the submission of multiple proposals. If multiple proposals are authorized the request shall include a statement substantially as follows:

Multiple Technical Proposals. In the first step of this two-step procurement, offerors are authorized and encouraged to submit multiple technical proposals presenting different basic approaches. Each technical proposal submitted will be separately evaluated and the offeror will be notified as to its acceptability.

(b) Receipt and evaluation of technical proposals. The following actions will be taken with respect to receipt and evaluation of technical proposals:

(1) Every precaution shall be taken to safeguard technical proposals against disclosure to unauthorized persons.

(2) Any reference to price or cost will be removed.

(3) Technical evaluation of the proposals will be based upon the criteria contained in the request for technical proposals and such evaluation will not include consideration of capacity or credit as defined in § 1-1.708.

(4) Technical proposals will be categorized as acceptable or unacceptable. Proposals will not be categorized as unacceptable when a reasonable effort on the part of the Government could bring the proposals to an acceptable status and increase competition. The contracting officer shall arrange for any necessary discussions with sources submitting technical proposals for the purpose of obtaining additional information or clarification which may be required. When, after discussion and submission of necessary information and clarification, technical proposals are determined to be acceptable, they will be so categorized. If, however, it is determined at any time that a technical proposal is not reasonably susceptible to being made acceptable, it should be classified as unacceptable and no discussions of it need thereafter be initiated.

(5) Upon final determination that a technical proposal is unacceptable, the contracting officer shall notify the source submitting the proposal of that fact. The notice shall indicate, in general terms the basis for such determination including a statement of whether rejection was based on failure to furnish sufficient information or an unacceptable engineering approach.

(c) [Reserved]

(d) Discontinuance. If, as a result of

the evaluation of technical proposals, it appears necessary to discontinue the twostep advertising method of procurement, the full facts and circumstances will be set forth in writing and submitted to the office which originally approved the method of procurement. If that office approves the discontinuance, each source will be notified in writing of the discontinuance and the reasons therefor.. § 1-2.503-2 Step Two.

Upon completion of Step One, a formally avertised procurement in accordance with Subparts 1-2.2, 1-2.3, and 1-2.4 will be conducted, except that invitations for bids

(a) Will be issued only to and considered only from those sources whose technical proposals have been evaluated and determined to be acceptable under Step One.

(b) Will include the following statement:

This invitation for bids is issued pursuant to two-step formal advertising procedures in subpart 1-2.5 of the Federal Procurement Regulations. Bids will be considered only from those firms who have submitted acceptable technical proposals pursuant to the first step of such procedures as initiated by

(Identify the request for technical proposals) Any bidder who has submitted multiple technical proposals in the first step of this two-step procurement may submit a separate bid covering each technical proposal which has been determined acceptable by the Government.

(c) Will prominently state that the supplies or services to be procured will be in accordance with the specifications and the bidder's technical proposal, as finally accepted, under the request for technical proposals. This may be accomplished in the Schedule item description by a provision substantially in the form of the following example:

Radio antenna, in accordance with Exhibit No. dated (use other description of specifications as appropriate) and your Technical Proposal (insert specific identification of the bidder's proposal including any revision thereof as finally accepted), incorporated herein by reference. Nothing contained in said Technical Proposal shall constitute a waiver of any of the provisions of said Exhibit (or specifications).

(d) Will not be synopsized (see Subpart 1-1.10) or publicly posted (see § 1-2.203-2), except that the names of firms which have submitted acceptable

1-3.903-1

1-3.903-2

Approval of programs.

Administration of program.

Review and approval of contractor's purchasing system and

subcontracts.

[Reserved]

Review and approval of subcontracts.

AUTHORITY: The provisions of this Part 1-3 issued under sec. 205(c), 63 Stat. 390; 40 U.S.C. 486(c).

SOURCE: The provisions of this Part 1-3 appear at 29 F.R. 10155, July 24, 1964, unless otherwise noted.

§ 1-3.000 Scope of part.

This part prescribes policies and procedures which shall be observed by executive agencies in connection with procurement by negotiation. As directed by statute (see § 1-2.102(c)), agencies shall not negotiate pursuant to section 3709 of the Revised Statutes, but shall comply with the negotiation requirements of Title III of the Federal Property and Administrative Services Act of 1949 (hereafter referred to in this Part 1-3 as "the Act"), unless otherwise authorized by law.

(b) No contract shall be entered into as a result of negotiation unless or until the following requirements have been satisfied:

(1) The contemplated procurement comes within one of the circumstances permitting negotiation enumerated in Subpart 1-3.2;

(2) Any necessary determinations and findings have been made (see Subparts 1-3.2 and 1-3.3);

(3) Such clearance or approval as is prescribed by applicable agency procedures has been obtained; and

(4) The prospective contractor has been determined to be responsible in accordance with § 1-1.310.

(c) Wheneven property or services are to be procured by negotiation, proposals shall be solicited from the maximum number of qualified sources, including small business concerns (see § 1-1.702(b) (3)), consistent with the nature of and requirements for the supplies or services to be procured, in accordance with the basic policies set forth in this Part 1-3, to the end that the procurement will be made to the best advantage of the Government, price and other factors considered. Proposals shall be supported by statements and analyses of estimated costs or other evidence of reasonable prices and by such information concerning other vital matters as is deemed necessary by the contracting officer (see § 13.807). Unless award without written or oral discussion is permitted under § 1– 3.805–1(a), negotiation shall thereupon be conducted in accordance with § 13.805, with due attention being given to the factors in § 1-3.102 and any other appropriate factors.

(d) Negotiated procurement shall be on a competitive basis to the maximum practical extent. When a proposed procurement appears to be noncompetitive, the procuring activity is responsbile not only for assuring that competitive procurement is not feasible, but also for acting whenever possible to avoid the need for subsequent noncompetitive procurements. This action shall include both examination of the reasons for the procurement being noncompetitive and steps to foster competitive conditions for subsequent procurements, particularly as to the availability of complete and accurate data, reasonableness of delivery requirements, and possible breakout of components for competitive procurements.

§ 1-3.102 Factors to be considered in negotiating contracts.

During the course of negotiations, due attention shall be given to the following and any other appropriate factors:

(a) Comparison of prices quoted and consideration of other prices for the same or similar property or services, with due regard to production costs, including extra pay shift, multi-shift and overtime costs and any other factor relating to the price, such as profits, cost of transportation, and cash discounts.

(b) Comparison of the business reputation, capacity, and responsibility of the respective persons or firms who submit offers.

(c) Consideration of the quality of the property or services offered, including the same or similar property or services previously furnished, with due regard to conformance with specification requirements.

(d) Consideration of delivery requirements.

(e) Discriminating use of price and cost analyses.

(f) Investigation of price aspects of any important subcontract.

(g) Individual bargaining, by mail or by conference.

(h) Consideration of cost sharing. (i) Effective utilization in general of the most desirable type of contract.

(j) Consideration of the size of the business concern.

(k) Consideration as to whether the prospective supplier requires expansion or conversion of plant facilities.

(1) Consideration as to whether the prospective supplier is located in a surplus or scarce labor area.

(m) Consideration as to whether the prospective supplier will have an adequate supply of qualified labor.

(n) Consideration of subcontracting, with the extensive use of small business subcontractors being considered a favorable factor.

(0) Consideration of the existing and potential workload of the prospective supplier.

(p) Consideration of broadening the industrial base by the development of additional suppliers.

(q) Consideration of whether the contractor requires Government furnished property, machine tools, or facilities.

§ 1-3.103

Dissemination of procurement information.

(a) Synopses of proposed procurements and contract awards shall be prepared and publicized in the Department of Commerce "Synopsis of U.S. Government Proposed Procurement, Sales, and Contract Awards," in accordance with the requirements of §§ 1-1.1003 and 1-1.1004.

(b) Promptly after making awards in any procurement in excess of $10,000, the contracting officer normally shall give written notice to the unsuccessful offerors that their proposals were not accepted. Upon request, unsuccessful offerors whose offered prices were lower than those of the contractor which received the award shall be furnished the reasons why their proposals were not accepted; but in no event will an offeror's cost breakdown, profit, overhead rates, trade secrets, or other confidential business information be disclosed to any other offeror.

(c) Classified information shall be furnished only in accordance with agency regulations governing the handling of classified information.

When a mistake in a contractor's proposal is not discovered until after award, the authority to correct mistakes contained in § 1-2.406-4 may be utilized in accordance with the limitations and procedures set forth therein.

Subpart 1-3.2-Circumstances

Permitting Negotiation

§ 1-3.200 Scope of subpart.

Subject to the requirements and limitations prescribed in Subparts 1-3.1 and 1-3.3 and in this Subpart 1-3.2, or as otherwise provided by law, procurement may be effected by negotiation under any one of the exceptions contained in sections 302(c) (1) through 302(c) (15) of the Act (see §§ 1-3.201 through 1-3.215). Each negotiated contract shall contain a reference to the authority under which it was negotiated.

§ 1-3.201 National emergency.

(a) Authority. Section 302(c) (1) of the Act (41 U.S.C. 252(c)(1)) provides that purchases and contracts may be negotiated if "determined to be necessary in the public interest during the period of a national emergency declared

by the President or by the Congress." At present, a state of national emergency exists by reason of Presidential Proclamation No. 2914 of December 16, 1950 (3 CFR).

(b) Determination. The Administrator of General Services has determined, pursuant to section 302(c) (1) of the Act, that it is necessary in the public interest during this period of national emergency that contracts be negotiated by executive agencies to assist labor surplus areas and small business concerns and to further the Balance of Payments Program.

(c) Application. (1) The authority of this section of the Act, shall be used, in accordance with the foregoing determination, to negotiate contracts in furtherance of the policies for assistance to labor surplus areas as are stated in the Office of Civil and Defense Mobilization Defense Manpower Policy No. 4 (Revised). (See Subpart 1-1.8.)

(2) The authority of this section of the Act shall also be used, in accordance with the foregoing determination, to negotiate unilateral set-aside contracts with small business concerns, where small business joint set-aside determinations pursuant to Subpart 1-1.7 are not feasible, when it is determined by the contracting officer to be in the interest of (i) maintaining or mobilizing the Nation's full productive capacity, (ii) war or national defense programs, or (iii) assuring that a fair proportion of the total purchases and contracts for property and services for the Government are placed with small business concerns.

(3) The authority of this section of the Act shall be used, in accordance with the foregoing determination, to negotiate contracts for U.S. end products or services, as provided in Subpart 1-6.8 of this chapter, in furtherance of the U.S. Balance of Payments Program.

[29 F.R. 10155, July 24, 1964, as amended at 32 FR. 5622, Apr. 6, 1967]

§ 1-3.202 Public exigency.

Pursuant to the authority of section 302(c) (2) of the Act (41 U.S.C. 252 (c) (2)), purchases and contracts may be negotiated without formal advertising if "the public exigency will not admit of the delay incident to advertising."

(a) Application. In order for this authority to be used, the need must be compelling and of unusual urgency, as when the Government would be seriously injured, financially or otherwise, if the property or services to be purchased or