(District or area)

cation is accessible only by

(Indicate: i.e. "boat" and for several months

or "boat and air" etc.) each year is accessible only by The Government's operations which consist of require the use

(General description only) of trucks of this type. The location presently has of these trucks with stocks of spare parts determined necessary from experience to maintain these trucks in proper operational efficiency. There are also trucks of other manufacture with required stocks of spare parts which will gradually be eliminated by standardization. No commercial supply or service centers are maintained at this remote location or within approximately -- miles thereof.

3. It is impractical to provide service and repair facilities for numerous makes of vehicles and to maintain stocks of parts necessary to keep the various makes in operating condition. Each make of vehicle usually requires additional special equipment for proper servicing and repair. This results in

added cost, housing, and related administrative expense. Similarly each additional make requires the maintenance of separate stocks of spare service and repair parts which require additional bins, storage, and clerical and administrative expenses. The annual savings in cost estimated to result from the maintenance of reduced stocks of parts made possible by standardizing on these trucks is

4. (State other factors and details as applicable.)

5. Under these circumstances the Alaska Road Commission regards the standardization and interchangeability as necessary in the public interest.

Determinations

1. Based upon the foregoing findings, I hereby determine, within the meaning of section 302(c) (13) of the Federal Property and Administrative Services Act of 1949, that:

A. The equipment described is technical equipment;

B. Negotiation is necessary, in the situation and in the locality described, in order to assure standardization of the equipment and interchangeability of parts; and

C. Such standardization and interchangeability is necessary in the public interest.

2. Upon the basis of these findings and determinations, I hereby authorized the negotiation of a contract (or contracts) for procurement of the equipment described in these findings pursuant to section 302 (c) (13) of the Federal Property and Administrative Services Act of 1949.

Secretary of the Interior.

§ 1-3.214 Negotiation after advertising. Pursuant to the authority of section 302(c) (14) of the Act (41 U.S.C. 252(c) (14)), purchases and contracts may be negotiated without formal advertising if "for property or services as to which the agency head determines that bid prices after advertising therefor are not reasonable (either as to all or some part of the requirements) or have not been independently arrived at in open competition."

(a) Application. This authority is designed to cope with cases where bids received after advertising are too high, although not actually identical or apparently collusive, and cases of indicated possible collusive bidding. Indications of possible violation of antitrust laws or collusive bidding are to be reported in accordance with Subpart 1-1.9. Where, after advertising, some of the bids do not appear reasonable, and the reasonable bids do not cover the full quantity required, the contracting officer

may, at his discretion, accept the reasonable bids. Negotiation for the balance of the quantity required is subject to the requirements of § 1-3.214(b).

(b) Limitations. This authority shall not be used unless it has been determined in accordance with Subpart 1-3.3 that the bid prices, after formal advertising for the property or services, are not reasonable or were not independently arrived at in open competition. Also, after such determination has been made and after rejection of bids, no contract shall be negotiated under this authority unless;

(1) Notification of intention to negotiate and reasonable opportunity to negotiate have been given to each responsible bidder which submitted a bid in response to the invitation for bids; and

(2) The negotiated price is the lowest negotiated price offered by any responsible supplier.

§ 1-3.215 Otherwise authorized by law.

(a) Pursuant to the authority of sec. tion 302(c) (15) of the Act (41 U.S.C. 252 (c) (15)), purchases and contracts may be negotiated without formal advertising if "otherwise authorized by law." This provision preserves the authority to negotiate contracts conferred by other legislation. The following are typical examples:

(1) Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.).

(2) Small Business Act (15 U.S.C. 631).

(3) Section 321 of the Transportation Act of 1940 (49 U.S.C. 65). (This law permits negotiation for transportation services when the services required can be procured from any common carrier. This authority shall not be used to eliminate competition from companies which are not common carriers when the services may also be performed by such companies.)

(b) When negotiating pursuant to other statutory authority:

(1) The law so authorizing should be cited in the purchase or contract instrument.

(2) The requirements of section 304 of the Act shall apply. These pertain to the covenant against contingent fees, examination of records, and various aspects of cost-type contracting.

(c) Other statutory authority of an agency to procure "without advertising" or "without regard to section 3709 of the

(a) The determinations and supporting findings referred to in this Part 1-3 are documents required to justify the use of the authority (1) to enter into contracts by negotiation, (2) to make advance payments under negotiated contracts, (3) to determine the kind of contract to be used, (4) to determine the estimated cost of, and fees to be paid under, cost-plus-a-fixed-fee contracts, or (5) to waive a requirement for the submission and certification by contractors or subcontractors of cost or pricing data.

(b) Determinations and findings ordinarily shall be made only with respect to individual purchases or contracts. However, where class determinations and findings are made, they shall not be construed to authorize the procurement by negotiation of supplies or services within the class which feasibly and practicably could be procured through formal advertising (see § 1-1.301-2).

(c) Pursuant to section 307 of the Act (41 U.S.C. 257), the determinations and decisions provided in Title III of the Act to be made by the agency head, and the written findings in support of the determinations required by §§ 1-3.211 through 1-3.214 and paragraphs (a), (b), and (d) of § 1-3.302, shall be final. § 1-3.302

Determinations and findings

required.

In addition to the determinations and findings required by Subpart 1-3.2, the following determinations in connection with the negotiation of contracts are required to be made in writing, supported by written findings as specified in § 13.305:

(a) The determination required by section 304 (b) of the Act (41 U.S.C. 254 (b)) as to estimated cost of, and fees to be paid under, cost-plus-a-fixed-fee contracts (see §§ 1-3.401, 1-3.405-4, and 13.405-5 (c) (2));

(b) The determination required by section 304 (b) of the Act that the use of

a cost or a cost-plus-a-fixed-fee contract or an incentive-type contract is likely to be less costly than other methods or that it is impracticable to secure property or services of the kind or quality required without the use of a cost or cost-plus-afixed-fee contract or an incentive-type contract (see §§ 1-3.404-4 and 1-3.405-1);

(c) The determination required by section 303 (b) of the Act (41 U.S.C. 253 (b)) that it is in the public interest to reject all bids;

(d) The determination required by section 305 (c) of the Act (41 U.S.C. 255 (c)) that the making of advance payments would be in the public interest (see § 1-30.405);

(e) The determination required with respect to waiving a requirement for the submission of cost or pricing data and the certification thereof (see § 1-3.807-3 (b)) and for the inclusion of the clauses required by §§ 1-3.814-1 through 1-3.814-3 in contracts with foreign governments or agencies thereof.

[29 F.R. 10155, July 24, 1964, as amended at 30 F.R. 9593, July 31, 1965]

§ 1-3.303 Determinations and findings by the head of the agency.

The determinations and written findings in support thereof, required by §§ 1-3.211 through 1-3.213, may be made only by the head of the agency, except that the authority to make the determinations and findings required by § 1-3.211 may be delegated by the head of the agency to a chief officer responsible for procurement and only with respect to contracts which will not require the expenditure of more than $25,000. [30 F.R. 9593, July 31, 1965]

§ 1-3.305 Form and requirements of determinations and findings.

(a) The form of determination and findings required shall be sufficient to satisfy the requirements of the applicable provisions of law and of this Part 1-3, and shall be in such form as may be prescribed in agency instructions.

(b) Each determination and findings required by Subpart 1-3.2 and § 1-3.302 shall be signed by the official making the determination and findings and shall set out enough facts and circumstances to clearly justify the specific determination made. Each determination and findings required to negotiate either an individual contract, or a class of contracts under

§§ 1-3.202, 1-3.207, 1-3.208, 1-3.210, 13.212 through 1-3.214, and for the procurement of property or supplies under § 1-3.211, shall set forth enough facts and circumstances to clearly and convincingly establish that the use of formal advertising would not have been feasible or practicable.

§ 1-3.306 Procedure with respect to determinations and findings.

Determinations and findings for authority to negotiate required by §§ 13.202, 1-3.207, 1-3.208, and 1-3.210 through 1-3.214 shall be signed by the appropriate official prior to issuance of a request for proposals. Any modifications of such determinations and findings subsequently found to be necessary I will not require cancellation of the request for proposals if the determinations and findings as modified support negotiation under any one of the authorities cited in Subpart 1-3.2. Where the facts continue to support the negotiation but under an authority for which a determination and findings is not required, cancellation of the determination and findings will not require cancellation of the request for proposals.

§ 1-3.308 Preservation of data.

(a) The originals of all determinations and findings required by this Part 1-3, and copies of supporting documents, shall be preserved and available in the files of the agency for a period of at least six years following the date of the determination.

(b) A copy of each determination and findings required by Subpart 1-3.2 and by (b) and (d) of § 1-3.302 shall be filed with the General Accounting Office copy of the contract in connection with which the determination and findings is made.

(c) In any case where a purchase or contract is negotiated under § 1-3.201 and §§ 1-3.207 through 1-3.214, data with respect to negotiation shall be preserved in the files of the agency for a period of six years following final payment on such purchase or contract. Such data shall be sufficient to show:

(1) The reason and basis for use of negotiation;

(2) The extent of competition secured; and

(3) Other essential information bearing on the actual negotiations.

(d) Where in other cases of negotiation, the requirements of paragraphs

(a) and (c) of this § 1-3.308 are not applicable, final data shall nevertheless be made a part of the file to support the action taken. This includes the informal records required with respect to purchases resulting from oral offers.

Subpart 1-3.4-Types of Contracts § 1-3.400 Scope of subpart.

This subpart (a) describes and defines types of contracts for procurement by negotiation, (b) defines the areas of applicability in which each type of contract may be used appropriately and sets forth considerations and policies governing the choice of type of contract, and (c) imposes conditions on the use of certain of the available types of contracts. § 1-3.401 Types of contracts.

(a) A contract negotiated under this Part 1-3 may be of any type or combination of types described in this Subpart 1-3.4 which will promote the best interests of the Government, subject to the restrictions in § 1-3.401(b). The respective contract types vary as to (1) the degree and timing of responsibility assumed by the contractor for the costs of performance, and (2) the amount and type of profit incentive offered the contractor to achieve or exceed specified standards or goals. With regard to degree of cost responsibility, the various types of contracts may be arranged in order of decreasing contractor responsibility for the costs of performance. At one end is the firm fixed-price contract under which the parties agree that the contractor assumes full responsibility in the form of profits or losses, for all costs under or over the firm fixed price. At the other end of this range is the costplus-a-fixed-fee contract where profit, rather than price, is fixed and the contractor's cost responsibility is therefore minimal. In between are the various incentive contracts which provide the varying degrees of contractor cost responsibility, depending upon the degree of uncertainty involved in contract performance.

(b) The cost-plus-a-percentage-ofcost system of contracting shall not be used. In furtherance of this policy, all prime contracts (including letter contracts) on other than a firm fixed-price basis, shall by an appropriate clause prohibit cost-plus-a-percentage-of-cost subcontracts. In addition, all cost-plusfee subcontracts under prime contracts

which are on other than a firm fixedprice basis shall limit the payment of fees to those prescribed by agency procedures within the limitations of section 304 of the Act (see § 1-3.405-5 (c)). [Reserved]

§ 1-3.402

§ 1-3.403

Selection of contract type.

(a) General. The selection of contract type is generally a matter for negotiation and requires the exercise of judgment. Type of contract and pricing are interrelated and should be considered together in negotiation in accordance with § 1-3.803. Because the type of contract affects the resulting price to the Government, use of an appropriate type is of primary importance in obtaining fair and reasonable prices. Each contract file shall include documentation to show why the particular contract type was used, except for small purchases (see Subpart 1-3.6); repetitive types of procurement usually accomplished on a firm fixed-price basis, such as subsistence procurement; or awards made on the setaside portion of formally advertised procurements partially set aside for either small business or labor surplus area concerns. Although no absolute rules can be laid down, there are many factors which should be considered in the use of an appropriate type of contract, including those which follow.

(1) Price analysis. Price analysis (see § 1-3.807-2(b)) may provide a basis for selection of contract type. The degree to which price analysis can provide a realistic pricing standard should be carefully considered, even where there may not be full and free competition.

(2) The cost estimate. In the absence of effective price competition and where price analysis is not sufficient, the cost estimates of the offeror and of the Government are the bases for negotiation of any pricing arrangements. As a minimum, the uncertainties involved in performing at the cost estimated, and their possible impact on costs, must be identified and evaluated so that a pricing arrangement can be negotiated which imposes a reasonable degree of cost responsibility upon the contractor. The following are some of the considerations which may influence the estimate and hence, the selection of contract type:

(i) Type and complexity of the item. (ii) Stability of design, which in turn may influence such subordinate considerations as the adequacy and firmness of

specifications, and the availability of relevant historical pricing data and prior production experience.

(iii) Prospective period of contract performance and length of production run at the time of negotiation.

(iv) Extent and nature of subcontracting contemplated.

(v) Adequacy of the contractor's estimating system.

(3) Urgency of the requirement. In certain procurements the best interests of the Government may dictate that the urgency of the requirement be a primary consideration in selection of contract type.

(4) Technical capability and financial responsibility of the contractor.

(5) Adequacy of the contractor's accounting system. Before reaching agreement on price and contract type, determination should be made that the contractor's accounting system will permit timely development of all necessary cost data in the form required by the specific contract type contemplated. This may be particularly critical where the contract type requires revision of price while performance is in progress, or where a cost-reimbursement type of contract is being considered and all current or past experience with the contractor has been on a fixed-price basis (see § 1-3.809).

(6) Other concurrent contracts. If performance under a proposed procurement involves operations which concurrently are required in performance of other work, the nature of the pricing arrangements on the other work may be important in selecting the contract type for the proposed procurement. This factor may not be so important where close controls exist that will assure proper allocation of costs.

(b) Research. In the majority of research programs, including preliminary explorations and studies, the work to be performed cannot be described precisely. Hence, the negotiation of cost-plus-afixed-fee or cost-sharing contracts frequently is necessary. However, where the level of contractor effort desired can be identified and agreed upon in advance of performance, negotiation of a firm fixed-price contract should be considered.

(c) Development and test. Where possible, a final commitment to undertake specific product development and test should be avoided until preliminary exploration and studies have indicated

a high degree of probability that the development is feasible and the Government generally has determined both its minimum requirements for product performance and schedule completion and its desired performance and schedule completion objectives. The precision with which the performance objectives can be defined will largely determine the type of contract employed, with firmfixed-price contracts receiving first consideration. In development programs where use of cost and performance incentives are considered desirable and administratively practicable, fixed-priceincentive and cost-plus-incentive-fee contracts are to be considered in that order of preference. The solicitation should describe the Government's minimum requirements for product performance and schedule completion, its desired performance and schedule completion objectives, and the type of contract contemplated. The Government's minimum requirements for product performance and schedule completion generally should not be considered subject to negotiation. The solicitation should also indicate the factors on which the Government will evaluate proposals and which of those factors the Government considers most important (e.g., greater weight may be assigned to the range of an aircraft than to its speed). When incentive contracts are to be used, contractors shall be required to submit targets and incentive sharing arrangements for meeting or surpassing the Government's requirements for performance and for schedule completion, together with an estimate of the cost thereof. The targets proposed by each offeror, the estimated cost thereof, and the sharing arrangements proposed should, to the extent practical, be considered by the Government in the contractor selection process. When this approach to contractor selection has been used, the resulting development program should be performed under an incentive contract which includes performance, schedule completion, and cost targets, the requisite test procedures by which attainment of performance targets will be measured, and provisions for varying profits to the extent targets are or are not met. In order to provide maximum incentive, the swing of profit variation should in each case be as wide as practical (see § 13.405-4(b)). The introduction of incentives into development is of such