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§ 16-1.302 Procurement sources.

eral Procurement Data System Sum of

Contract Actions of $10,000 or Less $ 16-1.302-1 Who may contract.

and Subcontract Data on Selected The OPM may contract with health Prime Contracts”, as appropriate, to benefits carriers for plans meeting the the Administrative Services Division, requirements of 5 U.S.C. Chapter 89, 5 Acquisition Branch, for each procureCFR Part 890, and this Chapter 16 for the provision of health coverage.

(b) Costs under FEHB contracts in

clude those for (1) carrier's adminis$ 16-1.302–3 Contracts between the Gov. trative expenses, (2) a service charge

ernment and Government employees or for carriers and (3) benefit costs. The business concerns substantially owned first two categories of costs reflect the or controlled by Government employ costs for operating the Program under ees.

contract and shall be reported on FPR 1-1.302-3 is applicable to the Standard Form 279. Benefit costs are administration of the FEHBP con compensation expenses of an employtracts. Except where OPM is directed er/employee relationship and shall be by statute to contract with Govern

reported by OPM as a part of its ment employees.

annual reports on Federal employee

compensation. $ 16-1.303 Approval signatures.

(c) FEHBP contract awards take FPR 1-1.303 is applicable to the ad

place only during the first quarter of ministration of the FEHBP contracts.

the calendar year. Dollar values re

ported on Standard Form 279 shall be $ 16-1.313 Records of contract actions. the amounts of such costs estimated FPR 1-1.313 is applicable to the ad

for the coming year during the rate ministration of the FEHBP contracts.

setting process for experience rated

carriers. For community rated carri$ 16-1.318 Disputes.

ers, such costs shall be actuarily esti

mated as a percentage of total subFPR 1-1.318 is applicable to FEHBP

scription income. contracts and a clause conforming in substance to the Disputes clause set forth in OPMPR 16-7.502-2 shall be

Subpart 16-1.4-Procurement included in all FEHBP contracts.

Responsibility and Authority § 16–1.320 Subcontractor gifts and kick- $ 16-1.400 Scope of subpart. backs.

This subpart sets forth the authori. FPR 1-1.320 is applicable to the ad- ty of the Director, Office of Personnel ministration of the FEHBP contracts. Management and the FEHBP con

tracting officer. $ 16-1.323 Preference for U.S. Flag Air Carriers.

8 16-1.401 Responsibility of the Director, FPR 1-1.323 is applicable to the ad

Office of Personnel Management. ministration of the FEHBP contracts. The director is responsible for ap

proval of the basic policies affecting 816-1.328 Fraudulent claims.

the administration of the FEHB law FPR 1-1.328 is applicable to the ad and issuance of regulations impleministration of the FEHBP contracts. menting these policies. 816-1.341 Reporting Contract Actions & 16-1.402 Authority of the FEHBP con(Federal Procurement Data System).

tracting officer. (a) The contracting officer shall The FEHBP contracting officer is comply with FPR 1-1.341 set out in authorized to enter into and adminisTemporary Regulation 48 by submit- ter FEHBP contracts on behalf of the ting Standard Form 279, "Federal Pro. Government and make related findcurement Data Systems Individual ings and determinations within the Contract Action Report (Over limitations of his or her prescribed $10,000)" or Standard Form 281, "Fed- duties and authority. In the exercise

of such authority, the FEHBP con- Subpart 16-1.9—Reporting Possible tracting officer is subject to the re

Antitrust Violations quirements in FPR 1-1.403 and any

8 16-1.901 General policy. further requirements, consistent with the Federal Procurement Regulations, Where proposals received in FEHBP imposed by OPM.

procurements evidence violations of

the antitrust laws, the procedures in $ 16-1.403 Requirements to be met before

FPR 1-1.9 may be used in referring entering into contracts.

such proposals to the Attorney General. No contract shall be entered into Subpart 16-1.10—Publicizing Procureunless all applicable requirements of

ment Actions law, Executive Orders and regulations have been met. The term "regula- 816-1.1001 General policy. tions” includes those issued by any FPR 1-1.10 is applicable to the adregulatory agency whether or not in- ministration of FEHBP contracts. In corporated or referenced in the Feder- addition, OPM will implement the folal Procurement Regulations.

lowing sections in the manner pre

scribed below. 8 16-1.405 Ratification of unauthorized

8 16-1.1003 Synopses of proposed procurecontract awards.

ments. FPR 1-1.405 is applicable to the ad At least 60 days prior to the beginministration of the FEHBP contracts.

ning of the annual negotiation process

for new FEHBP contracts, OPM shall 8 16–1.406 Cost accounting standards. publish a notice of its proposed pro

FPR 1-1.406 is applicable to the ad curement action in the Department of ministration of the FEHBP contracts Commerce Synopsis. Interested carri(see OPMPR 16-3.12).

ers shall be directed to OPM for information concerning submission of ap

plications for participation. Subpart 16-1.5—Contingent Fees

$ 16-1.1004 Synopses of contract awards. $ 16–1.500 Scope of subpart.

At the close of the negotiation FPR 1-1.5 is applicable to the ad- period, OPM shall publish in the Deministration of FEHBP contracts.

partment of Commerce Synopsis a list of all carriers approved for participa

tion in the FEHBP during the next Subpart 16-1.6-Debarred, Suspend- contract year. ed, and Ineligible Carriers

Subpart 16-1.12- Responsible 8 16-1.600 Scope of subpart.

Prospective Contractors This subpart sets forth OPM's policy & 16-1.1200 Scope of subpart. with regard to the debarment, suspension and ineligibility of carriers.

This subpart prescribes the policies

concerning the responsibility of pros8 16-1.601 Applicability.

pective carriers. OPM shall enforce the provisions of

8 16-1.1201 Applicability. FPR 1-1.6 with respect to health in

FPR subpart 1-1.12 is applicable to surance carriers and shall maintain a

the administration of FEHBP conconsolidated list of concerns to whom tracts. In addition, carriers must meet contracts will not be awarded. Hearing the requirements of 5 U.S.C. chapter provisions shall be those set forth at 5 89, and 5 CFR Part 890, and this CFR 890.205.

Chapter 16.

Subpart 16-1.23—Environmental


$ 16-1.2300 Scope of subpart.

FPR Subpart 1-1.23 is applicable to the administration of the FEHBP contracts.



Sec. 16-3.807-7 Unacceptable substitutes for

pricing negotiations. 16-3.807-8 Evaluation and pricing of indi

vidual contracts. 16-3.807-9 Specified contingencies. 16-3.807-10 Subcontracting considerations

in cost analysis. 16-3.807-11 Overhead rate consideration. 16-3.807-50 Certificate of community

rating. 16-3.808 Service charge. 16-3.808-50 Additional factors and consid

erations for determining the service

charge. 16-3.809 Contract audit as a pricing aid. 16-3.810 Exchange of information. 16-3.811 Record of price negotiation. 16-3.812 Disposition of postaward audits. 16-3.813 Startup and other nonrecurring

costs. 16-3.814 Contract clauses. 16-3.814-50 Price reduction for defective

certificate of community rating.

16-3.000 Scope of part.

Subpart 16-3.1-Use of Negotiation 16-3.100 Scope of subpart. 16-3.101 General requirements for negotia

tion. 16-3.102 Factors to be considered in negoti

ating contracts. 16-3.104 Disclosure of mistakes after


Subpart 16-3.2—Circumstances Permitting


Subpart 16-3.9–Subcontracting Policies and

Procedures 16-3.903-2 Review and approval of subcon

tracts. 16-3.903-50 Subcontract clause.

16-3.200 Scope of subpart. 16-3.215 Otherwise authorized by law.

Subpart 16-3.3—Determinations, Findings, and

Authorities 16-3.301 General.

Subpart 16-3.12—Cost Accounting Standards 16-3.1200 Scope of subpart.

AUTHORITY: 40 U.S.C. 486(c); 5 U.S.C. 8913.

SOURCE: 46 FR 51572, Oct. 20, 1981, unless otherwise noted.

Subpart 16-3.4—Types of Contracts

16-3.400 Scope of subpart. 16-3.401 Types of health benefits plan con


& 16–3.000 Scope of part.

This part prescribes policies and procedures which shall be observed by OPM in connection with procurement by negotiation under the Federal Employees Health Benefits Program (FEHBP).

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Subpart 16-3.1-Use of Negotiation

16-3.800 Scope of subpart. 16-3.801 Basic policy. 16-3.802 Preparation for negotiation. 16-3.803 Type of contract. 16-3.804 Conduct of negotiations. 16-3.805 Selection of offerors for negotia

tion and award. 16-3.806 Cost, profit, and price relation

ship. 16-3.807 Pricing techniques. 16-3.807-1 General. 16-3.807-2 Requirements for price or cost

analysis. 16-3.807-3 Cost or pricing data. 16-3.807-4 Certificate of current cost or

pricing data. 16-3.807-5 Defective cost or pricing data. 16-3.807-6 Refusal to provide cost or pric

ing data.

8 16-3.100 Scope of subpart.

This subpart deals with the nature and use of negotiation in the award of contracts under the Federal Employees Health Benefits Program (FEHBP).

8 16-3.101 General requirements for nego

tiation. No contract shall be entered into as a result of negotiation unless or until the following requirements have been the following requireme satisfied:

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Subpart 16-3.2—Circumstances

Permitting Negotiation

§ 16-3.200 Scope of subpart.

FPR 1-3.200 is applicable to the administration of the FEHBP contracts. $ 16-3.215 Otherwise authorized by law.

(a) Pursuant to the authority of section 302(c)(15) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 252(c)(15)) purchases and contracts may be negotiated without formal advertising if “otherwise authorized by law." This provision preserves the authority to negotiate contracts conferred by other legislation.

(b) Contracts between OPM and health benefits carriers are contracted for "without regard to section 5 of title 41 or other statute requiring competitive bidding.” (5 U.S.C. 8902) This statutory authority is construed to authorize negotiation pursuant to sec. tion 302(c)(15) of the Act and without regard to the advertising requirements of sections 302(c) and 303 of the Act (see FPR 1-3.215(c)).

§ 16-3.401 Type of health benefits plan

Contracts. (a) The Federal Employees Health Benefits Act provides that the Office of Personnel Management may contract with qualified carriers. The Act provides that rates charged under these health benefit plans shall reasonably and equitably reflect the cost of the benefits provided. Two types of contracts are used in the FEHBP, experience rated and community rated. Definitions and explanations of these two contract types are contained in Part 4 of this Chapter 16, “Special Types and Methods of Procurement."

(b) Other contract types or combination of types which will promote the best interest of the Government, subject to the restrictions in FPR 13.401(b) or in 5 U.S.C. 8902(1), may be negotiated lI appropriate negotiated if appropriate in the circumstance. To the extent that a contract type other than experience rated or community rated is selected, the relevant subsection of FPR Subpart 13.4 would apply. However, the costplus-a-percentage-of-cost contract shall not be used.

Subpart 16-3.3—Determinations,

Findings, and Authorities

Subpart 16-3.8—Price Negotiation

Policies and Techniques

8 16-3.301 General.

$ 16-3.800 Scope of subpart. The following sections regarding de- FPR 1-3.800 is applicable to the adterminations, findings, and authorities ministration of the FEHBP contracts.

The renegotiation of rates or benefits in an FEHBP contract constitutes a modification as that term is used in FPR 1-3.800.

§ 16–3.801 Basic policy.

FPR 1-3.801 is applicable to the administration of the FEHBP contracts and is supplemented as follows: The FEHBP contract pricing team specified in FPR 1-3.801-3(b)(1) may include an actuary.

$ 16–3.802 Preparation for negotiation.

The provisions of FPR 1-3.802(a) should be adapted to the FEHBP procedures and requirements as specified in Part 4 of this chapter 16, “Special Types and Methods of Procurement” and 5 CFR 890.203.

8 16-3.803 Type of contract.

FPR 1-3.803 is applicable to the administration of the FEHBP contracts.

8 16-3.804 Conduct of negotiations.

FPR 1-3.804 is applicable to the administration of the FEHBP contracts. 8 16-3.805 Selection of offerors for negoti

ation and award. Application for approval of, and proposal of amendments to, health benefits plans should be made according to the procedures set out in 5 CFR Part 890.

the cost or pricing data requirement on the FEHBP, the following supplementary information is provided:

(1) A community rated contract (see OPMPR 16-4.152-1(a)) meets the exception cited in FPR 1-3.8073(b)(1)(ii). Consequently, the contracting officer need not apply FPR 13.807-3(a) to carriers offering community rated plan contracts. The contracting officer may, however, require the carrier of a community rated plan to demonstrate that the community rate is in fact a community rate. In any event, the carrier shall be required to submit a certificate in accordance with OPMPR 16-3.807-50 certifying that the proposed rates are in fact a community rate as defined by OPMPR 16-4.151-2. Cost and pricing data may be required for any portion of the proposed rate that is not a part of the community rate if that portion is otherwise in accordance with the dollar criteria of FPR 1-3.807-3.

(2) Since cost or pricing data is not required for a community rated contract, subcontract cost and pricing data as referred to in FPR 1-3.8073(d)(1) need not be requested by the contracting officer.

(3) The contracting officer shall require carriers offering experience rated plan contracts to submit written cost or pricing data in accordance with FPR 1-3.807-3. Generally, each experience rated plan shall be required to submit, with its rate proposal, a projection of its operations for completion of the current year and for succeeding contract year(s), and to explain the derivation of each item in the projection. Data supplied by the carrier will be checked against reports filed by the carrier showing monthly paid claims incurred by quarter of each year. The data in these reports will also be verified by comparison to the carrier's annual accounting statement filed with OPM. The Office of Actuary will review the information filed by the carrier and compare the carrier's data with an independent projection developed by the actuary.

(4) A carrier offering an experience rated plan which is required to submit and certify cost or pricing data in ac

8 16–3.806 Cost, profit, and price relation

ship. FPR 1-3.806 is applicable to the administration of the FEHBP contracts.

$ 16-3.807 Pricing techniques. 8 16–3.807-1 General.

FPR 1-3.807-1 (a) and (b)(2) are applicable to the administration of the FEHBP contracts. 8 16–3.807-2 Requirements for price or

cost analysis. FPR 1-3.807-2 is applicable to the administration of FEHBP contracts.

8 16-3.807-3 Cost or pricing data.

(a) FPR 1-3.807-3 is applicable to the administration of FEHBP contracts. To clarify implementation of

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