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Subpart 1-2.5—Two-Step Formal Advertising

§ 1-2.501 General.

(a) Two-step formal advertising is a method of procurement designed to promote the maximum competition practicable when available specifications are not sufficiently definite to permit a formally advertised procurement in accordance with Subparts 1-2.2, 1-2.3, and 1-2.4. It Is a flexible procedure and is especially useful, in procurement of complex and technical items, to prevent the elimination of potentially qualified producers from the competitive base.

(b) Two-step formal advertising is conducted in two phases. The first step consists of the request for, and the submission, evaluation, and, if necessary, discussion of a technical proposal, without pricing, to determine the acceptability of the supplies or services offered. As used in this context, the word "technical" has a broad connotation and, among other things, includes engineering approach, special manufacturing processes, and special testing techniques. Also, when required to clarify basic technical requirements, other related requirements such as management approach, manufacturing plan, or facilities to be utilized may be clarified in this step. The second step consists of a formally advertised procurement, confined to those offerors who submitted an acceptable technical proposal in Step One.

(c) This method of procurement requires that the contracting officer work closely with technical personnel and rely on their specialized knowledge In determining the technical requirements of the procurement and the criteria to be used in evaluating technical proposals, and In making such evaluation. An objective of the two-step procedure is to permit the development of a sufficiently descriptive statement of the Government's requirements, including the development of a technical data package, so that- subsequent procurements may be made by conventional formal advertising.

§ 1-2.502 Conditions for use.

The two-step formal advertising method of procurement may be used when its use has been approved at a level higher than the contracting officer and when all of the following conditions are present:

(a) Available specifications or pi chase descriptions are not sufficien definite or complete to permit full a free competition without engineer] evaluation and necessary discussion the technical aspects of the require rr. to insure mutual understanding betwc each source and the Government.

(b) Definite criteria exist for evalu: ing technical proposals, such as appli< ble design, manufacturing, testing, a performance requirements, and spec requirements for operational sultabil and ease of maintenance; however, su criteria shall not include considerate of capacity or credit as defined

§ 1-1.708 of this chapter.

(c) More than one technically qus fled source is expected to be availa both initially and after technical evali tion.

(d) A firm fixed-price contract 01 fixed-price contract with escalation (j § 1-2.201 (a) (21)) will be used.

§ 1-2.503 Procedures. § 1-2.503-1 Step One.

(a) Requests for technical propose A request for technical proposals sh be distributed to qualified sources in s cordance with § 1-1.302-1 of this chap: In addition, the request shall be sync sized in accordance with Subpart 1-1 and publicly posted in accordance wl § 1-2.203-2. The request may be In t form of a letter and shall contain, as minimum, the following Information:

(1) The best practicable descrlptl of the supplies or services required.

(2) Notification of the Intent to co duct the procurement in two steps a the actions Involved.

(3) The requirements of the tec nical proposal, I.e., the necessary deta such as drawings, data, presentatic etc., to be submitted.

(4) The criteria for evaluating t technical proposal (§ 1-2.502(b)).

(5) A statement that the technlc proposals shall not include prices or prl ing information.

(6) The date by which the propa must be received.

(7) A statement that the Governme may discuss the technical aspects of t proposal with the concern submitti the proposal.

(8) A statement that In the seed step of the procurement only bids baa upon technical proposals determined

be acceptable, either initially or as a realt of discussions, will be considered for tvard; and that each bid in the second step must be based on the bidder's own technical proposal.

(9) A statement that sources submitting unacceptable technical proposals vill be so notified upon completion of the technical evaluation.

(10) A statement either that only one technical proposal may be submitted by each offerer or that multiple technical proposals may be submitted. When compliance with specifications permit utilization of essentially different technical approaches, it is generally in the Interest of the Government to authorize the submission of multiple proposals. If multiple proposals are authorized the request shall include a statement substantially as folows:

Multiple Technical Proposals. In the first Rep of this two-step procurement, offerors ire authorized and encouraged to submit multiple technical proposals presenting different basic approaches. Each technical proposal submitted will be separately evaluated «nd the offerer will be notified as to Its KCeptabllity.

(b) Receipt and evaluation of technical proposals. The following actions will be taken with respect to receipt and -valuation of technical proposals:

(1) Every precaution shall be taken to •feguard technical proposals against disclosure to unauthorized persons.

(2) Any reference to price or cost will be removed.

(3) Technical evaluation of the proposals will be based upon the criteria contained in the request for technical proposals and such evaluation will not include consideration of capacity or credit as denned in § 1-1.708.

H) Technical proposals will be catsgorized as acceptable or unacceptable. Proposals will not be categorized as unacceptable when a reasonable effort on she part of the Government could bring ie proposals to an acceptable status and acrease competition. The contracting Acer shall arrange for any necessary Uscussions with sources submitting techUcal proposals for the purpose of ob•inlng additional information or clariIcation which may be required. When, ifter discussion and submission of necssary information and clarification, £chnical proposals are determined to be Acceptable, they will be so categorized.

It, however, it is determined at any time that a technical proposal is not reasonably susceptible to being made acceptable, it should be classified as unacceptable and no discussions of it need thereafter be initiated.

(5) Upon final determination that a technical proposal is unacceptable, the contracting officer shall notify the source submitting the proposal of that fact. The notice shall indicate, in general terms the basis for such determination including a statement of whether rejection was based on failure to furnish sufficient information or an an unacceptable engineering approach.

(c) [Reserved]

(d) Discontinuance. If, as a result of the evaluation of technical proposals, it appears necessary to discontinue the two-step advertising method of procurement, the full facts and circumstances will be set forth in writing and submitted to the office which originally approved the method of procurement. If that office approves the discontinuance, each source will be notified in writing of the discontinuance and the reasons therefor.

§ 1-2.503-2 Step Two.

Upon completion of Step One, a formally advertised procurement in accordance with Subparts 1-2.2,1-2.3, and 1-2.4 will be conducted, except that invitations for bids—

(a) Will be issued only to and considered only from those sources whose technical proposals have been evaluated and determined to be acceptable under Step One,

(b) Will include the following statement:

This Invitation for bids Is Issued pursuant to two-step formal advertising procedures In subpart 1-2.5 of the Federal Procurement Regulations. Bids will be considered only from those firms who have submitted acceptable technical proposals pursuant to the first step of such procedures as Initiated by

(Identify the request for technical proposals) Any bidder who has submitted multiple technical proposals In the first step of this two-step procurement may submit a separate bid covering each technical proposal which has been determined acceptable by the Government.

(c) Will prominently state that the supplies or services to be procured will be in accordance with the specifications and the bidder's technical proposal, as

finally accepted, under the request for technical proposals. This may be accomplished in the Schedule item description by a provision substantially in the form of the following example:

Radio antenna, In accordance with Exhibit

No. dated (use other

description of specifications as appropriate)

and your Technical Proposal (insert

specific identification of the bidder's proposal including any revision thereof as finally accepted). Incorporated herein by reference. Nothing contained In said Technical Proposal shall constitute a waiver of any of the provisions of said Exhibit (or specifications).

(d) Will not be synopsized (see Subpart 1-1.10) or publicly posted (see 51-2.203-2), except that the names of firms which have submitted acceptable technical proposals in Step One of twostep formal advertising will be listed in the Commerce Business Daily for the benefit of prospective subcontractors. Such lists should be followed by a statement substantially as follows: It is suggested that small business firms or others interested in subcontracting opportunities in connection with this procurement make direct contact with the above firms.



3.000 Scope of part.

Subport 1-3.1—Use of Negotiation

3.100 Scope of subpart.

!.101 General requirements for nego


Factors to be considered In negotiating contract s. Dissemination of procurement


Disclosure of mistakes after

Sabport 1—3.2—Circumstances Permitting

Scope of subpart.

National emergency.

Public exigency.

Purchases not In excess of $2,500.

Personal or professional services.

Services of educational Insti-

Purchases outside the United

Medicines or medical supplies.

Property purchased for authorized resale.

Subsistence supplies.

Impracticable to secure competition by formal advertising.

Experimental, developmental, or research work. %

Purchases not to be publicly disclosed.

Technical equipment requiring standardization and interchangeability of parts. 1-3.314 Negotiation after advertising.

1-3.215 Otherwise authorized by law.

Subpart 1-3.3—Determinations, Findings, and Authorities

1-3.301 General.

1-3303 Determinations and findings required.

1-3308 Determinations and findings by

the head of the agency.

1-3304 | Reserved |

1-3.306 Form and requirements of de

terminations and findings.

1-3308 Procedure with respect to de

terminations and findings.

1-3307 [Reserved]

1-3306 Preservation of data.

1—3.4—Types of Contracts

Scope of subpart.

Types of contracts.


Selection of contract type.

Fixed-price contracts.


1-3.404-1 General.

1-3.404-2 Firm fixed-price contract.

1-3.404-3 Fixed-price contract with escalation.

l-3.40*-4 Fixed-price incentive contract.

1-3.404-5 Prospective price •redetermlnatlon at a stated time or times during performance.

1-3.404-6 [Reserved]

1-3.404-7 Retroactive price redetermlnatlon after completion.

1-3.405 Cost-reimbursement type contracts.

1-3.405-1 General.

1-3.405-2 Cost contract.

1-3.405-3 Cost-sharing contract.

1-3.405-4 Cost-plus-incentive-fee contract.

1-3.405-5 Cost-plus-a-flxed-fee contract.

1-3.406 Other types of contracts.

1-3.406-1 Time and materials contract.

1-3.406-2 Labor-hour contract.

1-3.407 Additional incentives.

1-3.407-1 General.

1-3.407-2 Contracts with performance Incentives.

1-3.408 « Letter contract.

1-3.409 Indefinite delivery type contracts.

1-3.410 Other types of agreements.

1-3.410-1 Basic agreement.

1-3.410-2 Basic ordering agreement.

Subpart 1-3.5—[Reserved!
Subpart 1-3.6—Small Purchases

1-3.600 Scope of subpart.

1-3.601 Purpose.

1-3.602 Policy.

1-3.603 Competition.

1-3.603-1 Solicitation.

1-3.603-2 Data to support small purchases.

1-3.604 Imprest funds (petty cash) method.

1-3.604-1 General.

1-3.604-2 Definition of Imprest fund.

1-3.604-3 Agency responsibilities.

1-3.604-4 Use of Imprest funds.

1-3.604-5 Limitations.

1-3.604-6 Procurement and payment.

1-3.604-7 Tax exemption certificates.

1-3.605 Purchase order forms.

1-3.605-1 Standard Form 44, Purchase Order-Invoice-Voucher.

1-3.605-2 Standard Forms 147 and 148, Order for Supplies or Services.

1-3.605-3 Agency order forms.

1-3.606 Blanket purchase arrangements.

1-3.606-1 General.

1-3.606-2 Authority to use blanket purchase arrangements.

1-3.606-3 Establishment of account.

1-3.606-4 Documentation.

1-3.606-5 Agency implementation.

1-3.607 Interagency use of local term contracts.

Subparl 1-3.7—[Reserved]

Subpart 1-3.8—Price Negotiation Policies and Techniques


1-3.800 Scope of subpart.

1-3.801 Basic policy.

1-3.802 Preparation for negotiation.

1-3.803 Type of contract.

1-3.804 Conduct of negotiations.

1-3.805 Selection of offerers for negotiation and award.

1-3.805-1 General.

1-3.805-2 Cost-reimbursement type contracts.

1-3.806 Cost, profit, and price relationships.

1-3.807 Pricing techniques.

1-3.807-1 General.

1-3.807-2 Requirements for price or cost analysis.

1-3.807-3 Cost and pricing data.

1-3.807-4 Certificate of current cost or pricing data.

1-3.807-5 Defective cost or pricing data.

1-3.807-6 Refusal to provide cost or pricing data. ,

1-3.807-7 Unacceptable substitutes for pricing negotiations.

1-3.807-fl Evaluation and pricing of individual contracts.

1-3.807-9 Specified contingencies.

1-3.807-10 Subcontracting considerations in cost analysis.

1-3.807-11 Overhead rate considerations.

1-3.807-12 Sole source items.

1-3.808 Profit or fee.

1-3.808-1 General.

1-3.808-2 Factors for determining fee or profit.


1-3.808-3 Minimal fees or cost shar


1-3.809 Audit as a pricing aid.

1-3.810 (Reserved]

1-3.811 [Reserved]

1-3.812 [Reserved]

1-3.813 Reproduction and startup

other nonrecurring costs 1-3.814 Contract clauses.

1-3.814-1 Price reduction for defective c

or pricing data. 1-3.814-2 Audit and records. 1-3.814-3 Subcontractor cost and prlc


Subpart 1-3.9—Subcontracting Policies an Procedures

1-3.900 Scope of subpart.

1-3.901 General.

1-3.902 "Make-or-buy" programs.

1-3.902-1 Review of program.

1-3.902-2 Approval of programs.

1-3.902-3 Contract clause.

1-3.902-4 Administration of program.

1-3.903 Review and approval of contr

tor's purchasing system i

subcontracts. 1-3.903-1 [Reserved] 1-3.903-2 Review and approval of subc<


Authority: The provisions of this Part Issued under sec. 205(c), 63 Stat. 39O: U.S.C. 486(c).

Source: The provisions of this P>art appear at 29 F.R. 10155, July 24, 1964. unl otherwise noted.

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