clauses, or has specifically directed to be included in all existing basic ordering agreements by amendment.

(iv) New Technology clause may be included in an order issued under a basic ordering agreement when the contractor requests its inclusion.

Basic ordering agreements shall be reviewed at least annually, before the anniversary of their effective dates, and revised to conform with the current requirements of this chapter. Modifications shall not have retroactive effect.

(5) The contracting officer issuing an order under a basic ordering agreement shall be responsible for assuring compliance with the provisions of paragraph (c) (1), (2), (3), and (4) of this section. § 18-3.450 Incentive contracts.

(a) Policy. It is NASA policy to make judicious and effective use of incentive contracts of both the cost and the performance type. Particular care and judgment are required in choosing procurements appropriate for incentive contracts, and in framing and negotiating the specific incentive terms. The procedures set forth in this § 18-3.450 are established to:

(1) Effectively seek out procurements that lend themselves to the use of contract incentive provisions;

(2) Avoid the use of incentive provisions in situations where they are unsuited and where their use could have adverse results; and

(3) Insure, in connection with contracts in which incentive provisions are to be included, that the skills necessary to draft and negotiate the appropriate incentive provisions are available to NASA procurement offices.

(b) Responsibilities of the director of procurement. In order to implement the policy objectives of paragraph (a) of this section for use of incentive contracts, the Director of Procurement will perform the following functions:

(1) Review, with Headquarters Program Offices and with NASA field installations, as necessary, forthcoming procurements in order to select, well in advance, those procurements which appear to lend themselves to the inclusion of incentive features;

(2) Provide or arrange for guidance and technical assistance to procurement offices in connection with the drafting and negotiation of incentive provisions in those contracts approved in advance

20-130-74- -16

by the Director of Procurement, for application of incentive provisions;

(3) Review and make recommendations to field installations with regard to proposals made by them as to the use of incentive provisions in forthcoming contracts;

(4) Appraise the capability within NASA to select, negotiate, and administer incentive contracting and assist in making required training arrangements;

(5) Study, in conjunction with the Director of Financial Management, Office of Administration, and the Director, Management Information Systems Division, NASA Headquarters, the linking of incentive provisions to PERT-Cost;

(6) Maintain close contact with the Department of Defense in the incentives field and keep informed of other studies, literature, or developments within the Government and industry bearing on incentive contracting;

(7) Develop more precise policy guidelines governing use of incentive provisions; and

(8) Report quarterly to the Deputy Administrator regarding the progress being made within NASA to utilize incentive provisions.

In carrying out the functions specified in this paragraph (b), the Director of Procurement will utilize the assistance of the Headquarters Program Offices, the Office of the General Counsel, and the Audit Division.

(c) Advance approval of incentives. (1) The advance approval of the cognizant Headquarters program director will be obtained on the NASA prenegotiation position for procurements that are selected for Headquarters review and approval in accordance with the Master Buy Plan Procedure (see Subpart 18-50.2) and which contemplate the use of an incentive or an award fee type of contract, prior to the discussion of incentive arrangements in negotiations, and in addition to any required approval of a procurement plan. The request for advance approval will be submitted immediately upon the establishment of a tentative NASA prenegotiation position, which may occur prior to the issuance of requests for proposals or which may result from the review and evaluation of offerors' responses to requests for proposals. The following information will be included in a prenegotiation memorandum to be submitted in support of

each request for approval of a prenegotiation position:

(i) Brief description of the procurement action;

(ii) Proposed contractor(s);

(iii) Procurement objectives which will be aided by the planned incentives; (iv) Type of contract contemplated and rationale supporting selection of the contract type;

(v) Parameters considered suitable for application of incentives (performance, schedule, cost, multiple or combinations of these). Discuss in detail the objectives of the proposed incentive arrangement, and the extent of any reliance on extra-contractual influences. Be specific, avoid vague generalization such as "improvement in performance, management, quality, delivery, at lowest possible cost" or "motivate the contractor to improve his quality, timeliness and cost consciousness";

(vi) Estimated target cost (minimum and maximum position). Discuss the extent and evaluation of any significant variance between the NASA estimated cost objective and the contractor's proposed estimated cost. Describe the audit and technical input utilized in development of the estimated cost. Discuss the range of confidence in the estimated target cost, i.e., the most pessimistic and the most optimistic estimates of cost expectancy, discuss in detail the bases for the establishment of the range of confidence in target cost and pricing techniques used to validate the cost estimates or range of incentive effectiveness;

(vii) Target, maximum, and minimum fee objective (if CPIF); target profit and ceiling price (if FPI); base and maximum fee (if CPAF). Discuss the bases for the establishment of fees or profit (target, maximum, minimum, base and award fee as appropriate) using the factors contained in § 18-3.808;

(viii) Performance incentive. Goals, minimum acceptable performance; target performance; method of measurement or test; furnish a value analysis of increments of increase or decrease in performance accomplishment, explain the base for establishment of goals and targets.

(ix) Schedule incentive. Discuss the planned delivery schedules or milestones in terms of the earliest desirable target and the latest acceptable dates; furnish a value analysis of increments of increase and decrease in the schedule accomplishment in relation to the cost in

centive. Where milestones are used, give the reasons for their selection.

(x) Cost incentive. Sharing formula, fee swing (minimum and maximum position).

(xi) Award fee. Suggested criteria, rating, relative weighting evaluation award periods, method planned for fee payments and the designation of the Fee Determining Official.

(xii) Multiple incentives. Relative weighting; trade-offs; dependencies, i.e., the extent to which the incidence of the several individual incentives depends upon the attainment to some degree of other targets; overlap, i.e., arrangements by which the effect of one or more of the incentives may be extended beyond the effectiveness range implied by the relative weight assigned.

(xiii) If the action is a conversion, discuss the treatment of existing cost overrun or underrun and the effective point or date of conversion. Also, discuss the method used in determining the contractor fee earned, if any, as of conversion date in relation to the extent of performance completed under the prior phase. Discuss why a conversion is required and furnish a projection at completion of cost and fee if the present contractural arrangement is allowed to remain. Discuss the details of performance, cost, and schedule relationships as determined appropriate on a case-bycase basis describing the historical trends and rationale for projections of each factor.

(xiv) Graphic illustrations of incentive arrangement, including graphics of the total contract and details of cost, performance, schedule or award fee relationships.

(xv) If the action is an extension or renewal (e.g., by exercise of an option) of a contract which contains an incentive arrangement or if the contractor has previously performed under an incentive contract, furnish details of the results of previous operations under incentive. If the previous operations were under an award fee incentive arrangement, furnish a summary of the periodic evaluation comments of the installation's Incentive Review Board or comparable body.

(xvi) If the nature of the procurement indicates that significant "Changes" clause activity may be anticipated, an explanation of the following is required: The special provisions that will be con

sidered to provide a formalized adjustment for major changes that can be predicted; the efforts which have been made to construct the schedule and performance incentive features so that they will remain effective even with the changes or certain classes of changes, and the methods, procedures, and capabilities that will be used to make timely equitable adjustments in consonance with keeping the contractor motivated at least in accordance with the original incentive features.

Where the planned fee in the prenegotiation position exceeds the limitations set forth in § 18-3.450 (f), justification for such fee will be set forth in separate correspondence for review and approval by the Director of Procurement. The advance approval of an incentive arrangement shall not be construed as requiring the preparation of an incentive contract, if in the course of negotiations the exercise of good business judgment requires a different contractual arrangement. However, the decision, that an incentive arrangement previously approved will not be used, will be coordinated with the approving authority prior to the commitment of NASA to a position in negotiations. If during the course of negotiations. the contracting officer finds that the incentive plan as approved by the cognizant Headquarters program director cannot be negotiated or for other reasons requires changes, approval for such changes will be obtained prior to the commitment of NASA to a position in negotiations.

(2) Every procurement plan shall contain a discussion of the rationale for the proposed selection of the contract type. Approval of a procurement plan does not constitute approval of the prenegotiation position required by paragraph (c) (1) of this section.

(3) The Director of Procurement will make available such assistance as may be necessary in support of field procurement office capability to draft, negotiate and administer the incentive provisions of new procurement actions or major amendments to existing incentive structures.

(4) In a support service contract with a firm option and containing a basic incentive structure approved by Headquarters, in the exercise of the option, the incentive plan need not be resubmitted to Headquarters for approval. If the contractual arrangement in

volves an "agreement-to-agree," rather than a firm option, advanced Headquarters approval of the proposed incentive structure will be required in those cases where (i) the nature or scope of the effort is changed; or (ii) the concept or criteria of the incentive structure, or both, differ from that previously approved. Where the nature or scope of the services, or the concept or criteria of the incentive structure do not differ from that previously approved, advanced Headquarters approval is not required.

(5) The prenegotiation memorandum will be retained as part of the official contract file. Also, significant work papers supporting the development of the pricing objective will be retained as part of the official contract file documentations.

(d) Technical assistance. The selection, drafting, negotiation, and administration of contract incentives require a team effort in which substantial technical assistance must be provided to procurement and legal personnel. The contracting officer shall obtain such assistance from technical personnel in his organization and shall be satisfied that the project director or comparable official is in agreement with the incentive approach being followed in any given case. Any differences of opinion shall be brought to the attention of the Director of Procurement.

(e) Contract clauses. (1) Fixed-price incentive contracts with cost incentives will include either the "Incentive Price Revision (Firm Target)" clause in § 187.108-1, or the "Incentive Price Revision (Successive Targets)" clause in § 187.108-2, as appropriate.

(2) Cost-plus-incentive-fee contracts with cost incentives will include the "Allowable Cost, Incentive Fee, and Payment" clause in § 18-7.203-4(b). In addition, the "Alteration in Contract" clause in § 18-7.105-1 will be included, followed by the clause set forth below which may be modified by the contracting officer if necessary to meet the requirements of a particular procurement:

TYPES OF CONTRACTS

For the purpose of this cost-plus-incentivefee contract, certain terms in this contract have the following meanings:

(a) "Estimated Cost" means "target cost" except in the following instances:

(1) Where the term first appears in the second sentence of the clause of this contract entitled "Changes."

(2) Wherever it appears in the clause of this contract entitled "Limitation of Cost."

(3) Wherever it appears in the clause of this contract entitled "Estimated Cost and Fixed-Fee."

(4) If this contract is incrementally funded, wherever the term appears in the clause "Limitation of Government's Obligation."

(5) If the "Government Property" clause is used, wherever the term appears.

(b) "Fixed-Fee" means "Fee."

(c) "Allowable Cost, Fixed-Fee, and Payment" means "Allowable Cost, IncentiveFee, and Payment."

Where a contract is not solely of the cost-plus-incentive-fee type (e.g., one which also provides for a fixed-fee), the first sentence of the clause shall be changed to read as follows:

"For the purpose of the cost-plus-incentive-fee portions of this contract, certain terms in this contract have the following meanings":

(3) Cost-plus-award-fee contracts will include the "Allowable Cost, Fixed-Fee and Payment" clause in § 18-7.203-4(a), modified in accordance with § 18-7.2034(c) (6). In addition, the "Alteration in Contract" clause in § 18-7.105-1 will be included, followed by the sentence set forth below which may be modified by the contracting officer if necessary to meet the requirements of a particular procurement:

"For the purpose of this cost-plus-awardfee contract, the term 'Fixed-Fee' in this contract means 'Fee'."

Where a contract is not solely of the cost-plus-award-fee type (e.g., one which also provides for a fixed-fee), the sentence shall be changed to read as follows:

"For the purpose of the cost-plus-awardfee portions of this contract, the term 'FixedFee' in this contract means 'Fee'."

(f) Administrative requirements as to incentive fees. The negotiation of a costtype-incentive contract (CPIF-CostPlus-Incentive-Fee, CPAF-Cost-PlusAward-Fee) will establish the target cost, target fee (basic fee for CPAF contracts), minimum and maximum fee, and the method for computing increases or decreases from target or basic fee, and may provide for a negative fee, if appropriate to the reward and penalty concepts of the incentive arrangements in the contract. The statutory limitations in 10 U.S.C. 2306(d) apply only to fixed-fees. Incentive fee arrangements (CPIF and CPAF) which contain provisions for maximum fees which exceed (1) 15% of the target cost in contracts

for experimental, developmental, or research work, or (2) 10% of the target cost in other contracts will require the approval of the Director of Procurement prior to award of the contract. Requests for approval of such fees will be submitted to the Director of Procurement through the cognizant Program Director and shall be supported by complete justification, including a discussion of any exceptional circumstances where lower rates of fee will not provide sufficient range for effective operation of the incentive arrangements toward the attainment of procurement objectives. The request for approval of such fees may be included as a part of the request for contract approval under the provisions of § 18-50.105 (b) (4). (See § 18-3.450 (c) (1) relating to approval of fee in prenegotiation planning.) This paragraph is not applicable to contracts for architect-engineer services.

[36 FR 707, Jan. 16, 1971, as amended at 37 FR 14930, July 26, 1972; 39 FR 13099, Apr. 11, 1974]

Subpart 18-3.5-Solicitation of
Proposals and Quotations

§ 18-3.500 Scope of subpart.

This subpart applies only to negotiated procurements in excess of $2,500 (see Subpart 18-3.6 for small purchases). § 18-3.501 Preparation of request for proposals or request for quotations. (a) Forms used for requesting proposals or quotations on negotiated procurements shall be in accordance with Part 18-16 (see also § 18-1.309).

(b) Generally, requests for proposals or quotations shall be in writing. Solicitations shall contain the information necessary to enable a prospective offeror to prepare a proposal or quotation properly. Written requests shall be as complete as possible and normally should contain the following information if applicable to the procurements involved:

(1) Request for proposals or request for quotations number and date of issuance;

(2) Title and/or number of the program or project (e.g., "Apollo S-IC Instrumentation");

(3) Name and address of procurement office issuing the request; identification of the individual responsible for supplying additional information or answering inquiries; complete address of person to receive proposals; number of copies of proposal required to be submitted;

(4) Closing date and time;

(5) With respect to late proposals or modifications, include the provision set forth in § 18-3.802-4 (c) (this provision will be appropriately modified in the case of request for quotations); where Standard Form 33 (Solicitation, Offer, and Award) is used, the following notice shall be prominently set forth in the request for proposals:

NOTICE TO OFFERORS-LATE OFFERS AND
MODIFICATIONS (JULY 1968)

Paragraph 8, "Late Offers and Modifications or withdrawals," of Standard Form 33A does not apply to this solicitation. See the special provision in this solicitation entitled, "Late Proposals."

(6) Requirement for stipulation of a time within which the Government may accept the proposal;

(7) Number of pages and list of enclosures;

(8) Item description or statement of work;

(9) Type of contract contemplated (see § 18-3.803);

(10) Requirement for statement on contingent fees (see § 18-1.506(c));

(11) Statement on Buy American Act (§ 18-6.104-2) and requirement for Buy American Certificate (§ 18–6.104–3);

(12) Requirement that the offeror state whether he operates as an individual, partnership or corporation (showing state where incorporated);

(13) Statement that the selected contractor will or will not require access to classified information (see NASA Management Instruction 1650.1, "Industrial Security Policies and Procedures");

(14) Time of delivery or performance requirements (see § 18-1.305);

(15) Requirement that the proposal or quotation state the intended place of performance, including the street address, and the names and addresses of owner and operator of producing facilities, if other than offeror, when it is reasonably expected that such facilities will be used in the performance of the contract;

(16) Place and method of delivery; (17) Provisions to be made for reliability assurance (see § 18-1.5105);

(18) A description of the quality assurance system to be used (see § 181.5003);

(19) Place, method, and conditions of inspection, test, and acceptance (see § 18-14.101 et seq.);

(20) Identification of the special factors, such as Government cost or other expenditures, including reliability and maintainability requirements, which will be considered in evaluating the proposals, together with an indication of the relative importance to be given these factors, where applicable (see § 183.804-2);

(21) Method and format of price quotation desired (fixed-price or cost type, if known at the time), including a reference to the necessity for cost or price breakdown (see § 18-3.501(c) (2) (ix));

(22) Description of information required to support proposed prices; e.g., subcontract structure, purchasing system, royalty, and cost and price information (see Subparts 18-3.8 and 18-3.9, Subpart 18-9.1 and Part 18-23);

(23) Information as to requirements for Certificate of Current Cost or Pricing Data (see § 18-3.807-3);

(24) When the New Technology clause of § 18-9.101-4 is to be applicable to the procurement, the provisions of §18-9.1013(h) entitled "Waiver of Rights to Inventions" shall be included;

(25) Notice to offerors of the Government's desires as to the use of incentive considered applicable, objectives of the incentive performance goals, schedule milestones, critical delivery parameters, and similar information intended to elicit contractor response to the procurement objectives but without premature disclosures prejudicial to the Government's pre-negotiation position (see § 183.450);

(26) Notice to offerors of the possibility that award may be made without discussion of proposals (see § 18-3.102);

(27) The Certification of Independent Price Determination required by § 181.115;

(28) Contract clauses required by law or this Regulation, copies of applicable standard or NASA forms which will form a part of the contract, and any report forms or handbooks required to be used or followed in complying with the terms of the contract;

(29) Directions for obtaining copies of any documents, such as plans, drawings and specifications, which have been incorporated by reference (see § 181.1201);

(30) Instructions for disposition of drawings and specifications supplied with the request for proposals or request for quotations;