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18907 Cancellation of invitations for shall be cited in the contract as aubids.

thority for negotiation. For imple(a) Before opening-see § 1-2.208.

menting instructions, see Subpart 1(b) After opening-see § 1-2.404-1.

3.2. $ 1-18.208 Award.

1-18.301-2 Work outside the continental See § 1-2.407. A notice of award shall

United States. be furnished to the successful bidder Contracts for construction work to as soon as possible and not later than be performed outside the continental the time set for acceptance in the invi. United States may be negotiated purtation for bids or any extension to suant to the applicable paragraphs of which the bidder has agreed. The section 302(c) of the Act, except that notice of award shall:

contracts to be performed in Hawaii, (a) Identify the invitation;

Puerto Rico, or any possession of the (b) Identify the contractor's bid;

United States may not be negotiated (c) Set forth the award price;

under section 302(c)(6). Negotiated (d) Advise contractor of date by

contracts shall include a citation to which formal contract and/or per

the statutory authority for negotiaformance and payment bonds must be

tion. executed and returned; and

(e) Include directions regarding com $ 1-18.302 Contracts estimated not to mencement of work (i.e., upon receipt

exceed $10,000. of award, or upon receipt of notice to proceed which will be issued upon re

Section 302(c)(3) of the Federal ceipt of acceptable performance and

and Property and Administrative Services payment bonds, as appropriate).

Act of 1949, as amended, authorizes

the use of negotiation for contracts Subpart 1-18.3—Negotiations

(small purchases) which do not exceed

$10,000. Policies and procedures for § 1-18.301 Limitation on authority to ne

the implementation of that authority gotiate contracts.

are prescribed in Subpart 1-3.6, Small Construction contracts

Purchases. Construction contracts in shall be

excess of $2,000 are subject to certain made by formal advertising whenever such method is feasible and practica

statutory requirements such as the

Davis-Bacon Act (see Subpart 1-18.7) ble under existing conditions and cir

which are applicable only to such con. cumstances, even though such conditions and circumstances would other

tracts. Contract provisions which imwise satisfy the requirements for nego

plement those statutes are set forth in tiation in this subpart and Part 1-3.

the Standard Forms prescribed for use However, this provision shall not be

in § 1-16.402-2. construed to limit the use of small

[41 FR 27725, July 6, 1976) business restricted advertising.

$ 1-18.303 Price negotiation policies and § 1-18.301-1 Work in the continental

procedures. United States. Contracts for construction work to

The policies and procedures in Subbe performed in the continental

part 1-3.8 shall be followed regardless United States (49 States on the North

of the type of contract used. Where a American Continent and the District

cost-plus-a-fixed-fee contract is used, of Columbia) may be negotiated only

the fee shall be determined in accordif authorized pursuant to sections

ance with agency procedures. The 302(c)(1), (2), (3), (10), (11), (12), or

statutory limit for such fees is 10 per(14) of the Federal Property and Ad

cent of the estimated cost of the conministrative Services Act of 1949, as

tract (see $ 1-3.405-5(c)). amended (see section 302(e), 41 U.S.C. 252(e)), which Act is hereinafter re

á: $ 1-18.304 Subcontracting with small busiferred to in this subpart as the “Act."

ness concerns. The appropriate statutory provision(s) See § 1-1.710.

$ 1-18.305 Subcontracting policies and and cost or pricing data shall be reprocedures.

quired as provided in § 1-3.807-3. Sub

ject to the provisions of $ 1-3.807-3, (a) Review and approval of contrac

such data shall be required, to the tor's purchasing system and subcon

extent necessary, in any case where tracts. See § 1-3.903.

there are significant differences be(b) Subcontracting by cost-reim

tween the Government estimate and bursement type construction contrac

the proposals submitted on any item. tors. (1) Construction work under a

All data shall be evaluated and anacost-reimbursement type prime construction contract that is to be subcon

lyzed, as shall cost or pricing data on

subcontracts (§ 1-3.807-10) when such tracted shall be performed to the fullest extent practicable under unit

data is requested by the contracting price or lump-sum subcontracts ob

officer. tained by competitive bids. Each proj

(b) Where appropriate, additional ect or phase thereof under a general

pricing tools may be used, such as contractor shall be analyzed by the

comparision of current prices for simicontractor, in conjunction with the

lar features of work, adjusted for difcontracting agency, to determine

ferences in site and specifications. In those elements which can be per addition, rough yardsticks such as cost formed under a fixed-price subcon- per cubic foot for structures, cost per tract.

linear foot for utilities, cost per cubic (2) The apportionment of work be- yard for excavation, concrete, etc., tween the prime and subcontractors may be developed and compared with shall be based on the best interests of proposed prices which are questioned. the Government, taking into consideration all factors including the follow.



$ 1-18.306-2 Cost-reimbursement type ing:

contracts. (i) The general practice of the con (a) Use of cost-reimbursement type struction industry of utilizing subcon contract. This type of contract may be tractors for certain specialty phases of used only when it is consistent with the work;

§ 1-3.405. (ii) The additional management, (b) Information to be prepared for technical, and craft skills which a spe negotiating-(1) Description of the facialty subcontractor may contribute to cility. A sufficiently detailed descripthe efficient prosecution of the work, tion of the facility to be constructed particularly on complex industrial shall be provided to permit an evalua. type facilities which require maximum tion of the magnitude, physical charconcentration of such skills;

acteristics, and complexity of its major (iii) The qualifications of the prime components. For example: contractor to perform such specialty

(i) Major buildings and other strucwork, based on the extent to which he

tures, including the number of each has customarily performed the work

type and an explanation of the funcwith his own organization and the

tional requirements for each; competency of his available organiza

(ii) Major utilities; and tion to perform the work; and

(iii) Major equipment to be installed (iv) The amount of work that should

by the contractor. be performed by the prime contractor

(2) Services required of the contracin order to ensure adequate supervi

tor. A statement should be prepared sion of the project (see § 1-18.104).

which gives the extent to which the $ 1-18.306 Preparation for negotiation.

contractor shall:

(i) Perform work with his own § 1-18.306-1 Fixed-price type contracts. forces;

(a) Proposals and, where required, (ii) Procure services of subcontraccost or pricing data submitted by po

tors; tential contractors shall be evaluated (iii) Procure materials and equipand compared with the Government ment; estimate required by $ 1-18.108. Pro (iv) Supervise the project; and posals shall be required in all cases, (v) Provide other services.

(3) Estimated cost and time for com- the selection procedure if evaluation pletion. (i) Prepare an estimate of the shows that there are several available total cost of construction, exclusive of contractors equally well qualified to the contractor's fee broken down by undertake construction of a project on the major components listed in the de a CPFF basis, and if the scope is suffiscription required by paragraph (b)(1), ciently defined to permit a reasonably above. To the extent available, identi- accurate estimate of the cost of the fy labor, material, and indirect costs, work. Where these conditions prevail and any amount included for contin and amounts of the fee proposals are gencies. List separately materials and the only significant differences in the equipment that will be furnished by overall proposals of several equally the Government and the total related qualified construction contractors, the cost.

contract should be awarded on the (ii) Prepare an estimated time for

basis of the lowest reasonable fee procompletion with an explanation of the posal. basis therefor.

(c) A completely documented record (4) Marimum fixed fee. Determine,

shall be made of all steps and deci. in accordance with agency procedures,

sions in the selection of a contractor. the maximum fixed fee that may be paid for the required services.

§ 1-18.307 Negotiations. (c) Conclusion of negotiations. Negotiations relative to the contract and § 1-18.307–1 Fixed-price construction confee shall be concluded at as early a

tracts. date as practicable. When mutually acceptable terms of contract, estimate of

Negotiations will be conducted with

the responsive offerors within a comcost, and estimate of time of performance have been agreed to, the fixed fee

petitive price range except where an should be negotiated. Generally, nego

award is made on initial proposals tiations relative to the fee shall be suc

without negotiations, all as provided cessfully concluded prior to making

in § 1-3.805. commitment on final selection. In the

$ 1-18.307-2 Cost-reimbursement type event it is necessary to use a letter contract, it should include the basis

contracts. for determining the fee, which estab (a) Negotiations shall be conducted lishes the possible range of fees for in accordance with agency procedures. the work. Should it be evident in the (b) The factors set forth in § 1-3.808 course of negotiations that no hope should be considered in negotiating exists for a meeting of the minds the fee for a cost-reimbursement type within the previously determined contract. maximum allowable (ceiling) fee, then consideration should be given to termi. $ 1-18.308 Audit as a pricing aid. nating negotiations and entering into

See § 1-3.809. & similar action with the next best qualified contractor (§ 1-18.307-2). § 1-18.309 Record of negotiations. $ 1-18.306–3 Selection of a cost-reimburse. The record of negotiations shall ment type contractor.

demonstrate conformity with the re(a) Construction contractors for

quirements of $ 1-3.101 and, to the cost-reimbursement type contracts

extent applicable, include the general shall be selected on the basis of quali

type of information indicated in the fications and the ability to provide the

paragraphs below. The scope and particular services required (see § 1

detail of information to be included 3.805-2). The evaluation for purposes

generally should be determined on the of determining relative qualifications

basis of the nature, dollar value, and of firms under consideration should be

complexity of the transactions inperformed in accordance with agency

volved: procedures.

(a) Name and address of contractor; (b) Fee proposals for construction

(b) Location of construction site; services should be secured as a part of (c) Contract number;

(d) Nature of contract action (letter (t) The names and affiliations of al contract, conversion of letter contract, persons taking part in or present a etc., as well as type of contract);

the negotiations. (e) Program basis for the contract; (f) Description of the project;

Subparts 1-18.4—1-18.5—[Reserved (g) Total price or estimated cost;

(h) Term of contract and construc- Subpart 1-18.6–Buy American Act tion schedules;

(i) Justification for use of negotia- $ 1-18.600 Scope. tion in lieu of formal advertising;

This subpart implements the Bus (j) The request for proposals;

American Act (41 U.S.C. 10a-10d) and (k) Number of firms invited to the policies set forth in Executive submit proposals and a list of the Order 10582, December 17, 1954 (3 firms quoting along with their respec CFR, 1954-1958 Comp., p. 230), as tive quotations;

amended by Executive Order 11051 (1) Reasons for selection of the pro September 27, 1962 (3 CFR, 1959-1963 posed contractor. (If a fixed-price Comp., p. 635), with respect to con award is made to other than the low struction contracts. offeror, explain.); (m) A summary of principal points

principal points § 1-18.601 Definitions. involved in negotiation and the final As used in this subpart, the follow results thereof. (The record should be ing definitions apply: in sufficient detail to reflect the most (a) “Construction” means construcsignificant considerations controlling tion, alteration, or repair of any public the establishment of the initial or re building or public work. vised price or fee.);

(b) “Construction material" means (n) For fixed-price contracts, an ex

any article, material, or supply planation of why cost or pricing data

brought to the construction site for inwere, or were not required (see $ 1

corporation in the building or work. 3.807) and, if not required in the case

(c) Component” means any article, of any price negotiation in excess of

material, or supply directly incorpo$100,000, give the basis for determin

rated in construction material. ing that the price resulted from ade

(d) "Domestic construction materiquate price competition (If cost or

al” means an unmanufactured conpricing data were submitted and a cer

struction material which has been tificate of cost and pricing data was re

mined or produced in the United quired (§ 1-3.807-4), show the reliance

States, or a manufactured construcplaced upon the factual cost or pricing

tion material which has been manu

factured in the United States if the data submitted and the use of these data by the contracting officer in de

cost of its components which are termining his total price objective.);

mined, produced, or manufactured in

the United States exceeds 50 percent (0) For cost-reimbursement type

of the cost of all its components. The contracts, the fee determination in

cost of components shall include detail including the cost breakdown

transportation costs to the place of inused to arrive at the estimated cost for

corporation into the construction mafee computation purposes;

terial and, in the case of components (p) Names and locations, when avail

of foreign origin, duty (whether or not able, of prospective subcontractors

a duty-free entry certificate may be and estimated amounts of respective

issued). subcontracts which will exceed

(e) “Nondomestic construction mate$100,000;

rial” means a construction material (q) If the contract contains any form other thar. a domestic construction of price redetermination or escalation, material. the reasons for such inclusion;

(f) “United States" means the (r) General types and values of Gov. States, the District of Columbia, ernment property to be furnished; Puerto Rico, American Samoa, the (s) Funding data; and

Canal Zone, the Virgin Islands, and

any other place subject to its jurisdiction.

public of Panama, signed January 25, 1955).

$ 1-18.602 Buy American policy.

§ 1-18.602-4 Noting exceptions and find

ings. § 1-18.602-1 General.

Exceptions for nondomestic conOnly domestic construction material struction material because use of parshall be used in the performance of ticular domestic construction material contracts for construction in the would be impracticable or would unUnited States made by executive agen reasonably increase the cost or becies, except for particular material as cause domestic construction material to which it is determined:

is unavailable shall be noted in the (a) By the agency head, that to contract. Findings justifying such exmake such requirement is impractica ceptions shall be made a matter of ble;

public record. (b) In accordance with agency procedures, that domestic construction ma

$ 1-18.603 Unreasonable cost determinaterial is unavailable in sufficient and tion. reasonably available commercial quantities and of a satisfactory quality; or

§ 1-18.603-1 General. (c) In accordance with $ 1-18.603, A determination shall be made that that to make such requirement would the use of domestic construction mateunreasonably increase the cost.

rial would unreasonably increase the

cost where, with respect to each par81-18.602-2 Determining domestic con

ticular construction material: struction material.

(a) A bid or proposal offers nondoIn determining whether a construc mestic construction material (not tion material is a domestic construc

listed as excepted in the invitation for tion material:

bids or request for proposals), the cost (a) Only the construction material

of which, plus 6 percent thereof, is less and its components shall be consid

than the cost of comparable domestic ered; and

construction material; and (b) A component shall be considered

(b) That bid or proposal offers the to have been mined, produced, or man

lowest price of any received, after ufactured in the United States (re

adding to each bid or proposal, for gardless of its source in fact) if the evaluation purposes, 6 percent of the construction material in which it is in- cost of all nondomestic construction corporated is manufactured in the material, which qualifies under paraUnited States and the component is of graph (a), above, offered in each bid or a class or kind determined by the proposal. agency concerned to be not mined, produced, or manufactured in the

§ 1-18.603-2 Cost computation. United States in sufficient and reason The cost of construction material ably available commercial quantities shall be computed as including all cost and of a satisfactory quality.

of delivery to the construction site.

The cost of nondomestic construction $ 1-18.602–3 Panamanian material used material shall also include any appli. in Canal Zone.

cable duty. Computations shall be Construction material mined, pro

based on costs on the date of opening duced, or manufactured in the Repub of bids or proposals. lic of Panama, when purchased for use in the Canal Zone, is exempted from

$ 1-18.603-3 Deviations by agency head. the provisions of the Buy American Deviations from the requirements of Act (under item 3 of the Memorandum § 1-18.603-1 may be authorized by the of Understandings Reached Ancillary agency head in accordance with $ 1to the Treaty of Mutual Understand. 1.009 of this chapter, the Buy Ameriing and Cooperation between the can Act, and Executive Orders 10582 United States of America and the Re- and 11051.

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