This subpart provides guidance for the use of Subparts B, C, and D of this part, (a) in the evaluation of costs in pricing of negotiated fixed-price type contracts and subcontracts where such evaluation is required to establish prices for such contracts, (b) in the negotiation of termination settlements, and (c) in the negotiation of any adjustment in price required by the contract, such as issuance of change orders, a suspension of work for the convenience of the Government under an appropriate contract clause, and equitable adjustments under the Government-furnished property clause.

[26 F.R. 9643, Oct. 12, 1961]

§ 15.601 Definition of fixed-price type

§ 15.602 Basic considerations.

(a) Under fixed-price type contracts, the negotiated price is the basis for payment to a contractor whereas allowable costs are the basis for reimbursement under cost-reimbursement type contracts. Accordingly, the policies and procedures of Subpart H, Part 3, of this chapter, are governing and shall be followed in the negotiation of fixed-price type contracts. Cost and accounting data may provide guides for ascertaining fair compensation but are not rigid measures of it. Other types of data, criteria, or standards may furnish reliable guides to fair compensation. The ability to apply standards of business judgment as distinct from strict accounting principles is at the heart of a negotiated price or settlement.

(b) Among the different types of fixed-price type contracts, the need for consideration of costs varies considerably as indicated below:

(1) Retrospective pricing and settlements. In negotiating firm fixed prices or settlements for work which has been completed at the time of negotiation (e.g., final negotiations under fixedprice incentive contracts, redetermination of price after completion of the work, or negotiation of a settlement agreement under a contract terminated for the convenience of the Government), the treatment of costs is a major factor in arriving at the amount of the price or settlement. However, even in these situations, the finally agreed price or settlement may represent something other than the sum total of acceptable costs plus profit, since the final price accepted by each party does not necessarily reflect agreement on the evaluation of each element of cost, but rather a final resolution of all issues in the negotiation process.

(2) Forward pricing. The extent to which costs influence forward pricing varies greatly from case to case. In negotiations covering future work, actual costs cannot be known and the importance of cost estimates depends on the circumstances. The contracting officer must consider all the factors affecting the reasonableness of the total proposed price, such as the technical, production or financial risk assumed, the complexity of work, the extent of competitive pricing, and the contractor's record for efficiency, economy and ingenuity,

as well as available cost estimates. He must be free to bargain for a total price which equitably distributes the risks between the contractor and the Government and provides incentives for efficiency and cost reduction. In negotiating such a price, it is not possible to identify the treatment of specific cost elements since the bargaining is on a total price basis. Thus, while cost data is often a valuable aid, it will not control negotiation of prices for work to be performed, or a target price under an incentive contract.

[25 F.R. 14309, Dec. 31, 1960]

§ 15.603

Cost principles and their use.

(a) When, pursuant to § 15.602, costs are to be considered in the negotiation of fixed-price type contracts, the appropriate subpart of this part shall be used as a guide in the evaluation of cost data required to establish a fair and reasonable price in conjunction with other pertinent considerations as set forth more fully in Subpart H, Part 3, of this chapter, and-in the case of negotiated termination settlements part C, Part 8 of this chapter.

Sub

(b) In retrospective pricing, whenever an occasion arises in which acceptability of a specific item of cost becomes an issue, the appropriate part of this Part 15 will serve as a guide for the contracting officer in his conduct of negotiations.

(c) In applying this part to fixed-price contracts, contracting officers will: (1) Not be expected to negotiate agreement on every individual element of cost; and (2) be expected to use their judgment as to the degree of detail in which they consider the individual elements of cost in arriving at their evaluation of total cost, where such evaluation is appropriate. However, the negotiation record should fully substantiate and justify the reasoning leading to any negotiated price.

(d) In order to permit the proper evaluation of cost data submitted by contractors for use in negotiating prices, it may be necessary to obtain breakdowns or account analyses in respect to some cost items particularly those whose treatment may be dependent upon special circumstances as stated in the principles. Contractors will be expected to be responsive to reasonable requests for data of this kind.

[25 F.R. 14309, Dec. 31, 1960]

This subpart prescribes forms for use in procuring supplies by formal advertising; it is not applicable to specialized procurements for which other instructions are given by this subchapter or departmental procedures.

[25 F.R. 14311, Dec. 31, 1960]

§ 16.101 Combination Type (Standard Forms 33, 33–A, 32, 26, and 36 and DD Form 1260).

[30 F.R. 14093, Nov. 9, 1965]

§ 16.101-1 General.

The following supply contract forms shall be used in effecting procurements by formal advertising:

(a) Invitation, Bid, and Award (Supply Contract) (Standard Form 33);

(b) Bidding Instructions, Terms, and Conditions (Supply Contract) (Standard Form 33-A);

(c) General Provisions (Supply Contract) (Standard Form 32);

(d) Any other special terms for the invitation for bids or additional contract

1 Appendix F, containing a facsimile of each of the forms listed below, has been filled with the Office of the Federal Register; copies of forms may be obtained through the Contracting Officer in any of the military departments.

provisions which are prescribed by this subchapter or Departmental procedures (Note.-The Federal, State, and Local Taxes clause at § 11.401-1 of this chapter shall be used as a part of Standard Form 32, when that standard form is used in any advertised procurement or in any of the other circumstances set forth in § 11.401-1. When a standard form is used in a negotiated fixed-price type contract in excess of $10,000 where the contracting officer is not satisfied that the contract price, virtue of competition or otherwise, excludes contingencies for State and local taxes, the Federal, State, and Local Taxes clause at § 11.401-2 shall be made a part of the contract, and the clause at § 11.401-1 shall be deleted from Standard Form 32.);

(e) Continuation Sheet (Supply Contract) (Standard Form 36) (when needed with Standard Forms 33 and 33-A or 26 or DD Form 1260);

(f) Amendment to Invitation for Bids (DD Form 1260) when needed; and (g) Award (Supply Contract) (Standard Form 26) when needed. [30 F.R. 14093, Nov. 9, 1965] § 16.101-2 Conditions for use.

(a) The Invitation, Bid, and Award (Standard Form 33) and the Schedule portion of Standard Form 33 shall be prepared in accordance with §2.201 of this chapter. One copy of Standard Form 33-A shall accompany each copy of Standard Form 33. Bidders shall be requested to return only three signed copies of their bids.

(b) Standard Form 32 and any additional general provisions may be attached to each copy of the Invitation for Bids. Alternatively, only one copy of Standard Form 32 and any additional general provisions need be furnished to each bidder, for retention, if such provisions are specifically incorporated by reference, including each form name, number and date, in the Schedule. visions which are inapplicable to a particular procurement, or to military procurements generally may be deleted by appropriate reference in an "Alterations in Contract" clause.

Pro

(c) Award of contracts shall be accomplished by completing the Award portion of Standard Form 33 and furnishing a copy of the form, so completed, to each successful bidder. Alternatively, such award may be accomplished by furnishing a completed Standard Form 26 to each successful bidder. Papers pre

viously forwarded to bidders need not accompany the successful bidder's copy of the Award document. The required use of the Award portion of Standard Form 33 or the use of Standard Form 26 does not preclude the additional use of informal documents, including telegrams, as notices of awards.

(d) DD Form 1260 (Amendment to Invitation for Bids) shall be used when it is necessary to issue an amendment.

(e) Continuation Sheet (Supply Contract) (Standard Form 36) shall be used when additional space is required for the Schedule, Amendment, or Award. [30 F.R. 14094, Nov. 9, 1965]

Subpart B-Forms for Negotiated
Procurement

This subpart prescribes forms for use in procuring supplies or services by negotiation (see also Subpart C of this part, Purchase and Delivery Order Forms); it is not applicable to specialized procurements for which other instructions are given by this subchapter or departmental procedures.

[25 F.R. 14311, Dec. 31, 1960]

§ 16.201 Request for quotation (Standard Form 18).

[25 F.R. 14311, Dec. 31, 1960]

§ 16.201-1 General.

Standard Form 18 is prescribed to obtain price, cost, delivery, and related information from suppliers. [25 F.R. 14311, Dec. 31, 1960] § 16.201-2 Conditions for use.

Standard Form 18 is authorized for use when it appears reasonably certain that the procurement will be consummated by (a) a fixed-price type contract involving extensive negotiation or, (b) a cost-reimbursement type contract. Standard Form 36 (Continuation Sheet), or DD Form 1155c (Continuation Sheet) may be used as required. Standard Form 18 may be used for negotiated procurements in excess of $2,500 and shall be used for negotiated procurements of $2,500 or less (including purchase orders) when written solicitations (other than by telegram) of quotations are used (see § 3.604 of this chapter). Two copies of Standard Form 18 shall be sent to each prospective supplier and he shall be requested to return only one signed copy. A quotation submitted on this form is not to be construed as an offer which

can be accepted by the Government to form a binding contract. Therefore, issuance by the Government of a purchase order pursuant to a supplier's quotation does not constitute a contract, but the purchase order is an offer by the Government to the supplier to buy certain goods or services upon specified terms and conditions.

[30 F.R. 6013, Apr. 29, 1965]

§ 16.202 Negotiated contract forms (DD Forms 1261 and 1270).

(a) General. (1) DD Form 12611 (Negotiated Contract) is designed for use in entering into negotiated contracts where the signature of both parties on a single document is appropriate.

(2) DD Form 1270 (General Provisions (Short Form Negotiated Contract)) is designed for use with DD Form 1261 as set forth in (b) below, but need not be used in contracts to be performed outside the United States, its Territories, its possessions or Puerto Rico.

(3) DD Form 1261 (Negotiated Contract), in conjunction with appropriate General Provisions (as provided in paragraphs (b), (c), and (d) of this section), is prescribed for use in entering into negotiated contracts except:

(i) Contracts for which DD Forms 746, 746-1, and 746-2 are used in accordance with § 16.203;

(ii) Contracts for the construction, alteration, or repair of buildings, bridges, roads, or other kinds of real property;

(iii) Procurements for which special contract forms are prescribed by this subchapter (for example, §§ 16.501, 16.503, 16.504, 16.505, and 16.506); and

(iv) Procurements for which purchase order and related forms are authorized by Subpart C of this part.

(b) Short form negotiated supply and services contracts.

(1) Except as provided in paragraph (a) (2) and (3) of this section, DD Form 1261 (Negotiated Contract), and DD Form 1270 (General Provisions (Short Form Negotiated Contract)), shall be used for negotiated fixed-price type supply contracts which do not exceed $10,000 and which are for standard or commercial items not involving special inspection due to complicated specifications. These forms may be used also for nonpersonal services contracts which do not exceed $10,000. Standard Form 36 (Continuation Sheet) shall be used

1 Filed as part of the original document.