(2) The supplies or services are immediately available.

(3) One delivery and one payment will be made.

(4) Its use is determined to be more economical and efficient than use of other small purchase methods.

(c) Terms and conditions. There are no written terms and conditions included on Standard Form 44. Since there is, for all practical purposes, simultaneous placing of purchase orders on Standard Form 44 and delivery of the items ordered, written terms and conditions are not considered necessary.

(d) Instructions for use. General procedural instructions governing the use of Standard Form 44 are printed on the form and on the inside front cover of each book of forms.

Agency

(e) Agency implementation. implementation shall be consistent with this § 1-3.605-1, and shall provide adequate safeguards regarding the control of forms and accounting for purchases.

(f) Description and availability of form. (1) Standard Form 44 is available from General Services Administration supply depots in four-part carbon interleaved sets made up into books, consisting of twenty-five sets per book. Each set of forms consists of the following copies: Seller's Invoice, Seller's Copy of Order, Receiving Report-Accounting Copy, and Memorandum Copy. Standard Form 44 may be ordered in the same manner as other standard forms, or the form may be ordered specially printed in accordance with paragraph (f)(2) of this § 1-3.605–1.

(2) Standard Form 44 may be ordered specially printed (i) to include agency name, address, and serial numbers; and (ii) on special weight of paper and with the type of construction, number of sets per book, and number of parts per set, as specified by the ordering agency. Also, the administrative instructions on the inside front cover of the books may be supplemented by using agencies. However, the format of Standard Form 44 may not be changed unless otherwise authorized by the General Services Administration.

§ 1-3.605-2 Standard Forms 147 and 148, Order for Supplies or Services. (a) General. (1) Standard Form 147, Order for Supplies or Services (illustrated in § 1-16.901-147) and Standard

Form 148, Continuation Sheet (illustrated in § 1-16.901-148), are multi-purpose forms designed for use as a purchase order, delivery order, receiving and inspection report, and invoice.

(2) Standard Forms 147 and 148 are available for use by all Federal agencies and shall be used when in the judgment of the agency concerned the use of such forms is considered economical and efficient.

(3) Standard Form 147 is designed primarily for use as:

(i) A purchase order for small purchases not in excess of $2,500.

(ii) A delivery order for ordering or scheduling deliveries against established contracts or from Government sources of supply.

(b) Terms and conditions. (1) Terms and conditions generally suitable for most small purchases are printed on the reverse of Standard Form 147.

(2) Additional terms and conditions, which are consistent with those printed on the form, may be added by agencies provided they are designated as agency terms and conditions, and not as standard terms and conditions of Standard Form 147.

(c) Description and availability of forms. (1) Standard Forms 147 and 148 are available from General Services Administration supply depots in carbon interleaved sets of six parts and may be ordered in the same manner as other standard forms, or the forms may be ordered specially printed in accordance with paragraph (c) (2) of this § 1-3.605-2.

(2) Standard Forms 147 and 148 may be ordered specially printed (i) to include agency name, address, and serial numbers; and (ii) on special weight of paper and with the type of construction, and number of copies per set, as specified by the ordering agency. The forms may be made up as snap-out manifold forms, cut sheets, or reproducible masters. However, the format of Standard Forms 147 and 148 may not be changed unless authorized by the General Services Administration.

§ 1-3.605-3 Agency order forms.

Where Standard Forms 147 and 148 are not used, order forms designed by executive agencies shall conform insofar as practicable with the form illustrated in § 1-16.901-147.

This section establishes policy relating to the purchase of day-to-day requirements through arrangements with vendors or dealers to furnish, on a "charge account" basis, such supplies or nonpersonal services as the Government may order from such sources during a stated period of time. Generally, these arrangements should be made only with local sources so that individual purchases thereunder can be effected with a minimum of time and paper work. In addition to making blanket purchase arrangements for small purchases, similar blanket purchase accounts may be established with Federal Supply Schedule contractors, if not inconsistent or at variance with the terms of the applicable Federal Supply Schedule Contract.

§ 1-3.606-2

Authority to use blanket

purchase arrangements.

(a) Blanket purchase arrangements are authorized when:

(1) A wide variety of items in a broad class of goods, like hardware, are generally purchased from local suppliers but the exact items, quantities, and delivery requirements are not known in advance and may vary considerably.

(2) There is a need to provide local commercial sources of supply for one or more offices or projects in a given area that do not have or need authority to purchase otherwise.

(3) In any other case where the writing of numerous purchase orders can be avoided through the use of this procedure.

(b) Blanket purchase arrangements should be made with local firms from whom numerous individual purchases will likely be made in a given period. For example, where past experience has shown that certain commercial firms selling supplies in a local area are dependable and consistently lower in price than other supply firms in the area dealing in the same commodities, and numerous small purchases are usually made from such suppliers, it would be advantageous to establish blanket purchase arrangements with these firms.

(c) There is no prohibition against making these arrangements with several suppliers for the same class or classes of items. Where experience indicates that prices vary between suppliers, it is pref

(a) Any documentation that assures the following with respect to individual purchase transactions is permissible:

(1) That the vendor and purchaser are in agreement as to what is being purchased.

(2) That at the time of delivery a record of sale and receipt is created.

(3) That at the time of billing for payment the foregoing requirements have provided evidence of the items, quantity, price, date sold and other relevant data.

(b) The issuance of a formal purchase order to document blanket purchase arrangements may be necessary only in certain instances. Such instances may be: when required by the vendor for administrative or tax exemption purposes; when administratively deemed necessary in the best interests of the Government by an agency; or when it is necessary to fix the extent of items covered, quantity, prices, expenditure authorized, activities participating, or otherwise identify or isolate areas of the arrangement. The issuance of a purchase order for Government purchasing or accounting reasons alone is not

necessary.

(1) Purchase orders establishing blanket purchase arrangements, when required, may be general and broad in language with only sufficient detail to indicate the general nature of supplies or services to be covered, and may or may not, as the need dictates, be specific as to quantity, quality, specifications, or time limitation. The blanket purchase orders may be issued on any authorized purchase order form. Individual blanket purchase orders terminate when the purchases thereunder total the dollar

amount limitation or when the stated time period expires.

(2) In any contemplated amendment of a blanket purchase order, due consideration should be given to possible changes in market conditions, sources of supply, etc., which may warrant placing a new order with the same or a different source in preference to amendment.

§ 1-3.606-5 Agency implementation.

The following general instructions are set forth for agency use in the issuance of administrative regulations implementing this policy:

(a) The vendor-agency relationship is that of an open account limited only by the maximum amount and time period limitations fixed by that agency.

(b) The vendor-agency arrangement may be limited to furnishing individual items, or commodity groups or classes, or it may be unlimited for all items or services that the source of supply is in a position to furnish.

(c) The requirements of one or more activities, offices, or projects in a geographical area may be secured by this means.

(d) Authority and responsibility for effecting blanket purchase arrangements should be delegated by agencies to the lowest agency level to which the responsibility is placed or assigned for providing supplies for its own operations or to other offices, installations, projects, or functions. Such levels may be organized supply points, separate independent or detached field parties, or one-man posts or activities.

(e) The use of blanket purchase arrangements does not exempt the agency from responsibility for keeping obligations and expenditures within available funds, but this should be accomplished by the use of simplified methods and by avoiding formal fiscal recordation of individual deliveries and transactions under blanket purchase arrangements.

(f) The use of a blanket purchase arrangement does not authorize purchases not otherwise authorized by law or regulation. For example, the blanket purchase arrangement, being a method of simplifying the making of individual small purchases, may not be used to avoid the $2,500 limitation.

(g) The blanket purchase arrangement method is primarily designed to reduce the amount of documentation in connection with small purchases. The same policies as to selection of suppliers

on the basis of price, time discounts, quality of merchandise, and responsibility of suppliers pertain to blanket purchase arrangements and purchases thereunder as to purchases made by other approved methods. Individual purchases under blanket purchase arrangements should be made only after making price comparisons with other sources available to the extent practicable, consistent with the size and nature of the purchase involved.

(h) Constant consideration should be given to possible changes in market conditions, sources of supply, and other pertinent factors which may warrant making new arrangements with different dealers or vendors, or modifying existing arrangements.

§ 1-3.607 Interagency use of local term

contracts.

(a) General. This § 1-3.607 provides for the cooperative use by the field office of one executive agency of the local term contracts of another agency, or of another office of the same agency, under the circumstances outlined, and establishes criteria for local term contracting by an agency for the combined needs of several agency offices in the area. These contracts provide a means of meeting the local requirements for supplies and services not available from normal agency internal supply channels or other prescribed sources of supply. All Federal agencies are urged to participate in this program.

(b) General conditions warranting use. The use of term contracts usually will be found expedient and economical under any or all of the following conditions:

(1) When the day-to-day requirements for the supply or service are continuing or recurring.

(2) When the probable total requirements only are known and it is expedient and economical to have a source of supply and price determined in advance of the individual instances of actual need.

(3) When this method best meets the needs for providing ordering offices with ready sources of supply.

(c) Use of existing contracts. In lieu of entering into a separate contract for an item coverd by a local term contract of another office or agency, use of the term contract should be considered under any one of the following circumstances, if such use is approved by the contracting

office and if the contract permits (or is amended to permit) such use:

(1) When such use will obviate the administrative expense and time delay incident to making a separate contract.

(2) When there is a price advantage to be gained, freight and other costs considered.

(3) When the requiring office has local purchasing authority but is not staffed or authorized to execute contracts.

(d) Multiple use contracts. In furtherance of the economical and other advantages to be gained from cross utilization of local term contracts, wherever possible the requirements of several offices in the same community should be combined and included in a single contract:

(1) When there is a local repetitive need for a particular article or service by the individual agencies;

(2) When an advantage accrues to requiring offices or activities through establishment of such contracts; and

(3) When it is expedient and practical for a single office to perform the contracting function for other offices, delivery or performance under the contract being arranged for by the participating offices as required.

(e) Selection of contracting agency. The following criteria usually will determine which of the agency offices in any given area having a common need for a given article or service should assume the responsibility for contracting for the requirements of the group in addition to its own needs:

(1) Current or potential preponderant use or consumption.

(2) Actual or potential qualifications and experience of contracting personnel, with due regard to adequacy of staff.

(3) Physical location of the contracting office in relation to market area serving the agencies.

(4) Consideration of the bid prices consistently received for a given article or service by individual contracting offices.

(f) Responsibilities of contracting office and participating offices. The responsibilities of the contracting agency and of the other participating offices with respect to common local term contracts, except where other arrangements have been made, normally will be:

(1) Contracting office. (i) Arranging with participating offices for submission of estimated requirements.

(ii) Soliciting and analyzing bids and awarding and executing contracts.

(iii) Exercising general contract administration, except followup and expediting.

(iv) Making available to the participating office such contract data as is required for placing orders, payment of invoices, etc.

(2) Other participating offices. (i) Placing of orders directly with contractor.

(ii) Arranging for inspection and acceptance.

(iii) Arranging for billing and paying the contractor.

Subpart 1-3.7-Negotiated
Overhead Rates

SOURCE: The provisions of this Subpart 1-3.7 appear at 31 F.R. 15805, Dec. 15, 1966, unless otherwise noted.

§ 1-3.700 Scope of subpart.

This subpart sets forth the policies and procedures governing the establishment of overhead rates by negotiation (including determination or settlement) for use in cost-reimbursement type contracts.

As used in this subpart:

(a) The term "overhead (indirect costs)" includes, but is not limited to, the general groups of indirect expenses such as those generated in manufacturing departments, engineeering departments, tooling departments, general and administrative departments, and, if applicable, indirect costs accumulated by cost centers within those general groups (see § 1-15.203 of this chapter). In the case of contractors using fund accounting systems (e.g., educational institutions), the term includes, but is not limited to, the general groups of expenses such as: general administration and general; operation and maintenance of physical plant; library; and departmental administration (see §§ 1-15.305 and 1-15.306 of this chapter).

(b) The term "billing overhead rate" (or "billing rate") means a tentative percentage or dollar factor which is acceptable to the contracting officer and is established for interim reimbursement purposes. For example, a "billing rate" could be used where the use of a "provisional overhead rate" is not appropriate or desirable, or where such a rate has not yet been negotiated (see

§ 1-3.703(b)), and pending final settlement of the actual allowable overhead. A "billing rate" is not negotiated and is not incorporated into a contract. It gives the contracting officer a procedure which is more easily administered and provides him with greater flexibility (than would a "provisional overhead rate") for prompt adjustment to meet new or changed circumstances during the rate period.

(c) The term "provisional overhead rate" (or "provisional rate") means a tentative percentage or dollar factor mutually agreed upon by the contracting officer and the contractor. It is negotiated for interim reimbursement pending final settlement of the actual allowable overhead (see § 1-3.703(b)). Such rate shall be incorporated in the contract and changed, if necessary, by contract amendment.

(d) The term "negotiated final overhead rate" means a percentage or dollar factor which expresses the ratio (s) mutually agreed upon by the contracting officer and the contractor after the close of the contractor's fiscal year, unless the parties mutually agree to a different period, of allowable indirect expense incurred in the completed period to direct labor, manufacturing cost, cost of sales, or other appropriate allocation or distribution base of the same period (see §§ 1-15.203 and 1-15.305-2 of this chapter). Ordinarily, such rates are used as a means of determining the amount of reimbursement for the applicable indirect costs for such completed period; in such cases, they are termed "postdetermined" overhead rates. In certain circumstances involving educational institutions, negotiated final overhead rates may be used as a means of determining the amount of reimbursement for the applicable indirect costs to be incurred during a future period of contract performance; in such cases, they are termed "predetermined" overhead rates (see § 1-3.703(c)).

(e) The term "contracting officer" includes the authorized representative of a contracting officer.

plished after the fact on an individual contract basis and is based upon an audit of actual costs incurred during the period involved, in accordance with agency procedures (see § 1-3.705 (c)). However, where a contractor performs work in the same period under several contracts for one or more procurement activities or agencies, it may be desirable and appropriate, when mutually agreed to by the agencies and the contractor, to negotiate uniform overhead rates for application to all such contracts, in order to: (a) Effect uniformity of approach, (b) effect economy in administrative effort, and (c) promote timely settlement of reimbursement claims. The foregoing objectives are not intended to preIclude the use of an overhead rate which excludes elements of cost which are not allocable to a particular contract. (See, for example, §§ 1-3.807-11 and 1-15.307-1 of this chapter.) The basis or justification for the latter shall be contained in the contract file (see § 1-3.706).

§ 1-3.703 Applicability.

(a) Billing overhead rates (see § 1-3.701 (b)) or negotiated (provisional and final) overhead rates (see § 1-3.701 (c) and (d) may be used in any costreimbursement type contract (except facilities contracts) where such use, pursuant to the guidelines of this Subpart 1-3.7, is appropriate; where the use of negotiated rates will accomplish one or more of the purposes enumerated in § 1-3.702; or where the use of either billing or negotiated rates will be otherwise advantageous to the Government. (See paragraph (c) of this section with respect to predetermined fixed overhead rates with educational institutions.)

(b) Billing or provisional overhead rates should be used for interim reimbursement only after the contracting officer is satisfied either on the basis of a recent review or as a result of previous audits or past experience with the particular contractor, or similar reliable data or experience obtained from another Government agency and included in the contract file. that the contractor's accounting system (including items treated as indirect cost and the method of distributing them) conforms to generally accepted accounting principles; also, that its financial management policies and procedures, including contract financial controls, are adequate for the timely reporting of potential cost overruns and