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order to assure required standardization added cost, housing, and related adminisof equipment and interchangeability of
trative expense. Similarly each additional parts.
make requires the maintenance of separate
stocks of spare service and repair parts which (e) Determination and findings. (1)
require additional bins, storage, and clerical In order for this authority to be used, a
and administrative expenses. The annual determination and findings justifying use savings in cost estimated to result from the of the authority must be prepared in ac maintenance of reduced stocks of parts made cordance with Subpart 1-3.3.
possible by standardizing on these trucks is (2) The following example of findings and determinations is illustrative of
4. (State other factors and details as apthe type and amount of information
5. Under these circumstances the Alaska which may be considered sufficient to
Road Commission regards the standardizajustify negotiation under section 302 tion and interchangeability as necessary in (c) (13) of the Act:
the public interest. DEPARTMENT OF THE INTERIOR
Determinations FINDINGS AND DETERMINATIONS UNDER SECTION 1. Based upon the foregoing findings, I
302 (C) (13) OF THE FEDERAL PROPERTY AND hereby determine, within the meaning of secADMINISTRATIVE SERVICES ACT OF 1949
tion 302(c) (13) of the Federal Property and
Administrative Services Act of 1949, that: Findings
A. The equipment described is technical In accordance with the requirements of equipment; sections 302(C) (13) and 307 of the Federal B. Negotiation is necessary, in the situaProperty and Administrative Services Act of tion and in the locality described, in order 1949, 63 Stat. 377, as amended, I make the to assure standardization of the equipment following findings:
and interchangeability of parts; and 1. The Alaska Road Commission has stated C. Such standardization and interchangethat it has a requirement for 25 ------ ability is necessary in the public interest.
(Make and 2. Upon the basis of these findings and ------ trucks as set forth in (letter) or (req determinations, I hereby authorized the netype)
gotiation of a contract (or contracts) for uisition) dated --------------, and has sub procurement of the equipment described in mitted, by letter dated ----------; signed by these findings pursuant to section 302(c) (13)
---, information in justifica of the Federal Property and Administrative (Name and title)
Services Act of 1949. tion for such purchase under section 302(c) (13), as described or included in the findings
Secretary of the Interior. set forth below. 2. The trucks in question are required for
§ 1-3.214 Negotiation after advertising. use at -----------, Alaska. This lo
Pursuant to the authority of section (District or area)
302(c) (14) of the Act (41 U.S.C. 252(c) cation is accessible only by ------(Indicate: 1.e. “boat”
(14)), purchases and contracts may be ----------- and for several months negotiated without formal advertising or “boat and air” etc.)
if "for property or services as to which each year is accessible only by ----------- the agency head determines that bid The Government's operations which consist prices after advertising therefor are not ---------, require the use
reasonable (either as to all or some part (General description only) of trucks of this type. The location pre
of the requirements) or have not been sently has ------ of these trucks with stocks independently arrived at in open compeof spare parts determined necessary from tition." experience to maintain these trucks in proper (a) Application. This authority is deoperational efficiency. There are also -----trucks of other manufacture with required
signed to cope with cases where bids restocks of spare parts which will gradually be
ceived after advertising are too high, eliminated by standardization. No commer although not actually identical or apparcial supply or service centers are maintained ently collusive, and cases of indicated at this remote location or within approx possible collusive bidding. Indications imately ------ miles thereof.
of possible violation of antitrust laws 3. It is impractical to provide service and
or collusive bidding are to be reported repair facilities for numerous makes of ve
in accordance with hicles and to maintain stocks of parts nec
Subpart 1-1.9. essary to keep the various makes in operat
Where, after advertising, some of the ing condition. Each make of vehicle usually bids do not appear reasonable, and the requires additional special equipment for reasonable bids do not cover the full proper servicing and repair. This results in 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. 8 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 seryices 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
Revised Statutes" is construed to authorize negotiation pursuant to section 302(c) (15) of the Act and without regard to the advertising requirements of sections 302(c) and 303 of the Act. [29 F.R. 10155, July 24, 1964, as amended at 31 F.R. 348, Jan. 12, 1966] Subpart 1-3.3—Determinations,
Findings, and Authorities § 1-3.301 General.
(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 $8 1-3.202, 1-3.207, 1-3.208, 1-3.210, 1or an incentive-type contract is likely to 3.212 through 1-3.214, and for the probe less costly than other methods or that curement of property or supplies under it is impracticable to secure property or § 1-3.211, shall set forth enough facts services of the kind or quality required and circumstances to clearly and conwithout the use of a cost or cost-plus-&- vincingly establish that the use of formal fixed-fee contract or an incentive-type advertising would not have been feasible contract (see $$ 1-3.404–4 and 1-3. or practicable. 405–1);
§ 1-3.306 Procedure with respect to (c) The determination required by
determinations and findings. section 303(b) of the Act (41 U.S.C. 253 (b)) that it is in the public interest to
Determinations and findings for aureject all bids;
thority to negotiate required by $$ 1– (d) The determination required by 3.202, 1-3.207, 1-3.208, and 1-3.210 section 305(c) of the Act (41 U.S.C. 255 through 1-3.214 shall be signed by the (c)) that the making of advance pay appropriate official prior to issuance of ments would be in the public interest a request for proposals. Any modifica(see § 1-30.405);
tions of such determinations and find(e) The determination required with
ings subsequently found to be necessary respect to waiving a requirement for the will not require cancellation of the resubmission of cost or pricing data and quest for proposals if the determinations the certification thereof (see § 1-3.807-3 and findings as modified support negotia(b)) and for the inclusion of the clauses tion under any one of the authorities required by $$ 1-3.814–1 through 1-3. cited in Subpart 1-3.2. Where the facts 814-3 in contracts with foreign govern continue to support the negotiation but ments or agencies thereof.
under an authority for which a determi[29 F.R. 10155, July 24, 1964, as amended at
nation and findings is not required, can30 F.R. 9593, July 31, 1965]
cellation of the determination and find
ings will not require cancellation of the 8 1-3.303 Determinations and findings
request for proposals. by the head of the agency. The determinations and written find
§ 1-3.307 [Reserved] ings in support thereof, required by § 1-3.308 Preservation of data. $§ 1-3.211 through 1-3.213, may be made (a) The originals of all determinaonly by the head of the agency, except tions and findings required by this Part that the authority to make the determi
1-3, and copies of supporting documents, nations and findings required by § 1-3.211
shall be preserved and available in the may be delegated by the head of the
files of the agency for a period of at agency to a chief officer responsible for
least six years following the date of the procurement and only with respect to
determination. contracts which will not require the ex (b) A copy of each determination and penditure of more than $25,000.
findings required by Subpart 1-3.2 and (30 F.R. 9593, July 31, 1965)
by (b) and (d) of § 1-3.302 shall be filed § 1-3.304 [Reserved]
with the General Accounting Office copy
of the contract in connection with which 8 1-3.305 Form and requirements of
the determination and findings is made. determinations and findings.
(c) In any case where a purchase or (a) The form of determination and contract is negotiated under § 1-3.201 findings required shall be sufficient to and $s 1-3.207 through 1-3.214, data with satisfy the requirements of the appli respect to negotiation shall be preserved cable provisions of law and of this part in the files of the agency for a period of 1-3, and shall be in such form as may six years following final payment on such be prescribed in agency instructions. purchase or contract. Such data shall
(b) Each determination and findings be sufficient to show: required by Subpart 1-3.2 and § 1-3.302 (1) The reason and basis for use of shall be signed by the official making the negotiation; determination and findings and shall set (2) The extent of competition secured; out enough facts and circumstances to and clearly justify the specific determination (3) Other essential information bearmade. Each determination and findings ing on the actual negotiations. required to negotiate either an individual (d) Where in other cases of negotiacontract, or a class of contracts under tion, the requirements of paragraphs (a) and (c) of this § 1-3.308 are not ap- which are on other than a firm fixedplicable, final data shall nevertheless be price basis shall limit the payment of made a part of the file to support the ac fees to those prescribed by agency procetion taken. This includes the informal dures within the limitations of section records required with respect to pur- 304 of the Act (see § 1-3.405–5(c)). chases resulting from oral offers.
§ 1-3.402 [Reserved) Subpart 1-3.4—Types of Contracts § 1-3.403 Selection of contract type. § 1-3.400 Scope of subpart.
(a) General. The selection of conThis subpart (a) describes and defines tract type is generally a matter for negotypes of contracts for procurement by
tiation and requires the exercise of judgnegotiation, (b) defines the areas of ap
ment. Type of contract and pricing are plicability in which each type of con
interrelated and should be considered tract may be used appropriately and sets
together in negotiation in accordance forth considerations and policies govern
with 1-3.803. Because the type of coning the choice of type of contract, and
tract affects the resulting price to the (c) imposes conditions on the use of cer
Government, use of an appropriate type tain of the available types of contracts.
is of primary importance in obtaining
fair and reasonable prices. Each con$ 1–3.401 Types of contracts.
tract file shall include documentation to (a) A contract negotiated under this show why the particular contract type Part 1-3 may be of any type or combina was used, except for small purchases (see tion of types described in this Subpart Subpart 1-3.6); repetitive types of pro1-3.4 which will promote the best inter curement usually accomplished on a firm ests of the Government, subject to the fixed-price basis, such as subsistence prorestrictions in § 1-3.401(b). The re curement; or awards made on the setspective contract types vary as to (1) aside portion of formally advertised prothe degree and timing of responsibility curements partially set aside for either assumed by the contractor for the costs small business or labor surplus area conof performance, and (2) the amount and cerns. Although no absolute rules can be type of profit incentive offered the con laid down, there are many factors which tractor to achieve or exceed specified should be considered in the use of an standards or goals. With regard to de- appropriate type of contract, including gree of cost responsibility, the various those which follow. types of contracts may be arranged in
(1) Price analysis. Price analysis (see order of decreasing contractor responsi- § 1-3.807–2(b)) may provide a basis for bility for the costs of performance. At selection of contract type. The degree to one end is the firm fixed-price contract which price analysis can provide a realunder which the parties agree that the istic pricing standard should be carefully contractor assumes full responsibility in considered, even where there may not be the form of profits or losses, for all costs full and free competition. under or over the firm fixed price. At (2) The cost estimate. In the absence the other end of this range is the cost
of effective price competition and where plus-a-fixed-fee contract where profit. price analysis is not sufficient, the cost rather than price, is fixed and the con estimates of the offeror and of the Govtractor's cost responsibility is therefore ernment are the bases for negotiation of minimal. In between are the various in any pricing arrangements. As a minicentive contracts which provide the vary mum, the uncertainties involved in pering degrees of contractor cost respon forming at the cost estimated, and their sibility, depending upon the degree of possible impact on costs, must be identiuncertainty involved in contract per fied and evaluated so that a pricing formance.
arrangement can be negotiated which (b) The cost-plus-a-percentage-of imposes a reasonable degree of cost recost system of contracting shall not be sponsibility upon the contractor. The used. In furtherance of this policy, all following are some of the considerations prime contracts (including letter con which may influence the estimate and tracts) on other than a firm fixed-price hence, the selection of contract type: basis, shall by an appropriate clause pro (i) Type and complexity of the item. hibit cost-plus-a-percentage-of - cost . (ii) Stability of design, which in turn subcontracts. In addition, all cost-plus- may influence such subordinate considfee subcontracts under prime contracts erations as the adequacy and firmness of specifications, and the availability of a high degree of probability that the relevant historical pricing data and prior development is feasible and the Governproduction experience.
ment generally has determined both its (iii) Prospective period of contract minimum requirements for product perperformance and length of production formance and schedule completion and run at the time of negotiation.
its desired performance and schedule (iv) Extent and nature of subcontract completion objectives. The precision ing contemplated.
with which the performance objectives (v) Adequacy of the contractor's esti can be defined will largely determine the mating system.
type of contract employed, with firm(3) Urgency of the requirement. In fixed-price contracts receiving first concertain procurements the best interests sideration. In development programs of the Government may dictate that the where use of cost and performance inurgency of the requirement be a pri centives are considered desirable and mary consideration in selection of con- administratively practicable, fixed-pricetract type.
incentive and cost-plus-incentive-fee (4) Technical capability and financial contracts are to be considered in that responsibility of the contractor.
order of preference. The solicitation (5) Adequacy of the contractor's ac should describe the Government's minicounting system. Before reaching mum requirements for product peragreement on price and contract type, formance and schedule completion, its determination should be made that the desired performance and schedule comcontractor's accounting system will per pletion objectives, and the type of conmit timely development of all necessary tract contemplated. The Government's cost data in the form required by the minimum requirements for product perspecific contract type contemplated. formance and schedule completion genThis may be particularly critical where erally should not be considered subject the contract type requires revision of to negotiation. The solicitation should price while performance is in progress, also indicate the factors on which the or where a cost-reimbursement type of Government will evaluate proposals and contract is being considered and all cur which of those factors the Government rent or past experience with the con- considers most important (e.g., greater tractor has been on a fixed-price basis weight may be assigned to the range (see § 1-3.809).
of an aircraft than to its speed). When (6) Other concurrent contracts. If incentive contracts are to be used, conperformance under a proposed procure tractors shall be required to submit tarment involves operations which concur gets and incentive sharing arrangements rently are required in performance of for meeting or surpassing the Governother work, the nature of the pricing ment's requirements for performance arrangements on the other work may and for schedule completion, together be important in selecting the contract with an estimate of the cost thereof. type for the proposed procurement. The targets proposed by each offeror, the This factor may not be so important estimated cost thereof, and the sharing where close controls exist that will assure arrangements proposed should, to the proper allocation of costs.
extent practical, be considered by the (b) Research. In the majority of re Government in the contractor selection
ch programs, including preliminary process. When this approach to conexplorations and studies, the work to be tractor selection has been used, the reperformed cannot be described precisely. sulting development program should be Hence, the negotiation of cost-plus-a- performed under an incentive contract fixed-fee or cost-sharing contracts fre
which includes performance, schedule quently is necessary. However, where
completion, and cost targets, the requithe level of contractor effort desired can
site test procedures by which attainment be identified and agreed upon in advance
of performance targets will be measured, of performance, negotiation of a firm fixed-price contract should be consid
and provisions for varying profits to the
extent targets are or are not met. In ered. (c) Development and test. Where
order to provide maximum incentive, the possible, a final commitment to under swing of profit variation should in each take specific product development and case be as wide as practical (see § 1test should be avoided until preliminary 3.405-4(b)). The introduction of inexploration and studies have indicated centives into development is of such