of a

purpose of the provision is to prevent 30-consecutive-day period.

the Government from paying rental in (b) The monthly rental rate and its

excess of the contractor's investment, pro-rata share shall apply to all rental

and is included in lieu of an “option to periods of 1 month or more. The

purchase” clause. Once a particular weekly rate and its pro-rata shall

piece of equipment has been released, apply to all rental periods of 1 week or

the contractor will be required to more up to 1 month. The daily rate

return it to the job under the original and its pro-rata shall apply to all

rental period. rental periods up to 1 week. (C) Inasmuch as there are certain

936.7002-7 Record of negotiation. elements of cost to an equipment A record of negotiation shall set owner which do not change even forth the information used to deterthough the equipment is used on more mine the reasonableness of the rental than one shift per day, it is believed rates, including a breakdown of the equitable to pay a lower rental rate contractor's equipment ownership exduring a second and third shift than pense, similar to that itemized in the

Associated General Contractors of America's document, Contractors' Equipment Ownership Expense."

936.7002–8 Responsibility for repair and

replacement. The rental agreement describes the responsibilities of the parties with respect to maintenance and repair necessary to the operation of the rented equipment, or replacement of such equipment. The DOE's responsibility includes repairs resulting from normal wear and tear, provided they were necessary in order to continue the equipment in service. However, when the equipment is no longer required on the job, the extent of the DOE's obligation is only to return the equipment to the contractor in as good operating condition as when received, less wear and tear.

pleted by a representative of the DOE and, at his option, the contractor.

(c) If initial detailed inspection discloses that the condition of the equipment is doubtful, arrangements should be made with the contractor for a trial period of operation to prove the equipment, with provisions that if equipment is found unacceptable in the trial period, no rental, transportation, or other expenses will be due the contractor. Repairs to equipment which fails in service due to defects not reasonably ascertainable on initial inspection shall be at the contractor's expense. (49 FR 12016, Mar. 28, 1984; 49 FR 38951, Oct. 2, 1984)

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936.7002–9 Equipment condition and in

spection. (a) Construction equipment shall be given a rigid and detailed inspection by representatives of the DOE and, at the contractor's option, by representatives of the contractor, before its shipment and acceptance or use on the job. Equipment shall be inspected under actual workloads insofar practicable. In cases where it is not practical to inspect equipment prior to its shipment to the job site, the contractor should be informed of the extent of inspection and the expected condition of his equipment in the event the equipment does not meet required standards. The transportation, rental, or any other expenses shall be paid by DOE unless, at contractor's expense, the equipment is repaired to acceptable standards in a reasonable length of time. A similar inspection shall be made immediately prior to scheduled return shipment of an item of equipment.

(b) A detailed inspection report shall be signed by each representative inspecting. The initial inspection report shall be used at the time of release as a basis of determining the repairs necessary to place the equipment in as good operating conditions as when accepted less normal wear and tear. After necessary repairs are completed, a final inspection report shall be com

936.7003-1 Rental agreement.

The terms and conditions governing rental of construction equipment from a third party which does not operate the equipment are in accordance with 936.7002-2, 936.7002-4, 936.7002-8, and 936.7002-9, and the following subsections of this part, and are set forth in 936.7302, Outline of agreement for rental of third-party-owned construction equipment. Heads of Contracting Activities shall assure that these terms and conditions are used by DOE costreimbursement construction contractors and that similar terms and conditions are used by other DOE cost-reimbursement contractors or subcontractors in renting construction equipment from a third party. These terms and conditions may be suitably modified to provide for rental of equipment with operators. Some of the aspects of this agreement to which particular attention should be given are set forth in the next three subparts.

936.7003-2 Rental rates.

Third-party equipment shall be rented on the basis of competitive bids, rental rates, transportation costs, and other factors being considered. The rental specifications shall be based on the circumstances of a particular case, including the length of rental period, the availability of equipment in certain localities, and the work requirements.

limitations of the authority of the inspecting contractor.

Subpart 936.72-Acquisition of

Special Equipment

936.7003-3 Insurance.

The provisions of 936.7002-5(a) also apply to the rental of construction equipment from a third party. However, if the contracting officer determines that the rental rates are not to include the cost of insurance or self-insurance covering loss of or damage to the equipment, the rental agreement shall reflect this condition.

936.7003–4 Option to purchase equipment.

When accrued rentals on a particular item of equipment will likely approximate the appraised value of equipment and a decision has been made not to purchase in accordance with 936.7001(b), consideration shall be given to including in the rental agreement, an option to purchase the equipment.

936.7200 Scope of subpart.

Contracts for acquisition services only are rarely used. Acquisition of special equipment is generally contracted for in conjunction with CPFF contracts for construction, operating, or architect-engineer services. In special situations, acquisition of other equipment and construction materials is also contracted for in conjunction with CPFF contracts for perating or architect-engineer services. The description of acquisition services in paragraph (936.7202) of this section is applicable to all of these cases.

Subpart 936.71-Inspection and


936.7100 Scope of subpart.

This subpart implements and supplements FAR Part 36 by prescribing the policies and requirements for inspection and acceptance under construction contracts.

936.7101 Construction contracts.

(a) Inspection services may be performed by the architect-engineer responsible for the design. Inspection services may not be procured from a construction contractor with respect to its own work.

(b) When one contractor is to inspect the work of another, the inspection contractor will be given written instructions defining its responsibilities and stating that it is not authorized to modify the terms and conditions of the contract, to direct additional work, to waive any requirements of the contract, or to settle any claim or dispute. Copies of the instructions will be given to the contractor who is to be inspected, with a request to acknowledge receipt on a copy to be returned to the contracting officer. In this manner, both contractors are on express notice of the authority and

936.7201 Definition.

Special equipment is equipment for which the purchase price is of such a magnitude compared to the cost of installation as to improperly reflect the amount of technical direction and management effort required of the contractor. Generally, special equipment is considered to be a capitalasset-type of equipment (typically, equipment costing more than $1,000 and having a service life of more than two years) for which the cost of installation and handling (including unloading, hauling and warehousing) is 5 percent or less, of the purchase price of the equipment. However, the determination of specific items of equipment in this category requires application of judgment and careful study of the circumstances involved fi ch project. This category of equipment would generally include items such as:

(a) Major items of prefabricated process or research equipment.

(b) Major items of preassembled equipment such as packaged boilers, generators, machine tools, and larger electrical equipment. In some cases it would also include special apparatus or derices such as reactor vessels and reactor charging machines.

Subpart 936.73-Outline for Equipinent Rental Agreement

936.7300 Scope of subpart.

This subpart contains agreement formats which are suggested for use where DOE rents construction equipment from a prime cost-type construction contractor, or third-party-owned equipment. The outline for rental from the prime contractor is designed for use as an appendix to the prime cost-type construction contract. The format for use with third parties is an agreement within itself.

936.7202 Description of acquisition serv

ices. (a) Acquisition as herein considered is an activity involving judgment, knowledge, and experience relating to the manufacture, use, or application of the article or process to be purchased. It may include the development or location of sources of supply, and generally includes preparation of bidding documents, solicitation of proposals, analysis of proposals received (including, where necessary, technical and sometimes complicated evaluation of performance characteristics of the equipment of different manufacturers), inspection at manufacturer's plant as distinguished from inspection supplied under Title III services of an architect-engineer contract, and evaluation of production capacities to meet required delivery. Acquisition includes necessary coordination with participating contractors and DOE for especially designed equipment, general and specific expediting, and special assistance to the manufacturers in helping to locate scarce materials and machine tools and in supporting allocation for critical materials where this is a necessary function. Acquisition normally includes inspection and receiving upon delivery at the site (this may be a joint activity where the contracting agent is not the constructor) and payment. All on-site physical activities after delivery, including unloading, warehousing, hauling, and installation are considered a construction activity and not acquisition.

(b) Coordination, timing, and technical know-how are important factors to be considered in the selection of a contracting agent. The advantages and disadvantages of placing full responsibility in one contractor for construction and acquisition, or split responsibility where the acquisition is placed under a contract with architect-engineer or operating contractor, should be evaluated in the light of the above factors.

936.7301 Outline of agreement for rental

of contractor-owned construction

equipment. Attached to and made a part of Contract No. Contractor: The following provisions shall govern the use and rental of the Contractor's construction plant and equipment (hereinafter called the “equipment") under the contract:

1. Equipment rented. The Contractor agrees to furnish for his own use in the performance of the contract the equipment itemized in Schedule 1 (attached to and made part of this agreement). Each item of the equipment shall be clearly marked with the identification number assigned to it on Schedule 1. the Contractor and DOE may from time to time amend Schedule 1 by deleting items or adding items.

2. Payments. As provided in the clause of the contract entitled “Allowable Cost and Payment," the allowable costs of the performance of the contract shall include:

(a) Rental. Rental of equipment, for rental periods determined in accordance with paragraph 4 and at the rates set forth in Schedule 1 applied in accordance with paragraph 3.

(b) Transportation. Transportation of equipment in accordance with paragraph 5.

(c) Repair. Maintenance, repair, and replacement of equipment to the extent provided in paragraphs 6 and 7.

Payment shall be made in accordance with procedures set forth in the clause of the contract entitled “Allowable Cost and Payment.”

3. Application of rates. The rates set forth in Schedule 1 shall be applied in accordance with the following rules:

(a) Basis of rates. The rates are based upon one shift of 8 hours per day, 40 hours per week, or 176 hours per month (of 30 consecutive days).

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